-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YZhuQ5nDyJxVIIF5RbO6UB4GyYWBj1CQXBTElxG9zNefHskCpaCuC8Nvb/jGL8Z6 FEAgze+IvnQDdE7S5uemGg== 0000950130-94-000538.txt : 19940331 0000950130-94-000538.hdr.sgml : 19940331 ACCESSION NUMBER: 0000950130-94-000538 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRANE CO /DE/ CENTRAL INDEX KEY: 0000025445 STANDARD INDUSTRIAL CLASSIFICATION: 3490 IRS NUMBER: 131952290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-01657 FILM NUMBER: 94519073 BUSINESS ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033637300 10-K 1 FORM 10-K FORM 10-K 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, 1993 ----------------- 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 ------ CRANE CO. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-1952290 - ------------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No) 100 First Stamford Place, Stamford, CT 06902 - ---------------------------------------- -------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 363-7300 ------------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ----------------------- ------------------------ 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: 5% convertible subordinated debentures due July, 1994 8 1/2% senior notes due March, 2004 --------------------------------------------------------- (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 ----- ----- 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. ( ) Based on the closing sales price of March 16, 1994 the aggregate market value of the voting stock held by nonaffiliates of the registrant was $848,556,957. The number of shares outstanding of the registrant's common stock, $1.00 par value was 29,905,091 at March 16, 1994. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Portions of the annual shareholders report for the year ended December 31, 1993 are incorporated by reference into Parts I, II and IV. Portions of the proxy statement for the annual shareholders meeting May 9, 1994 are incorporated by reference into Parts I and III. PART I ------ Item 1. Business -------- The company is a diversified manufacturer of engineered industrial products, serving niche markets in aerospace, fluid handling, automatic merchandising and the construction industry. The company's wholesale distribution business serves the building products markets and industrial customers. Founded in 1855, Crane Co. employs over 8,700 people in North America, Europe and Australia. The company's strategy is to maintain a balanced business mix, to focus on niche businesses with high market share and to avoid capital-intensive and cyclical businesses. In the past five years, the company has completed seven acquisitions. In 1990 it acquired Lear Romec, a manufacturer of lubrication and fuel pumps for the aerospace industry. 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. In 1993, the company made five acquisitions. Perflow Instruments, Ltd., a British manufacturer of pressure and flow measurement equipment, was added to Crane Ltd. Huttig Sash and 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. The company significantly expanded its position as a supplier of fiberglass reinforced plastic (FRP) panels to the recreational vehicle market with the acquisition of Filon. Filon was integrated with the company's Kemlite unit in the fourth quarter of 1993. The company acquired Burks Pumps, Inc., a manufacturer of engineered pumps, in December 1993. This acquisition will complement the company's Chempump and Deming pump businesses and significantly increases its involvement in niche markets in the pump industry. In 1990 the company sold Sea-Pac Sales Co., a distributor of floor covering products, and its McAvity division, a Canadian manufacturer of waterwork valves and hydrants for an aggregate sales price of approximately $19 million. In April 1993, the company sold its precision ordnance business, UniDynamics/Phoenix for approximately $6 million. During March 1992 the company sold $100,000,000 8 1/2% notes that will mature on March 15, 2004. See page 24 of the Annual Report to Shareholders for the contributions to the company's sales and operating profit of each of its business segments and the assets employed in each segment. ENGINEERED INDUSTRIAL PRODUCTS ------------------------------ This segment is composed of operations that design and manufacture engineered products and systems for the aerospace, fluid handling, automatic merchandising, transportation, commercial construction and defense markets. The company serves the global valve market through manufacturing facilities in North America, the United Kingdom and Australia. The company sells a wide variety of valves and fluid control products for the chemical, processing, power and general industrial and commercial construction industries. Products include gate, globe, check, angle, ball and butterfly valves of steel, carbon and stainless steel, alloy, iron, cast iron and bronze designed for use under various pressures and temperatures, along with pipe fittings, actuators, pumps and flow measurement equipment. The North American unit also provides a full range of valve aftermarket services including parts, repairs, and modifications through eight service centers and the company's subsidiary in the United Kingdom also maintains repair and service facilities for valves, pumps, compressors, heat exchangers and similar equipment. -1- PART I ------ Item 1. Business (continued) -------- Crane Pumps & Systems manufactures pumps used in the chemical, power, hydro-carbon processing, municipal, general industrial and commercial industries. Products include sealless canned motor pumps designed to handle environmentally hazardous fluids, horizontal and vertical centrifugal pumps, standard vertical turbine pumps, submersible wastewater pumps, regenerative turbine, end suction centrifugal pumps, submersible deaerator pumps, split case pumps, and in-line pumps. The pumps are marketed under the Chempump, Deming, Barnes, Burks, Weinman and Prosser brand names. The company's Cochrane Environmental Systems division designs and markets water and wastewater treatment equipment for almost every major industry. Cochrane's products include deaerators, demineralizers, hot and cold process softeners, dealkalizers, filters, multiport relief valves, condensate drainage systems and clarifiers. These products have applications for boiler feed, industrial processes and wastewater treatment and recovery and are sold principally to public utilities and authorities and major industrial plants. The above products are sold directly to end users through Crane's sales organizations and through independent distributors and manufacturers' representatives. The company designs, manufactures and sells, under the name "Hydro-Aire", anti-skid and automatic brake control systems, fuel and hydraulic pumps, and other aerospace components for the commercial, military and general aircraft 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 pumps and fluid handling systems for military and commercial aerospace industries. Lear Romec has a leading share of the non-captive market for turbine engine lube and scavenge oil pumps. Also, it is the leading supplier of fuel boost and transfer pumps for commuter and business aircraft. The company, through Resistoflex/Defense, designs and manufactures high performance fittings used primarily in military aircraft under the name "Dynatube". The company, through Crane Defense Systems is engaged in the development and manufacture of specialized handling systems, elevators, ground support equipment, cranes and associated electronics. These products are sold directly to the government and defense contractors and represented less than 2% of 1993 sales. 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, inline transfer machines, rotary tables, press feeds and custom cams. These products are sold through company and independent sales representatives and distributors. -2- PART I ------ Item 1. Business (continued) -------- 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 and uses distributors to serve its commercial construction market. Cor Tec is the leading domestic manufacturer of fiberglass-reinforced laminated panels. The primary market for these panels is the truck and truck trailer segment of the transportation industry. Cor Tec markets its products directly to the truck and truck trailer manufacturers. Resistoflex/Industrial is engaged in the design, manufacture and sale of plastic-lined steel pipe, fittings, valves, bellows and hose used primarily by the pharmaceutical, chemical processing, pulp and paper, petroleum distribution, and waste management industries. Resistoflex sells its products through industrial distributors who provide stocking and fabrication services to industrial users in the United States. The Canadian operations of the company are conducted by Crane Canada, Inc., a wholly-owned subsidiary. Crane Canada manufactures plumbing fixtures and related building products. The unit commands a large share of the Canadian market for these products. Polyflon manufactures radio frequency and microwave components, substrates, capacitors, and antennas for commercial and aerospace uses, and resonating structures for the medical industry. National Vendors is the largest domestic manufacturer of full line vending machines for the automatic merchandising industry. Products include machines which dispense snacks, refrigerated and frozen foods, hot and cold beverages and postal commodities. These products are marketed in North America directly to vending machine operators. In Europe products are marketed through wholly- owned subsidiaries with operations located in the United Kingdom, Germany and France. National Rejectors, GmbH designs and manufactures electronic coin validators and handling systems for vending operations throughout Europe. These devices are sold directly to the vending, amusement, soft-drink, and ticket issuing industries. WHOLESALE DISTRIBUTION ---------------------- The company distributes millwork products through its wholly-owned subsidiary, Huttig Sash & Door Company ("Huttig"). These products include doors, windows, moldings and related building products. Huttig assembles certain of these products to customer specification prior to distribution. Its principal customers are building material dealers and building contractors that service the new construction and remodeling markets. Wholesale operations are conducted nationally through forty-seven branch warehouses 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 maintains a saw mill and a manufacturing plant in Missoula, 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. In addition, Huttig manufactures wood windows in Rock Hill, South Carolina. Valve Systems and 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, Louisiana, Oklahoma and California. -3- PART I ------ Item 1. Business (continued) -------- Canadian wholesale operations are conducted through the Crane Canada Supply Division of Crane Canada, Inc. This division, a distributor of plumbing supplies, valves and piping, maintains thirty-seven branches throughout Canada and is the largest single distributor for Crane manufactured products. This division also distributes products which are both complementary to and partly competitive with Crane Canada's own manufactured products. 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, management believes the company and its subsidiaries are important manufacturers or suppliers in a number of market niches and geographic areas it serves. 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, capital spending, energy exploration and energy allocations during times of scarcity. Since these products are also sold in a wide variety of markets and applications, management does not believe it can reliably quantify or predict the possible effects upon its business resulting from such changes. Seasonality is a considerable factor in Huttig and the Canadian operations. Order backlog totalled approximately $226 million as of December 31, 1993, compared with $262 million as of December 31, 1992. Management believes backlog is not material to understanding its overall business because long- term contracts are not customary to significant portions of its business, except within the defense and aerospace related businesses. RECENT DEVELOPMENTS ------------------- On March 18, 1994 pursuant to a tender offer, Crane Acquisition Corp., a wholly owned subsidiary of Crane ("Crane Acquisition"), acquired 5,620,383 shares of the common stock of ELDEC Corporation ("ELDEC") at $13.00 per share. With this purchase, Crane Acquisition Corp. acquired 98.7 percent of the outstanding shares of ELDEC and thereafter consummated the merger of ELDEC into Crane Acquisition Corp., each remaining share of ELDEC common stock would be converted into the right to receive $13.00 in cash. Therefore, ELDEC is now a wholly owned subsidiary of Crane. Funds in the amount of up to $74,000,000 required for the acquisition of ELDEC have been made available through short-term credit lines. ELDEC, a Washington based corporation, designs, manufactures and markets custom electronic and electromechanical products and systems for applications that are technically and environmentally demanding. The company serves both the commercial and military aerospace markets, and its major customers are airframe and aircraft engine manufacturers and electronic systems manufacturers. The company has four product lines; sensing systems that monitor the status of aircraft landing gear, doors and flight surfaces; low voltage and high voltage power supplies for avionic and defense electronic systems; monitor and control devices for aircraft engines, including flowmeters and engine diagnostic systems; battery chargers, transformer- rectifiers and other devices that regulate DC power on an aircraft. For the year ended March 31, 1993, ELDEC had net sales of $108,415,000, net income of $2,430,000, and total assets of $112,235,000. -4- PART I ------ Item 1. Business (continued) -------- 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 $18,300,000 in 1993 ($19,200,000 and $18,600,000 in 1992 and 1991, respectively). In addition, approximately $139,000, $4,100,000, and $6,900,000 were received by the company in 1993, 1992, and 1991, respectively, for customer sponsored research and development relating to projects within the Engineered Industrial Products segment. 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 or its competitive position. Item 2. Properties
MANUFACTURING FACILITIES* NUMBER AREA - -------------------------------------------- ------ ----------------- Engineered Industrial Products United States 25 3,323,000 sq. ft. Canada 5 739,000 sq. ft. Other International 6 945,000 sq. ft. Wholesale Distribution 3 552,000 sq. ft.
*Includes plants under lease agreements:
Leases Expiring Number Area Through ------ --------------- -------- United States 3 152,000 sq. ft. 1995 Canada 1 10,000 sq. ft. 1995 Other International 2 41,000 sq. ft. 2006
Engineered Industrial operates seven valve service centers in the United States, of which three are owned. The company also operates internationally nine distribution and eight service centers. Wholesale Distribution has forty-seven Huttig branch warehouses in the United States, of which twenty-nine are owned. The Canadian wholesale operation maintains thirty-seven distribution branch warehouses in Canada, of which sixteen are owned. Valve Systems and Controls operates four 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. -5- PART I ------ 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 proceeding other than ordinary routine litigation incidental to their businesses. The following proceeding is included herein because it has been reported in the media. On September 22, 1992 the company was served with a complaint filed in the U.S. District Court, Eastern District of Missouri naming the company and its former subsidiary CF&I Steel Corporation ("CF&I") as defendants and alleging violations of the False Claims Act in connection with the distribution of CF&I to the company's shareholders in 1985 (Civil Actions Nos. 91-0429-C-1 and 4:92CV00514JCH). The complaint alleges a continuing agreement and concert of action between the company and CF&I to distribute CF&I to the company's shareholders, thereafter to terminate CF&I's pension plan so as to cause the Pension Benefit Guaranty Corporation ("PBGC") to assume CF&I's liability for $140 million in unfunded pension liabilities and to prevent the PBGC from obtaining any reimbursement from the company, and to publish and file misleading information in furtherance of that objective. The complaint seeks treble damages and attorney's fees. The company believes it has defenses to the complaint on the grounds, among others, that the allegations are without merit, the plaintiff has no standing and the False Claims Act does not apply. On June 1, 1993 the federal court in the Eastern District of Missouri dismissed the complaint for lack of standing of the plaintiff. The plaintiff has filed an appeal. The company expects the dismissal to be affirmed by the appellate court. 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. 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. Cor Tec recently constructed an air remediation 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. Cor Tec has refused to execute such a Decree or pay a penalty. No formal complaint has been filed by the Ohio Attorney General against the company or Cor Tec with regard to the styrene emissions. Cor Tec believes 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 -6- PART I ------ Item 3. Legal Proceedings (continued) ----------------- 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 --------------------------------------------------- There have been no matters submitted to a vote of security holders during the fourth quarter of 1993. -7- PART I ------ EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------ The executive officers of the registrant are as follows:
Officer Name Position Business Experience Age Since - ----------------------------- ----------------------------- ----------------------------- --- ----- Robert S. Evans Chairman, Chief Chairman, Chief 50 1974 Executive Officer Executive Officer and and President President of the company Jeremiah P. Cronin(1) Vice President- Vice President - Finance 50 1989 Finance and and Chief Financial Officer Chief Financial of the company, previously Officer Senior Vice President Finance and Administration of Research-Cottrell, Inc. L. Hill Clark(2) Executive Vice Executive Vice President of 49 1994 President the company, previously President of Lear Romec, and previously held various positions Allied Signal Inc. Paul R. Hundt Vice President Vice President, Secretary 54 1976 Secretary and and General Counsel of the General Counsel company Robert J. Muller, Jr. Executive Vice Executive Vice President of 47 1988 President the company Anthony D. Pantaleoni Vice President Vice President - Environment, 39 1989 Environment, Health & Safety, previously Health & Safety Director of Environmental, Health and Safety Audit Programs of Hoechst Celanese, Director of Environmental, Health and Safety Affairs of Specialty Chemicals Group Richard B. Phillips Vice President Vice President - Human 50 1987 Human Resources Resources of the company Michael L. Raithel Controller Controller of the company 46 1985 David S. Smith(3) Vice President- Vice President - Finance 37 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 Bankers Trust Company Gil A. Dickoff Treasurer Treasurer of the company, 32 1992 previously Assistant Treasurer of the company
(1) Resigned March 16, 1994 (2) Effective January 27, 1994 (3) Effective March 21, 1994 -8- PART II ------- The information required by Items 5 through 8 is hereby incorporated by reference to Pages 6 through 27 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 l1. Executive Compensation ---------------------- The information required by Item l1 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. -9- PART IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ----------------------------------------------------------------
Page ---- (a) Financial Statements and Schedules*: Independent Auditors' Report................................................... 13 Schedule V Property, Plant and Equipment............ 14 Schedule VI Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment............................... 15 Schedule VIII Valuation and Qualifying Accounts......... 16 Schedule IX Short-Term Borrowings..................... 17 Schedule X Supplementary Income Statement Information 18
*The consolidated balance sheets of Crane Co. and subsidiaries as of December 31, 1993 and 1992 and the related consolidated statements of income, changes in common shareholders' equity and cash flows for the years ended December 31, 1993, 1992 and 1991 and the financial review, appearing on Pages 6 through 27 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 schedules beginning on Page 14 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: (1) 8-K filed January 12, 1994 regarding acquisition of Burks Pumps, Inc. (2) 8-KA filed January 26, 1994 including financial statements of Burks Pumps and Crane Co. pro forma. (c) Exhibits to Form 10-K: (3) Articles of Incorporation and By-laws: There is incorporated by reference herein: (a) The company's Articles of Incorporation contained in Exhibit D to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. (b) The company's by-laws contained in Exhibit A to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (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. -10- PART IV ------- 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. 2) Third Supplemental Indenture dated as of April 30, 1969 between Registrant and B of A contained in Exhibit 4.2 to Registration Statement No. 2-32586 (5% Convertible Subordinated Debentures, Series B, due July 1, 1994). (10) Material Contracts: ------------------ (iii)Compensatory Plans Exhibit A: The Crane Co. Restricted Stock Award Plan as amended through May 10, 1993. Exhibit B: The Crane Co. Non-Employee Directors Restricted Stock Award Plan as amended through May 10, 1993. There is incorporated by reference herein: (a.) The Crane Co. Restricted Stock Award Plan contained in Exhibit 4.1.1 to Post-Effective Amendment No. 2 to the Registrant's Registration Statement No. 33-22904 on Form S-8 filed on July 6, 1988 and the related agreements filed as Exhibit 4.4.2-2 to Post-Effective Amendment No. 4, Exhibit 4.4.2-3 to Post-Effective Amendment No. 5 and Exhibit 4.4.2- 4 to Post-Effective Amendment No. 6, and Exhibit 4.4.2-5 to Post-Effective Amendment No. 7. (b.) The indemnification agreements entered into with Mr. R. S. Evans, each other director of the company and Mr. P. R. Hundt 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. (c.) 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. (d.) The forms of Agreement and Supplemental Agreement between the company and each of its five most highly compensated officers which provide for the continuation of certain employee benefits upon a change of control contained in Exhibit E to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. (e.) The Crane Co. Stock Option Plan as amended through May 6, 1991 contained in Exhibit 1(a)(2) to Post-Effective Amendment No. 2 to the company's Registration Statement No. 33-18251 on Form S-8 filed with the Commission on November 2, 1987. (11) Statement re computation of per share earnings: Exhibit C: Computation of net income per share. (13) Annual report to security holders: Exhibit D: Annual Report to shareholders for the year ended December 31, 1993. (22) Subsidiaries of the Registrant: Exhibit E: Subsidiaries of the Registrant. (24) Consent of Experts and Counsel Exhibit F: 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. -11- 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 D. S. Smith ------------------------- D. S. Smith Vice President-Finance Date 3/28/94 ----------------- 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 -------- R. S. Evans - -------------------------- R. S. Evans Chairman, Chief Executive Officer, President and Director Date 3/28/94 ------------------ D. S. Smith M. L. Raithel - -------------------------- -------------------------- D. S. Smith M. L. Raithel Vice President-Finance Controller Date 3/28/94 Date 3/28/94 ---------------------- ---------------------- DIRECTORS --------- C. J. Queenan, Jr. ------------------- C. J. Queenan, Jr. Date 3/28/94 --------------- M. Anathan, III E. T. Bigelow A. A. Seeligson, Jr. - ------------------------------- -------------------- ------------------------- M. Anathan, III E. T. Bigelow A. A. Seeligson, Jr. Date 3/28/94 Date 3/28/94 Date 3/28/94 -------------------------- -------------------- ------------------- R. S. Forte' D. C. Minton B. Yavitz - ------------------------------- ------------------ ------------------------ R. S. Forte' D. C. Minton B. Yavitz Date 3/28/94 Date 3/28/94 Date 3/28/94 ------------- -------------------- __________________ D. R. Gardner ------------------------ D. R. Gardner Date 3/28/94 -------------------
-12- 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, 1993 and 1992, and for each of three years in the period ended December 31, 1993 and have issued our report thereon dated January 24, 1994 (except for the note "Subsequent Event" on page 21, as to which the date is February 11, 1994); such financial statements and report are included in your 1993 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedules of Crane Co., listed in Item 14. These financial statement schedules are the responsibility of the Company's mamnagement. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. Deloitte & Touche January 24, 1994 -13- CRANE CO. AND SUBSIDIARIES SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT Years Ended December 31, 1993, 1992 and 1991 (In Thousands)
Balance at Currency Balance at Beginning Acquisitions Additions Divestitures Retirements Translation end of of Year of Businesses at Cost of Businesses or Sales Reclasses Adjustments Year ------------ ------------- --------- ------------- ------------ --------------- ------------ --------- 1993 - ---- Land $ 20,422 $ 744 $ 1,518 $ - $ 116 $ - $ (43) $ 22,525 Buildings and Improvements 114,958 7,992 16,129 - 741 47 (745) 137,640 Machinery and Equipment 241,930 16,360 21,191 7,461 7,663 (47) (2,767) 261,543 -------- ------- ------- -------- ------- -------- -------- -------- $377,310 $ 25,096 $38,838 $ 7,461 $ 8,520 $ - $ (3,555) $421,708 ======== ======== ======= ======= ============= ======== ======== ======== 1992 - ---- Land $ 20,900 $ - $ - $ - $ 362 $ - $ (116) $ 20,422 Buildings and Improvements 122,296 - 1,261 - 6,364 74 (2,309) 114,958 Machinery and Equipment 239,160 1,034 21,913 - 7,055 (1,777)(1) (11,345) 241,930 -------- ------- ------- -------- ------- -------- -------- -------- $382,356 $ 1,034 $ 23,174 $ - $13,781 $ (1,703) $(13,770) $377,310 ========= ======== ======== ======== ======= ======== ======== ======== 1991 - ---- Land $ 21,004 $ - $ 11 $ - $ 108 $ - $ (7) $ 20,900 Buildings and Improvements 125,019 - 2,633 - 5,310 - (46) 122,296 Machinery and Equipment 242,923 - 18,796 - 21,247 - (1,312) 239,160 -------- ------- ------- -------- ------- -------- -------- -------- $388,946 $ - $21,440 $ - $26,665 $ - $ (1,365) $382,356 ========= ======== ======= ======== ======= ======== ======== ========
Rates of depreciation vary from three to twenty-five years in consideration of the use and character of the assets. (1) Includes $1,703 of computer software to other assets. -14- CRANE CO. AND SUBSIDIARIES SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the Years Ended December 31, 1993, 1992 and 1991 (In Thousands)
Additions Balance at Charged to Currency Balance Beginning Acquisitions Costs and Divestitures Retirements Translation at End of Year of Businesses Expenses of Businesses or Sales Reclasses Adjustments of Year ---------- ------------- --------- ------------- ----------- ------------ ------------ -------- 1993 - ---- Buildings and improvements $ 57,129 $ 34 $ 4,555 $ - $ 740 $ (638) $ (453) $ 59,887 Machinery and equipment 156,996 137 19,589 5,544 7,259 638 (2,130) 162,427 -------- -------- ------- ------- --------- ------- ------- -------- $214,125 $ 171 $24,144 $ 5,544 $ 7,999 $ - $(2,583) $222,314 ======== ======= ======== ======= ========== ======= ======= ======== 1992 - ---- Buildings and improvements $ 54,721 $ - $ 4,594 $ - $ 733 $ (45) $(1,408) $ 57,129 Machinery and equipment 150,731 - 19,125 - 4,879 45 (8,026) 156,996 -------- ------- ------- ------ --------- ------- ------- -------- $205,452 $ - $23,719 $ - $ 5,612 $ - $(9,434) $214,125 ========= ======= ======== ====== ========= ======= ======= ======== 1991 - ---- Buildings and improvements $ 51,184 $ - $ 4,878 $ - $ 1,599 $ 170 $ 88 $ 54,721 Machinery and equipment 149,529 - 18,845 - 16,880 (170) (593) 150,731 -------- ------ ------- ------ --------- ------- ------- ------- $200,713 $ - $23,723 $ - $18,479 $ - $ (505) $205,452 ======== ====== ======== ====== ========= ======= ======= ========
-15- CRANE CO. AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (In Thousands)
Balance at Additions Balance Beginning Charged to at End Description of Year Cost & Expenses Deductions of Year - ----------------------------------- ---------- --------------- ---------- ------- 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 ====== ======= ======= ====== Year Ended December 31, 1992: - ----------------------------------- Allowance for doubtful accounts $1,268 $ 1,038 $ 1,447 $ 859 Allowance for cash discounts, returns and allowances 708 7,805 7,701 812 ------ ------- ------- ------ $1,976 $ 8,843 $ 9,148 $1,671 ====== ======= ======= ====== Year Ended December 31, 1991: - ----------------------------------- Allowance for doubtful accounts $ 389 $ 1,068 $ 189 $1,268 Allowance for cash discounts, returns and allowances 701 7,709 7,702 708 ------ ------- ------- ------ $1,090 $ 8,777 $ 7,891 $1,976 ====== ======= ======= ======
-16- CRANE CO. AND SUBSIDIARIES SCHEDULE IX - SHORT-TERM BORROWINGS (In Thousands)
At December 31, - --------------------------------- ---------------------------- Weighted Avg. Maximum Weighted Avg. Balance Interest Month-End Avg. Balance Interest Outstanding Rate Balance Outstanding(1) Rate (2) ----------- ---------- --------- ------------- --------- 1993 $108,048 7.0% $108,048 $46,623 7.4% ======== ===== ======== ======= ===== 1992 $ 32,906 9.3% $ 45,591 $36,917 8.9% ======== ===== ======== ======= ===== 1991 $ 25,575 8.40% $ 27,621 $19,113 9.1% ======== ===== ======== ======= =====
NOTES: (1) Average monthly borrowings are calculated using month-end balances outstanding during the year. (2) The approximated weighted average is calculated by dividing the related interest expense by monthly average borrowings. -17- CRANE CO. AND SUBSIDIARIES SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION (in Thousands)
Item Charged to Costs and Expenses ---- ----------------------------- Years Ended December 31, 1993 1992 1991 - ------------------------ ------- ------- ------- Maintenance and repairs $15,569 $17,173 $19,037
NOTE: Amounts for amortization of intangible assets, taxes other than payroll and income taxes, royalties and advertising costs are not presented as such amounts are less than 1% of net sales. -18- EX-10 2 MATERIAL CONTRACTS EXHIBIT 10 EXHIBIT A CRANE CO. RESTRICTED STOCK AWARD PLAN (As Amended through May 10, 1993) 1. PURPOSES OF THE PLAN The 1988 Restricted Stock Award Plan (the "Plan") for key officers and employees of Crane Co. (the "Company") is intended to attract and retain employees of the Company and its subsidiaries who are and will be contributing to the success of the business; to motivate and reward outstanding employees who have made significant contributions to the success of the Company and encourage them to continue to give their best efforts to its future success; to provide competitive incentive compensation opportunities; and to further opportunities for stock ownership by such employees in order to increase their proprietary interest in the Company and to increase their personal interest in its continued success. Accordingly, the Company may, from time to time, on or before May 30, 1998, grant to selected key officers and employees ("Participants") awards of shares of Common Stock par value $1.00, of the Company ("Common Stock") subject to the terms and conditions hereinafter provided. 2. ADMINISTRATION OF THE PLAN This Plan shall be administered by the Organization and Compensation Committee of the Board of Directors of the Company or by such other Committee composed of at least three members of the Board of Directors of the Company as may be designated by the Board. Such Committee (the "Committee") is authorized to interpret the Plan and may from time to time adopt such rules and regulations for carrying out the Plan as it may deem appropriate. No member of the Committee shall be eligible to participate in, and no person shall become a member of the Committee if within one year prior thereto he or she shall have been eligible to participate in this Plan or any other plan of the Company or any of its affiliates (other than the 1988 Non-Employee Director Restricted Stock Plan) entitling the participants therein to acquire stock, stock options, stock appreciation rights or restricted stock of the Company or any of its affiliates. Decisions of the Committee in connection with the administration of the Plan shall be final, conclusive and binding upon all parties, including the Company, stockholders and employees. The Committee may employ attorneys, consultants, accountants or other persons and the Committee and the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All usual and reasonable expenses of the Committee shall be paid by the Company. No member shall receive 1 compensation with respect to his services for the Committee except as may be authorized by the Board of Directors. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon all employees who have received awards, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan or awards made thereunder, and all members of the Committee shall be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. Subject to the terms, provisions and conditions of this Plan as set forth herein, the Committee shall have sole discretion and authority: (a) to select the key officers and employees to receive awards under the Plan (it being understood that more than one award may be granted to the same person); (b) to determine the number of shares to be awarded each recipient; (c) to determine the restrictions as to period and the market value threshold applicable to each award; (d) to determine the time or times when awards may be granted and any additional terms and conditions which may be placed upon receiving such award; and (e) to prescribe the form of agreement, legend or other instruments evidencing any awards granted under this Plan. "With respect to any outstanding awards, the Committee shall have sole discretion and authority to modify at any time the restriction as to period (as well as any schedule of installments for the lapse thereof), the market value threshold applicable thereto, the terms and conditions placed thereon, and the form of agreement, legend or other instrument evidencing such award provided that no such modification shall increase the benefit under such award beyond that which the Committee could have originally granted at the time of the award, or shall impair the rights of any participant under such award except in accordance with the Plan, or any applicable agreement, or applicable law, or with consent of the participant." 3. STOCK SUBJECT TO THE PLAN The aggregate number of shares of Common Stock which may be awarded under the Plan shall not exceed 1,000,000 shares provided, however, effective May 10, 1993 the maximum number of shares which may be awarded under the Plan shall be increased so that the number of shares available for grant under the Plan on and after that date shall be 500,000 shares. Shares to be awarded under this Plan shall be made 2 available, at the discretion of the Board of Directors, either from the authorized but unissued shares of Common Stock of the Company or from shares of Common Stock reacquired by the Company, including shares purchased in the open market. If any shares of Common Stock awarded under the Plan are reacquired by the Company in accordance with Section 6(c) of the Plan, such shares shall again become available for use under the Plan and shall be regarded as not having been previously awarded. 4. ELIGIBILITY Restricted stock shall be awarded only to key officers and employees of the Company or of a subsidiary of the Company. The term "employees" shall include officers as well as other employees of the Company and its subsidiaries and shall include directors who are also employees of the Company or of a subsidiary of the Company. 5. AWARDS AND CERTIFICATES (a) The prospective recipient of an award of restricted stock shall not, with respect to such award, be deemed to have become a participant or to have any rights with respect to such award until and unless such recipient shall have executed an agreement or other instrument evidencing the award and delivered a fully executed copy thereof to the Company and otherwise complied with the then applicable terms and conditions. (b) Each participant shall be issued a certificate in respect of shares of restricted stock awarded under the Plan. Such certificate shall be registered in the name of the participant, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such award substantially in the following form: "The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the 1988 Restricted Stock Award Plan of Crane Co. and an Agreement entered into between the registered owner and Crane Co. Copies of such Plan and Agreement are on file in the offices of Crane Co., 100 First Stamford Place, Stamford, CT 06902." (c) All certificates for restricted stock delivered under this Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 3 (d) The Committee may adopt rules which provide that the stock certificates evidencing such shares may be held in custody by a bank or other institution, or that the Company may itself hold such shares in custody until the restrictions thereon shall have lapsed and may require, as a condition of any award, that the participant shall have delivered a stock power endorsed in blank relating to the stock covered by such award. (e) Recipients of awards under this Plan are not required to make any payment or provide consideration other than the rendering of services. (f) The Committee will have the discretion, as to any award, to award a separate cash amount, payable to the participant at the time when the forfeiture restrictions on the restricted stock lapse or at such earlier time as a participant may elect to be taxed with respect to such restricted stock equal to (i) the federal income tax and golden parachute excise tax (if any) payable with respect to the lapse of such restrictions or with respect to such election, divided by (ii) one (1) minus the total effective federal income and excise tax rate applicable as a result of the lapse of such restrictions or a result of such election. 6. RESTRICTIONS AND FORFEITURES The shares of Common Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions: (a) Subject to subparagraph (d) hereof, commencing with the date of each award (the "Restriction Period"), the participant will not be permitted to sell, transfer, pledge or assign restricted stock awarded under this Plan until the expiration of the period set by the Committee or until the Common Stock attains a threshold market value established by the Committee at the date of the award, whichever is earlier. Within these limits the Committee may provide at the time of the award for the lapse of such restrictions in installments where deemed appropriate. (b) Except as provided in Section 6(a), the participant shall have with respect to the restricted stock all of the rights of a shareholder of the Company, including the right to vote the shares and receive dividends and other distributions. (c) Subject to the provisions of Section 6(d), unless otherwise determined by the Committee, upon termination of employment for any reason during the restriction period, all shares still subject to restriction shall be forfeited by the participant and will be reacquired by the Company. (d) In the event of a participant's retirement, permanent total 4 disability, or death or in the event of a change in control, all remaining restrictions will lapse with respect to such participant's restricted stock. In addition, in cases of special circumstances, the Committee may, in its sole discretion when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to such participant's restricted stock. For purposes of this Plan, the term "change in control" shall mean (i) the first purchase of shares pursuant to a tender offer or exchange offer (other than a tender offer or exchange offer by the Company) for all or part of the Company's Common Stock or any securities convertible into such Common Stock, (ii) the receipt by the Company of a schedule 13D or other advice indicating that a person is the "beneficial owner" (as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act") of 20% or more of the Company's Common Stock calculated as provided in paragraph (d) of said Rule 13d-3, (iii) the date of approval by stockholders of the Company of an agreement providing for any consolidation or merger of the Company in which the Company will not be the continuing or surviving corporation or pursuant to which shares of Common Stock of the Company would be converted into cash, securities or other property, other than a merger of the Company in which the holders of Common Stock of the Company immediately prior to the merger would have the same proportion of ownership of common stock of the surviving corporation immediately after the merger, (iv) the date of the approval by stockholders of the Company of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company (v) the adoption of any plan or proposal for the liquidation (but not a partial liquidation) or dissolution of the Company (vi) the date upon which the individuals who constitute the Board of Directors of the Company (the "Board") as of April 25, 1988 (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to such date who election, or nomination for election by the Company's shareholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company, as such terms are used in Rule l4a-ll of Regulation l4A promulgated under the Exchange Act) shall be for purposes of this agreement, considered as though such person were a member of the Incumbent Board. (e) Notwithstanding the other provisions of this Section 6, the Committee may adopt rules which would permit a gift by a participant of restricted stock to a spouse, child, stepchild, grandchild or legal dependent or to a Trust whose beneficiary or beneficiaries shall be either such a person or persons or the participant. (f) Any attempt to dispose of restricted stock in a manner 5 contrary to the restrictions shall be ineffective. (g) Nothing in this Section 6 shall preclude a participant from exchanging any restricted stock for any other shares of Crane Common Stock that are similarly restricted. 7. TERMINATION AND AMENDMENT The Board of Directors may amend, suspend or terminate the Plan at any time, provided that no such modification without the approval of shareholders shall: (a) materially increase the benefits accruing to participants under the Plan or materially increase the maximum number of shares of Common Stock which are available for awards under the Plan; (b) extend the period during which awards may be granted under the Plan beyond May 30, 1998; or (c) impair the rights of any participant under any then outstanding award, except in accordance with the Plan or any applicable agreement or applicable law or with consent of the participant; or otherwise materially change the requirements for eligibility under the Plan, except that any such increase or modification that results from adjustments authorized by Section 8(a) does not require such approval. 8. MISCELLANEOUS (a) In the event that the number of outstanding shares of Common Stock of the Company shall be changed by reason of split-ups or combinations of shares or recapitalizations or by reason of stock splits, distributions or dividends, the number of shares for which awards of restricted stock may be granted under this Plan shall be appropriately adjusted as determined by the Board of Directors so as to reflect such change. (b) No employee or other person shall have any claim or right to be granted shares of restricted stock under the Plan, and neither the Plan nor any action taken thereunder shall be construed as giving any participant, recipient, employee or other person any right to be retained in the employ of the Company. (c) Income realized as a result of an award of restricted stock shall not be included in the participant's earnings for the purpose of any benefit plan in which the participant may be enrolled or for which the participant may become eligible unless otherwise specifically provided for in such plan. (d) The Company shall have the right to require the participant to pay to the Company the cash amount of any taxes which the Company is 6 required to withhold provided that anything contained herein to the contrary notwithstanding, the committee may accept stock received in connection with the award being taxed or otherwise previously acquired in satisfaction of withholding requirements. (e) Each award of restricted stock shall be evidenced by a written agreement, executed by the employee and the Company, containing such restrictions, terms and conditions as the Committee may require. 9. TERM OF PLAN This Plan shall be submitted to the shareholders of the Company at the Annual Meeting in 1988 and, if approved by the shareholders, shall become effective April 25, 1988. No shares shall be awarded under the Plan after May 30, 1998. 7 EXHIBIT B CRANE CO. NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN (As Amended through May 10, 1993) l. PURPOSE: The purposes of the 1988 Non-Employee Director Restricted Stock Plan (the "Plan") are to attract and retain well-qualified persons for service as directors of Crane Co. (the "Company") to provide directors through the payment of a portion of directors fees in shares of the Company Common stock, $1.00 par value ("Common Stock"), with the opportunity to increase their proprietary interest in the Company and thereby to increase their personal interest in the Company's continued success. 2. ADMINISTRATION: Responsibility and authority to administer and interpret the provisions of this Plan shall be conferred upon a committee of at least three persons (all of whom shall be persons not eligible to participate in the Plan) having full authority to act (the "Committee"). The members of the Committee shall be the Chairman of the Board (provided that he is not eligible to be a participant under the Plan), the Vice President Finance of the Company, and at least one additional disinterested person to be elected by the Chairman. The Committee shall record its proceedings under the Plan. The Committee may employ attorneys, consultants, accountants or other persons and the Committee, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All usual and reasonable expenses of the Committee shall be paid by the Company. No member shall receive compensation with respect to his services for the Committee except as may be authorized by the Board of Directors. All actions taken and all interpretations and determinations made by the committee in good faith shall be final and binding upon all employees who have received awards, the Company and other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretations taken or made in good faith with respect to the Plan or awards made thereunder, and all members of the Committee shall be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. 3. ELIGIBILITY: All directors of the Company who are not full-time employees of the Company shall be participants in the Plan. 4. AWARDS: Directors shall be entitled to an annual director's fee which is not dependent upon attendance at meetings (the "Base Fee"). The Base Fee shall be payable in stock and cash as provided hereunder. The stock portion of the Base Fee shall be determined pursuant to this SECTION 4. At the Company's Annual Meeting each calendar year, each eligible director shall be awarded the number of full shares of Common stock of the Company (rounded to the nearest ten shares) determined by dividing (i) the dollar amount equal to the excess of (a) the Base Fee then in effect over (b) $15,000 by (ii) by the average of the high and low prices of a share of Common Stock on the New York Stock Exchange- Consolidated Trading on the day preceding the award date, or, if no sale of Common Stock has been recorded on such date, then on the next preceding date on which a sale was so made (the "Fair Market Value"). Each such award shall be evidenced by a written agreement, executed by the director and the Company, containing such restrictions, terms and conditions as the Committee may require. A director who becomes a member of the Board of Directors after the Annual Meeting in any year shall be awarded a prorated number of full shares of Common Stock based on an allocation of such director's annual fee based on the number of full months of service for that year. The price of Common Stock to be used in determining the number of shares of Common Stock to which such director shall be entitled for such year shall be the Fair Market Value of a share of Common Stock, on the day next preceding the date of the director's election to the Board. 5. VESTING: (a) An award of Common Stock is forfeitable if the director ceases to remain a member of the Board of Directors until the Annual Meeting of the year following the year of the award, except in the case of death or disability (as determined by the Committee), which disability renders the director unable to continue to serve the Company or upon a change of control of the Company as set forth in Paragraph 5(b) hereof. In the event of death or disability, an allocated portion of the award for the year of death or disability, based on the number of full months of service, shall become non-forfeitable and distributable as of the date of such death or disability. Shares which are forfeited may be regranted. (b) Notwithstanding anything else herein, all restrictions on any Common Stock that may have been awarded to a director hereunder shall lapse in the event of a "change in control." For purposes of this Plan, the term "change in control" shall mean (i) the first purchase of shares pursuant to a tender offer or exchange offer (other than a tender offer or exchange offer by the Company) for all or part of the Company's Common Stock or any securities convertible into such Common Stock, (ii) the receipt by the Company of a Schedule l3D or other advice indicating that a person is the "beneficial owner" (as that term is defined in Rule l3d-3 under the Securities Exchange Act of l934 ("Exchange Act") of 20% or more of the Company's Common Stock calculated as provided in paragraph (d) of said Rule l3d-3, (iii) the date of approval by stockholders of the Company of an agreement providing for any consolidation or merger of the Company in which the Company will not be the continuing or surviving corporation or pursuant to which shares of Common Stock of the Company would be converted into cash, securities or other property, other than a merger of the Company in which the holders of Common stock of the Company immediately prior to the merger would have the same proportion of ownership of common stock of the surviving corporation immediately after the merger, (iv) the date of the approval by stockholders of the Company of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company, or (v) the adoption of any plan or proposal for the liquidation (but not a partial liquidation) or dissolution of the Company or (vi) the date upon which individuals who constitute the Board of Directors of the Company (the "Board") as of April 25, 1988 (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to such date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company, as such terms are used in Rule l4a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purpose of this Agreement, considered as though such person were a member of the Incumbent Board. 6. TERMS AND CONDITIONS: The difference between the Base Fee and the portion of such Base Fee awarded under the Plan in Common Stock (valued at Fair Market Value) shall be paid to directors in cash on a monthly basis. Until such time as the risk of forfeiture lapses or, the shares awarded are forfeited, a director has the right to vote and to receive dividends on and other distributions with respect to the shares awarded. At such time as the risk of forfeiture lapses, a director's Common Stock will have all the rights of any other Common stock. No payment will be required from the director upon the issuance or delivery of any restricted stock, except that any amount necessary to satisfy applicable federal, state or local tax requirements shall be withheld or paid promptly upon notification of the amount due and prior to or concurrently with the issuance or delivery of a certificate representing such stock provided that anything contained herein to the contrary notwithstanding, the Committee may accept stock received in connection with the award being taxed or otherwise previously acquired in satisfaction of withholding requirements. No shares may be sold or transferred (including, without limitation, transfer by gift or donation) during the period ending on the fifth anniversary of the date of the award or the departure or resignation of the director from the Board whichever is earlier; except with regard to shares which vest as a result of death or disability (sales, assignments, or transfer of which will not be permissible in the absence of an effective registration statement covering such shares or an opinion of counsel for the Company, that such registration is not required by reason of an exemption from the Securities Act of 1933) or upon a change of control of the Company (as defined in Section 5(b) hereof), at which time all restrictions on transfer shall lapse. Up to 50,000 common shares of the Company may be issued pursuant to this Plan provided, however, effective May 10, 1993 the maximum number of shares which may be awarded under the Plan shall be increased so that the number of shares available for grant under the Plan on and after that date shall be 50,000 shares. Shares of Common Stock issued pursuant to the Plan may be drawn from authorized but unissued shares or from treasury, as determined by the Committee. Such shares will not be registered under the Securities Act of 1933, as amended (the "Act") and will be "restricted securities" as defined in the Act or rules promulgated thereunder. Such shares may not be sold, assigned, transferred or otherwise disposed of in the absence of an effective registration statement covering such shares, or an opinion of counsel for the Company that such registration is not required by reason of an exemption available under the Act. Certificates for shares issued under the Plan shall bear an appropriate legend reflecting such restrictions. Prior to termination of the restriction on sale and transfer provided herein, the certificates for the shares awarded pursuant to the Plan will be held by the Company's Treasurer in custody for the Director. The Committee shall appropriately adjust the number of shares for which awards may be granted pursuant to the Plan in the event of reorganization, recapitalization, stock split, reverse stock split, stock dividend, exchange or combination of shares, merger, consolidation, rights offering, or any change in capitalization. 7. AMENDMENT OR DISCONTINUANCE: The Board of Directors of the Company may at any time amend, rescind or terminate the Plan, as it shall deem advisable; provided, however, (i) that no change may be made in Awards theretofore granted under the Plan which would impair participants' rights without their consent, and (ii) that no amendment to the Plan shall be made without approval of the Company's stockholders if the effect of such amendment would be to (a) materially increase the number of shares reserved for issuance hereunder or benefits accruing to participants under the Plan; (b) materially change the requirements for eligibility under Section 3 hereof, (c) materially modify the method for determining the number of shares awarded under Section 4 hereof; except that any such increase or modification that results from adjustments authorized by the last paragraph of Section 6 shall not require such approval. 8. EFFECTIVE DATE AND TERM OF PLAN: The Plan shall become effective as of April 25, 1988 and shall remain in effect until May 30, 1998. Awards granted prior to such termination, shall, notwithstanding termination of the Plan, continue to be effective and shall be governed by the Plan. 9. GOVERNING LAW: This Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of Delaware pertaining to contracts made and to be performed wholly within such jurisdiction. EX-11 3 STATEMENT RE COMPUTATION OF NET INCOME PER SHARE EXHIBIT 11 (Page 1 of 2) CRANE CO. AND SUBSIDIARIES EXHIBIT C TO FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1993 Computation of Net Income Per Share (In Thousands Except Per Share Data)
Primary 1993 1992 1991 1990 1989 - ----------------------------------- -------- -------- ------------ -------- -------- Income before a change in accounting $48,893 $24,286 $44,993 $62,735 $55,919 Cumulative effect of a change in accounting - - (22,341)(a) - - ------- ------- -------- ------- ------- Net Income $48,893 $24,286 $22,652 $62,375 $55,919 ======= ======= ======= ======= ======= Per common share before a change in accounting $ 1.62 $ .79 $ 1.42 $ 1.96 $ 1.72 Cumulative effect of a change in accounting - - (.70)(a) - - ------- ------- -------- ------- ------- Net income per share $ 1.62 $ .79 $ .72 $ 1.96 $ 1.72 ======= ======= ======= ======= ======= Average number of primary shares 30,217 30,845 31,628 32,057 32,583
(a) Postretirement benefits other than pensions (Page 2 of 2) CRANE CO. EXHIBIT C TO FORM 10-K (CONTINUED) ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1993 Computation of Net Income Per Share (In Thousands Except Per Share Data)
Fully Diluted 1993 1992 1991 1990 1989 - ----------------------------------- -------- -------- ------------ -------- -------- Income before a change in accounting $48,893 $24,286 $44,993 $62,735 $55,919 Conversion of debentures: Add back interest, net of income tax 25 30 32 32 37 ------- ------- ------- ------- ------- Income assuming conversion of debentures before change in accounting 48,918 24,316 45,025 62,767 55,956 Cumulative effect of a change in accounting - - (22,341)(a) - - ------- ------- -------- ------- ------- Net income - assuming conversion of debentures $48,918 $24,316 $22,684 $62,767 $55,956 ======= ======= ======= ======= ======= Income per share before a change in accounting $ 1.61 $ .78 $ 1.41 $ 1.94 $ 1.69 Cumulative effect of a change in accounting - - (.70)(a) - - ------- ------- -------- ------- ------- Net income $ 1.61 $ .78 $ .71 $ 1.94 $ 1.69 ======= ======= ======= ======= ======= Average number of primary shares 30,217 30,845 31,628 32,057 32,583 Add: Adjustment to primary shares for dilutive stock options (ending market price higher than average market price) - 18 55 - 176 Shares reserved for conversion of debentures 187 217 231 242 277 ------- ------- ------- ------- ------- Total average number of shares 30,404 31,080 31,914 32,299 33,036 ======= ======= ======= ======= =======
(a) Postretirement benefits other than pensions EX-13 4 CRANE CO. ANNUAL REPORT EXHIBIT 13 Financial Highlights Crane Co. and Subsidiaries (In thousands except per share data)
1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- Net Sales $1,310,205 $1,306,977 $1,302,532 $1,438,248 $1,455,589 Operating Profit 85,856 45,244(a) 78,902 113,311 105,045 Income before Taxes 79,818 38,689 72,405 102,488 91,579 Provision for Income Taxes (30,925) (14,403) (27,412) (39,753) (35,660) ---------- ---------- ---------- ---------- ---------- Income from Operations $ 48,893 $ 24,286(a) $44,993(b) $ 62,735 $ 55,919 ========== ========== ========== ========== ========== Per Primary Share: Income from Operations $ 1.62 $ .79(a) $1.42(b) $ 1.96 $ 1.72 Cash Dividends Per Common Share .75 .75 .75 .75 .71 Average Primary Shares Outstanding 30,217 30,845 31,628 32,057 32,583 ---------- ---------- ---------- ---------- ----------
(a) Includes special charge of $39,444 ($24,400 after tax) or $.78 per share. (b) Income before cumulative effect of a change in accounting for postretirement benefits other than pensions of $22,341 ($.70 per share).
Table of Contents 1 Financial Highlights 2 Letter to Shareholders 4 Description of Business Units 6 Management's Discussion and Analysis of Operations 11 Financial Statements 16 Financial Review 23 Management's Responsibility/ Independent Auditors' Report 24 Segment Data 27 Shareholder Information Back Directors and Officers Cover
1 A Letter to Our Shareholders - -------------------------------------------------------------------------------- R. S. Evans Chairman, Chief Executive Officer and President Overall Results Crane's results in 1993 improved from the 1992 level with excellent performances at several of our business units. Earnings for the year were up 3 percent to $1.62 per share from $1.57 in 1992 before a special charge of 78 cents. Sales remained at $1.3 billion for the year. This year's operating profit of $85.9 million increased 1 percent over last year's $84.7 million before the 1992 special charge of $39.4 million. Operating results were excellent at Kemlite, National Vendors, and Huttig--three of our largest units. Kemlite achieved record results in 1993, continuing to dominate the fiberglass panel market in the transportation industry with its innovative products. In addition, it acquired Filon, which was fully integrated with Kemlite in the fourth quarter of 1993, and will establish Kemlite as the leading fiberglass panel supplier to the recreational vehicle market. For the ninth year in a row, National Vendors increased its share of the United States market achieving record year-end results, and now has a 55 percent share of the domestic full service vending machine market. National Vendors' $25 million capital expansion program continues on schedule for completion in 1995. Once completed, the new plant will consolidate production in one facility, increase capacity, and reduce costs. Huttig's operating profit was up 41 percent from 1992 on an 11 percent increase in sales. Operating margins have continued to grow over the past year to 3.7 percent of sales from 2.9 percent in 1992 and 1.4 percent in 1991. In addition, Huttig's after-tax return on invested capital improved to over 11 percent. Huttig's new management information system is now beginning to produce results, and allows Huttig to better serve its customers while improving asset turns and shipping margins. Crane's Canadian operations have returned to profitability mainly through consolidations and cost reductions, in spite of a very poor housing market. Full year consolidated results reflected the three-year downturn in the aerospace industry. Although both of our aerospace companies remained profitable and financially healthy, their contribution to earnings in 1993 was reduced significantly from the prior year. In addition, weakness in the general industrial market in the United States and the still-depressed European economy, particularly in Germany, adversely affected results. Acquisition Activity In 1993 we continued our strategy of looking for acquisitions which complement our existing businesses and which have leading positions in niche markets. It was a very active year in that regard, and five acquisitions were completed for a total of $105 million. Perflow Instruments Ltd., acquired in February, added equipment for the measurement and control of fluid and gas flows to our United Kingdom business, addressing the requirements of the building maintenance and construction markets. The addition of this high-quality digital flow control technology has made a small but excellent addition to Crane Ltd.'s Fluid Systems Division. In April Huttig acquired Rondel's, Inc., a distributor of doors, windows and molding in Spokane, Washington. Rondel's has made a strong contribution to Huttig's sales and profits, filling a void in Huttig's distribution system in the states of Washington and Idaho. In May, Huttig purchased Whittier-Ruhle Millwork Company, which represented its first distributor located in the mid- Atlantic region. In October Kemlite acquired Filon, a manufacturer of fiberglass-reinforced plastic panels for $25.6 million. As previously mentioned, Filon is the leading fiberglass-reinforced plastic (FRP) panel supplier to the recreational vehicle market, a market in which Kemlite has had limited success. 2 - -------------------------------------------------------------------------------- Filon brings Kemlite a new state-of-the-art manufacturing facility located in Jonesboro, Arkansas, which increases Kemlite's capacity by 60 percent. Filon was integrated with the Kemlite operating unit in the fourth quarter of 1993 with the benefits already evident. Filon will add $35 million to Kemlite sales in 1994, making Kemlite the dominant supplier of FRP panels to both the transportation and recreational vehicle markets. At the end of December, we acquired Burks Pumps, Inc. for $70 million in cash. The Burks acquisition will triple Crane's participation in niche pump markets to almost $100 million a year. Burks has followed a strategy of buying pump companies and consolidating manufacturing facilities, a strategy well-suited to Crane's management style. They achieve improved operating results through brand management, customer service, and capacity utilization. Burks Pumps has manufacturing operations in Piqua, Ohio and Decatur, Illinois, and provides engineered pumps for an array of specialized commercial, industrial and municipal fluid handling applications. These products are marketed under the Barnes, Burks, Weinman, Crown and Prosser brand names. Also included is the Seller's line of tank cleaning equipment for the industrial clean-in-place market. During February 1994 a tender offer was commenced, terminating in mid-March, to acquire ELDEC Corporation for a total of $94 million including assumed debt. Similar to our Hydro-Aire and Lear Romec divisions, ELDEC is a maker of electronic and electromechanical products and systems for the aerospace market. The purchase of a company with excellent products and leading market share position in an industry undergoing consolidation and change made sense to us, since the aerospace industry will eventually improve. During 1994 we expect that the downturn in the aerospace market will reach bottom and begin to improve in 1996. With the addition of ELDEC we should be well prepared for that turnaround. Internal Management During the fourth quarter of 1993 we established a sales office in Singapore to represent our fluid handling and other products in Asia and the Pacific Rim. We also have a Pacific representative for our millwork business in Guam, expanding the market potential of Huttig. Our valve operations in North America, Australia and the United Kingdom, are now managed on a global basis. Our worldwide valve operations are exploring new arrangements for combining manufacturing operations and have established common outsourcing for valves in eastern Europe and Asia. This strategy should allow us to be cost competitive in the global valve markets and improve utilization of our existing manufacturing facilities. In January of 1994, L. Hill Clark was elected Executive Vice President of Crane Co. by our board of directors. Hill was president of Lear Romec and later took on additional management responsibilities within the Engineered Industrial Products segment. Our incentive compensation system has been based on economic value added (EVA) since 1990. This concept is regarded by many experts, as noted in Fortune magazine in September of 1993, to be the best for creating wealth for shareholders. Our system uses the prior year as a benchmark with incentive awards paid over several years. This focuses managers on continuous improvement over the long term, since awards are subject to adjustment based on subsequent years' performance. We are confident that the system, which is now firmly established throughout the organization, properly aligns management and shareholder interests. The employees of Crane have achieved, in aggregate, a sales-per-employee increase of 7 percent, up to $156,900 per employee from $146,600 in 1992. While this number indicates improvement, we need to do better. The best way to increase this number is to increase sales while improving profitability. Financial Condition Crane's balance sheet remains strong despite an increase in net debt of $101 million in 1993 due to acquisitions. Our strong cash flow, perhaps the best indicator of our performance, gives us the ability to take advantage of opportunities to increase shareholder value. Crane's return on shareholders' equity increased to over 17 percent from the 16 percent reported in 1992. While this was below our target of 20 percent, improvement continues from the low recessionary returns of previous years. As always I wish to thank the employees of Crane for their efforts and achievements in 1993. Further integration of our recent acquisitions promises to generate solid returns, and we can look forward to a challenging and rewarding 1994. Sincerely, /s/ Robert S. Evans Robert S. Evans Chairman, Chief Executive Officer and President February 28, 1994 3 Crane Co. and Subsidiaries
Unit and Location Products and Industries Served Engineered Industrial Products Crane Valves Crane Valves, North America Joliet, IL Angle, Ball, Butterfly, Check, Gate, Globe Valves of Steel, Stainless Steel, Alloy, Iron and Bronze; Valve Repair and Service Chemical, Processing, Power, and General Industrial Construction Crane Ltd. United Kingdom Ball, Butterfly, Check, Gate and Globe Valves of Bronze, Cast Iron, Carbon Steel and Alloys; Pumps and Pumping Sets; Pipe Fittings; Actuators; Condensate Recovery Sets; Heat Exchangers; Pressure and Flow Measurement Equipment; Mechanical Maintenance and Engineering Service Building Services, General Industry and the Power Generation, Petrochemical and Process Industries Crane Australia Pty., Limited Cast Steel and Iron Valves; Centrifugal Pumps Petroleum, Petrochemical, Oil and Power Industries Crane Pumps & Systems, Inc. Barnes Pumps, Inc. Piqua, OH Submersible Wastewater Pumps Municipal, Industrial and Commercial Wastewater Burks Pumps Regenerative Turbine and End Suction Centrifugal Pumps Specialty Industrial Markets and Original Equipment Manufacturers Deming Pump Horizontal & Vertical Centrifugal, Standard Vertical Turbine, and Air-Operated Diaphragm Pumps General Industrial, Original Equipment Manufacturers, and Water and Wastewater Treatment Prosser/Enpo Submersible Dewatering Pumps and Military Products Utility and Construction Industries; Government Contracts Weinman Split Case, End Suction and In-Line Pumps Commercial HVAC Industry Sellers Rotary Tank Cleaners and Steam Injectors Engineered Cleaning Equipment for General Industry Chempump Division Leakproof Centrifugal Pumps, Metering Pumps, Warrington, PA Pump Repair and Service Chemical, Power and Hydro-Carbon Processing Industries Cochrane Environmental Deaerators, Demineralizers, Hot and Cold Systems Division Process and Other Softeners, Dealkalizers, King of Prussia, PA Filters, Industrial Water and Waste Treatment Equipment, Multiport Relief Valves, Condensate Drainage Systems and Clarifiers Most industries requiring Water and Wastewater Treatment Hydro-Aire Division Anti-Skid and Automatic Braking Systems, Fuel Burbank, CA and Hydraulic Pumps, Coolant Pumps and Systems, Hydraulic and Pneumatic Valves and Regulators, Actuators and Solid State Components Commercial, Business and Military Aerospace Industries Lear Romec Division Lubrication Pumps and Fuel Pumps for Aircraft Elyria, OH and Aircraft Engines Commercial and Military Aircraft, Ground Vehicles, Land and Marine Applications, and Missiles
4
Unit and Location Products and Industries Served Engineered Industrial Products (continued) Resistoflex/Defense High Performance Separable Fittings for Operating Jacksonville, FL Pressures to 8,000 PSI and Flexible, Plastic- Lined Hose Assemblies Military and Aerospace Contractors Crane Defense Systems Specialized Handling Systems, Elevators, Winches, Conroe, TX Ground Support Equipment, Cranes and Associated Electronics Shipbuilding, Aerospace and Commercial Construction Ferguson Manufacturer of Index Drives and Tables; St. Louis, MO Mechanical Parts Handlers; Inline Transfer Machines; Rotary Tables; Press Feeds; Custom Cams; Special Intermittent Motion Machines Automated Assembly and Parts Handling Kemlite Company Fiberglass-Reinforced Plastic Panels used as Joliet, IL truck interior wall liners and roofs; recreational vehicle sidewall and roofs; and wall and ceiling systems for the building market Truck, Trailer, Recreational Vehicle and Commercial Construction Cor Tec Company Fiberglass-Reinforced Polyester Resin Laminated Washington Court House, OH Panels for transportation, construction, marine, signage and sound barrier applications Truck and Trailer Manufacturers and Infrastructure Construction Resistoflex/Industrial Corrosion Resistant Plastic-Lined Pipe, Marion, NC Fittings, Valves, Bellows and Hose Assemblies Pharmaceutical, Chemical Processing, Pulp and Paper, Petroleum Distribution, and Waste Management Industries Crane Canada, Inc.--Plumbing Manufacturer of Plumbing Fixtures and Plumbing Montreal, Canada Brass Residential, Industrial, Commercial and Institutional Construction Polyflon Company Radio Frequency and Microwave Components, New Rochelle, NY Capacitors, Circuit Processing, Substrates, Resonating Structures, Antennas Magnetic Resonance Imaging, Radar and Microwave Manufacturers National Vendors Electronic Vending Machines for snack foods and Bridgeton, MO confections, cold drinks, hot beverages, refrigerated food and frozen food; Coin and Currency Changers Automated Merchandising National Rejectors, GmbH Coin and Currency Changers, Electronic Buxtehude, Germany Validators, Magnetic Card Cashless Payment Systems Automated Merchandising Wholesale Distribution Huttig Sash & Door Company Distributor of Millwork, Specialty Construction Chesterfield, MO Materials and Related Products Building Products Retailers and Contractors Valve Systems and Controls Industrial Distributor of Automated Valves and Houston, TX Integrated Control Systems Petroleum, Chemical, Power and General Processing Industries Crane Supply of Canada Distributor of Pipe, Valves, Fittings, Plumbing Montreal, Canada Fixtures and Supplies produced by Crane Canada and other manufacturers Industrial, Municipal, Commercial and Institutional Construction
5 Management's Discussion and Analysis of Operations - --------------------------- Results of Operations Consolidated
(In millions) 1993 1992 1991 -------- ------- -------- Sales $1,310.2 $1,307.0 $1,302.5 Operating Profit $ 85.9 $ 45.2* $ 78.9 Operating Margin 6.6% 3.5% 6.1%
* Includes a special charge of $39.4 million. Sales of $1.3 billion in 1993 were slightly above the prior year's level. The improvement was due to strong sales at National Vendors for automated merchandising equipment; at Huttig which serves the residential construction industry; and at Kemlite which supplies fiberglass-reinforced panels to the transportation, recreational vehicle and commercial construction industries. These increases were partially offset by lower shipments to the aerospace industry at Hydro-Aire and Lear Romec, and weakness in businesses serving the general industrial market. Sales in 1992 showed a small increase over the 1991 level due to strong sales at National Vendors, Huttig, Kemlite and Cor Tec. Offsetting the increases were lower shipments at Hydro-Aire, weak economies in Canada, Germany, and the United Kingdom, and reduced defense spending. Operating profit totalled $85.9 million in 1993 compared to 1992 operating profit of $45.2 million. The 1992 earnings included a $39.4 million special charge in the second quarter. Excluding the special charge, operating profit increased 1 percent from the adjusted 1992 level. The increase was due to improved performance at Huttig, market share gains at National Vendors and Kemlite, and improved results in Canada and the defense related businesses, both the result of cost reductions. Offsetting these improvements were lower results at the company's aerospace units, its European operations, and businesses serving the general industrial market in the United States. The 1992 results, before the special charge, were 7 percent above the 1991 level. The earnings improvement was due to increased housing starts, company- wide cost reduction measures, and innovative new products at the company's automated merchandising unit and transportation related businesses. These improvements were partially offset by lower results at the company's aerospace units, its German coin handling operation, and its Canadian subsidiary, Crane Canada, Inc. The 1992 special pre-tax charge of $39.4 million ($24.4 million after tax), reduced earnings by $.78 per share. This charge included $20.1 million of environmental expenses and asset write-downs associated with Unidynamics/Phoenix; $12.1 million primarily related to product liability exposure and excess facility costs; and $7.2 million of costs related to the settlement of an anti-trust lawsuit involving a previously discontinued business. Net interest expense was reduced $2.6 million in 1993 due to the redemption of two bond issues in August 1992 and reduced borrowing costs from interest rate swap agreements. In 1992 net interest expense was up less than $100 thousand over 1991 as higher borrowing levels were almost completely offset by higher interest income on short-term investments. Miscellaneous income totalled $0.9 million in 1993. In 1992 miscellaneous income totalled $2.9 million and consisted primarily of a $3.7 million gain from the sale of an equity investment. The company's effective tax rate was 38.7 percent in 1993, 37.2 percent in 1992, and 37.9 percent in 1991. Results for 1991 were impacted by the early adoption of the SFAS Statement No. 106, which required accrual basis accounting for postretirement benefits other than pensions. This change in accounting resulted in an after-tax non-cash charge of $23.6 million. A single "catch-up" adjustment for all prior years of $22.3 million, or $.70 per share, was reflected in the first quarter of 1991 as the cumulative effect of a change in accounting, and $1.3 million, or $.04 per share, related to the additional charge for the 1991 fiscal year. Income from operations, net of taxes, totalled $48.9 million in 1993. This compares to $48.7 million in 1992 before the special charge ($24.4 million after tax) and $45 million in 1991 before the cumulative effect of the accounting change. The return on sales remained at 3.7 percent in 1993--the same as last year, excluding the special charge and up from 3.5 percent in 1991, before the cumulative effect of the accounting change. Income per share increased to $1.62 compared to $1.57 in 1992 before the special charge of $.78 per share. Income per share for 1991, before the cumulative effect of the accounting change, was $1.42. 6 - -------------------------------------------------------------------------------- The Engineered Industrial Products segment's operating profit declined 8 percent to $78.2 million in 1993 on 6 percent lower sales. In 1992 operating profit increased slightly on a $3 million sales decline from 1991. Operating margins decreased to 11.7 percent of sales from 12.0 percent in 1992 and 11.9 percent in 1991 due principally to lower aerospace earnings. North American Valves operating profit totalled approximately $1 million in 1993, significantly below the 1992 level. The valves market was extremely weak with lower pricing affecting all product lines. This follows a year when profits were double the 1991 level. In 1993 the company consolidated its Canadian valve business with its valve business in the United States. The Canadian business operated at a loss in both 1993 and 1992. In March 1992 the company purchased the Jenkins Valve product line for $4 million. The valve business in the United Kingdom operated at a profit of $2.5 million, down $0.8 million from the 1992 level of $3.3 million, but a significant improvement over the $0.6 million loss in 1991. Sales increased 4 percent from the 1992 level due to higher export shipments and the acquisition of Perflow Instruments, Ltd. in February 1993. Shipments in 1992 were down 10 percent from the 1991 level. Crane Australia's profit was up 14 percent on 4 percent higher sales in 1993. Engineered Industrial Products
(In millions) 1993 1992 1991 ------ ------ ------ Sales $667.6 $710.9 $713.9 Operating Profit $ 78.2 $ 85.1* $ 84.8 Operating Margin 11.7% 12.0% 11.9%
* Before special charge of $34.7 million (includes $20.1 million of environmental expenses and asset write-downs at Unidynamics/Phoenix; $7.4 million for product liability exposure; and $7.2 million related to the settlement of an anti-trust lawsuit involving a previously discontinued business). The company acquired Burks Pumps, Inc., a manufacturer of engineered pumps, in December 1993. This acquisition will complement the company's Chempump and Deming pump businesses and significantly increases its involvement in niche markets in the pump industry. Chempump manufactures sealless canned motor pumps and Deming manufactures pumps for the general industrial market. Burks' annual sales are double the $30 million combined annual revenues of Chempump and Deming. The Chempump and Deming pump businesses showed improved operating results in 1993, increasing 37 percent from the $1.3 million profit recorded in 1992, after suffering a loss in 1991. Sales decreased 6 percent in 1993 compared to a 4 percent increase in 1992. Cochrane Environmental Systems designs and markets water and wastewater treatment equipment and systems for almost every major industry. The company reported a 23 percent decrease in profit in 1993, after a 12 percent decrease in 1992. Profit for 1993 was lower principally due to reduced margins as a result of competitive pricing pressures. Sales decreased 8 percent in 1993, after showing a 3 percent improvement in 1992. Hydro-Aire is the world leader in the design and manufacture of electronically controlled anti-skid braking systems for the aerospace industry. Hydro-Aire continued to be impacted by the down-turn in the aerospace industry over the last 3 years which resulted in lower shipments of 22 percent, 12 percent, and 2 percent, respectively. Profitability declined 33 percent in 1993, 18 percent in 1992, and 13 percent in 1991. Lear Romec is one of the world leaders in the supply of high quality oil lubrication and fuel boost pumps for the aerospace industry. Sales and operating profit continue to be adversely affected by the depressed aerospace market and cutbacks in military spending. Operating profit declined 31 percent in 1993 after a 14 percent decline in 1992 on lower shipments of 20 percent and 12 percent, respectively. In 1991 earnings were up 29 percent on a 15 percent increase in sales from the 1990 level. The defense businesses which now include Resistoflex/Defense and Crane Defense Systems supply a variety of products and equipment such as separable fittings for aircraft engines, cargo and personnel elevators, cranes, and ammunition handling equipment. Sales were down 25 percent in 1993 due to the March divestiture of the precision ordnance business of Unidynamics/Phoenix, Inc. This compares to a 30 percent decline in sales for 1992. Operating profit increased by approximately $2.9 million, mainly due to the improved results at Crane Defense Systems. 7 Management's Discussion and Analysis of Operations (continued) - -------------------------------------------------------------------------------- The defense businesses continued to focus on cost reduction measures in a declining market. These businesses represent less than 2 percent of Crane's total sales. Ferguson has a complete line of products for transferring and positioning components on assemblies in an automated process. Ferguson's profit decreased $1.7 million in 1993 on an 11 percent drop in sales due to weakness in the general industrial market in the U.S. and Europe. This compared to a profit increase of $2.3 million in 1992 on 9 percent higher sales. In 1991 Ferguson made a small profit. Kemlite is the leading supplier of fiberglass-reinforced panels to the transportation, recreational vehicle and building products markets. Kemlite's operating profit increased 36 percent over last year, with sales up 18 percent. Kemlite maintained its strong market position within the transportation market, and significantly expanded its position in the recreational vehicle market with the October 1993 acquisition of Filon. Filon was integrated with Kemlite's fiberglass panel business with the benefit of the consolidation already evident in fourth quarter results. Filon added $7.2 million to Kemlite's sales in 1993. In 1992 operating profit more than doubled on a 25 percent increase in sales compared to lower profit and sales in 1991. The increase was due to product innovations, such as its translucent roof, and competitive pricing. Cor Tec manufactures fiberglass-reinforced laminated panels used primarily for the truck and truck trailer industry. Operating profit increased $0.8 million with operating margins increasing to 7.7 percent of sales versus 3.5 percent in 1992. Sales increased 56 percent in 1992 and led to a significant improvement in profit, compared to a small operating loss in 1991. Resistoflex/Industrial manufactures and sells corrosion-resistant plastic-lined pipes, fittings and valves used in the chemical process and pharmaceutical industries. Resistoflex products are designed to satisfy the requirements for environmentally responsible systems that safely handle fluids without emitting dangerous vapors into the atmosphere. Operating profit declined to 16 percent of sales from 23 percent in 1992 as a result of competitive market conditions. Sales decreased 11 percent in 1993 from the prior year. 1992 showed a small increase in profit on 3 percent lower sales. In 1991 both sales and operating profit were slightly below record 1990 results. The Canadian Plumbing operation offers a full line of plumbing products for the residential and commercial building markets in Canada. Operating profit increased $4.4 million to $4.2 million which included a $3.1 million favorable pension adjustment. During 1993 the Canadian valve business was consolidated into the domestic Valve division to form North American Valves. Results for 1992 have been adjusted for this change. Plumbing operated at a small loss in 1992 which included a $1.5 million charge to cover the cost of closing the British Columbia Pottery plant. Polyflon manufactures high-performance substrate systems and high-voltage, high- frequency capacitors for commercial and aerospace uses and magnetic resonance imaging (MRI) for the medical industry. Sales in 1993 totalled $2.4 million and were down 20 percent from the prior year level. National Vendors is the industry leader in the design, manufacture and distribution of vending machines for the automated merchandising industry. Results for 1993 improved due to continued market acceptance of National Vendors' products. Profit increased 15 percent in 1993, compared to 37 percent in 1992. Included in 1993 results was a $3.5 million charge to cover the cost of an unfavorable jury verdict in December. Sales totalled $131 million in 1993, a 22 percent increase over the record level of $110 million recorded in 1992. In 1991, the United States Postal Service awarded National Vendors a $22.3 million contract for an upgraded version of the Postal Commodity Merchandiser; $14.6 million of this order was completed in 1993 and $7.7 million in 1992. 8 - -------------------------------------------------------------------------------- National Rejectors, GmbH designs and manufactures coin validators and handling systems for the automatic vending market throughout Europe. The depressed European economy and changes in gambling regulations in Germany caused shipments to be lower in 1993 and 1992 and resulted in operating losses for the two years. In 1991, the company was profitable. The Wholesale Distribution segment's results continued to improve in 1993, with operating profit increasing 58 percent on an 8 percent increase in sales. The signicant increase was due mainly to the continued recovery in the residential construction market in the United States. Profits improved substantially in 1992 after experiencing sales and operating profit declines in 1991. Wholesale Distribution
(In millions) 1993 1992 1991 ------ ------ ------ Sales $655.2 $608.5 $602.8 Operating Profit $ 20.0 $ 12.6 $ 9.4 Operating Margin 3.0% 2.1% 1.6%
Huttig Sash and Door Company is the largest nationwide distributor of millwork, windows, doors, and related products in the United States. Operating profit of $19.3 million was $5.6 million above the prior year level, with shipments increasing $37.3 million on a same branch basis. The improved performance was primarily due to increased sales volume and improved margins. Huttig's markets have shown improvement nationwide with the exception of California. Results for 1993 included the April acquisition of Rondel's Inc. and the May acquisition of Whittier-Ruhle Millwork Co. These acquisitions accounted for an increase in sales of $16.5 million and profit of $1 million, and expanded Huttig markets in the states of Washington and New Jersey. Operating profit for 1992 of $13.7 million was $8.4 million above the 1991 level, on an 11 percent increase in sales. Shipments and operating profit in 1991 decreased 17 percent and 72 percent, respectively, from the prior year level. Approximately 40 percent of the 1991 sales decline was attributable to the divestiture of the Sea-Pac unit of Palmer G. Lewis. Profit in 1991 was negatively impacted by non-recurring costs which totalled approximately $4.5 million and included the closing of six facilities. Valve Systems and Controls is a value-added industrial distributor providing power-operated valves and flow control systems to the petrochemical, oil refinery, and pipeline transmission industries. The unit operated at a small loss in 1993 on a 3 percent sales decline. Sales for 1992 were 20 percent below the prior year and the unit operated at break-even. Operating profit decreased in 1991 despite a 7 percent increase in sales due to lower profit margins caused by lower demand for valve actuated products in the petrochemical market which increased price competition. Crane Supply Canada, a wholesale distributor of plumbing supplies, valves and piping, operated at a $1.1 million profit in 1993 on a small improvement in sales from the prior year level. The profit improvement is attributable to cost reduction efforts implemented during the year. The unit operated at a loss of $1.2 million on an 11 percent decline in sales in 1992 resulting from a decline in sales and margins in the industrial sector. In 1991, Canada Supply experienced a small profit decline on 6 percent lower sales, but remained profitable due to the implementation of cost reduction measures. 9 Management's Discussion and Analysis of Operations (continued) - -------------------------------------------------------------------------------- Liquidity and Capital Resources The company generated $71.0 million of cash from operating activities compared to $64.1 million in 1992 and $81 million in 1991. Cash flow from operations in 1993 was equal to 35 percent of the net debt outstanding at year end. At December 31, 1993, the net debt to capital ratio was 41 percent compared to 28 percent and 24 percent in 1992 and 1991, respectively. The company's working capital totalled $122 million compared to $205 million in 1992, with the current ratio at 1.4:1 compared to 2.2:1 in 1992. During the year $11.7 million of debt was retired. Interest coverage remained strong at 8.0 times interest expense for 1993 compared to 6.4 for 1992 and 7.3 for 1991. Expenditures relating to modernization, productivity improvements and expansion of existing businesses amounted to $38.8 million, compared to $23.2 million in 1992 and $21.4 million in 1991. Capital spending is expected to increase significantly in 1994 as a plant expansion at National Vendors and a new office building for Kemlite are completed. These two expenditures alone will total approximately $20 million in 1994. In addition, other significant productivity improvement projects have been planned. These projects will be funded by cash flows from operating activities. In 1992 the company recorded a $39.4 million pre-tax special charge to cover environmental clean-up costs, asset write-downs, product liability exposure, excess facility costs, and the settlement of an anti-trust lawsuit. During 1993 the company expended $2.9 million of the reserve, with $5.4 million and $2.2 million expected to be expended in 1994 and 1995. During the year the company purchased 394,000 shares of its common stock for $10.4 million, compared to 1,062,000 shares for $24.8 million and 876,000 shares for $19.8 million in 1992 and 1991, respectively. As of December 31, 1993, the company had $281 million in uncommitted short-term credit lines of which $173 million was unused. In January 1994 these lines were increased by $40 million. Long-term debt outstanding at year-end totalled $109 million, with scheduled payments of $3.9 million in 1994 and $1.0 million in 1995. In March 1992, the company sold $100 million of twelve-year senior notes with a coupon rate of 8.5 percent in a public offering. This enabled the company to terminate its $100 million revolving credit agreement with Morgan Guaranty Trust Company. In August 1992 the company exercised its right to redeem the outstanding $44.8 million of 7% Subordinated Debentures Series B due July 1, 1994 at a redemption price of 100% of the principal amount outstanding. Unidynamics Corporation, a wholly owned subsidiary, exercised its right to redeem the $8.7 million of 91/2% Sinking Fund Debentures due April 1, 1999 at the redemption price of 100.95% of the principal amount. During 1993 the company acquired Burks Pumps, Inc., for approximately $70 million, the operating assets of Filon for approximately $26 million, Rondel's Inc. and Whittier-Ruhle Millwork Company for $5.8 million and $3.1 million, respectively, and purchased Perflow Instruments Ltd. for $1.2 million. In addition, the company purchased 663,810 shares of Mark Controls Corporation for approximately $6.0 million. Subsequent to December 31, 1993 the company entered into an agreement to purchase the outstanding shares of ELDEC Corporation for approximately $74 million. The company will initially finance the transaction through short-term credit lines. In March 1993 the company sold the precision ordnance business of its subsidiary, Unidynamics/Phoenix, Inc. for $6.0 million. During 1992 the company acquired certain assets of Jenkins Canada, Inc. for approximately $4 million and purchased the equivalent of 600,000 shares of Mid Ocean Reinsurance Company, Ltd. for $10 million. The adoption of SFAS No. 109, "Accounting for Income Tax", led to a small favorable tax adjustment in 1993. In January 1994 the company will adopt SFAS No. 112 "Employer's Accounting for Postemployment Benefits". The company accrues most postemployment benefits when incurred, thus the effect of SFAS No. 112 will not be material. 10 Consolidated Statements of Income Crane Co. and Subsidiaries (In thousands except per share data)
For Years Ended December 31 1993 1992 1991 ---------- ---------- ---------- Net Sales $1,310,205 $1,306,977 $1,302,532 Operating Costs and Expenses: Cost of sales 1,016,548 1,006,009 1,002,800 Selling, general and administrative 178,381 187,750 192,419 Depreciation and amortization 29,420 28,530 28,411 Special charge -- 39,444 -- ---------- ---------- ---------- 1,224,349 1,261,733 1,223,630 ---------- ---------- ---------- Operating Profit 85,856 45,244(a) 78,902 Other Income (Deductions): Interest expense--net of interest income of $4,465, $4,979 and $2,097 in 1993, 1992 and 1991 (6,931) (9,485) (9,443) Miscellaneous--net 893 2,930 2,946 ---------- ---------- ---------- (6,038) (6,555) (6,497) ---------- ---------- ---------- Income before Taxes 79,818 38,689 72,405 Provision for Income Taxes 30,925 14,403 27,412 ---------- ---------- ---------- Income before Cumulative Effect of a Change in Accounting 48,893 24,286 44,993 Cumulative effect of a change in accounting for postretirement benefits other than pensions, net of taxes of $13,862 -- -- (22,341) ---------- ---------- ---------- Net Income $ 48,893 $ 24,286(a) $ 22,652 ========== ========== ========== Primary Net Income Per Share: Income before cumulative effect of a change in accounting $ 1.62 $ .79 $1.42 Cumulative effect of a change in accounting for postretirement benefits other than pensions -- -- (.70) ---------- ---------- ---------- Net Income $ 1.62 $ .79(a) $ $.72 ========== ========== ========== Average primary shares outstanding 30,217 30,845 31,628 Fully Diluted Net Income Per Share: Income before cumulative effect of a change in accounting $ 1.61 $ .78 $ 1.41 Cumulative effect of a change in accounting for postretirement benefits other than pensions -- -- (.70) ---------- ---------- ---------- Net Income $ 1.61 $ .78(a) $ .71 ========== ========== ========== Average fully diluted shares outstanding 30,404 31,080 31,914 Cash Dividends Declared Per Common Share $ .75 $ .75 $ .75 ---------- ---------- ----------
(a) Includes special charge of $39,444 ($24,400 after tax) or $.78 per share. 11 Consolidated Balance Sheets (In thousands except share data)
Balance December 31 1993 1992 -------- -------- Assets Current Assets: Cash and cash equivalents $ 12,592 $ 49,104 Accounts receivable, less allowance of $3,054 ($1,671 in 1992) 178,767 157,702 Inventories, at lower of cost, principally LIFO, or market; replacement cost would be higher by $54,470 ($49,623 in 1992): Finished goods 119,014 104,353 Finished parts and subassemblies 24,261 18,905 Work in process 22,516 22,072 Raw materials and supplies 27,908 18,703 -------- -------- Total Inventories 193,699 164,033 Other current assets 8,488 7,814 -------- -------- Total Current Assets 393,546 378,653 Property, Plant and Equipment at Cost: Land 22,525 20,422 Buildings and improvements 137,640 114,958 Machinery and equipment 261,543 241,930 -------- -------- Gross Property, Plant and Equipment 421,708 377,310 Less accumulated depreciation 222,314 214,125 -------- -------- Net Property, Plant and Equipment 199,394 163,185 Other Assets 38,142 26,205 Cost in Excess of Net Assets Acquired, less accumulated amortization of $11,812 ($9,897 in 1992) 113,083 62,168 -------- -------- $744,165 $630,211 ======== ========
12 Crane Co. and Subsidiaries
Balance December 31 1993 1992 -------- -------- Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt $ 3,852 $ 9,348 Loans payable 108,048 32,906 Accounts payable 73,385 59,405 Accrued liabilities 81,107 71,144 U.S. and foreign taxes on income 5,291 1,220 -------- -------- Total Current Liabilities 271,683 $174,023 Long-Term Debt 105,557 111,048 Reserves and Other Liabilities 20,631 23,008 Accrued Postretirement Benefits 42,570 39,398 Accrued Pension Liability 6,767 7,709 Deferred Income Taxes 6,138 3,673 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--29,863,044 shares (29,958,470 in 1992) after deducting 18,540,813 shares in treasury (18,182,624 in 1992) 29,863 29,958 Capital surplus 10,160 15,252 Retained earnings 263,666 236,475 Currency translation adjustment (12,870) (10,333) -------- -------- Total Common Shareholders' Equity 290,819 271,352 -------- -------- $744,165 $630,211 ======== ========
13 Consolidated Statements Crane Co. and Subsidiaries of Cash Flows (In thousands)
For Years Ended December 31 1993 1992 1991 --------- -------- -------- Cash Flows from Operating Activities: Net income $ 48,893 $ 24,286 $ 22,652 Accounting change--postretirement benefits -- -- 22,341 --------- -------- -------- Income before accounting change 48,893 24,286 44,993 Special charge -- 29,284 -- Depreciation 24,144 23,719 23,723 Amortization 5,276 4,811 4,688 Deferred income taxes 980 (8,157) (1,661) Cash (used for) provided from operating working capital (3,400) (11,725) 15,298 Other (4,874) 1,866 (6,020) --------- -------- -------- Total from Operating Activities 71,019 64,084 81,021 --------- -------- -------- Cash Flows from Investing Activities: Capital expenditures (38,838) (23,174) (21,440) Proceeds from disposition of capital assets 986 1,264 6,571 Purchase of equity investments (5,964) (10,000) -- Sale of equity investments -- 3,733 12,035 Payments for acquisitions (105,493) (4,002) -- Proceeds from divestiture 6,029 -- -- --------- -------- -------- Total Used for Investing Activities (143,280) (32,179) (2,834) --------- -------- -------- Cash Flows from Financing Activities: Equity: Dividends paid (22,511) (22,999) (23,472) Reacquisition of shares (10,405) (25,060) (19,530) Stock options exercised 3,322 3,592 3,600 --------- -------- -------- (29,594) (44,467) (39,402) --------- -------- -------- Debt: Proceeds from issuance of long-term debt -- 99,000 -- Repayments of long-term debt (11,737) (70,462) (22,690) Net increase (decrease) in short-term debt 77,123 10,705 (1,845) --------- -------- -------- 65,386 39,243 (24,535) --------- -------- -------- Total Provided from (Used for) Financing Activities 35,792 (5,224) (63,937) --------- -------- -------- Effect of exchange rate on cash and cash equivalents (43) (158) (32) --------- -------- -------- (Decrease) Increase in cash and cash equivalents (36,512) 26,523 14,218 Cash and cash equivalents at beginning of year 49,104 22,581 8,363 --------- -------- -------- Cash and cash equivalents at end of year $ 12,592 $ 49,104 $ 22,581 ========= ======== ======== Detail Of Cash (Used For) Provided From Operating Working Capital: Accounts receivable $ (8,503) $ 4,909 $ 4,213 Inventories (10,581) 9,845 24,760 Other current assets (454) (737) (1,253) Accounts payable 9,895 (2,264) 2,395 Accrued liabilities 2,055 (8,052) (7,692) U.S. and foreign taxes on income 4,188 (15,426) (7,125) --------- -------- -------- Total $ (3,400) $(11,725) $ 15,298 ========= ======== ======== Supplemental disclosure of cash flow information: Interest paid $ 17,418 $ 19,395 $ 15,019 Income taxes paid 34,721 35,650 35,195 --------- -------- --------
See Financial Review 14 Consolidated Statements of Changes Crane Co. and Subsidiaries in Common Shareholders' Equity
Currency Total Common Common Capital Retained Translation Shareholders' (In thousands except share data) Shares Surplus Earnings Adjustment Equity ------- -------- -------- ----------- ------------- Balance December 31, 1990 $31,245 $ 48,027 $235,210 $ 2,324 $316,806 Net income -- -- 22,652 -- 22,652 Cash dividends -- -- (23,472) -- (23,472) Reacquisition of 876,456 shares (876) (18,904) -- -- (19,780) Exercise of stock options, 269,524 shares 270 3,330 -- -- 3,600 Conversion of debentures, 12,798 shares 12 41 -- -- 53 Restricted stock awarded, 92,120 shares, net 92 2,286 (415) -- 1,963 Currency translation adjustment -- -- -- (1,344) (1,344) ------- -------- -------- -------- -------- Balance December 31, 1991 30,743 34,780 233,975 980 300,478 Net income -- -- 24,286 -- 24,286 Cash dividends -- -- (22,999) -- (22,999) Reacquisition of 1,062,413 shares (1,062) (23,748) -- -- (24,810) Exercise of stock options, 237,597 shares 237 3,355 -- -- 3,592 Conversion of debentures, 11,971 shares 12 38 -- -- 50 Restricted stock awarded, 28,750 shares, net 28 827 1,213 -- 2,068 Currency translation adjustment -- -- -- (11,313) (11,313) ------- -------- -------- -------- -------- 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 -- 2,601 Currency translation adjustment -- -- -- (2,537) (2,537) ------- -------- -------- -------- -------- Balance December 31, 1993 $29,863 $ 10,160 $263,666 $(12,870) $290,819 ======= ======== ======== ======== ========
See Financial Review 15 Financial Review - -------------------------------------------------------------------------------- Accounting Policies Principles of Consolidation--The consolidated financial statements include all subsidiaries. All significant intercompany items have been eliminated. Certain prior year amounts have been reclassified to conform with the 1993 presentation. Cash Equivalents--Highly liquid investments with original maturities of three months or less are considered cash equivalents. 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 costs of sales by $1,500,000, $2,500,000, and $3,400,000 in 1993, 1992 and 1991, respectively. Property, Plant and Equipment--Depreciation was 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--Cost in excess of net assets acquired is being amortized on a straight-line basis principally over forty years. Other intangible assets are being amortized on a straight-line basis over their estimated useful lives which range from five to twenty years. Income Taxes--The company changed its method of accounting for income taxes, effective January 1, 1993, to conform with SFAS No. 109, "Accounting for Income Taxes." The Statement requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their tax basis. Prior to 1993, provisions were made for deferred income taxes where differences existed between the time that transactions affected taxable income and the time that these transactions entered into the determination of income for financial statement purposes. Interest Rate Swap Agreements--The company 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. Net Income Per Share--Primary earnings per share calculations are based upon the weighted average number of common shares outstanding after giving effect to dilutive stock options. Fully diluted earnings per share gives effect to the assumed conversion of convertible debentures and the effect of dilutive stock options. Revenues--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 approximately 2% of sales in any one year. Accounts receivable include unreimbursed costs and accrued profits to be billed of $4,615,000, and $8,116,000 at December 31, 1993 and 1992, respectively. Special Charge The 1992 special charge of $39.4 million, or 78 cents per share, included $20.1 million of environmental expenses and asset write-downs associated with Unidynamics/Phoenix, $12.1 million primarily related to product liability exposure and excess facility costs, and $7.2 million of costs related to the settlement of an anti-trust lawsuit involving a previously discontinued business. Research and Development Product development and engineering costs aggregated approximately $18,300,000, $19,200,000, and $18,600,000 in 1993, 1992 and 1991, respectively. In addition, approximately $139,000, $4,100,000, and $6,900,000 was received in 1993, 1992 and 1991, respectively, for customer-sponsored research and development relating to projects within the Engineered Industrial Products segment. Miscellaneous--Net
For Years Ended (In thousands) December 31, 1993 1992 1991 ---- ------ ------- Gain (Loss) on disposal of capital assets $425 $ (779) $(4,237) Gain on investments 556 3,997 7,039 Other (88) (288) 144 ---- ------ ------- $893 $2,930 $ 2,946 ==== ====== =======
Income Taxes The company adopted the provisions of SFAS 109 effective January 1, 1993. The effect of adopting this standard was not material to the company's financial statements. A reconciliation between income taxes based on the application of the statutory federal income tax rate to income before income taxes and income taxes as set forth in the Consolidated Statements of Income follows:
(In thousands) 1993 1992 1991 ------- -------- ------- Income before taxes: Domestic $83,296 $ 49,980 $67,484 Foreign (3,478) (11,291) 4,921 ------- -------- ------- 79,818 38,689 72,405 ------- -------- ------- Statutory federal tax at 35% (34% in 1992 and 1991) 27,936 13,154 24,618 Increase (reduction) from: Foreign and local taxes 4,756 1,551 3,122 Goodwill 686 659 664 Non-taxable FSC income (737) (804) (783) Effect of tax rate increase (510) -- -- Other (1,206) (157) (209) ------- -------- ------- Provision for income taxes $30,925 $ 14,403 $27,412 ======= ======== ======= Percentage of income before taxes 38.7% 37.2% 37.9% ======= ======== =======
16 - -------------------------------------------------------------------------------- The foregoing provision includes (benefits)/charges for foreign taxes of $413,000, ($4,235,000) and $2,941,000 and state taxes of $5,140,000, $3,352,000 and $4,405,000 in 1993, 1992 and 1991, respectively. At December 31, 1993, the company had unremitted earnings of foreign subsidiaries of $64 million for which a deferred tax liability has not been recognized. It is the intention of the company to indefinitely reinvest these earnings in foreign operations. The determination of the amount of the unrecognized deferred tax liability for temporary differences related to these foreign subsidiaries is not practicable. Deferred income taxes at December 31, 1993 consisted of:
(In thousands) Assets Liabilities ------- ----------- Accelerated depreciation $ -- $15,516 Difference between book basis and the tax basis of assets -- 9,350 Postretirement benefits 15,684 -- Inventory related 1,388 -- Insurance related 5,354 -- Environmental related 5,414 -- Pension -- 4,084 Deferred compensation 1,790 -- Other 5,706 963 ------- ------- $35,336 $29,913 ======= =======
At December 31, 1993 current deferred tax assets of $12.6 million were included in other receivables and $1.1 million of current deferred liabilities were included in income tax payable. Non-current deferred tax assets and non-current deferred tax liabilities of $6.1 million were included in deferred income taxes. The provision for income taxes is composed of the following:
(In thousands 1993 1992 1991 ------- ------- ------- Deferred income taxes $ 980 $(8,157) $(1,661) Current income taxes 29,945 22,560 29,073 ------- ------- ------- $30,925 $14,403 $27,412 ======= ======= =======
The components of deferred income tax (benefits)/expenses are as follows:
(In thousands) 1993 1992 1991 ------- ------- ------- Depreciation $(1,829) $(3,109) $(1,425) Reserves 2,271 (5,348) (635) Other 538 300 399 ------- ------- ------- $ 980 $(8,157) $(1,661) ======= ======= =======
Postretirement Benefits In 1991 the company adopted SFAS No. 106 "Postretirement Benefits Other Than Pensions," which requires accrual of postretirement health care and life insurance benefits during the years an employee provides services. In years prior to 1991 the company expensed these benefits on a cash basis. Postretirement health care and life insurance benefits are provided for certain domestic and foreign employees who meet minimum age and service requirements. The company does not pre-fund these benefits and has the right to modify or terminate benefits.
(In thousands) December 31, 1993 1992 ------- ------- Accumulated postretirement benefit obligation: Retirees $24,807 $24,076 Fully-eligible active plan participants 1,973 2,297 Other active plan participants 6,669 8,503 ------- ------- Total 33,449 34,876 Unrecognized net gain 9,121 4,522 ------- ------- Accrued postretirement benefit $42,570 $39,398 ======= ======= Net periodic cost: Service cost--benefits earned during the period $ 850 $ 943 Interest cost on accumulated benefit obligation 2,768 2,772 Amortization of gain (182) (100) ------- ------- Net cost 3,436 3,615 Benefits paid (2,482) (2,588) Burks Pumps acquisition 2,218 -- Accrued postretirement benefit-- beginning of year 39,398 38,371 ------- ------- Accrued postretirement benefit-- end of year $42,570 $39,398 ======= =======
The cost of covered benefits was assumed to increase 13% for 1993, and then to decrease gradually to 5% by 2007 and remain at that level thereafter. In prior years, the cost of covered benefits was assumed to increase 15% until 1993 and then decrease gradually to 7% by 2009, 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 $3.6 million and the net periodic cost by approximately $0.8 million for the year. The discount rate used in determining the accumulated postretirement benefit obligation was 7.25% in 1993 and 8.5% in prior years. 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 $2,193,000, in 1993, $1,853,000 in 1992, and $1,660,000 in 1991. 17 Financial Review (continued) - -------------------------------------------------------------------------------- Pensions The company and its subsidiaries have pension plans which cover substantially all of their employees and non-employee 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 adjacent table sets forth net periodic pension costs.
(In thousands) 1993 1992 1991 -------- -------- -------- Service cost-benefits earned during the period $ 7,305 $ 7,598 $ 7,543 Interest cost on projected benefit obligation 13,979 13,864 14,730 Actual gain on plan assets (35,872) (14,368) (31,514) Net amortization and deferral 13,443 (4,947) 13,426 -------- -------- -------- Pension (income) expense for company-sponsored pension plans $ (1,145) $ 2,147 $ 4,185 ======== ======== ========
The following table sets forth by funded status the amounts recognized in the company's balance sheet at December 31, for company-sponsored pension plans:
1993 1992 ----------------------- ----------------------- (In thousands) Overfunded Underfunded Overfunded Underfunded ---------- ----------- ---------- ----------- Actuarial present value of benefit obligation: Vested $153,497 $6,500 $136,111 $4,691 Nonvested 5,052 99 4,303 132 -------- -------- -------- ------ Accumulated benefit obligation 158,549 6,599 140,414 4,823 Effect of future pay increases 28,829 282 32,467 310 -------- -------- -------- ------ Projected benefit obligation 187,378 6,881 172,881 5,133 -------- -------- -------- ------ Assets and book reserves relating to such benefits: Funded assets at fair value 232,475 5,890 203,292 4,155 Book reserves, net (5,830) 709 (1,690) 668 -------- -------- -------- ------ 226,645 6,599 201,602 4,823 -------- -------- -------- ------ Assets and book reserves greater (less) than projected benefit obligations $ 39,267 $ (282) $ 28,721 $ (310) ======== ======== ======== ====== Consisting of: Unrecognized net asset (liability) at date of adoption less amortization $ 13,195 $ (675) $ 15,684 $ (748) Unrecognized net gains (losses) 25,138 (396) 13,992 (180) Unrecognized prior service cost 934 -- (955) -- Adjustment required to recognize minimum liability -- 789 -- 618 -------- -------- -------- ------ $ 39,267 $ (282) $ 28,721 $ (310) ======== ======== ======== ======
18 - -------------------------------------------------------------------------------- The assumed discount rate, expected return on assets and rate of compensation level increases used to determine the projected benefit obligation for U.S. plans at December 1993 were 7.25%, 8.25%, and 4.75%, respectively. The rates at December 1992 and 1991 were 8.5%, 9.5%, and 6.25%, respectively. The rates for foreign plans at December 1993 were 7.5% to 8.25% for discount rate, 8.25% to 9.0% for return on assets, and a 7.5% compensation increase. The foreign rates at December 1992 and 1991 were 8.5% to 9.0%, 9.0%, and 6.25% to 7.5%, respectively. At December 31, 1993, substantially all plan assets are invested in listed stocks and bonds. These investments include common stock of the company which represents 3% 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 $1,482,000 in 1993, $1,301,000 in 1992, and $1,177,000 in 1991. The company sponsors a savings and investment plan [401(k) Plan] which is available to eligible non-bargaining and salaried employees of the company and certain of its subsidiaries. The company contributes, on a matching basis, an amount equal to 50% of deferred savings up to 6% of each participant's compensation, all of which is invested in company stock. During the last three years, the company made annual contributions of approximately $2 million to the 401(k) Plan. Employer's Accounting for Postemployment Benefits The Financial Accounting Standards Board requires that SFAS No. 112, "Employers' Accounting for Postemployment Benefits," be implemented for fiscal years beginning after December 15, 1993. The company currently accrues most postemployment benefits when incurred, therefore, the adoption of SFAS 112 in January 1994 will not be material. Accrued Liabilities
(In thousands) December 31, 1993 1992 ------- ------- Employee-related expenses $27,209 $23,455 Insurance 13,532 13,774 Environmental 4,360 5,214 Sales allowances 4,693 4,603 Interest 4,004 4,565 Litigation 3,500 -- Taxes other than income 2,532 2,171 Professional fees 2,452 2,081 Pensions 2,812 915 Other 16,013 14,366 ------- ------- $81,107 $71,144 ======= =======
Reserves and Other Liabilities
(In thousands) December 31, 1993 1992 ------- ------- Environmental $ 8,669 $ 7,165 Insurance 4,707 6,616 Warranty 4,494 4,685 Relocation 640 1,954 Employee benefits 602 1,051 Other 1,519 1,537 ------- ------- $20,631 $23,008 ======= =======
Short-Term Financing At December 31, 1993, the company had $281,000,000 in uncommitted short-term credit lines with domestic and foreign banks, $173,000,000 of which was unused. Long-Term Financing
(In thousands) December 31, 1993 1992 -------- -------- Crane Co.: Senior debt: 8 1/2% notes due 2004 $100,000 $100,000 Original issue discount (852) (936) -------- -------- 99,148 99,064 -------- -------- Subordinated debt: 7% Sinking fund debentures due 1993 - 7,612 5% Convertible debentures due 1993 and 1994, convertible at $3.70 and $4.26 738 889 -------- -------- Total Crane Co. 99,886 107,565 -------- -------- Subsidiaries: Industrial revenue bonds 4,757 8,550 Capital lease obligations 3,284 2,605 Other 1,482 1,676 -------- -------- Total Subsidiaries 9,523 12,831 -------- -------- Total long-term debt 109,409 120,396 Less current portion 3,852 9,348 -------- -------- Long-term debt net of current portion $105,557 $111,048 ======== ========
At December 31, 1993, the principal amounts of long-term debt repayments required for the next five years are $3,852,000 in 1994, $1,045,000 in 1995, $954,000 in 1996, $887,000 in 1997, and $806,000 in 1998. 19 Financial Review (continued) - -------------------------------------------------------------------------------- Interest Rate Swap Agreements 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. During 1993 the company entered into five agreements. Two swap positions which changed the company's interest rate exposure from fixed to floating were terminated in August with realized gains. Two outstanding agreements with notional amounts of $20 million each that convert the company's interest rate exposure from fixed to floating will mature in May and December 1994. The company also entered into an off-market swap to lock in the gain on an exposed swap position executed in 1992. The gain on this transaction is being amortized over the life of the original agreement. In 1992 the company transacted an off-market swap to lock in a gain on an interest rate swap position that was recorded earlier in the year. This gain is being amortized over the life of the original agreement. 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.
1993 1992 ---------------------------- -------- Carrying Fair Carrying Fair (In thousands) Amount Value Amount Value -------- -------- -------- -------- Assets: Investments $ 16,083 $ 16,010 $ 10,000 $ 10,000 Liabilities: Short-term debt 111,900 115,450 42,254 42,778 Long-term debt 105,557 118,707 111,048 121,437 Unrealized gain on interest rate swap agreements--net -- 1,153 -- 739
Investments--the company purchased the equivalent of 600,000 shares of Mid Ocean Reinsurance Company, Ltd. in 1992 for $10 million. In 1993 the company purchased 663,810 shares of Mark Controls Corporation for approximately $6 million which approximates fair value at December 31, 1993. These investments are included in other assets on the balance sheet. Short-term and Long-term debt--rates currently available for borrowing with similar terms and remaining maturities are used to estimate fair value for debt issues that are not quoted on an exchange. Interest rate swap agreements--the fair value of interest rate swaps is the amount at which they could be settled, based on estimates obtained from dealers. 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, 1993:
Minimum Capital Operating Sublease (In thousands) Leases Leases Income Net ------- --------- -------- ------- 1994 $ 800 $ 9,878 $ 818 $ 9,860 1995 639 8,441 397 8,683 1996 554 6,585 151 6,988 1997 439 5,234 103 5,570 1998 360 3,773 93 4,040 Thereafter 1,540 11,547 350 12,737 ------- ------- ------ ------- Total minimum lease payments 4,332 $45,458 $1,912 $47,878 ======= ====== ======= Interest (1,048) ------- Present value $ 3,284* =======
* Includes $530 due within one year. The weighted average interest rate for capital leases is 7.7%. Rental expense for all operating leases was $15,865,000, $17,081,000 and $18,910,000 for 1993, 1992 and 1991, respectively. The cost of assets capitalized under leases is as follows at December 31:
(In thousands) 1993 1992 ------- ------- Buildings and improvements $11,223 $11,569 Machinery and equipment 8,344 8,218 ------- ------- 19,567 19,787 Less accumulated depreciation 15,808 15,655 ------- ------- $ 3,759 $ 4,132 ======= =======
The company has established a self-insurance program to cover certain liability costs beneath the levels of insurance provided by its various policies in force. At December 31, 1993, 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. The company has been named a potentially responsible party (PRP) in connection with various site clean-ups directed by the Environmental Protection Agency or by state environmental agencies. Most involvements at these sites are on a de minimus basis or remedial actions have been sufficiently completed that either individually or in the aggregate they are not expected at 20 - -------------------------------------------------------------------------------- this time to be material. However, all environmental sites by their nature are subject to uncertainties including uncertainties about the status of the law, regulations, technology, and information related to the individual site. On the basis of current information, there are two sites where the company's environmental exposure at this time is not believed to be de minimus or remote. One site in Arizona arises out of operations of a subsidiary prior to its acquisition by the company. At that site, a soil vapor extraction system will be completed in 1994 to operate for 3 years, and a groundwater remediation system will be completed in 1995 to operate for 15 years as presently conceived. The future costs of both systems including operating costs have been fully reserved. The company is presently in litigation with the subsidiary's insurers and has reached negotiated settlements with certain of the carriers. No insurance recoveries were anticipated in establishing the reserve. At the other site in California, the company has completed a soil clean-up and has committed to pay 30% of the construction cost of a water blending facility for a water remediation project with six other PRPs. The company has obtained, after litigation, reimbursement from its insurance carriers and has provided sufficient reserves to cover anticipated future expenditures for the blending facility. In January 1994, the company was advised that it will be one of up to forty parties named in a cost recovery action for this same site by another PRP who is implementing the major portion of that water remediation project. The net amount demanded of the company is approximately $13 million. Based on a preliminary understanding of the facts, the company believes its proportionate responsibility, if any, should not be material. Acquisitions, Divestitures and Investments On December 29, 1993 the company acquired Burks Pumps, Inc. for $70 million. The net assets of Burks Pumps have been included in the financial statements at values representing a preliminary allocation of the purchase price. Although final valuations will affect this allocation, they are not expected to have a material effect on the financial statements. The purchase price exceeded the preliminary fair values assigned by $50 million. Burks Pumps has manufacturing operations in Piqua, OH and Decatur, IL and provides engineered pumps for an array of specialized commercial, industrial and municipal fluid handling applications. These products are marketed under the Barnes, Burks, Weinman, Crown and Prosser brand names. Also included is the Seller's line of tank cleaning equipment for the industrial clean-in-place market. This acquisition substantially increases the company's involvement in niche markets in the pump industry. In October 1993 the company acquired Filon, a manufacturer of fiberglass- reinforced plastic (FRP) panels, for approximately $26 million. Filon was integrated with Kemlite which produces FRP panels for the transportation, building products and recreational vehicle markets. During April and May 1993, the operating assets of Rondel's Inc. and Whittier- Ruhle Millwork Company were purchased for $5.8 million and $3.1 million, respectively. Both companies are value-added wholesale distributors of high quality building products and will enhance Huttig's nationwide distribution network. In addition, Crane Ltd. purchased Perflow Instruments Ltd., a manufacturer of equipment for the measurement and control of fluid and gas flows, for $1.2 million. In March 1992, certain assets of Jenkins Canada, Inc., a manufacturer of bronze and iron valves, were acquired by the company for approximately $4 million. The above mentioned acquisitions were accounted for by the purchase method. Since Burks Pumps was acquired late in December, its operating results were not material and are not included in the company's 1993 income. The results of operations for all other above- mentioned acquisitions have been included in the financial statements from their respective dates of purchase. These acquisitions did not have a material effect on the results of operations. Pro forma financial information assuming the acquisition of Burks Pumps, Inc. had taken place as of the beginning of 1992 is provided below:
(In thousands except per share data) 1993 1992 ---------- ---------- Net Sales $1,365,700 $1,359,617 Operating Profit 89,432 48,945 Net Income 49,363 23,235 Income Per Share $ 1.63 $ .75 ---------- ----------
During March 1993 the company sold the precision ordnance business of its subsidiary, Unidynamics/Phoenix, Inc., for $6 million. At December 31, 1993, the company held 663,810 shares of Mark Controls Corporation. The company's investment of approximately $6 million is carried at cost which approximated market, and represents approximately 13.2 percent of the outstanding shares of Mark Controls Corporation. During 1992 the company purchased the equivalent of 600,000 shares of Mid Ocean Reinsurance Company, Ltd. for $10 million. Subsequent Event In February 1994 the company announced a definitive merger agreement with ELDEC Corporation whereby the company commenced a tender offer at $13.00 per share for all outstanding shares of common stock of ELDEC. The tender offer, upon completion, will be followed by a merger in which any nontendering stockholders will have the right to obtain $13.00 per share in cash. As part of the transaction, the company has signed agreements with certain ELDEC shareholders to purchase approximately 51% of the outstanding ELDEC shares at $13.00 per share upon the closing of the tender offer. ELDEC has approximately 5,696,000 shares outstanding. ELDEC custom designs and manufactures electronic and electromechanical systems for aerospace and defense applications. 21 Financial Review (continued) - -------------------------------------------------------------------------------- Stock Options and Stock Award Plans A summary of stock option transactions follows:
Number of Shares 1993 1992 1991 --------- --------- --------- Outstanding January 1 1,215,966 1,230,438 1,249,713 Options granted 283,000 264,000 268,250 Options cancelled (8,500) (40,875) (18,001) Options exercised (216,792) (237,597) (269,524) --------- --------- --------- Outstanding December 31 1,273,674 1,215,966 1,230,438 ========= ========= =========
At December 31, 1993, options for 809,736 shares were exercisable and 458,384 shares were available for grant. Per share option prices ranged from $6.56 to $27.25. The company's restricted stock award plan provides for awards of common stock to key officers and employees, subject to resale restrictions. The current restrictions on outstanding awards are scheduled to lapse, in part, over a five year period, or upon the achievement of certain performance objectives. In 1993 the shareholders approved a proposal of the board of directors to amend 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 73,000 shares in 1993, and as of December 31, 1993, 427,000 shares are available for future awards. Compensation expense is determined based on the market value at the time of the award and is normally amortized over the five year restriction period. Pursuant to the Non-Employee Director Restricted Stock Plan, non-employee directors received 3,040 shares of company stock in 1993 as a group. All directors who are not full-time employees of the company are eligible to participate in the plan. 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 Shares Purchase Rights In July 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 The company has two industry segments: Engineered Industrial Products and Wholesale Distribution. Operations in the Engineered Industrial Products segment involve the production and sale of various engineered products including valves, specialty pumps, anti-skid braking control systems for the aerospace industry, a variety of products and equipment with defense applications, electronic vending machines and coin handlers and fiberglass reinforced panels. Operations in the Wholesale Distribution segment involve the distribution of millwork, windows, doors and related products, plumbing supplies, valves and piping, actuated valves and flow control systems. An analysis of sales, operating profit, assets, capital expenditures and depreciation and amortization appears on page 24. 22 Management's Responsibilities 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. 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, independent auditors, whose report appears on this page. 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, Chief Executive Officer and President /s/ J. P. Cronin J. P. Cronin Vice President--Finance and Chief Financial Officer Independent Auditors' Report - -------------------------------------------------------------------------------- Deloitte & Touche - ---------- 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, 1993 and 1992, 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, 1993. 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. 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, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in the note "Postretirement Benefits", in 1991 the Company changed its method of accounting for postretirement benefits other than pensions to conform with Statement of Financial Accounting Standards No. 106. /s/ Deloitte & Touche Stamford, Connecticut January 24, 1994, except for the note "Subsequent Event" on page 21, as to which the date is February 11, 1994 23 Analysis by Segment Crane Co. and Subsidiaries (In thousands)
1993 1992 1991 ---------------- ---------------- ---------------- Amount % Amount % Amount % ---------- --- ---------- --- ---------- --- Net Sales: Industry Segments: Engineered Industrial Products $ 667,576 50 $ 710,875 54 $ 713,876 54 Wholesale Distribution 655,218 50 608,519 46 602,761 46 ---------- --- ---------- --- ---------- --- 1,322,794 100 1,319,394 100 1,316,637 100 Intersegment Sales (12,589) (12,417) (14,105) ---------- ---------- ---------- $1,310,205 $1,306,977 $1,302,532 ========== ========== ========== Geographic Region: United States $1,031,724 77 $ 999,543 75 $ 961,775 73 Canada 171,576 13 172,345 13 189,470 14 Other International 135,752 10 157,733 12 172,187 13 ---------- --- ---------- --- ---------- --- 1,339,052 100 1,329,621 100 1,323,432 100 Interregional Sales (28,847) (22,644) (20,900) ---------- ---------- ---------- $1,310,205 $1,306,977 $1,302,532 ========== ========== ========== Operating Profit: (a) Industry Segments: Engineered Industrial Products $ 78,166 80 $ 85,080 87 $ 84,830 90 Wholesale Distribution 19,969 20 12,640 13 9,365 10 ---------- --- ---------- --- ---------- --- 98,135 100 97,720 100 94,195 100 Corporate (12,279) (13,032) (15,293) Special Charge -- (39,444) -- ---------- ---------- ---------- $ 85,856 $ 45,244 $ 78,902 ========== ========== ========== Geographic Region: (b) United States $ 94,751 97 $ 97,020 99 $ 83,812 89 Canada 3,930 4 (2,091) (2) 3,041 3 Other International (546) (1) 2,791 3 7,342 8 ---------- --- ---------- --- ---------- --- 98,135 100 97,720 100 94,195 100 Corporate (12,279) (13,032) (15,293) Special Charge -- (39,444) -- ---------- ---------- ---------- $85,856 $ 45,244 $ 78,902 ========== ========== ========== Assets: Industry Segments: Engineered Industrial Products $ 472,883 69 $ 368,044 67 $ 399,284 68 Wholesale Distribution 207,716 31 180,737 33 189,933 32 ---------- --- ---------- --- ---------- --- 680,599 100 548,781 100 589,217 100 Corporate 63,566 81,430 41,020 ---------- ---------- ---------- $ 744,165 $ 630,211 $ 630,237 ========== ========== ========== Geographic Region: United States $ 522,772 77 $ 394,276 72 $ 417,692 71 Canada 84,194 12 83,354 15 87,227 15 Other International 73,633 11 71,151 13 84,298 14 ---------- --- ---------- --- ---------- --- 680,599 100 548,781 100 589,217 100 Corporate 63,566 81,430 41,020 ---------- ---------- ---------- $ 744,165 $ 630,211 $ 630,237 ========== ========== ==========
Capital Expenditures Depreciation and Amortization ------------------------- ----------------------------- 1993 1992 1991 1993 1992 1991 ------- ------- ------- --------- -------- -------- Industry Segments: Engineered Industrial Products $23,875 $19,210 $16,790 $21,079 $21,498 $21,340 Wholesale Distribution 8,615 3,767 4,650 5,279 4,406 4,474 Corporate 6,348 197 -- 3,062 2,626 2,597 ------- ------- ------- ------- ------- ------- $38,838 $23,174 $21,440 $29,420 $28,530 $28,411 ======= ======= ======= ======= ======= ======= Geographic Region: United States $31,999 $13,616 $12,021 $22,372 $21,078 $21,495 Canada 3,182 4,263 5,219 3,264 3,396 3,079 Other International 3,657 5,295 4,200 3,784 4,056 3,837 ------- ------- ------- ------- ------- ------- $38,838 $23,174 $21,440 $29,420 $28,530 $28,411 ======= ======= ======= ======= ======= =======
(a) For 1992, $34,744 of the special charge relates to the Engineered Industrial Products segment, and $4,700 is applicable to Corporate. 1991 results included charges (credits) of $1,346, $946 and $(124) to Engineered Industrial Products, Wholesale Distribution and Corporate, respectively, related to the adoption of SFAS No. 106, "Postretirement Benefits Other than Pensions." (b) For 1992, $34,444 of the special charge is applicable to the United States and $5,000 is applicable to Canada. 24 Five-year Summary of Selected Crane Co. and Subsidiaries Financial Data (In thousands except per share data)
Years Ended December 31 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- Net Sales $1,310,205 $1,306,977 $1,302,532 $1,438,248 $1,455,589 Depreciation and Amortization 29,420 28,530 28,411 30,102 33,629 Operating Profit 85,856 45,244(a) 78,902 113,311 105,045 Interest Expense 11,396 14,464 11,540 16,746 19,177 Income before Taxes 79,818 38,689 72,405 102,488 91,579 Provision for Income Taxes (30,925) (14,403) (27,412) (39,753) (35,660) ---------- ---------- ---------- ---------- ---------- Income from Operations $ 48,893 $ 24,286(a) $ 44,993(b) $ 62,735 $ 55,919 ========== ========== ========== ========== ========== Income Per Common Share Primary $ 1.62 $ .79(a) $ 1.42(b) $ 1.96 $ 1.72 Fully Diluted 1.61 .78(a) 1.41(b) 1.94 1.69 Cash Dividends Per Common Share $ .75 $ .75 $ .75 $ .75 $ .71 Assets $ 744,165 $ 630,211 $ 630,237 $ 664,811 $ 654,557 Long-Term Debt $ 105,557 $ 111,048 $ 83,847 $ 104,143 $ 119,102 ---------- ---------- ---------- ---------- ----------
(a) Includes special charge of $39,444 ($24,400 after tax) or $.78 per share. (b) Income before cumulative effect of a change in accounting for postretirement benefits other than pensions of $22,341 ($.70 per share). 25 Quarterly Results for the Year (Unaudited) Crane Co. and Subsidiaries (In thousands except per share data)
Quarter Year ------------------------------------------ ---------- First Second Third Fourth -------- -------- -------- -------- 1993 Net Sales $312,313 $337,693 $337,924 $322,275 $1,310,205 Cost of Sales 241,804 259,455 263,867 251,422 1,016,548 Depreciation and Amortization 5,593 5,353 5,476 5,034 21,456 -------- -------- -------- -------- ---------- Gross Profit $ 64,916 $ 72,885 $ 68,581 $ 65,819 $ 272,201 -------- -------- -------- -------- ---------- Net Income $ 10,766 $ 15,726 $ 12,762 $ 9,639 $ 48,893 Primary Net Income Per Share $ .36 $ .52 $ .42 $ .32 $ 1.62 -------- -------- -------- -------- ---------- 1992 Net Sales $313,541 $338,550 $338,862 $316,024 $1,306,977 Cost of Sales 242,440 261,066 262,431 240,072 1,006,009 Depreciation and Amortization 5,519 5,534 5,226 5,120 21,399 Special Charge -- 39,444 -- -- 39,444 -------- -------- -------- -------- ---------- Gross Profit $ 65,582 $ 32,506 $ 71,205 $ 70,832 $ 240,125 -------- -------- -------- -------- ---------- Net Income (Loss) $ 9,006 $ (9,480)(a) $ 10,515 $ 14,245 $ 24,286(a) Primary Net Income (Loss) Per Share $ .29 $ (.31)(a) $ .34 $ .47 $ .79(a) -------- -------- -------- -------- ----------
(a) Includes special charge of $39,444 ($24,400 after tax) or $.78 per share. 26 Market and Dividend Information - -- Crane Co. Common Shares
New York Stock Exchange Composite Price Per Share Dividends Per Share ------------------------------------------------- ------------------- 1993 1992 1993 1992 ------------------------ ----------------------- Quarter High Low High Low ----------- ----------- ----------- ---------- -------- -------- First $27 7/8 $22 5/8 $27 7/8 $23 3/8 $.1875 $.1875 Second 30 5/8 24 7/8 27 5/8 23 .1875 .1875 Third 30 7/8 26 5/8 25 1/4 21 7/8 .1875 .1875 Fourth 29 24 1/8 24 3/8 21 3/4 .1875 .1875 ------ ------ $.75 $.75 ====== ======
At December 31, 1993 there were approximately 6,900 holders of record of Crane Co. common stock. Shareholder Information - ------------------------------------------------------------------------------ Form 10-K Copies of Form 10-K for 1993 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 9, 1994 at the Sheraton Stamford Hotel, One First Stamford Place, Stamford, CT 06902 in the Freedom II room. Stock Listing Crane Co. common stock is traded on the New York Stock Exchange, listed under the symbol "CR." Independent Auditors Deloitte & Touche 333 Ludlow Street 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 plans 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. 27 Shareholder Information (continued) - -------------------------------------------------------------------------------- Stock Transfer Agent and Registrar of Stock First Chicago Trust Company of New York Customer Service: 1-201-324-0498 Non-Postal Deliveries 14 Wall St., 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 Trustees and Disbursing Agents Bank of America National Trust and Savings Association Customer Service Center: 1-800-423-5041 Corporate Trust #8510 333 So. Beaudry Avenue; 25th Fl. Los Angeles, CA 90017 The Bank of New York Corporate Trust Department: 1-800-524-4458 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 you choose to make; and Voluntary Cash Only: 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 28 EX-22 5 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 22 CRANE CO. EXHIBIT E TO FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1993 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. 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 Huttig Sash & Door Company Delaware Crane Australia Pty., Limited Australia Crane Canada Inc. Canada Crane Limited Great Britain Dyrotech Industries, Inc. Delaware Kemlite Company, Inc. Delaware Burks Pumps, Inc. Delaware EX-24 6 INDEPENDENT AUDITORS' CONSENT EXHIBIT 24 EXHIBIT F 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 24, 1994 (except for the note "Subsequent Event" on page 21, as to which the date is February 11, 1994), appearing in and incorporated by reference in this Annual Report on Form 10-K of Crane Co. for the year ended December 31, 1993. Deloitte & Touche Stamford, Connecticut March 31, 1994 -----END PRIVACY-ENHANCED MESSAGE-----