Document EdeJ7vKxRNRmj055yKzd9jQLV

<DOCUMENT> <TYPE>10-K405 <SEQUENCE>1 <FILENAME>0001. txt <DESCRIPTION>FORM 10-K405 <TEXT> <PAGE> 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, 2000 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 incorporation or organization) (I.R.S. Employer 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: Title of each class Name of each exchange on which registered Common Stock, par value $1.00 Preferred Share Purchase Rights* New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: 8 1/2* senior notes due March 2004 6 3/4% senior notes due October 2006 (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(a) 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 http://www.sec.gov/Archives/edgar/data/25445/00009501.../0000950130-01 -001276-0001 .tx 4/26/2001 jfage/ or is Indicate by check mark if the disclosure of delinquent filers pursuant to 405 of Regulation S-K is not contained herein, and will not be contained, best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) Item to the Based on the average stock price of $27.47 on January 31, 2001 the aggregate market value of the voting stock held by nonaffiliates of the registrant was $1,663,953,578. The number of shares outstanding of the registrant's common stock, $1.00 par value was 60,573,483 at January 31, 2001. DOCUMENTS INCORPORATED BY REFERENCE Portions of the annual report to shareholders for the year ended December 31, 2000 and portions of the proxy statement for the annual shareholders meeting to be held on April 23, 2001 are incorporated by reference into Parts I, II, III and IV of this Form 10-K Annual Report. <PAGE> PART I Item 1. Business Crane Co. ("Crane" or the "company") is a diversified manufacturer of engineered industrial products. Founded in 1855, Crane employs over 9,000 people in North America, Europe, Asia and Australia. STRATEGY The company's strategy is to grow the earnings of niche businesses with high market share, build an aggressive and committed management team whose interests are directly aligned to those of the shareholders, and maintain a focused, efficient corporate structure. ACQUISITIONS In the past five years, the company has completed 13 acquisitions. During 2000, the company completed two acquisitions at a total cost of $11.9 million. In March 2000, the company acquired Streamware Corporation, a privately held company based in Norwood, Massachusetts that is a leading provider of business managemenr software and market analysis tools for the vending and food service industry. In December, the company acquired the assets of the Valve Repair Division of Groth Corporation. located in Houston, Texas, the Valve Reparr Division provides both shop and field testing and repair services for a broad range of valve types and is an authorised repair facility for many leading valve manufacturers. Cost in excess of net assets acquired in 2000 amounted to $8.5 million and is being amortized over 15 years. In December 2000, the company entered into an agreement to purchase certain operations of the Industrial Flow business of Alfa Laval Holding A3 for approximately $47 million. This transaction is expected to close by the end of April 2001. During 1999, the company completed one acquisition at a total cost of $33 million. In October 1999, the company acquired Stentorfield, Ltd., which is based in Chippenham, England. Stentorfield is a premier designer and manufacturer of hot and cold beverage vending machines, serving the U.K. and European market with a broad line of full size and tabletop products, for the hotel, restaurant, office coffee service and vending industries. Stentorfield is http:' 'www.sec.gov. Archives/edgar/data/25445/00009501... '0000950130-01 -001276-0001 .tx 4/26/2001 known in the industry to provide high quality, reliable and easily serviced products and excellent customer service. This business was integrated with Crane's National Vendors business, which is the leading North American designer and manufacturer of full line vending machines, for snack, food and beverage. The acquisition provides the means for National Vendors to satisfy the growing U.K. and European demand for a broader "one-stop" product offering, consisting of Stentorfield's drinks machines and National Vendors' snack and food machines. During 1998, the company completed four acquisitions at a total cost of $178 million. In May, the company acquired Environmental Products USA, Inc. This business manufactures membrane-based water treatment systems for industrial, commercial and institutional markets. In August, the company acquired Sequentia Holdings, Inc., a manufacturer of fiberglass-reinforced plastic panels for the construction and building produces markets. Sequentia complements the company's Kemlite subsidiary, which provides fiberglassreinforced plastic panels for the transportation and recreational vehicle markets. In September, the company acquired Liberty Technologies, Inc. which develops, manufactures, markets and sells valve, motor, engine and compressor condition monitoring products and related services to the nuclear power generation and industrial process markets worldwide. Liberty complements the company's nuclear valve business which provides valves, valve diagnostic equipment and related services to the nuclear power industry, and its Dynalco Controls business, which provides sensors, instrumentation, control products and automation systems for use in industrial engine applications. Also in September, the company acquired the Plastic-Lined Piping Products ("PLPP") division of The Dow Chemical Company. PLPP was integrated with the company's Resistoflex division, which supplies lined pipe and valves to the chemical process and industrial markets. <PAGE> 2 PART I Item 1. Business (continued) During 1997, the company completed four acquisitions at a total cost of $70 million, including assumed debt. In March, the company acquired the transportation products business of Sequentia, Incorporated. This business, which produces fiberglass-reinforced plastic panels for the truck body, trailer and container market, has been integrated with the company's Kemlite subsidiary. Also in March, the company acquired Polyvend Inc., a manufacturer of snack and food vending machines. Polyvend was completely integrated into Crane's National Vendors division, significantly expanding its sales distribution channels. In April, the company acquired the nuclear valve business of ITI MOVAT3 from Westinghouse. MOVATS is a leading supplier of valve diagnostic equipment and valve services to the commercial nuclear power industry. In December, the company acquired certain operations and product lines of Stockham Valves Fittings, Inc. The acquired product lines and related manufacturing operations have been integrated into the company's valve businesses. During 1996, the company acquired two companies. In mid-October, the company acquired Interpoint Corporation in a tax-free merger in which the company issued 1,094,312 shares of Crane common stock and assumed $26 million in debt. Interpoint is a leader in the design and manufacture of standard and custom miniature DC-to-DC power converters with applications in aerospace and medical technology industries. In late October, the company acquired Grer.son Electronics Ltd. of Daventry, England. Grenson Electronics produces low voltage power conversion electronics for aerospace, defense and industrial markets. DIVESTITURES http://www.sec.gov'Archives/edgar/data/25445/00009501.../0000950130-01-001276-000l.tx 4/26-2001 In the past five years, the company has divested seven businesses. In May 2000, the company sold its interest in Powec AS, a Norwegian manufacturer of power supplies for the telecommunications industry. In addition, the company's wholly owned ELDEC Corporation subsidiary sold its related telecommunications power supply product line to the same purchaser. Total consideration for both businesses was $45.6 million. In April 1999, the company sold Southwest Foundry, acquired as part of the Stockham Valves and Fittings, Inc. transaction, for $400,000. In December 1999, the company sold its Crane Defense Systems business for $6.4 million in cash and a $750,000 note. In 199S, the company sold two foundry operations acquired as part of the Stockham Valves and Fittings Inc. transaction. Accu-Cast, Inc. and the Aliceville Foundry were sold for a total of $4.3 million. In 1997, the company sold its Valve Systems and Controls division for $7.5 million in cash and $1.5 million in preferred stock. In March of 1996, the company sold Empire Foundry for $1.4 million. DISCONTINUED OPERATIONS On December 16, 1999, the company distributed all of the shares of its Huttig Building Products ("Huttig") subsidiary to shareholders of the company on the basis of one share of Huttig for every 4.5 shares of Crane Co. common stock. Prior to this spin-off distribution, Huttig repaid an intercompany loan of $68 million to the company, which the company used to pay down debt. The Wholesale segment was discontinued when Huttig was spun off. LONG-TERM FINANCING In September 1998 the company sold $100,000,000 of 6 3/4* notes that will mature on October 1, 2006. During April 1992 the company sold $100,000,000 8 1/2* notes that will mature on March 15, 2004. PART I Item 1. Business (continued) BUSINESS SEGMENTS See page 27 of the Annual Report to Shareholders for year ended December 31, 2000, for sales, operating profit and assets employed by each business segment. AEROSPACE The Aerospace segment consists of ELDEC, Hydro-Aire, Lear Romec and Interpoint. ELDEC designs, manufactures and markets custom position indication and control systems, proximity sensors, pressure sensors, true mass fuel flowmeters and power conversion systems for the commercial transport, business, regional, general aviation, military, repair and overhaul and electronics markets. These products are custom designed for specific aircraft to meet technically demanding requirements of the aerospace industry. ELDEC has facilities in Redmond, Washington, one in England and one in France. In May 2000, ELDEC sold its interest in Powec AS, a Norwegian manufacturer of power supplies for the telecommunications industry. In addition, ELDEC sold its related telecommunications power supply product line to the same purchaser. The company accounted for its investment in Powec AS using the equity method. Hvdrc-Aire designs, manufactures and sells aircraft brake control and anti-skid systems, including electro-hydraulic servo valves and manifolds. http: www.sec.gov/Archives/edgar/data/25445/00009501 .../0000950130-01 -001276-0001 .tx 4/26/2001 embedded software and rugged electronic controls, hydraulic control valves, landing gear sensors and fuel pumps as original equipment to the commercial transport, business, regional, general aviation, military and government aerospace, repair and overhaul markets. In addition, Hydro-Aire 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 Hydro-Aire 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 aircraft manufacturers, airlines, governments, and aircraft maintenance and overhaul companies. Lear Romec designs, manufactures and sells lubrication and fuel pumps for aircraft, aircraft engines and radar cooling systems for the commercial and military aerospace industries. Lear Romec has a leading share of the non-captive market for turbine engine lube and scavenge oil pumps. Lear Romec also manufactures fuel boost and transfer pumps for commuter and business aircraft. Interpoint designs, manufactures and sells standard and custom miniature (hybrid) DC-to-DC power converters and custom miniature (hybrid) electronic circuits for applications in commercial, space and military aerospace, medical technology, fiber optic and medical technology industries. Interpoint has facilities in Redmond, Washington and in Taiwan. The segment employs 2,100 people and had assets of $258.7 million at year-end. The order backlog totaled $301.6 million at December 31, 2000. <PAGE> 4 PART I (continued) Item 1. Business (continued) ENGINEERED MATERIALS The Engineered Materials segment consists of five businesses: Kemlite, CorTec, Resistoflex, Polyflon and Crane Plumbing. 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, to institutions where fire rated materials with low smoke generation and minimum toxicity are required, and for residential construction. Kemlite sells its products directly to the truck trailer and recreational vehicle manufacturers. Secuentia manufactures fiberglass-reinforced plastic panels for the construction and building products markets. Kemlite uses distributors to serve its commercial construction market and some segments of the recreational vehicle market. Sequentia's Grand Junction, Tennessee and Houston, Texas plants were added to Kemlite1s plants in Joliet, Illinois and Jonesboro, Arkansas. CorTec manufactures fiberglass-reinforced laminated panels serving the truck and truck trailer segment of the transportation industry and for specialty applications. CorTec markets its products directly to the truck and truck trailer manufacturers. Resistoflex is engaged in the design, manufacture and sale of corrosion-resistant, plastic-lined steel pipes, fittings, tanks, valves, expanscon joints and hose used primarily by the pharmaceutical, chemical http: www.sec.gov/Axchives/edgar/data/25445/00009501.../0000950130-01 -001276-0001 .tx 4/26/2001 processing, pulp and paper, ultra pure water and waste management industries. It also manufactures high-performance, separable fittings for operating pressures to 8,000 PSI used primarily in the aerospace industry. Resistoflex sells its industrial products through distributors who provide stocking and fabrication services to industrial users in the United States. Its aerospace products are sold directly to the aerospace industry. Resistoflex also manufactures plastic-lined pipe products at its Singapore plant serving the Asian chemical processing and the Asian pharmaceutical industries. Polyflon manufactures microwave laminates, high voltage RF capacitors, radomes and circuit processing for wireless communication, magnetic resonance imaging, microwave and radar system manufacturers. Crane Plumbing manufactures plumbing fixtures in Canada. Its products are sold through distributors in Canada, where it has a large share of the Canadian plumbing fixtures market. This segment had assets of $228.6 million at December 31, 2000 and employed 1,700 people. Order backlog at year-end 2000 was $18.7 million. MERCHANDISING SYSTEMS The Merchandising Systems segment has two operating units: National Vendors, the industry leader in the design and manufacture of a complete line of vending merchandisers for the food service vending market; and NRI, which manufactures electronic coin validators in Buxtehude, Germany for the automated merchandising and gambling/amusement markets in Europe. PART I (continued) Item 1. Business (continued) National Vendors products include electronic vending merchandisers for refrigerated and frozen foods, hot and cold beverages, snack foods, single cup individually brewed hot drinks and combination vendors/merchandisers, designed to vend both snack foods and hot/cold drinks, or snacks and refrigerated/frozen foods in one machine. National Vendors manufactures its products in Bridgeton, Missouri. National Vendors' products are marketed to customers in the United States and Europe by company sales and marketing personnel, as well as distributors, and in other international markets through independent distributors. In March 2000, the company acquired Streamware Corporation, a privately held company based in Norwood, Massachusetts that is a leading provider of business management software and market analysis tools for the vending and food service industry. The acquisition of Streamware gives National Vendors an opportunity to develop a significant new business. Streamware's VendMAX is a fully integrated software/hardware solution that offers operators complete cash accountability, inventory control and improved merchandising capabilities. NRI is among the relatively few makers of coin validators that will supply European countries, which must equip existing and new coin-operated vending machines, with validators programmed for the new euro coins that will go into circulation at the start of 2002. Merchandising Systems employs 1,400 people and had assets of $159.5 million at year-end 2000. Order backlog totaled $69.4 million at December 31, 2000. FLUID HANDLING http://www.sec.gov/Archives/edgar/data/25445/00009501 .../0000950130-01 -001276-0001 .tx 4/26/2001 The Fluid Handling segment consists of the Crane Valves, Crane Valves-U.K., Valve Services, Crane Pumps, Crane Environmental and Crane Supply businesses. The Crane Valves and Crane Valves-U.K. businesses, with four manufacturing facilities in North America, as well as operations in the United Kingdom, Australia, Norway, China and Indonesia, sell a wide variety of commodity and special purpose valves and fluid control products for the chemical and hydrocarbon processing, power generation, marine, general industrial and commercial construction industries. Products are sold under the trade names Crane, Jenkins, Pacific, Westad, Flowseal, Center Line, Stockham, Triangle and Duo-Check. The company's Valve Service business, with two manufacturing facilities in North America, provides valves, valve diagnostic equipment and related services to the nuclear power, chemical and hydrocarbon processing and power generation industries. Crane Pumps has eight manufacturing facilities in the United States. Pumps are manufactured under the trade names Deming, Weinman, Chempump, Burks, Chem/Meter, Barnes, Sellers and Process Systems. Pumps are sold to a broad customer base, which includes chemical and hydrocarbon processing, automotive, municipal, industrial and commercial wastewater, power generation, commercial heating, ventilation and air-conditioning industries and original equipment manufacturers. The Crane Environmental business has manufacturing facilities in Pennsylvania and Florida and serves the water and wastewater treatment market. Its products are sold under the trade names Cochrane and Environmental Products. Crane Supply, a distributor of plumbing supplies, valves and piping in Canada, maintains thirty-five branches throughout Canada and distributes Crane manufactured products in that country. Crane Supply also distributes products that are both complementary to and competitive with Crane's own manufactured products. Products in this group are sold directly to end users through Crane's sales organization and through independent distributors and manufacturers representatives. This segment employs 3,100 people and had assets of $308.7 million at December 31, 2000. Fluid Handling order backlog totaled $91.6 million. <PAGE> 6 PART I (continued) Item 1. Business (continued) ' CONTROLS This segment includes five businesses: Barksdale, Powers Process Controls, Dynalco Controls, Azonix, and Ferguson. The companies in this segment design, manufacture and market industrial and commercial products that control flows and processes in various industries including petroleum, chemical, construction, food and beverage, power generation and transportation. 3arksdale manufactures solid state and electromechanical pressure switches and transducers, level switches and continuous level indicators, temperature switches, and directional control valves that serve a broad range commercial and industrial applications. It has manufacturing and marketing facilities in the United States and Germany. of Powers Process Controls designs, manufactures and markets water mixing and thermal shock protection shower systems, commercial and residential plumbing brass, process controllers and instrumentation, process control valves and temperature regulators for industrial applications and the commercial and institutional construction industry. http://www.sec.gov/Archives/edgar/data/25445/00009501.. ./0000950130-01 -001276-0001 .tx 4/26/2001 Dynalco Controls designs and manufactures rotational speed sensors, temperature and pressure instruments and monitors for rugged environments, microprocessor based engine and mechanism controls. Dynalco's products are used worldwide by industries in a variety of applications, including stationary natural gas engines, power generation, oil and gas production and transmission, and agriculture equipment. Azonix manufactures operator interfaces and measurement and control systems for hazardous and harsh applications, intelligent data acquisition products, high-precision thermometers and calibrators for the oil and gas, petrochemical, chemical, pharmaceutical and metal processing industries. Ferguson designs and manufactures, in the United States and through Ferguson Machine Co. S.A. in Europe, precision index and transfer systems for use on and with machines that perform automatic forming, assembly, metal cutting, testing and inspection operations. Products include mechanical index drives, pick-and-place robots, in line transfer machines, rotary tables, press feeds and custom cams. The products in this segment are sold directly to end users and engineering contractors through the company's own sales force and cooperatively with sales representatives, stocking specialists and industrial distributors. Controls had assets of $118.0 million at December 31, 2000, and employs 800 people. On December 31, 2000, Crane Controls had a backlog of $22.3 million. 7 < PAGE> PART I (continued) Item 1. Business (continued) COMPETITIVE CONDITIONS The company's lines of business are conducted under actively competitive conditions in each of the geographic and product areas they serve. Because of the diversity of the classes of products manufactured and sold, they do not compete with the same companies in all geographic or product areas. Accordingly, it is not possible to estimate the precise number of competitors or to identify the principal methods of competition. Although reliable statistics are not available, the company believes that it is an important supplier to a number of market niches and geographic areas. The company's products have primary application in the aerospace, hydrocarbon processing, petrochemical, power generation, automated merchandising and transportation industries. As such, they are dependent upon numerous unpredictable factors, including changes in market demand, general economic conditions and capital spending. Because these produces are also sold in a wide variety of markets and applications, the company does not believe it can reliably quantify or predict the possible effects upon its business resulting from such changes. Seasonality is a factor in the Canadian operations. Net sales in Canada and assets related to Canadian operations were 13.89% and 7.14% of the respective 2000 consolidated amounts. 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 http://www.sec.gov/Archives/edgar/data/25445/00009501 .../0000950130-01 -001276-0001 ,tx 4/26/2001 numerous patents and licenses, none are of such importance that termination would materially affect its business. Product development and engineering costs totaled approximately $55.0 million in 2000, $58.9 million in 1999, and $70.9 million in 1998. Included in these amounts were approximately $6.7 million, $7.4 million and $15.8 million received by the company in 2000, 1999 and 1998, respectively, for customer sponsored research and development. The company is not dependent on any single customer nor are there any issues at this time regarding available raw materials for inventory. Costs of compliance with federal, state and local laws and regulations involving the discharge of materials into the environment or otherwise relating to the protection of the environment are not expected to have a material effect upon the company's capital expenditures, earnings or competitive position. <PAGE> 8 PART I (continued) Item 1. Business (continued) FORWARD LOOKING STATEMENTS Throughout the Annual Report to Shareholders, particularly in the Chairman's Letter to Shareholders and Management's Discussion and Analysis of Operations, the company makes numerous statements about expectations of future performance and market trends, and statements about plans and objectives and other matters, which, because they are not historical fact, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, the company and its representatives may, from time to time, make written or oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and in its reports to shareholders, which can be identified by the use of forward-looking terminology such as "believes", "contemplates", "expects", "may", "will", "could", "should", "would" or "anticipates" or the negative thereof or comparable terminology. All forward-looking statements speak only as of the date on which such statements are made and involve risk and uncertainties that exist in the company's operations and business environment and are not guarantees of future performance. The company assumes no obligation to update any of these forward-looking statements, whether as a result of new information or future events. As a responsibility to our investors, the company will make reasonable efforts at timely disclosure of future facts and circumstances which may affect such statements. Because the company wishes to take advantage of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995, readers are cautioned to consider the following important risk factors that could affect the company's businesses and cause actual results to differ materially from those projected. General A substantial portion of the sales of the company's business segments are concentrated in industries which are cyclical in nature. Because of the cyclical nature of these businesses, their results are subject to fluctuations in domestic and international economies, as well as to currency fluctuations and http://www.sec.gov/Archives/edgar/data/25445/00009501 .../0000950130-01 -001276-0001 .tx 4/26/2001 unforeseen inflationary pressures. Reductions in the business levels of these industries would negatively impact the sales and profitability of the affected business segments. While the company is a principal competitor in most of its markets, all of its markets are highly competitive. The company's competitors in many of its business segments can be expected in the future to improve technologies, reduce costs and develop and introduce new products, and the ability of the company's business segments to achieve similar advances will be important to their competitive positions. Competitive pressures, including those discussed above, could cause one or more of the company's business segments to lose market share or could result in significant price erosion, either of which could have an adverse effect on the company's results of operations. The company's acquisition program entails the potential risks inherent in assessing the value, strengths, weaknesses, contingent or other liabilities and potential profitability of acquisition candidates and in integrating the operations of acquired companies. There can be no assurance that suitable acquisition opportunities will be available in the future, that the company will continue to acquire businesses or that any business acquired will be integrated successfully or prove profitable. <PAGE> 9 PART I (continued) Item 1. Business (continued) Forward Looking Statements (continued) Net sales and assets related to operations outside the United States were 36.3% and 20.9% of the respective 2000 consolidated amount. Such operations and transactions entail the risks associated with conducting business internationally, including the risk of currency fluctuations, slower payment of invoices, adverse trade regulations and possible social and economic instability. While the full impact of this economic instability cannot be predicted, it could have a material adverse effect on the company's revenue and profitability. Certain of the company's business segments are dependent upon highly qualified personnel, and the company generally is dependent upon the continued efforts of key management employees. Particularly in light of the current tight labor market, the company's prospects would be adversely affected by an inability to retain its key personnel. New factors emerge from time to time, and it is not possible for management to predict all of such factors. Further, management cannot assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Aerospace A significant fall-off in demand for air travel or a decline in airline profitability generally could result in reduced aircraft orders, and could also cause the airlines to scale back their purchases of repair parts from Crane companies. The companies could also be impacted if major aircraft manufacturers, such as Boeing, which represents approximately 21% of the http:/7www.sec.gov/Archives/edgar/data/25445/00009501.../0000950130-01 -001276-0001 .tx 4/26/2001 segment's revenue, encountered production problems, or if pricing pressure from aircraft customers caused the manufacturers to press their suppliers to lower prices. Sales and profits could face erosion if pricing pressure from competitors increased, if planned new products were delayed, if finding new aerospace-qualified suppliers grew more difficult, or if required technical personnel became harder to hire and retain. Aerospace segment results could be below expectations if further slowing of the U. S. economy causes customers to delay or cancel spare parts or aircraft orders. Engineered Materials In the Engineered Materials segment, sales and profits could fall if there were a decline in demand for truck trailers, recreational vehicles or building products, for which Crane's companies produce fiberglass-reinforced panels. Profits could be adversely affected as well by unanticipated increases in resin and fiberglass material costs, by unforeseen fluctuations in the Canadian dollar, and by any inability on the part of Crane's companies to maintain their position in product cost and functionality against competing materials. Merchandising Systems Results at Crane's U.S.-based vending machine business could be reduced by delays in launching or supplying new products or an inability to achieve new product sales objectives. Results at Crane's German-based coin validation machine business could be affected by changes in demand stemming from the advent of the euro, the planned new European currency, as well as by unforeseen fluctuations in the value of the euro or other European currencies versus the U.S. dollar. <PAGE> 10 PART I (continued) Item 1. Business (continued) Forward Looking Statements (continued) Fluid Handling Crane's companies could face increased price competition from larger competitors. Further slowing of the U. S. economy could reduce sales and profits, particularly if projects for which Crane's companies are suppliers or bidders are cancelled or delayed, or if the companies' ability to source product from international sources is impeded. At Crane's Canadian distribution operation, reported results in U.S. dollar terms could be eroded by an unanticipated weakening of Canada's currency. Controls A number of factors could affect the Controls segment's results. Lower sales and earnings could result if Crane's companies can not maintain their cost competitiveness, encounter delays in introducing new products, or fail to achieve their new product sales objectives. Results could decline because of an unanticipated decline in demand for Crane products .from the industrial machinery, oil and gas, or heavy equipment industries, or from unforeseen http://www.sec.gov/Archives/edgar/data/25445/00009501.. ./0000950130-01 -001276-0001 .tx 4/26/2001 product obsolescence. <PAGE> Item 2. Properties 11 PART I (continued) TOTAL MANUFACTURING FACILITIES Fluid Handling United States Canada International Aerospace United States International Engineered Materials United States Canada International Crane Controls United States International Merchandising Systems United States Other International NUMBER 15 2 7 6 3 10 3 1 5 2 1 2 AREA 1,191,000 sq. 140,000 sq. 1,144,000 sq. ft ft ft 634,000 sq. ft 40,000 sq. ft 1,235,000 sq. 636,000 sq. 10,000 sq. ft. ft , ft 334,000 sq. ft . 63,000 sq. ft. 463,000 sq. ft. 131,000 sq. ft. Leased Manufacturing Facilities Leases Expiring Through Number Area United States Canada Other International Other Facilities 2009 2001 2007 11 1 5 536,000 sq. 13,000 sq. 133,000 sq. ft ft ft Fluid Handling operates five valve service centers in the United States, of which two are owned, and three distribution centers in the United States. This segment operates thirty-eight distribution and three service centers outside the United States. Crane Controls operates one distribution center outside the United States. Merchandising Systems operates eight distribution centers in the United States and six outside the United States. Engineered Materials operates seven distribution centers in the United States, of which one is owned, and two outside the United States. In the opinion of management, these properties have been well maintained, are in sound operating condition, and contain all necessary equipment and facilities for their intended purposes. http://www.sec.gov/Archives/edgar/data/25445/00009501.../0000950130-01-001276-000 l.tx 4/26/2001 <PAGE> 12 PART I (continued) Item 3. Legal Proceedings Neither the company, nor any subsidiary of the company has become a party to, nor has any of their property become the subject of, any material legal proceedings, other than ordinary routine litigation incidental to their businesses. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of 2000. <PAGE> 13 PART I (continued) EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the registrant are as follows: <TABLE> <CAPTION> <S> Name <C> Position <c> Business Experience During Past Five Years Robert S. Evans* Chairman and Chief Executive Officer Chairman and Chief Executive Officer of the company since 1984 President of the company Eric C. Fast* President and Chief Operating Officer President and Chief Opera Officer, previously Co-he Investment Banking of Sal Barney and a Managing Dir firm Gil A. Dickoff Treasurer Treasurer of the company, previously Assistant Trea of the company Augustus I. duPont Vice President, General Counsel and Secretary Vice President and Genera Counsel and Secretary of the company. Bradley L. Ellis Vice PresidentChief Information Officer Vice President - Chief Information Officer of th company since July 1997, with the Business System group of Arthur Andersen international provider of business consulting servi Elise M. Kopczick Vice PresidentHuman Resources Vice President-Human Resc since January 2001, previ President of the company' Romec subsidiary and Vice http://www.sec.gov/Archives/edgar/data/25445/00009501 .../0000950130-01 -001276-0001 .tx 4/26/2001 Human Resources at the co Hydro-Aire subsidiary Thomas M. Noonan Vice PresidentController and Chief Tax Officer Controller since February Vice President - Taxes si September 1999, previousl of Taxes of the company f 1996 to September 1999, p Director of Taxes Tax Cou Corporation, a manufactur adhesives and coatings Anthony D. Pantaleoni </TABLE> Vice PresidentEnvironment, Health & Safety Vice President - Enviromr Health & Safety of the co <PAGE> 14 PART I (continued) EXECUTIVE OFFICERS OF THE REGISTRANT (continued) <TABLE> <CAPTION> <S> Name <C> Position <C> Business Experience During Past Five Years Michael L. Raithel </TABLE> Vice PresidentFinance and Chief Financial Officer Vice President - Finance and Chief Financial Offic February 2000, previously of the company since 1985 * On January 22, 2001 the company announced that Mr. R. S. Evans planned to retire from his positions as Chief Executive Officer effective at the Annual Meeting, although he will continue to serve the company as Chairman of the Board, and Mr. E. C. Fast, currently President and Chief Operating Officer of the company, will succeed Mr. Evans as Chief Executive Officer. ' PART II Item 5-. Market for the Registrant's Common Stock and Related Stockholder Matters. The information required by Item 5 is hereby incorporated by reference to Pages 35 through 37 of the 2000 Annual Report to Shareholders. Item 6. Selected Financial Data. The information required by Item 5 is hereby incorporated by reference to Pages 35 of the 2000 Annual Report to Shareholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information required by Item 7 is hereby incorporated by reference to Pages 6 through 14 of the 2000 Annual Report to Shareholders. Item 7A. Quantitative and Qualitative Disclosures about Market Risks. The information required by Item 7A is hereby incorporated by reference to Page 34 of the 2000 Annual Report to Shareholders. Item 8. Financial Statements and Supplementary Data. http://www.sec.gov/Archives/edgar/data/25445/00009501.../0000950130-01 -001276-0001 .tx 4/26/2001 The information required by Item 8 is hereby incorporated by reference to Pages 15 through 28 and page 35 of the 2000 Annual Report to Shareholders. Item 9. None Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 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 dated March 7, 2001, which the company has filed with the Commission pursuant to Regulation 14A 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. 15 <PAGE> PART III (continued) Item 11. Executive Compensation The information required by Item 11 is incorporated by reference to the definitive proxy statement dated March 7, 2001, which the company has filed with the Commission pursuant to Regulation 14A. Item 12. Security Ownership of Certain Beneficial Owners and Management The inform ation required by Item 12 is incorporated by reference to the definitive proxy statement dated March 7, 2001, which the company has filed 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 dated March 7, 2001, which the company has filed with the Commission pursuant to Regulation 14A. PART IV Item 14. Exhibits, Financial Statement Schedule, and Reports on Form - 8-K (a)(1) The consolidated balance sheets of Crane Co. and subsidiaries as of December 31, 2000 and 1999 and the related consolidated statements of income, changes in common shareholders' equity and cash flows for the years ended December 31, 2000, 1999 and 1998 and the report thereon of Deloitce & Touche LLP dated January 16, 2001 appearing on Pages 15 through 28 of Crane Co.'s 2000 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 (2) Financial statement 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. (3) Exhibits: Exhibit 10(i) Exhibit 10(j) The EVA Incentive Compensation Plan as amended January 22, 2001. The employment agreement with Eric C. Fast http://www.sec.gov/Archives/edgar/data/25445/00009501.. ./0000950130-01 -001276-0001 .tx 4/26/2001 Exhibit 11 Exhibit 13 Exhibit 21 Exhibit 23 date January 22, 2001. Computation of net income per share. Annual Report to shareholders for the year ended December 31, 2000. Subsidiaries of the Registrant. Independent auditors' consent. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended December 31, 2000. (c) Exhibits to Form 10-K: There is incorporated by reference herein: (3) (a) The company's Certificate of Incorporation, as amended on May 25, 1999 contained in Exhibit 3A to the company's Annual report on Form 10-K for the fiscal year ended December 31, 1999. (b) The company's By-Laws, as amended on January 24, 2000 contained in Exhibit 3B to the company's Annual report on Form 10-K for the fiscal year ended December 31, 1999. (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 6, 1998. <PAGE> 16 PART IV (continued) Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued) (b) There is incorporated by reference herein: 1) Indenture dated as of April 1,1991 between the Registrant and the Bank of New York contained in Exhibit 4.1 to the company's report on Form 8-K - filed with the Commission on September 16, 1998. (10) Material Contracts: (iii)Compensatory Plans There is incorporated by reference herein: (a) The forms of Employment/Severance Agreement between the company and certain executive officers (form I) and (form II) which provide for the continuation of certain employee benefits upon a change of control as contained in Exhibit C of the company's annual report on Form 10-K for the fiscal year ended December 31, 1994. (b) The indemnification agreements entered into with each director and executive officer of the company, the form of which is contained in Exhibit C to the company's definitive proxy statement filed with the Commission in connection with the company's April 27, 1987 Annual Meeting. http://www.sec.gov/Archives/edgar/data/25445/00009501.../0000950130-01-001276-0001.tx 4/26/2001 (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 Crane Co. 1998 Stock Option Plan contained in Exhibit 4.1 to the company's Registration Statement No. 333-50489 on Form S-8 filed with the Commission on April 20, 1998. (e) The Crane Co. 1998 Restricted Stock Award Plan contained in Exhibit 4.1 to the company's Registration Statement No. 333-50487 on Form S-8 filed with the Commission on April 20, 1998. (f) The Crane Co. 1998 Non-Employee Director Restricted Stock Award Plan contained in Exhibit 4.1 to the company's Registration Statement No. 333-50495 on Form S-8 filed with the Commission on April 20, 1998. (g) The Crane Co. 2000 Non-Employee Director Stock Compensation Plan contained in Exhibit 10(a) to the company's quarterly report on Form 10-Q for the quarter ended March 31, 2000. (h) The employment agreement with Eric. C. Fast contained in Exhibit 10(b) to the company's quarterly report on Form 10-Q for the quarter ended March 31, 2000. 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. <PAGE> 17 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. - CRANE CO. (Registrant) By M. L. Raithel M. L. Raithel Vice President-Finance and Chief Financial Officer Date 2/26/01 Pursuant to the requirements of the Securities Exchange Act of 1934, 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 http://www.sec.gov/Archives/edgar/data/25445/00009501 .../0000950130-01 -001276-0001 .tx 4/26/2001 R. S. Evans Chairman and Chief Executive Officer and a Director Date 2/26/01 E. C. Fast E. c. Fast President and Chief Operating Officer and a Director Date 2/26/01 M. L. Raithel M. L. Raithel Vice President-Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date 2/26/01 Date DIRECTORS E. T. Bigelow, Jr. E. T. Bigelow, Jr. 2/26/01 R. S. Forte Date D. R. Gardner D.R. Gardner 2/26/01 J. J. Lee J. J. Lee Date 2/26/01 W. E. Lipner Date D. C. Minton. D. C. Minton Date 2/26/01 C. J. Queenan, Jr. C. J. Queenan, Jr. Date 2/26/01 J. L. L. Tullis Date </TEXT> </DOCUMENT> 18 http://www.sec.gov/Archives/edgar/data/25445/00009501.../0000950130-01 -001276-0001 .tx 4/26/2001 <DOCUMENT> <TYPE>10-Q <SEQUENCE>1 <FILENAME>0001.txt <DESCRIPTION>QUARTERLY <TEXT> FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2CCC Commission File Number 1-1657 CRANE CO. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 13-1951191 (I.R.S. Employer Identification No.) 100 First Stamford Place, Stamford, CT. (Address of principal executive office) 06902 (Zip Code) :203) 363-7300 (Registrant's telephone number, including area code) .Not Applicable. Page 1 of 14 Indicate by check mark whether the registrant *1. nas filed ail reports requi to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1 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 The number of shares outstanding of the issuer's classes common stock, as of http://www.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021 -000 l.tx 4/26/2001 October 31, 2000: Common stork, 31.01 Par Value - cl,3"",~S2 shares <PAGE> Part I - Financial Information Item I. Financial Statements <TA3LE> rane statarres Ccr.so-taa Page 2 of 14 fr ) C*\ <CAPT10N> <s> Net Sales Operating Costs and Expenses Cost of sales Selling, general and administrative Depreciation and amortitat Operating Profit Qr- ~ ` --y Miscellaneous - net ree Months r c S' . f W^ . Mine Months Sectemcer 2000 " ~ r\ k<= ^ncera- Met http://www.sec.gov/Archives/edgar'data'25445'00000254...0000025445-00-000021 -000l.tx 4/26/2001 Net Income Average Basic Sr.&r- _ Ci2.u0d M0" Zr.Sr.5ir0r Income from Continuing Operations Income from Discontinued Operations Net Income Average Dilutee Shares Outstanding Dividends Per Share See Notes tc ^_____ a - -tt </TABLE> $.33 " A"0 i'age j or 14 $1.59 ? a. $1.57 61,540 <PA.GE> <TA8LE> Part I - Einantial Information Item 1. Financial Statements .rate _o. a <CA V\-*-/ - c,0 uicunts) Assets <S> Current Assets ` j.> {n W Ul I I Oi )` II | Ol ' iV> Net .--.ss Other C *ota. 'rcce 'It wOS rent ass: d quz.prr.e a <L 03 2, 2 c2 c* f i> 'Oi I- U http:/\vAVAv.sec.gov/Archives/edgar data 25445 00000254... 0000025445-00-000021-000l.tx 4/26/2001 Other Assets Intangibles Cost in excess cf rage 4 oi 14 244,402 37,5"3 41, 260,141 30,876 44, 4: 308,626 256, 64 S 45,771 43,796 329,321 ====== = = =.= 31,313,5"6 31,180,69" </TABL2> <PAGE> <TABLE> Parc I - Financial Inforrr.atrcr. Item 1. Financial Statements <QP> DT,~QV> .cnsc.taatea c; Ut2> Liabilities and Sharer. <S> Current Liabilities Cuv'v~or'*" S U r' ~ ^S Z Loans cayac-S Tota_ _cr < 14,5 <C> 42 5 y*y 4 Accrued ension Li ^re^err^o o ^ a ^*'a ue http://www.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021-000 l.tx 4/26/2001 Capital surplus Retained earnings AC CUT C~ 06 ^ CCTC T6'" ~ 3 2_ V ^ Cctjt O'" S" C 2/1 .oe 1.c* i..C C v*^csS J v~*' Total Common Share. (2. r- C * y Common Stock Issued Less Common Stock hel Common Stock O' :d 98,289 99, 940 i ag<--> ui it 96,262 650,668 {16,835; 125,5C2' o3 2, 426 5,599; </TAELZ> <PAGE> <TABLE> Part I - Financial Information iCor.t'd. Item 1. Financial Statements Crane Co. ar.o Sucsidiarie; Consolidated Statements of Cash F.cws In Thousands. <CA?TI0h> <S> Operating activities: dins Months Ended Seotember 30, 20 DC 1999 <C> <C-> e?c. --I - -I 3. S -9 . ...c. . . or Proceeds nsccsiti: , , , c. 1, ; http://www.sec.gov/Archives/edgar'data'25445/00000254... 0000025445-00-000021-000l.tx 4/26/2001 rctgc uui it Equity: Dividends para Reacquisitior. of RA ' Q' ~ * ^ r ~ sr.ares-cce.n r.arket C"----- > ' - - ru - - --tZ. occLons 0x02721303 y*''>cv-*vc 1 8, 15 6, :6C, 633] ICh 470^ Net equity Debt Proceeds from issuance of long-term Repayments of long-term. decs Net oecrease in short-term decs deot {12,160) 86,200 : 12 5, 1 3 5 ` '3, 313. Net debt 33,51 A' Total used for Financing activities Cash Used in Discontinued Operations Effect of exchange rate or. cash and cash equivalents ;110,674) ,3_0 / Decrease in cash and cash equivalents Cash and cash equivalents at beginning of period ! 636) 3/ 34 3 C a. S H 3X3 2 3 S X 0 Cl "3 1 V 3 -- 0 X 3 5 3 3 S X 2 Cl 33 3130 32,619 Detail of Case Provided by Working capital: Accounts receivable Inventories Other current assets Accounts payable A.ccruea liabilities U.S. and foreign taxes Used for. or. income iterating Activities $(23,484) 19,034 ;i,381) 5, 3 c j. '10, 626) [2, 930; Total 3'14, 136. Supplemental disclosure of case Interest paid Income taxes paid See Notes to </TABLE> < PAGE> flov; tr.fcrm.atior.: Consolidated Financial -5- 31",4 93 57,951 Statements [2 0, 301 H\413 ;7Efc 5, 84c (62,626 133,00C (139,S7C [68 f "52 (131,378 (13,841 (4 0C (i,182 16,195 $15,013 $ 7,322 20,776 6, 6C1 2, 705 (22,028 (1,136 $14,24C $22,55S 48,12C http://www.sec.gov,/Archives/edgarAdata/25445/00000254.../0000025445-00~000021-000 l.tx 4/26/2001 rage / ui it Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year er.aec ^0v 2* 1999. 2. Net Sales, ore ss errii" a r.a rceranir. a crcfit cv seoc.er.t are as follows <CAPTION> 2^0 ~ K s E^ded Septer.eer 30/ 111 1993 Ended --* '** t 1999 <S> (In Chous&r.as Net Sales: Engineered Materials Merchandising Aerospace Fluid Handling Crane Controls Other Intersegment Elicits , ui <-~5, 169 151,036 252,70S 333,401 91,261 9, 669 ]3, "36,' or-., . n t 3 Gross Profit: Engineered Materials Merchandising Aerospace Fluid nar.u-1r.5 Crane Controls Other Corporate cr a </TABLE> $ 70,431 53,369 123,414 "2,164 2 9, 64 5 1 arr <FAGE> Part 1 <TA3LE> <CA?T_Ch> <S> ^ _ , Engineered Merchanais Aeroscace r iU a 3 V ^^^ " r ^ "- > t J ^ http://vwwv.sec.gov/Archives/edgar/data/25445/00000254...'0000025445-00-000021-000 l.tx 4/26/2001 rage 8 or 14 O - 3 i. :/?ABLE> 5140,569 $142,715 l Ir.ver.-c^ies Enventories are stated at the lower cf cost o: iast-ir., first-out (LIEO; method cf inventory would be higher by 322.3 nillicn at September 3ec*'e',`cav~ 3C " 9 9 9, a^ci 323. " ' 3 i. c r 3** 2sev market, principally on the -aluation. Replacement cost 31, 20C0, $2"?.5 million at ar 31, 1999. 4 . .ntanqtD-1: Intangrc^e assets are amortize:: or. a stra estimated useful lives, white range from five amortization was $24.3 million at September September 30, 1999 and $22.0 million at Decern: - -_______ __ ever meir "wenty years. Accumulated 20C0, $21.1 million at ., 1999 5. v2" 3r. 3xc6S cf Assets -c Cos: r-' v' : 3,, ^ $60.1 million at lecencer 31, 1999. Ir. Corporation was acquired. The cost in excess this acquisition will be amortized over 13 y-i method. - L______ct . Wg S s 3, = r:n cf 2CC0, Streamware : net assets resulting from :s using the straight-line 6. Miscellaneous Met 2 <"v A arm respeo: investments cf 7. Tota: ended <TABLE> <CAPTIOM> ;omDre.nensive Septembei 3HO - J J J Was 3S r.ine-mcnth periods :e Months En.de September 30, . ^ )GC 1999 <S> Met In: trc )20 3. d*- Comerer 5 ^ -- r c ^. C r t Jo, t JA 11,191, :35,-04 ^4, </TA3TE> < Metes 8. Soecial Charces Oa ci :d. -j ^ we re http://www.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021 -000l.tx 4/26/2001 rage ?ui h consolidating facilities, reducing staff, rationalizing product lines and for other unusual items. In total, five manufacturing facilities have beer, closed or ceased production. A. summary of the liability balances included in accrued liabilities relating to severance and facility closure costs at September 30, 2000 is as follows: <TABLE> <CAPTION> (In thousands, <s> Severance costs Facility closure costs Liability 3alar.ee at lecerr.ber 21, 19?? <c> <C> 31,327 1, 695 Total $3,111 $3,022 </TABLE> Part I - Financial Information (Cont'd) Item 2. Management's Discussion ar.d Analysis of Financial Condition and Results of Ccerations Th: Months Ended Seotemb<E This 10Q may contain forward-locking statements as defined by the Private Securities Litigation Reform Act tf 1395. Ir.ese state: er.es creser.t management's expectations, beliefs, clans ant ace .'times r-r performance, and ass tm.ct _cr.s :r J cogr-rts .::t ~~rt discussions contained tr. tn;.s 11-1, except t: one zzz.z z c.sz. z n0y zzz:zs. _ t*. historical facts, are forward-locking ana acccro r.g_y involve estimates, assumptions, judgments ar.d uncertainties. There ar a number of factors that could cause actual results or outcomes to differ mater ally from those addressed in the forward-looking statements. Such factors are detailed in the Company's Annual Report on Form 1D-K for the fiscal year ended December 31, 19SS filed with the Securities ar.d 3xcr.ar.ae Commission. Results from Third Quarter of 2( enxarea Income from continuing ccer: $.35 per diluted share outst: diluted share outstanding f: of $18.4 million pre-tax, : outstanding in the third cuar: a _ .il" _a..'. 'C/Q ~r cli.-- ;t jo Cj <?AGE> Part I - Financial Information (Conn'd, Item 2. Management's Discussion ar.d Analysis of Financial Condition * Operatir.o http://www.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021-000 l.tx 4/26/2001 rage iuoi i-t million compared with 322.3 million r.arges of S18.4 million ir>. the third cuart er cf 1232 t r. sales c: -- 2_**'g oroi i* margins -were 11.4-. :cr she tr.iro qua: quarter 1255 (after special charges,. 2.4 in the zr.ir: -- V-, /-> - K -I V'f'N "V * , 1 2000 increased ever she orders received erring me mire quarcer 1995 cy $5.2 million, or 21, ro $354. t million. dec sales from dorr.escic businesses were ''4 1 of total net sales in 220C compared with ~3s in the same three-month period of 1599. Operating profit from domestic businesses was 35" and 911(after special charges) of total operating profit for 21C 1 and 1955, respectively. Operating profit margins for domestic businesses .-.ere 11.4-. in 1))) compared with 10. IV in 1999 (after special cr.arges . Operating profit .margins ::r r.tr.-'JS businesses were 5.9s in 20C-0 versus 2."-. ir. 1999 .after scecial charoes . Hi CO\Q Engineered Materials sales decreased by $2.4 million, :r 9:, to 331.4 .million for the third quarter of 2351 compared with toe third q.arrer of 1992. Operatic, profit decreased $5.3 million, or 34", tc 39.2 :r.i!l.:n in 2333 versus $14. million in 1999 'after special charges cf $." million _n one third quarcer o 1999). Operating profit margins for the segment declir.ec tc 12.0V compared with I6.5V in 1999 'after scecial charges'. The decrease m results was driven bv Kemiite, which experienced a sales decline cf 3 2.2 oi__icr., or 16-., tc $51.3 million and an. operating profit decline cf $4.6 million, or 36", to $5.1 million for the ouarter comoared -with tr.e third cuarter of 1259. yen. lice continues to ce adversely affected by tr.e downturn ir. tr.e trar.se: rt st.tr. ar.d recreational vehicle markets and ir.creasec raw materia. costs. Iroer bac-ilcg decreased by $5.5 million to 315.6 mi_lior. from Secoem.cer 'f - - Merchandising Systems sales increased by $3.2 million, or to 354.0 million for the third quarter of 2CC3 compared wior. the third quarter of 1999. Operating profit decreased $3.6 million, cr 361, to $6.4 mii_.tr. ir. 20CC versus S10.C million in 1999. Operating profit margins for the segment were 11.9V in 25CC compared with 20.3V in 1225. V-acior.ai Veneers' sales increased 35. ^ million, or 15V, tc $44.5 million, with the 1229 Ster.torcield acq..iscolor, tor.tributir.c 3". 2 million o: -I million, or 43;, tc 34.' . j 5C 1. C 123 _ impacted by costs associc */<, a s ** euro and British oound. hr ales decreasec cy 31.5 million, or 16:, to $9.5 million and operating profit decreased $.5 million, cr 21V, to $1.9 million due to unfavorable U.S. dollar-to-euro exchange rates and delayed demand for euro-based coin validators. Order backlog increased by $12.5 million to $30.9 million from Sectember 33, 1999. Aerospace sales decreased by 3: quarter cf 223 3 c crop a re c * S 2--' ^ * v* - ~ >s ::i: * Operating profit margins ctr ~ (after special charges. . ?e: commercial aerospace mar.tec experiencing production belay: of key electronic oo.mpcner.cs. 2 served cy this segment is ev: backlog from September 2 2, i-- stacr_ccat: .ire quarter cf 1229'. ;cat witr. 12.1* in 1999 .er sales volume in the car.ret. Ir.terccir.t is : design and shcrtages : the aerospace m.arkets .or. increase in truer <?AGE> Part I Item 2. Fi.nsnci.3l. Znrorr.3ci.c Mans cement1s > ^ ^. d I-yys i s http://www.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021-000l.tx 4/26/2001 I'dgC 11 Ui 1H- Fluid Handling sales 4 w v . V( million. oi , 5:*-(. 3 rr.i.iior. tne third quarter of 2000 compared with the thirc quarter of 1599. Operating profit increased 310.2 million to 36.3 million in 2111 versus a 33.9 million loss in 1999 'after special charges cf 35.5 million in the tr.ird quarter of 1999). Operating profit margins improvea to 5.5 - compared with (3.21) in 1999 (after special charges;. On a comparable basis, Commercial Valves' operating profit improved by 31.5 million to SI.I million on a $6.3 million, or a 20*, sales reduction to $25.5 million. Engineered Valves' operating profit, on a comparable oasis, increase: ncrease m sales to 32" . 3 :: :s of high-margin pressure-seal v= segment's backlog decreased cv 32. ' 1999. Controls sales decrease:: 3.5 million, or L , to 325.-; million for the third quarter of 2C21 compared with the tr.ird quarter cf 1999. Operating loss increased $.3 million to a 3.9 million loss in 2001 versus $.6 million loss in 1999 (after special charges of $1.6 million in the third quarter of 1999). Operating profit margi ns were ,'3.2*; versus (2.1\ in 1999 (after special charges,. The bulk cf t operating loss increase resulted from continuing operational inefficiencies at Fergus: >w: of manufacturing at its St. Louis fa-----------. .. ;ac,<_oa million to $2".6 million from Sectember 31, 1999. Mine Months Ended September 30, 2000 C rvN 5 Y' C September 30,1999 to Mine Months Zr.aed For the nine months ended September 30, 2ICC, ime rrem. continuing operations was $96.9 million, or 31.5? per diluted share tstanoir.g, compared with $36.9 million, .ci_ e ^--dcc:.. eg for the nine months ended Sectember rges cf 315.4 Lllicr. pre-tax, S11.9 million alter-:. dU I. share outsta Lr.g in the nine months ended September -if. : the nine-month period ended September 31, ^ 1? were a t me sale of an investment ana non-operating expenses a u.l-tec share as compare.! to a non-operating gain of 3.13 :r.e nine months ended September 30,1999. Operating profi .r:e men: tdec September 3C, 200C, was $140.6 million on sales c 35 billion compared with $142.7 million (after special charges', on sales or Si..' 9C bi'I;on 'r. 1999. Ooerating profit margins .ber 30, 2102 , were 12.4v comDared with 12.9* for 3C, 1999 -af ter special charges). Orders co billion d period .a y sales in 2 profit fro operating domestic b charges,. versus 3. 5 Oceratina "" - Hi } . :cn- . or hr crof nargins :or 999 [after soeciai 6.1s in 2000 <? c-art _ Item 2. Mar.acement1 s Ciscussion ar. n-.a- psciss cf Financial Condition i Results of Oceraricr.s w s [ C, * J . http://www.sec.gov/Archives/edgar/data/25445/00000254..70000025445-00-000021 -000l.tx 4/26/2001 i age i-- uj. i-t versus the same nine-mcr.tb. period in 1999. Gross profit decreased 5% to $66.6 million for the nine-month period compared with 1999'after soecial charges). Operati ng profit decreased 11 , ar S A . ~ .tilli or., tc $41.2 million {after soecial charges of $.7 m,11 lion in t r.e tr.irs t-aroer c f 1393 . Iterating profit margins for cne segment decreases t-V - . - :r sales ocncareo tc 16.3: in 1999{after special charges, as ; v- <s. c ' ' " ~ " ovc" jr i* rv4 - .te ana oigr.er materia^ costs at Plumbing, Kemlite and R.esistcflex, :fset Improvement in operating margins at Nortec. Merchandising Systems sales increased 11?, or $16.' for the nine-month period compared witr the same ; decreased 3t to $56.4 mill! /tl b , $5.8 million, to $25.5 mu. or.. tee rati compared with 20.4? in 15? tn, to $167.4 million in 1959. .-ross 02 :it aecrease: 19?, or " 3j i r. s w *t 2 - - " I Cl - Europe and a favorable legal settl: results in 200C include costs relc Streamware Corporation in late Merer million, with the 1959 Ster.torfield acquisition the sales increase. XEI sales decreased 15*, unfavorable i'.S. dollar to Euro exchange rate, ar.r 6%, or $.4 million, due to me lower sales volume. __;r. m. .m. _r. aoctticr., "er.dors' acquisition of trs' sales increased $21.5 or touting $2C.7 million of $5.1 million, due to an eratir.g orofit decreased Aerospace sales cetr with 1999. Dross p zr.e s air.e nine-month period of 1999(after special charges). iterating profit decreased 13%, or $9.5 million, to $61.6 million -after spec!- i cnarges of $6.8 million in the third quarter of 1999). Operating profit mat gir.s were 24.1% compared to 25.2\ in 19S9 (after special charges;. Sales were 1 wer due to a slowdown in the commercial transport aerospace market cha^ `-/-*-r----a---.. _'___ ' : second naif of 1999 and lower shipments of standard arc custom, pro :t'..r.t. Operating profit at ELDEC and Hydro-Aire was oecacvelv t ^ crrrr.erciaL ard 3 f. te- kec scares >. vs ,c , ^ compared with cue Icwer reverses. Fluid Handling sales declined 9?, or $54.1 .million, t: 334: 3 million fCr ~ p nine-month period compared wic.n the same period in 19 99. Dross profit inr.c.crreeaasseedd 16% to $84.0 million versus 1999(after special charges) Operating profit increased $17.6 million, to $23.8 million in 2000 -after specia1l charges of $8.9 million in the third quarter tf 1399 . Operating pro: s for the segment improved to 6.5 tf sales compared t; 1.t in 1959 pa s a result of the special marges ar.o ue_at^: aut-.r.s cater. Ir. 1m?. mrn.c arable CaSlS, Commercial Valves operating prefer improved mg I.-. 4 :'i...itr. cr. a 15-, or 314.1 million, sales reduction as ms custr.ess ret..rrec t: profitability and operating margins inermeo to =.5 . T:.e sa_es decline resulted. principally from increased oisciplir.e ir. tricing and erder acceptance. rumps sales increased by $.9 million, resulting ir. increases oceratm.g profit ; $.1 million, 'while Crane Supply's operating prefer increased cy 11m er $.6 r_liter, cr. a comparable basis, on a 5 decrease ir. sales, due tc cost efe :_~ncees. Valve Services' shipments decreases cy $11.5 -illicr. ar.s operaticy profit decreased by 3.6 shutdowns and : _ mi.ir.ron or. a >5.3 mill, result of in: sed she: ~ ... <PAGE> Part 1 Item 2. tan: http://w\vdv.sec.gov/Archives/edgar.Mata/25445/00000254....'0000025445-00-000021 -0001 .tx 4/26/2001 X dgC i J Ui i"+ m de ecterr.be *3 n , -j higher-margin pressure seal valve closure of a steel valve facility quarter-turn valve shipments. ower generation market and the . K, partially offset by lower Controls sales increased 3V, or $2.3 million, to $93.6 million for the nine months ended September 30, 2000 versus the same period in 1999. Gross profit decreased n % to $27.7 million in 2000 compared with 1393 after special charges). Operating profit decreased $2.4 million, to a less of $1.2 million {after special charges . Operating profit'less margins declined to '1.30 versus 1.3* in 1999 (after special charges . Cyr.aloo ar.c .-.coni:-: a r.tieved higher operating profit, v.r.ioh was more than offset cy ceciir.es at Ferguson resulting from production problems caused cy cr.e integration c:: -t.~ freer.wocd, Mississippi production into its St. leuis facility. Liquidity and Capital Resources For the nine-month period ended September 30, 200C, the Oompar.y generated $93.7 million of cash from operating activities, versus $154.1 million in 1999. Net debt totaled 30.3: of capital at September 30, 20 5 5 compared with 32.5-- at September 30,1339. The current ratio at Septemcer 3C, 2551 was 2.3 with working capital totaling S2"'3.3 million compared wior. 2." ar.c $41'.5 at September 30, 1999. The Company had unused credit lines of $455.3 million available at September 30, 2000. During the first nine months of 2555, the Company paid $60.6 million for t5he repurchase of 2.9 million s5nares of Orar.e common stock at an average price of $20.93 per share ar.d $13.3 million fer the payment of dividends. Debt repayment totaled $38.5 million. Average diluted shares outstanding decreased by 6.7 million from the third quarter of 1399 due to the Company's share repurchases. The Company's cash flows and earn 1 jtmatrons f r sm changes in interest rates and foreign cu . 7r.e Company manages its exposures to these market risks escaelisned policies and procedures ana, ween ceem.ec accr me of interest rate swap agreements and forward exchange 33.1 million in long-term debt outstanding at September 30, 20CC, 73.6: was a t fixed rates of interest ranging from 6.75% to 6.50%. At September 30, 2000 , no interest rate swap agreements were outstanding and the amounts outstand ing for forward exchange contracts were .net material. T.ne Company does not er. ter into derivatives or other financial instruments for t radinO e CU 2* a t i ve ' curccses. <PAGE> . Item 2. Mar.acement' a New A v* -- wnic5n establishes and hedging activ as either assets neas No. a.-<- ccou. .er.r in a ted use of Gel - /CL - ar.dards for derivative instruments r.tity to recognize all derivatives terr.er.t of financial position ana ne 2111, me "7.33 issued 3taterr.er.t and Certain Hedarno di CL http://wwvv.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021-000 l.tx 4/26/2001 jl age i-tui it exposure to exchange rate risk or. foreign source income ar.d purchases. FAS 133 as amended under FAS 131 is effective for fiscal years beginning after December 15, 2311. Tr.e Company cues ret expect tuIs statement to have a significant impact on the resc.ts of ocerat_cns :r rir.ar.ctal ctstticr. and related disclosure requirements. In December 1993, the Securities and Exchange Commission staff released Staff Accounting Bulletin No.101, "Revenue Recognition in Financial Statements," (SAB 101) which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB 1013 issued ct June 2000 delayed the effective date cf SA.B 111 tc tr.e fourth quarter of 211). Crane Co. is required to accpt SA.B 111 in tr.e fourth quarter cf 2111 .retroactive tc January 1, 2000). Management aces rot expect SA.B 111 tc have a material effect on Crane Co. financial position or results cf operations and related disclosure requirements. Part II - Cither Information Item 1. Leqal Proceedinas qr.C1 tr.e year er.aea _ecem.ce: jeve_c.Dm.er.ts U ^ vl Lr. any cf the legal iecort on Form 10-K for Item 6. Exhibits arid Pacoris or Exhibit 27. quarter. Article 5 of R <PAGE> nar.ciai lata Schedule for the first -_o- Pursuant to the requirements registrant has duly caused : undersigned, thereunto duly authorized. Date Ncverr.cer ", 2111 3ate Moverr.b / 5 Act of 1934, the oe ?n its behalf by the CRANE CO. 'EGISTPAMT -.mer 'A v cr.an a. </?EXT> </DOC'JMENT> http://wwiv.sec.gov/Archives/edgar/data/25445/00000254.../0000025445-00-000021-000 l.tx 4/26/2001