Document M40bJmwZbpb69dwOVjK3gXgDV

I i ii i i i i \ ii" i > i CRTX0561 Annual Meeting The Crane Co. annual meet ing will be held at 10 A.M., Monday, April 30,1984, in Rooms B and C, 2nd Floor, Morgan Guaranty Trust Com pany of New York, 522 Fifth Avenue, New York, New York. Form 10-K Copies of Form 10-K for 1983, which is to be filed with the Securities and Exchange Commission, are available without charge to each Crane shareholder upon written request to the Secretary, 300 Park Avenue, New York, New York 10022. Executive Offices Crane Co. 300 Park Avenue New York. New York 10022 Telephone: (212) 980-3600 Contents Financial Highlights.......... 1 Letter to Shareholders .... 2 Operating Review............ 4 Financial Statements........ 10 Financial Review................ 16 Management's Discussion. 20 Directors and Officers.... 24 CRTX 0562 Financial Highlights Crane Co. and Subsidiaries Net Sales.................................................... Net Income (Loss) Continuing Operations....................... Discontinued Operations..................... 1983 $771,679,000 $ 26,377,000 (135,437,000) 1982" $763,563,000 $ 19,290,000 (22,633.000) 1981* I 1 S887.574.000 S 16.020.000 37.791 000 Total........................................................ $(109,060,000) $ (3,343.000) S 53 311.000 Per Common Share" Continuing Operations....................... Discontinued Operations..................... Total ........................................................ $ 2.59 (13.29) $(10.70) $ 1.89 (2.22) $ (.33)' SI 51 3 56 S5 07' Common Shareholders' Equity.................. $ 253,217,000 $380,995,000 S415.747.000 Per Common Share................................. $24.80 $37 43' S39 74' Cash Dividends Declared Per Common Share................................. Common Shares Outstanding.................. $ 1.60 10,212,159 S 1,57' 9,978.052 ~ * 5 i 53' ' 0.C56 539 | "Restated to reflect segment held lor disposal. "Assuming converson of subordinated debentures, net income (loss) per common share would amount to 3(10 70) 3( 33) m 1952 S- 3! - 'Sit 'Per share amounts adjusted for 2% stock dividends. i j 1984 marked Thomas Mellon Evans' 25th anniversary as chairman and chief executive officer of Crane Co. It also marked his retirement from the company's affairs when he resigned as chairman and a director on February 27th. Thomas Mellon Evans brought to Crane a new management philos ophy, one which basically altered the direction of the company. Instead of distribution, which represented the major portion of its busi ness in 1959, the company was redirected to participation in the industrial field, an area that held far greater growth and profit poten tial. In many ways, this paralleled Richard Teller Crane's decision, a few years after founding the company, to tie its future to the deve:eoment of steam power. Twenty five years of asset-based investment attest to the wisdom of this philosophy. Thus it is appropriate that, on this occasion, tribute should be paid to Thomas Mellon Evans for his leadership and many contributions to Crane Co. and its shareholders. CRTX 0563 To Our Shareholders: Crane Co. results continued to reflect the recession throughout much of 1983. Following historical patterns, capital goods markets served by the company were slow to recover, lagging behind the rest of the economy. Steelmaking operations were especially depressed and, as a result, the company decided to deconsolidate and hold this seg ment for disposal effective December 31,1983. All financial data and discussion excludes CF&I Steel Corporation. Net sales of continuing operations were $771,679,000, up slightly from $763,563,000 in 1982. Net income was $26,377,000, or $2.59 per share, compared with $19,290,000, or $1.89 per share, the prior year. Depreciation expense amounted to $25,488,000 in 1983, compared with $31,251,000 reported the year before. Net interest expense was approximately $13,504,000 below 1982 as a result of higher short term investments and a reduction of $18,312,000 in long-term debt. ' Capital expenditures were $12,843,000, compared with $18,708,000 in 1982. Sales by Crane Domestic were somewhat below the prior year. due largely to the slow recovery in capital goods markets. Earnings improved, however, as the aerospace division posted strong resuits. ! Medusa Corporation's results were affected by continued depressed construction activity. Though this segment did not report a profit, operating losses were considerably less than in 1982. Marginal asphalt and aggregates facilities were disposed of during the year. , The upturn in residential construction plus increased replacement and remodeling business resulted in substantially improved perform ance by Huttig Sash & Door Company. Sales reached a record high in 1983. - ; Crane Canada Inc. showed a modest improvement as residential con struction in that country rose sharply. Industrial product sales lagged, however, as capital spending remained depressed. International Operations continued at a low level with intense price competition as depressed demand and unsettled economic cona'itions affected the world markets Crane serves. I | i \ CF&I Steel Corporation, like other major domestic steel producers continued to operate at a loss. Therefore, in December. 1983 the company decided to restructure CF&l's stee'making facilities and *e b it as a business segment held for disposal. The investment in CF&i >s now carried at its estimated net realizable value. j ; , I CRTX 0564 I This restructuring of steel operations involved permanent shutdown of coke ovens, blast furnaces and basic oxygen furnaces, thus concen trating raw steel production in electric arc furnaces and utilizing con tinuous casters and finishing mills to manufacture rails, oil country tubular goods and wire products for the'agricultural and construction markets. The estimated $80,106,000 net loss on disposal included gains on the sale of certain coal properties and water rights. CF&I also sold land and water rights not needed for steelmaking oper ations to a subsidiary of the company to retire a $50,000,000 secured note Crane held. These assets will be marketed and net proceeds in excess of the note's value will be paid to CF&I. Cash dividends of $1.60 per share were declared in 1983 as well as a two percent stock dividend. The fourth quarter dividend was paid in January, 1984 and in February, the company paid a two percent stock dividend for the sixteenth time. At its January, 1984 meeting, the board elected E. Thayer Bigelow, vice president-finance of Time Inc., a director to fill the vacancy created when William H. Donaldson resigned earlier in the month. At the February meeting, after 25 years of dedicated service, Thomas M. Evans resigned as chairman and a director. Robert S. Evans, execu tive vice president, was elected chairman and chief executive officer in his place. On behalf of the board of directors, we wish to thank the company's shareholders, employees, customers and suppliers for their continued support. Respectfully submitted, Robert J. Slater President Robert S. Evans Chairman February 27,1984 I i CRTX 0565 : Operating Review Crane Domestic Crane Domestic manu factures and distributes a wide variety ofindustrial products. Valves and Fittings Valve operations continued to empha size product development, particu larly in the quarter-turn lines with the introduction of new ball and butterfly valves. A new CAD/CAM system, installed in the central engineering facility, will help with design and development of new products. As part of the ongoing efforts to become more cost effective, valve facilities were rationalized, expenses reduced and new production tech- nologies introduced. Increased ship ments of special fittings improved the results for that portion of the Division. Overall these operations did not per form profitably, however. Pumps : Deming experienced a disappointing ; year. Pump sales were down as the j result of depressed industrial activ ity and minimal capital spending. , Continued cost cutting has reduced j expenses, and operations were j streamlined to improve efficiency. The j water systems manufacturing facility in ' Florida was sold because of the lack of profit potential for this product line. Chempump sales and earnings were about the same as 1982 despite overcapacity throughout the chemical process industries, the Division's major market, and increasing competition. Engineer adjusts intensity ofheat in a unit designed to test thefire-safefeature ofCrane * ball valves. Whirlpool tubs were among the Cranefixtures chosen for luxury condominiums at Bramiermill, a planned community in Virginia. CRTX0566 i Business with the government marine sector remained strong and is ex pected to be increasingly important over the next several years. Fluid Treatment Cochrane sales were substantially lower, due to the continued slump in demand for engineered water treat ment systems. However, increased activity in pre-engineered systems and replacement parts enabled the Division to operate profitably though substantially below last year, Installa tion of a CAD system has improved Cochrane's ability to respond more rapidly to market needs. Building Products Plumbing product sales rose as con struction activity of all types strength ened in 1983 after being held down for two years by high interest rates, but the Division did not operate profitably. The residential line with new whirlpool tubs was expanded, and a luxury fam ily suite of china fixtures and other products was introduced along with several new decorator colors. Wholesale Operations Though Crane Supply's sales were somewhat below 1982, the Division operated profitably with results that were substantially better than 1982. Plumbing sales rose with housing starts, but industrial and commercial market segments were weak. This affected the movement of valves, fit tings, pumps and related products. Hydro-Aire This Division designs and manufac tures aircraft brake control systems, fuel pumps and other accessories used throughout the aerospace industry. Operations improved significantly ,n 1983. with record sales and earnings being posted Lower commercial and business aircraft equipment business was more than offset by strong rrv-tary equipment sales. 1983 saw the first deliveries of brak ing control equipment for the new commuter aircraft group, including ;he Beech 1900, de Havillana DHC-8. Embraer EMB-120. Saab-Faircnnd 340 and Aerospatiale/Aeritalia ATR-42. Also, the first year's commercial serv ice of Hydro-Aire's Mark IV a:i-c:gnal braking control was successfully achieved on Boeing's 767 aircra't \e-at Cochrane Computer-Aided Design and Draftingfacility has increased internal operating efficiency and speeded response to customer requirements. Hydro-Aire provides braking controls fur the McDonnell Douglas F'A-IS Hornet multimission fighter aircraft and the Rock veil International B-IB long-range mulct-rule strategic bomber. ii CRTX 0567 Medusa Corporation i Vledusa producesportland and masonry cements, aggre gates and asphalt, andpro vides roadpaving and highway safety construction services. Itsprincipal market areas are the Great Lakes states, western Pennsylva nia, Georgia and northern Florida. While 1983 cement shipments were slightly ahead of the prior year, demand in Medusa's market areas paralleled the rest of the industry, which lagged behind the overall rise in the economy. Aggregate, paving and highway safety operations also experienced a slow recovery in their markets, with moderate improvements in the sales of continuing operations. Several marginal aggregate facil ities were sold at a profit as the stringent cost reduction programs instituted earlier were carried on throughout 1983. 6 Medusa produces industrial and agricultural minerals atjin underground limestone mine in eastern Pennsylvania. ( I i ii Huttig Sash & Door Company Kuttig is a wholesale dis tributor ofbuilding materi als, with special emphasis on windows, doors and related millworkproducts. It has branches in the southeastern, southwestern and midwestern states. As the country's largest wholesaler of millwork, Huttig had a record year in 1983. The resurgence of new residen tial construction, along with increased remodeling and replacement activi ties, resulted in record high sales for the year. The Huttig Garden Door, intro duced at the end of 1982, is finding growing acceptance in the market place. In addition to new construction, this unit is being used to replace slid ing doors because of its greater energy efficiency. Early in 1984, a new branch was opened in Dothan, Alabama to serve the southern parts of that state and Georgia as well as the panhandle area of Florida. i Huttig's arc Garden Door units, with energy-saving insulatingglass, are being used in replacement markets as 'veil as neve home constructinn. Crane Canada Inc. Crane Canada manufac tures and distributesplumbing products and valvesfor construction and basic indus trial applications. Crane Supply, a network ofwhole sale branches, is the com pany's largest division. Overall, Canadian operations showed a modest improvement in 1983. This was due almost entirely to higher plumbing sales and earnings as new home construction rose substantially, aided by lower mortgage rates and government grants to buyers. Results for Crane Supply and valve and industrial product sales were adversely affected by the reduced level of capital spending throughout industry and the municipal sector. Crane Canada continued to attack expenses and costs in order to reduce breakeven points and compensate for lower volume. New product develop ment for the plumbing and valve areas led to the introduction of items to com plement existing lines. r Crane bronze, iron and steel valves are installed throughout Montreal's new sewage treatment complex handling sewagefor the entire island. r"-: ortx nr,70 -I \ International Operations Operations in the United Kingdom, Australia and Mexico supply valves, fit tings andpumps to interna tional chemical, petroleum, power and other industrial markets. The continuing depressed state of the British economy caused results in the United Kingdom to fall below 1982. The valve service and repair business continued to expand. Initiated two years ago, it has yet to reach its full potential. Malleable fittings production showed improved operating efficiency as the new automated foundry went on line during the year. Sales and earnings were down somewhat from 1982 for Crane Austra lia Pty. Limited during the year as that country's economy slid into a reces sion. This will affect 1984 results as well, with recovery of capital spending by business not expected until late in the year or early in 1985. Crane-Deming de Mexico S.A. con tinued to feel the effects of devaluation and unsettled business conditions. Crane steel valves at thejob siteprior to installation at a large automatedalumina refinery in Western .4 ustralia. i l J 1I 1j j9 CRTX 0571 Consolidated Statements of Income Crane Co. and Suos-e<anes For Years Ended December 31 Continuing Operations: Net Sales................................................................................. Operating Costs and Expenses: Cost of sales......................................................................... Selling, general and administrative. ................................. Depreciation......................................................................... Operating Profit..................................................................... Other income (Deductions): Interest expense--net of interest income of $13,711,610, $5,366,325 and $10,281,642 in 1983,1982 and 1981.... Dividend income on investments......................................... Miscellaneous--net(seepage17)..................................... Income Before Taxes--Continuing Operations................ Provision for Income Taxes (see page 17)........................... Income--Continuing Operations..................................... Discontinued Operations--CF&I Steel Corporation: (see page 16) Income (Loss) from operations, net of taxes........................... Estimated loss on disposal, net of taxes................................. Income (Loss)--Discontinued Operations......................... 1983 1982' 1981* j $771,679,465 $763,563,193 $887,574,027 627,139,146 93,457,386 25,487,756 746,084,288 25,595,177 624.238,061 99.003,269 31,250,613 754,491.943 9,071.250 711.038.354 j 105 600.198 | 33.916.134 j 850.555.236 j 37 018.791 (7,879,569) 720,000 27,929,298 20,769,729 46,364,906 19,987,946 26,376,960 (55.331.000) (80.106.000) (135,437,000) (21,383,486) 6,463,480 32.762.922 17.842.916 26.914,166 7,624,471 19,289,695 (22,632.265) (22,632,265) (20 154.530) 6.113 135 (2.101 436) (16 42,331)! 20.375.9-0 i i 4.S56.143 16.019.752 | j 37.790 903 37.790.903 Net Income (Loss).................................................................. Net income (loss) per common share: Average shares outstanding-- Continuing Operations................................................. Discontinued Operations............................................. Assuming conversion of debentures-- Continuing Operations............................................. Discontinued Operations............................................. $(109,060,040) $ (3,342.570) S 53.810.665 $ 2.59 (13.29) $(10.70) $ 1.89 (2 22) S( 33) i Si 51 ! 3 56! ^ ;*)? ' $ 2.53 (13.23) S(10.70) S 1 85 (2.18) S( .33) ;* 3 44 $4 91 ; "Restated to reflect segment held for disposal. See Financial Review I i j i CRTX 0572 : Consolidated Statements of Earned Surplus C'zre Co a':/ Sucsio ar es For Years Ended December 31 Balance at Beginning of Year.................................. ............. Net Income (Loss)................................................................. 1983 $268,583,058 (109,060,040) 159,523,018 1982 $301,243,194 (3,342,570) 297,900,624 l 1981 $284,292,588 53,810.665 338,103.253 Dividends Declared: Preferred shares--$3.75 per share. ............................. Common shares: Cash--$1.60 per share (Si.57 in 1982 and $1.63 in 1981) .. Stock--2%, market value of 199.554 shares (199,193 in 1982 and 202,630 in 1981)........................... 6,191 16,316,111 4,988,850 6.191 15,955,745 6.151,080 79.960 17.300.463 8.344.303 Excess of Cost Over Par Value of Reacquired Shares--Net: Preferred, none (1,182 in 1982 and 20,443 in 1981) and 3,223 common (297,446 in 1982 and 367,280 in 1981) reacquired, less 5,498 common issued under stock options (609 in 1982 and 37,108 in 1981)..................... . Balance at End of Year........................................................... (43,750) 21,267,402 $138,255,616 7,204.550 29,317.566 $268,583,058 - -- 11.135.333 36.860 059 S301.243.194 Consolidated Statements of Capital Surplus Crane Co. and Subsidiaries For Years Ended December 31 Balance at Beginning of Year............................................. Excess of debentures coriverted over par value of 32.278 common shares issued (19.157 in 1982 and 46.101 in 1981) Excess of market value over par value of common shares issued as a 2% stock dividend..................... Balance at End of Year..................................... ............ 1983 S 60,742,128 252,210 3,741,638 $ 64,735,976 1982 S 55.688.760 147,244 4.906.124 $ 60,742.128 1981 S 48 257 058 j 353 836 ^ 7 077.565 j S 55 688.760 j See Financial Review CRTX 0573 Consolidated Balance Sheets Crane Co. arc Subsidiaries At December 31 Assets Current Assets: Cash......................................................................................................... Short-term investments, at lower of cost or market......................... Accounts receivable, less allowance of $1,962,043 ($1,922,849 in 1982) . Refundable income taxes (see page 17).................................................. Inventories, at lower of cost, principally last-in first-out, or market; LIFO reserves amounted to $56,726,401 ($61,752,168 in 1982); Finished goods................................................................................. Work in process............................................................................. Raw materials and supplies................................................................. Prepaid expenses...................................................................................... Total Current Assets....................... ........................................... Investments Held for Disposal: (see page 16) Equity in CF&I Steel Corporation........................................................ Less; Reserve for possible loss on sale...................................................... Land and water rights................................................................................. Investments and Other Assets: Investments (market $50,400,000 in 1982) (see page 16).............. .. Unamortized debt discount....................................................................... Construction fund....................................................................................... Other assets................................................................................................ Property, Plant and Equipment at Cost: Land............................................................................................................. Buildings and improvements..................................................................... Machinery and equipment......................................................................... Less accumulated depreciation............................................................ .... 'Restated to reflect segment held for disposal. See Financial Review 1983 S 12,224,517 94,041,112 89,174,642 15,811,000 66,670,888 16,472,195 11,909,492 95,052,575 1,786,283 308,090,129 105,880,315 43,650,800 62,229,515 50,000,000 112,229,515 2,716,887 3,958,471 2,729,674 9,405,032 10,751,139 90,605,369 314,731,644 416,088,152 269,896,422 146,191,730 S575,916,406 $ 9,151.714 63.811.330 ! 86.565,125 j 21.700.000 i 70.885,571 15.275,384 10,'.03,772 96 264,727 2.051,574 279.544,470 .... 1 247.726 S37 247.726.S57 j --i 247,726,887 26.050 030 3,726.739 1.332,468 3.080,107 34.689,394 11.543.694 93.139,515 327.808.073 : 432.491.232 J 264.9S5 523 167.435.759 S729 456 5'0 CRTX 0574 ____________________________________ 19831982* Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt......................................... Loans payable to banks............................................................ Accounts payable......................................................................... Accrued liabilities (see page 17).......................................................... U.S. and foreign taxes on income.................................................. Total Current Liabilities.......................................................... Long-Term Debt (see page 15)................................................................... Capital Leases: (see page 17) Industrial revenue bonds......................................................................... Other........................................................................................................ Deferred Income Taxes--Depreciation.................................................... Reserves and Other Liabilities (see page17)......................................... Redeemable Preferred Shares: Cumulative preferred shares, 3%%, par value $100: Authorized--19,383 shares (24,223 in 1982) Outstanding--1,651 shares (1,651 in 1982)......................................... Common Shareholders' Equity: Common shares, par value $6.25: Authorized--20,000,000 shares Outstanding--10,212,159 shares (9,978,052 in 1982) after deducting 5,978,004 shares in treasury (5,974,781 in 1982)........... Capital surplus......................................................................................... Earned surplus--$22,448,214 ($49,345,969 in 1982) is not restricted under a long-term debt indenture (see page 17)................. Currency translation adjustment (see page 16)....................................... Total Common Shareholders' Equity................................... $ 7,313,686 10,135,424 33,837,266 46,680,891 2,674,648 100,641,915 170,970,470 24,261,130 7,000,757 31,261,887 4,414,793 15,245,061 165,100 $ 13.399.651 j 11,042.071 33,202,556 . 44,418.126 j 1.932.961 103,995.365 i 189.281,972 1 24.230.691 i 7.567,969 : 31,798.660 4.864,788 18,355.550 j 1 11 1 165.100 | i 63,825,994 64,735,976 138,255,616 (13,600,406) 253,217,180 $575,916,406 62.362.825 . 60.742,128 268,583.058 (10,692.936) 380.995.075 $729.456 5'0 CRTX 0575 Consolidated Statements of Changes in Financial Position v 'w' J jo^" ''I ^ Jl For Years Ended December 31 Source of Funds: Operations: Continuing: Income........................................................................... Depreciation..................................................................... Deferred income taxes.................................................... Amortization of debt discount......................................... Pension provision.......................................................... Other--net........................... v......................................... Funds provided from continuing operations................... Dividends from discontinued operations............................. Increase in long-term debt.................................................... Conversion of debt to common stock..................................... Decrease in long-term investments......................................... Disposals of property, plant and equipment--net................... Application of Funds: Additions to property, plant and equipment......................... Decrease (increase) in reserves and other liabilities.............. Increase in long-term investments......................................... Decrease (increase) in capital leases--net........................... Reduction in long-term debt.................................................... Reacquisition of shares, less options exercised..................... Cash dividends declared........................................................ Currency translation adjustments........................................... Increase in other assets--net.................................................. Increase in investments held for disposal............ ................. Net Source (Application) of Funds......................................... Increase (Decrease) in Components of Working Capital: Current assets: Cash and short-term investments....................................... Accounts receivable............................................................ Refundable income taxes.................................................... Inventories........................................................................... Prepaid exoenses.............................................................. Current liabilities: Current maturities of long-term debt............................... Loans payable to banks...................................................... Accounts payable................................................................ Accrued liabilities.............................................................. U.S. and foreign taxes on income....................................... Increase (Decrease) in Working Capital................................. `Restated to reflect segment held for disposal. See Financial Review 1983 1982' 1981' $ 26,376,960 25,487,756 (3,279,268) 1,009,852 796,000 599,247 50,990,547 50,990,547 456,675 28,500,000 8,576,576 88,523,798 $ 19.289,695 31.250.613 (4.034,309) 1.091,116 1.339,188 162,906 49,099,209 3,820.402 52,919,611 30,106,174 268,600 81,945,899 16,949,198 182.189.482 S 16 019 762 33.916 184 1 865.141 1 345 332 737 562 j 53 883.981 j 13 371.375 j 67 255 356 i J645.900 _j 8 552 812 | 76 -54 Cc3 ; 12,843,463 3,159,519 536,773 18,311,502 (55,242) 16,322,302 2,907,470 2,598,902 56,624,689 S 31,899,109 18.708,080 (6.297,224) 18,671,647 7.000.276 52.359,709 9.179,606 15.961,936 6,654,523 304.024 50.000,000 172,542,577 $ 9,646,905 19 938.472 , 2.316 SCO 29,341 556 .`304 272: 29 755 '96 15.247.140 17 330.423 4 038 413 1.518.306 120.231 24! i 5(43.777 173) S 33,302,585 2,609,517 (5,889,000) (1,212,152) (265,291) 28,545,659 (6,085,965) (906,647) 634,710 2,262,765 741,687 (3,353,450) S 31,899,109 S 15,247,671 (13.469,011) 21,700.000 (16,509.315) (410.889) 6.558.456 9.726.251 (4:163.986) (1.318,059) (6.493.982) (838.673) (3,088,449) $ 9.646.905 5(33 231 123)! f5.340.937)! (12.15' 03') j (51 213 .'4. i 9'0 5-D 4 962 r9? (10 296 738i, 4 922 305 (7 932 935/: (7.433 131): S (43.777.173) i CRTX 0576 ; Details of Long-Term Debt Crane Cc ana S'.,r,s a-a' as At December 31 Crane Co.: 6V2% Sinking fund debentures due 1992, $2,000,000 due annually, after deducting $1,723,000 in treasury in 1983........................... 'Bank term loan due 1985, $1,500,000 due quarterly, commencing March 31,1985.................................................................... 'Bank term loan due 1989, $1,875,000 due quarterly, commencing September 1,1985 .............................................................. Subordinated debentures: 10'/2% Sinking fund debentures due 1994, $4,567,000 due annually, after deducting $5,042,600 in treasury in 1983 ......................... 8% Sinking fund debentures due 1985, $8,241,000 due annually, after deducting $1,569,920 in treasury in 1983 .......................................... 7% Sinking fund debentures due 1993,5% due annually, after deducting $721,980 in treasury in 1983................................................ 7% Debentures due 1994, after deducting $3,818,000 in treasury in 1983 ........................................................................................................ 5% Convertible debentures due 1993, convertible at $12.50 per share (36,292 common shares reserved in 1983)............................. 5% Convertible debentures due 1994, convertible at $14.37 per share (231,169 common shares reserved in 1983)............................. 1983 S 16,000,000 6,000,000 30,000,000 52,000,000 45,191,500 8,240,460 11,381,400 48,259,000 453,650 3,321,900 116,847,910 168,847,910 Crane Canada Inc.: 5%% Collateralized sinking fund debentures, due 1985, $354,000 due in 1984, after deducting -0- in treasury in 1983 ................................................................................. Other Operations: Miscellaneous................................................................ .............. 2,122,560 ___ $170,970,470 'Floating with lending rate, which was 11.305% and 11.055% respectively, at December 31.1983. 1982 S 17,911.000 12.000.000 30.000.000 59.911.000 46.2^3.500 16 480.920 11.541ACO 48.259.G00 5C9 650 3.722.575 126,757.0^5 186.663.0^5 2.494 800 119.127 SI 89.281.972 CRTX 0577 Financial Review Crane Co. and Suosicuanes Consolidation The consolidated financial statements include all sub sidiaries except CF&I Steel Corporation, which is being held for disposal. See comments below under Investments Held for Disposal. Foreign currencies are translated in accordance with Statement of Financial Accounting Stand ards No. 52. Currency translation adjustments for the years 1983, 1982 and 1981 were $2,907,470, $6,654,523 and $4,038,413, respectively. Subsidiaries operating outside the United States and Canada represented approximately 10 percent of common shareholders' equity at December 31,1983 (7 percent at December 31,1982). During 1983 and 1982, inventory quantities in certain of the business segments were reduced as a result of contin uing low market demand. The LIFO effect on continuing ' operations was a reduction in cost of approximately $8,000,000 in 1983 and $13,000,000 in 1982. Investments Held for Disposal In December 1983, the company decided to restructure the steelmaking facilities of its subsidiary, CF&I Steel Corpora tion, and to hold CF&I as a business segment held for dis posal. Accordingly, the Consolidated Financial Statements have been restated to report the discontinued operations separately and the investment at estimated net realizable value assuming sale. The $80,106,000 estimated loss on disposal of CF&I, net of a tax benefit of $8,500,000, includes the net cost of restructuring its steelmaking facilities, and the provision by the company of a reserve for possible loss on sale. The restructuring costs, which related to the permanent shut down of primary steelmaking facilities and certain rolling mills, were net of gains on the sale of two coal mines and certain land and water rights. Income (loss) from operations that have been discontin ued are net of income tax benefits of $40,861,000 and $32,974,000 in 1983 and 1982, and an income tax provision of $26,742,000 in 1981. Sales were $231,093,000 in 1983, $362,835,000 in 1982 and $723,768,000 in 1981. As part of the restructuring, a subsidiary of the company purchased from CF&I certain land and water rights not necessary for CF&l's steelmaking operations. The consid eration for the purchase was the surrender by the company of the $50,000,000 secured note of CF&I it held and its release of certain subsidiaries pledged as security. The company intends to actively market the land and water rights and has agreed to pay as additional consideration to CF&I any proceeds realized on the sales, net of all costs incurred, in excess of $50,000,000. Investments During the first half of 1983 the company sold the remain ing 1.200.000 common shares of its investment in Atlantic Richfield Company in open market transactions for $51,887,000, resulting in a before-tax gain of $23,387,000 ($11,557,000 aftertax). Property, Plant and Equipment The company provides for depreciation of plant and equip- : ment at accelerated rates in order to provide a better matching of costs and revenues. I The company leases a portion of its warehouse build- ings, several manufacturing facilities (primarily through i industrial revenue bonds) and certain of its vehicles and equipment under capital and operating leases with terms of from one to thirty years. Certain leases may be renewed for periods of from three to twenty-five years and provide either an option to purchase or reduced annual rental payments of minimal amounts. Property, plant and equipment included the following amounts for capitalized leases at December 31: 1983 --982 ' (in thousands) Buildings and improvements................... ____ Machinery and equipment ... .. . Less accumulated depreciation .. . . $22,238 S22.565 33,820 34.161 56,058 56.725 25,199 23.396 S30.859 .333.330 Pensions The company and its subsidiaries have pension plans which cover substantially all of their employees. Pension expense ($2,559,000 in 1983, $3,566,000 in 1982 ard $8,217,000 in 1981) is actuarially determined and includes normal cost and amortization of prior service costs over periods not exceeding forty years (generally ten years prior to 1982). The 1983 and 1982 decreases in pension expense relate to reduced amortization of prior service costs to recognize the largely funded status of the plans and the amortization of actuarial gains arising from the purchase of guaranteed annuities for certain retiree groups. The assumed rate of return on investments is 8% for all years. A comparison at December 31. of accumulated plan benefits and net assets available for benefits for the company's pension plans is presented below Actuarial present value of accumulated plan benefitsVested.......................... Nonvested . Net assets available for benefits................ 1983 1982 (in tncusarcs) $ 72,337 4,141 S 76,478 5 3" sr~ 7 2d' S 33 333 SI 43,460 The weighted average rate of return assumed in deter mining the actuarial present value of accumulated c.an benefits was approximately 10 percent for 1983 and 3 per cent for 1982. CRTX 0578 I Miscellaneous--Net For Years Ended December 31 1983 1982 At December 31,1983, the aggregate amount of subsidi 1981 ary earnings available for dividends was $99,497,000. (in thousands) Covenants contained in a long-term debt indenture, Gain on investments--net (see page 16).............................. . Gain on disposal of capital assets--net..................... Termination of certain operations................................... Gain on repurchase of long-term debt............................ Minority interest.............................. Other ................................................. $23,387 $22,074 $ 56 5,651 11,453 2.700 (2,126) (4.333) (6.234) 568 (399) 848 2,741 (203) 1.031 1.962 (334) (251) S27.929 $32,763 $(2,101) amended as of year-end 1983, require the company to (i) maintain consolidated working capital (as defined, including long-term investments at lower of cost or market) of at least $185,000,000 and consolidated tangible net worth of at least 3225,000,000, (ii) restrict payments of cash dividends and (iii) restrict issuance of additional senior funded debt. Leases Future minimum payments, by year, and in the aggregate, under capitalized leases and operating leases with initial or remaining terms of one year or more consisted of the The major portion of the gains on disposal of capital following at December 31,1983: assets in 1983 and 1982 was from the sale of various Medusa Corporation aggregate and cement facilities. Capital Leases Minimum Operating Sublease Leases Income Net Accrued Liabilities At December 31 1983 1982 1984......................... . $ 5,670 (in thousands) S 6.519 $ 770 $11,419 . (in thousands) Payrolls............... ................................ .. $ 9,720 $ 8,677 Taxes other than income........................ ... 2,976 2.864 Interest.................................................. 4,849 5.048 Employee benefits................................ 3.590 2 474 Insurance............................................. . 3,656 3,232 Dividends................................................ . . 4,085 3,991 Caoital lease obligations........................... . . 3,301 5.368 Sales allowances.................................. 3,644 2,921 Other................................................... . . . 10,860 9,843 1985.......................... 1986.......................... 1987.......................... 1988.......................... Thereafter................ . Total minimum lease payments.. Interest..................... . Present value......... . 6,774 6,525 6,225 3,627 19,690 48,511 (13.948) S34.563 4,813 2,638 1.175 525 2,407 $18,127 718 . 10 369 424 3.759 218 7 132 119 4.033 4 22C93 $2,253 364.385 $46,681 $44,418 Reserves and Other Liabilities At December 31 1983 1982 (in thousands) Minority interest...................................... ... $ 7,583 S 8,796 Deferred income taxes--other............... 1,941 3,387 Pension and wage benefits..................... 3,317 2.921 Miscellaneous .................................... . . 2.404 3 252 $15,245 $18,356 Portion: Current................ . Long-term............ $ 3.301 31,262 $34,563 The weighted average interest rate for capital leases is 6.4%. These obligations mature in varying amounts through 2009. Rental expense was as follows for all operating leases: 1983 1982 1981 Long and Short-Term Financing At December 31.1983. the principal amounts of long-term debt repayments, net of amounts held in treasury, required for the next five years were S7,314.000 in 1984, 526.662.000 m 1985, $14,613,000 in 1986, $14,586,000 in 1987 and $14,560,000 in 1988. At year-end there were available with domestic and for eign banks $87,015,000 in short-term credit lines of which 576.880.000 was unused at that time. At December 31, 1983, cash balances of $2,850,000 were maintained under informal compensating balance agreements in connection with term loans and credit lines. Withdrawal of these com pensating balances was not legally restricted; however, substantial compliance was made with these arrange ments in 1983. These credit lines are subject to annual review. Minimum....................................... Contingent........................... Sublease income................ . . (in thousands) $11,480 $11,429 $10,390 587 489 557 (316) (414) 551 $11,751 $11,504 SIC 562 Income Taxes United States income taxes have not been provided on undistributed earnings of foreign subsidiaries, since for eign tax credits available on the portion of these earnings not required for indefinite reinvestment are adequate to eliminate any substantial federal taxes on normal distributions. CRTX 0579 Five Year Summary of Selected Financial Data Crane Co. and Subsidiaries (In Thousands) Years Ended December 31 Net Sales...................................................... Depreciation.............................................. Operating Profit.......................................... Interest Expense........................................ Income Before Taxes................................. Income Taxes............................................ Net Income.................................................. 1983 $771,679 25,488 25,595 21,591 46,365 (19,988) $ 26,377 Net Income Per Common Share:* Average Shares Outstanding................... Assuming Conversion of Debentures .... $2.59 2.53 Dividends Declared Per Common Share: Cash*........................................................ Stock........................................................ $1.60 2% Assets.......................................................... Long-Term Debt........................................ Capital Leases........................... .............. $575,916 170,970 31,262 Common Shareholders' Equity Total .......................................................... Per Common Share*................................. $253,217 24.80 'Restated to reflect segment held for disposal. 'Adjusted for 2% stock dividends in February, 1983. 1982* $763,563 31,251 9,071 26.750 26.914 (7.624) $ 19,290 $1.89 1.85 SI .57 2% 3729,457 189.282 31,799 S380.995 37.43 1981* $887,574 33,916 37.019 30.436 20.876 (4,856) S 16.020 $1.51 1 47 $1.63 2% $792,237 211.536 38.799 $415,747 39.74 I960' $913,597 36.263 50,396 34.114 36.346 (12.059) S 24.287 $2.25 2 18 SI 51 2% $812,577 241 291 38.495 $395,912 36.80 1979' $1,015,968 29.634 77.654 34.150 50.676 (10.454) S 40.222 S3 71 3 53 $1 34 2% S 347.220 - 296 505 3'< 189 5 371.316 34 48 Quarterly Results for the Year (Unaudited) Crane Co. and Subsidiaries (In Thousands) Quarter 1983 1st...................................... ........ 2nd. ............................ ........ 3rd.................................... ........ 4th.................................... ........ 1982* 1st...................................... ........ 2nd.................................... ........ 3rd................... .............. ........ 4th.................................... ........ Net Sales SI 64.132 195,139 217.910 194.498 $771,679 Gross Profit $ 25,072 31,124 31,605 33.495 SI 21.296 Income Continuing Operations $10,084 7,017 4.486 4,790 S26.377 Net Income (Loss) Net Income 'Less) Per Common Share Continuing ODeraticns ~otas S (7.120) (7.113) (8.127) (86.700) 3(109 060) S 99 69 44 47 32 59 S ( 70) ~oi Out *-**' r -i \ 5< ` w 7C) $172,570 200,209 206,253 184.531 $763,563 S 24,940 29,858 24,749 30.354 $109,901 S 1,034 2,463 5,144 10,649 $19,290 S 5.651 (3.233) (6.421) 660 S (3.343) S 10 24 51 1 04 SI 89' S 56 (32) i 64) 07 S (33)' 'Restated to reflect segment held for disposal. 'Adjusted for 2% stock dividends in February, 1983. CRTX 0580 Management's Discussion of Operations and Financial Condition Results of Continuing Operations Results of 1983 continuing operations compared with 1982 reflected the substantial improvement in North American residential construction and demand for aircraft compo nents. Partially offsetting this were the continued depressed conditions worldwide for capital goods to which major portions of the company's operations are directed. Crane Domestic sales were lower in 1983 than the pre vious two years, primarily due to weak market demand for fluid and pollution control products. Earnings did improve over 1982, but were below 1981 levels. The increase in earnings was wholly due to higher sales of aircraft compo nents. Crane Domestic has continued programs to intro duce competitive new products, to dispose of certain marginal operations and to use foreign sourcing to stay competitive given the strength of the U.S. dollar. These management actions plus major cost reduction programs in 1983 should enable Crane Domestic to adequately meet the demands of a stronger economy. Medusa sales, particularly for its cement operations, remained at low levels as the construction and road build ing industries remained depressed, resulting in a net loss in 1983. However, the operating loss incurred from Medu sa's reduced operating base was less than the previous year. Additional marginal aggregates and asphalt facilities were sold during 1983. Programs aimed at improving long term profitability are progressing according to plan and are expected to contribute substantially to operating results with the expected higher demand for cement and aggre gates products in 1984 and 1985. Huttig Sash & Door Company sales and earnings increased significantly from 1982 levels. Huttig's improved market penetration and a substantial upturn in residential construction contributed to improved operating margins. The outlook for the immediate future for Huttig given the continued high level of single family housing starts is excellent. Crane Canada Inc. results improved over 1982 but were well below those for 1981. All of the improvement came from the sales of plumbing products with the large increase in residential construction. Sales of fluid control products remained depressed with the continued low level of capital j spending. A major pickup in capital spending plus continI ued residential construction at current levels should sub| stantially improve operating results, i International Operations sales and operating profits j continued to be at low levels primarily reflecting the low i demand and competitive pricing of fluid control products, j This situation was particularly true for the United Kingdom ! operation. The program to modernize production facilities : at the large plant at Ipsv/ich in the United Kingdom was j continued so as to maintain its ability to keep its costs j competitive. ! Net interest expense decreased substantially from 1982 j due to much higher short-term investments and reductions in long-term debt. The company sold the remainder of its long-term investment in the Atlantic Richfield Company common shares for a pre-tax gain of $23.4 million. A simrar gain was made in 1982 on the sale of long-term invest ments. Marginal or excess facilities, primarily at Medusa, were disposed of at pre-tax gains of $5.7 million. Similar actions in 1982 resulted in pre-tax gains of $11 5 million Depreciation decreased $5.8 million from 1982. The i reduced capital spending, particularly at Medusa. accounted for the decrease. j ! Income taxes in 1983 were considerably above i 982 ana i 1981. The increased effective rate of 43.1% compared with j 28.3% in 1982 and 23.3% in 1981 was primarily due to S reduced non-taxable dividend income and lower invest- ! ments tax credits realized. j Discontinued Operations The decision was made in December, 1983 to hoid CF&i j Steel Corporation as a segment held for disposal and to t write-down the investment to estimated net reauzac-e vava ' assuming sale. The loss incurred from operations of CF&I j was $55.3 million net of taxes. In addition, an estimateo ! loss on disposal of $80.1 million net of taxes was'rcurrec ! As part of the restructuring of CF&I the comoany cor- ! chased from CF&I land and water rights not necessary `or steelmaking operations. The purchase considerat'cn was the surrender of the $50 million secured note of CF&I, that j arose from a cash payment made in December, 1982 to j retire a bank revolving credit agreement, and release of other security. The result was to relieve CF&I of current charges against cash flow for interest and principal reoay- ments. The company will actively market the propert.es , and has agreed to pay to CF&I any proceeds, net cf ail ' costs, which exceed $50 million. Liquidity and Capital Resources The company has depended primarily upon earnings ana bank borrowings (including short-term credit lines) to fur- j nish capital to finance operations and working capital. i However, in 1983 and 1982, the company aiso utilized pro ceeds from sales of capital assets as well as long-term investments to help fund capital expansion and to reouce long-term debt. Over the past three years, depreciation incurred and proceeds from disposals have exceeded capital excer.c - tures for most business segments. During this pence major > expansion programs at Medusa were largely come s:ec All operations, except the United Kingdom, had ic.`.er cap:- tal expenditures in 1983 compared to 1982. Long-term debt has been decreased by approximate S18 million through various scheduled and oot'onai 'eoay- ments. At December 31,1983, $36 million fluctuates .vr- lending rates, compared with 342 million at the ena of `3Z2 The company had cash and short-term investments of $106 million at the end of 1983. In addition there was a. a - able $77 million of unsecured credit lines. i Analysis by Segment rri.'=. ; -r 7 -r (In Thousands) Net Sales: Crane Domestic.................................. Medusa Corporation........................... Huttig Sash & Door Company............ Crane Canada Inc............................... International Operations..................... Total Net Sales............................. Operating Profit: Crane Domestic................................. Medusa Corporation........................... Huttig Sash & Door Company............ Crane Canada Inc............................... International Operations..................... Corporate................. .......................... Total Operating Profit................... Assets: Crane Domestic................................. Medusa Corporation............................. Huttig Sash & Door Company............ Crane Canada Inc............................... International Operations...................... Investments Held for Disposal............ Corporate.............................................. Total Assets................................... Crane Domestic...................................... ............ Medusa Corporation............................... ............ Huttig Sash & Door Company................ ............ Crane Canada Inc................................... ............ International Operations ..................... ............ Total.................................................. ............ 1983 Amount % 3241,102 110,719 221,164 134,736 63,958 $771,679 32 14 29 17 8 100 1982* Amount % $260,590 . 149,010 147,747 134.838 71,378 $763,563 34 20 19 18 9 100 1981Amount %' S298.671 183,914 160,669 165.183 79,137 $887,574 34; 21 : 18 19 8, 100 = $ 17,635 (10,490) 17,628 2,976 2,574 59 (35) 58 10 8 30,323 100 (4,728) S 25,595 $ 14.424 99 (16,272) (112) 7,461 51 2,605 18 6,357 44 14,575 100 (5.504) $ 9.071 $ 24,120 (7.742) 10.130 10,932 6.222 56 ' (18), 23 25 i 14 ; 43.662 ioo; (6.643) S 37.019 $ 85,334 106,879 71,916 50,046 45,333 359,508 112,230 104,178 $575,916 24 30 20 14 12 100 $ 94,407 133,805 60,133 55,020 42,394 385,759 247,727 95,971 $729,457 24 35 16 14 11 100 $106,556 182.457 58,145 66.793 47,344 461.295 223.078 107.864 S792.237 21 23 40 ; 13 i 14 j 10 i 100 I Capital Expenditures 1983 1982* 1981* $ 3,897 2,856 1,384 602 4,104 $ 5,818 7,194 1,945 1,045 2.706 $ 6,765 5,920 2,352 3,159 1,743 $12,843 $18,708 $19,939 ________ Depreciation 1983 1982* 1981* $ 6,411 14,240 1,477 1.461 1 899 $ 6.354 19.320 1.700 1,674 2,203 S 6,112 21.734 1.574 1.732 2.7*4 $25,488 $31,251 533 9*6 Restated to reflect segment held for disposal. CRTX 0582 I j Market and Dividend Information--Common Shares Crane Co. aru Sjbs:d<ares Quarter 1st........................................ ..................... 2nd...................................... ..................... 3rd........................................ ..................... 4th . . , .................................... ..................... New York Stock Exchange Price Per Share 1983 1982 High Low High Low $345/8 343/e 36 34s/e $22s/e 26% 305/s 26'Is $36V4 293/a 253/4 29 $23 22'Ib 173/4 20V4 At December 31,1983 there were approximately 9.472 holders of Crane Co. common stock. Adjusted for 2% stock dividend in February, 1983 Dividends Per ! Share 1983 1982T $ .40 .40 .40 .40 SI.60 $ .39 .39 39 40 Si.57 Impact of Inflation (Unaudited) Crane Co. and Subsidiaries The supplemental information reflecting the effects of infla tion as measured through "Constant Dollars" and "Current Cost" methods is set forth in the following tables. The supplemental information concerning the effects of inflation under either of the two methods is not a com prehensive application of inflation accounting and only reflects: (1) the effect on inventories and properties (excluding natural resource reserves prior to 1980) and related cost of goods sold and depreciation expense, and (2) the effect of general inflation on certain monetary assets and liabilities. Both of the methods inherently involve the use of assumptions, approximations and estimates and, therefore, the resulting measurements should be viewed in that context and not as precise indications of the effects of inflation particularly as it relates to the company. Constant Dollars This method attempts to measure the effect of increases in the general price level, as measured by the U.S. Govern ment Consumer Price Index for Ail Urban Consumers (CPI), on the purchasing power of the dollar. The general inflation (Constant Dollars) data has been stated in average 1983 dollars by applying the CPI to the historical cost informa tion. An adjustment to certain monetary assets and liabili ties is made with reference to converting opening and closing year-end balances by the actual and average CPI. Current Cost This method attempts to measure the effect of specific price changes experienced by the company. In estimating current costs various methods such as published indices for specific types modified to local conditions, approximate replacement costs and appraisals are used. The adjustments on cost of sales, under either method, are minimal since the historical inventories have been determined principally on the LIFO basis, which matches current sales dollars with current inventory replace ment cost. The effect of the general inflation adjustment on proper ties was determined by applying the CPI to the historical cost in the year of acquisition. The comparable adjustment on a current cost basis was determined through the use of specific price indices, particularly as to the cement indus try, appraisals, replacement cost, unit of space cosiihg and recoverable amount valuation. Depreciation expense for J both adjustments was calculated by applying the straight- i line method to the respective adjusted property amounts ] already determined, without benefit of income tax deduc- : tions for the difference between historical cost depreciation and either constant dollars or current cost depreciation. Unrealized Gain in Purchasing Power Since the closing CPI for both 1983 and 1982 exceeded the average CPI for those years and monetary liabilities exceeded monetary assets, the results were notional gains. These gains represent the decline in book value of net monetary liabilities. The notional gains will not be recog- ! nized until long-term debt, for example, is repaid with ! deflated dollars (reduced purchasing power dollars). How- j ever, since approximately $36 million of debt ($42 million j in 1982) fluctuates with lending rates, and these tend to follow inflation, the effect of this will be charged to income j as incurred. ! i Mineral Reserves j The company's present mineral reserves are expected to i be in adequate supply for its cement operations for the foreseeable future. The minerals produced by quarnes are ; used principally by the manufacturing operations. Due to competitive conditions, this production must be receives at cost or at a slight profit for the cement products to earn a reasonable profit. : The decline in proven reserves during the year resulted from the sale of operations. Proven mineral reserves at ; December 31, were: Proven Reserves 1983 1982 I Production 1983 1982 \ Limestone............................ Stone and Sand.................. (Thousands of Tons) 687,038 730.637 4,750 6 807 ; 2,417 65,417 -- 2.232 CRTX 0583 I Market and Dividend Information--Common Shares Crane Co. ana Suosidiares Quarter 1st........................................ ..................... 2nd...................................... ..................... 3rd.......................................... ..................... 4th.......................................... ..................... New York Stock Exchange Price Per Share 1983 1982 High Low High Low - $34% 34% 36 34% $22% 26% 30% 267a $3674 29% 25% 29 $23 22Va 17% 2074 At December 31,1983 there were approximately 9,472 holders of Crane Co. common stock. 'Adjusted for 2% stock dividend in February, 1983 Dividends Per Share 1983- 1982'- $ .40 .40 40 40 $1 60 S 39 39 % 39 i 40 si 57 j i Impact of Inflation (Unaudited) Crane Co. and Subsidiaries The supplemental information reflecting the effects of infla tion as measured through "Constant Dollars" and "Current Cost" methods is set forth in the following tables. The supplemental information concerning the effects of inflation under either of the two methods is not a com 22 prehensive application of inflation accounting and only reflects: (1) the effect on inventories and properties (excluding natural resource reserves prior to 1980) and related cost of goods sold and depreciation expense, and (2) the effect of general inflation on certain monetary assets and liabilities. Both of the methods inherently involve the use of assumptions, approximations and estimates and, therefore, the resulting measurements should be viewed in that context and not as precise indications of the effects of inflation particularly as it relates to the company. Constant Dollars This method attempts to measure the effect of increases in the general price level, as measured by the U.S. Govern ment Consumer Price Index for All Urban Consumers (CPI), on the purchasing power of the dollar. The general inflation (Constant Dollars) data has been stated in average 1983 dollars by applying the CPI to the historical cost informa tion. An adjustment to certain monetary assets and liabili ties is made with reference to converting opening and closing year-end balances by the actual and average CPI. Current Cost This method attempts to measure the effect of specific price changes experienced by the company. In estimating current costs various methods such as published indices for specific types modified to local conditions, approximate replacement costs and appraisals are used. The adjustments on cost of sales, under either method, are minimal since the historical inventories have been determined principally on the UFO basis, which matches current sales dollars with current inventory replace ment cost. The effect of the general inflation adjustment on proper ties was determined by applying the CPI to the historical cost in the year of acquisition. The comparable adjustment on a current cost basis was determined through the use of j specific price indices, particularly as to the cement Indus- | try, appraisals, replacement cost, unit of space ccsrrg arc recoverable amount valuation. Depreciation expense for : both adjustments was calculated by applying the straigrt- line method to the respective adjusted property amounts already determined, without benefit of income tax deduc- < tions for the difference between historical cost depreciation ! and either constant dollars or current cost depreciation. j Unrealised Gain in Purchasing Power j Since the closing CPI for both 1983 and 1982 exceeded ! the average CPI for those years and monetary liabilities ! exceeded monetary assets, the results were notional gams. - These gains represent the decline in book value of net monetary liabilities. The notional gains will not be recognized until long-term debt, for example, is repaid with i deflated dollars (reduced purchasing power dollars). How- I ever, since approximately $36 million of debt ($42 million ! in 1982) fluctuates with lending rates, and these tend to follow inflation, the effect of this will be charged to income as incurred. Mineral Reserves The company's present mineral reserves are expected to be in adequate supply for its cement operations for the foreseeable future. The minerals produced by quarr es are used principally by the manufacturing operations. Due to competitive conditions, this production must be receivec a: cost or at a slight profit for the cement products to ear'' a reasonable profit. The decline in proven reserves during the year resultec from the sale of operations. Proven mineral reserves at December 31, were: ; . Proven Reserves 1983 1982 Production 1983 1982 j Limestone........................... Stone and Sand.................. (Thousands of Tons) : 687,038 730.637 4,750 6.807 2,417 65.417 -- 2.382 CRTX 0584 Consolidated Statement of Income Adjusted for Changing Prices (In Thousands) Year Ended December 31,1983 Net Sales..................................................................... Cost of Sales................................................................ Depreciation................................................................ Selling, General and Administrative................................ Other Income--net...................................................... Provision for Income Taxes............................................. Net Income................................................................... Per common share................................................. Unrealized gain in purchasing power from holding net monetary liabilities................................... Effect on inventory and property, plant and equipment held during the year: General inflation.................................................... Specific price changes........................................... Difference.................................................... . Current cost: Inventory................................................................. Property, Plant and Equipment-- net of depreciation................................................ As Reported in Primary Statement $771,679 627,139 25,488 93,457 (20,770) 19,988 745,302 $ 26,377 $2.59 Adjusted For General Inflation (Constant Dollars) $771,679 635,139 31,664 93,457 (20,770) 19,988 759,478 $ 12,201 $120 $ 3,718 Adjusted For Changes in Specific Prices (Current Cost) $771,679 635,139 32,851 93,457 (20,770) 19,988 760.665 S 11,014 ST08 $ 3,718 $ 21,400 S (8,900) S. 3.0,300 $151,779 S318.252 Five Year Comparison of Selected Supplementary Financial Data Adjusted For Effects of Changing Prices (In Thousands of Average 1983 Dollars) Years Ended December 3119831982*1981* Net Sales As reported............................................................ Adjusted for general inflation................................... $771,679 771,679 $763,563 788,126 $887,574 972,291 Net Income As reported....... .................................................... Adjusted for general inflation................................... Adjusted for specific price changes.......................... S 26,377 12,201 11,014 S 19,290 (1,648) (2,911) S 16.020 5,551 2,738 1980* $ 913,597 1 ,104,608 2~ 287 21.5-32 15,369 1979' $1,015,968 1,394.502 S 40.222 49.055 44.917 Net Income per common share' As reported............................................................ Adjusted for general inflation................................... Adjusted for specific price changes.......................... Unrealized gain in purchasing power from holding net monetary liabilities................................. Net assets at year-end** As reported............................................................ Adjusted for general inflation................................... Adjusted for specific price changes.......................... Difference between general inflation and specific price changes on inventory and property, plant and equipment................................. Cash dividends declared per common share' As reported............................................................ Adjusted for general inflation................................... Market price per common share at year-end As reported............................................................ Adjusted for general inflation................................... Average Consumer Price Index................................... $2.59 1.20 1.08 $ 3,718 $190,988 445,838 474,002 $ 30,300 $1.60 1.60 $30.50 30.50 298.4 $1.89 (16) (.29) $ 7,173 $183,268 604,028 640,745 $1.51 .52 .25 $ 18,269 $192,669 697,730 765,949 $ 30,000 $1.57 1.62 $24.13 24.91 289.1 $ 29,800 $1.64 1.69 $36.00 39.44 272.4 $2.25 1.96 1.42 $ 36,386 S 197.254 729.784 815,707 $ 62,700 $1.51 1.56 S44.75 54.11 246.8 $3.71 4 53 4 15 S 52. * 63 : S 166/33 761 340 363 029 S 32 2C0 SI 34 ; 1 33 ; S33 25 45 64 217 4 Adjusted for 2% stock dividends Restated to reflect segment held for disposal. "Excludes assets held for disposal. CRTX 0585 i I ________________________________ Directors E. Thayer Bigelow Vice President-Finance, Time Inc., Information and Entertainment Langdon R Cook' President, Langdon P. Cook & Co., Incorporated, Municipal Bond Dealers Walter J. R Curley Private Venture Capital Investments Robert S. Evans" Elected Chairman of the Company February 27, 1984 Thomas M. Evans" Chairman of the Company, Retired February 27, 1984; Chairman of the Executive Committee, H.K. Porter Company, Inc., Manufacturing; President, Evans & Co., Incorporated, Investments Dante C. Fabiani Retired President of the Company Richard S. Forte General Partner, Forte Cashmere Company, Importer and Manufacturer Dorsey R. Gardner* President, Kelso Management Company, Investment Management Dwight C. Minton Chairman of the Board and Chief Executive Officer, Church & Dwight Co., Inc., Chemical Manufacturer Arthur A. Seeligson, Jr. Independent Oil Operator; Investments Robert J. Slater" President of the Company 'Member of the Audit Committee "Member of the Executive Committee -- Officers Thomas M. Evans Chairman, Retired February 27, 1984 Robert S. Evans Executive Vice President, Elected Chairman February 27,1984 Robert J. Slater President Ray R. J. Baker Vice President & General Manager Valves & Fittings Division B. Jack Barnes Vice President & General Manager Hydro-Aire Division William R. T. Crolius Vice President-Government Relations William C. Dackis Vice President & Assistant to the President Robert R. Foster Vice President & General Manager Crane Supply Company Paul R. Hundt Vice President, Secretary & General Counsel John C. Martineau Vice President & General Manager Plumbing Division James F O'Brien, Jr. Vice President-Finance Kenneth F Webel Vice President & General Manager Engineered Products Division Richard J. Neville Treasurer R. Kenneth Whitley Controller Operations Crane Domestic Crane Group New York, New York Hydro-Aire Division Burbank. California B.J. Barnes Vice President & General Manager Huttig Sash & Door Company Chesterfield, Missouri S. R Wells President Medusa Corporation Cleveland, Ohio D. E. Somes President Crane Canada Inc. Montreal. Canada G. A. Kelly President International Crane Australia Pty. Limited Sydney, Australia R J. Farrell Managing Director Crane Ltd. London, England J. M. Fraser Managing Director Crane-Deming de Mexico, S.A. Monterrey. Mexico W. M. Collins General Manager i ; j f : | ] : ! i ' | i i CRTX 0586 Stock Listings Crane Co. common stock is':traded on the New York and Pacific Stock Exchanges; the: preferred stock is traded over the counter. Stock Transfer Agent Morgan Guaranty Trust Company of New York New York, New York 10015 Registrar of Stock The Chase Manhattan Bank, N.A. New York, New York 10015 Bond Trustees and Disbursing Agents Citibank, N.A. New York, New York 10015 Bank of America National . Trust and Savings Association Los Angeles, California 90054 Auditors Deloitte Haskins & Sells New York, New York 10048 Equal Employment Opportunity Policy Crane Co. is an equal oppor tunity 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 or national origin. CRTX 0587 Printed U.S.A, CRANE Crane Co., 300 Park Avenue, New York, New York 10022 CRTX 0588