Document Raqgrqwn58GQDd6Kn2y67VLkE

PLAINTIFF'S EXHIBIT CRA-28 CRANE CO. Annual Report 1974 Building Products Aerospace and Aircraft Products CRTX 0305 To our Shareholders: Sales and net income for 1974 set an all-time record of $1,144,031,000 and $56,133,000, respec tively, compared with $947,093,000 and $20,577,000 in 1973. Net income per share on primary earnings was $11.05, compared with $3.93 in 1973. The profit margin on sales was 4,9 ner cent f'ornnar&ri with 2.2 per cent in 19Z3 Crane s record performance during 1974came principally from three of the four basic business areas served: fluid and pollution control, steel and aerospace. This was attributable to increased, pro duction and demand foj valves and steel, the removal of price , controls and elimination of unprontaoie one-rations, Building products experi enced the effects of a tall-off in construction activ ity during the second half, particularly in housing. The Company's backlog of orders at year end amounted to $340,000,000, compared with $241,000,000 at the end of 1973. Demand for valve and steel products used by energy-related and other heavy industries is expected to continue strong for some time to come. Durinq 1974, $45,828,000 was exoended oo capital imDrovements. princioaUv at CF&l Steel Corporation, Over the past five years; substantial modernization and cost reduction have been ac complished. Particular emphasis has been placed on eliminating unprofitable and marginal areas and strengthening the productivity and perfor mance of ongoing operations. During 1974, the Roebling, N.J., plant of CF&.I Steel Corporation was closed and disposed of, as was a domestic hydronic heating plant. The improvements made during this period enabled Crane to satisfy the unusually strong demand for its products. In August of 1974, the regular quarterly cash dividend of $.25 was increased to $.35 per share, and an extra cash dividend of $.20 per share was paid in December, 1974. This raised the total cash dividends to $1.40 for 1974, compared with $.93 in 1973,- an increase of approximately 50 per cent. In accordance with the Company's previously established policy, a 2 per cent stock dividend was paid on February 21,1975. On February 19, 1975, the Company an nounced that it was contemplating-an exchange offer for any and all outstanding common stock oInspiration Consolidated Copper Company, othei than 132,200 shares owned by its subsidiary, CF& Steel Corporation. The terms of the offering, ccg templated to be made by a new subsidiary of trl Company, will be contained in a prospectus pres ently intended to be filed for registration. On behalf of the Board of Directors, we wist to express our thanks to the shareholders, employ ees, customers and suppliers for their contribu tions toward a truly outstanding year. Respectfully submittec February 25,1975 D. C. Fabiat Presider /.V T. M. Evar Chairma * CRTX 0306 Contents 1 Financial highlights 2 Letter to shareholders 3 Financial statements 8 Financial review 12 Analysis of summary o( operations 14 Review of operations ' Crane Serves Industrial markets with-- Fluid and Pollution Control Products Valves Fittings Pumps Water conditioning systems Filtration equipment Steel Products Rails and accessories Oil casing and tubular products Merchant shapes and structurals Wire and wire products Aerospace and Aircraft Products Skid-control braking systems Valves, pumps, controls and other aerospace accessories and systems Building and construction markets with-- Building Products Plumbing Building materials Cutting edges Structurals Annual Meeting The Crane Co. 1975 annual meeting will be held Monday, April 21,1975, at the First Floor Meeting Room, Bankers Trust Company, 280 Park Avenue, New York City, at 10 A.M. Form 10-K Copies of Form 10-K for the year 1974 which are to be filed with the Securities and Exchange Commission are available without charge to each shareholder of the Company upon written request made to the Secretary, 300 Park Avenue, New York, N.Y. 10022. Cover The scope of Crane's Interests is shown in part on the cover--valves to control the flow of cooling water in a refinery, steel products, clean room assembly of components for a jumbo jet's braking system, and a branch in the Company's distribution system for building products. United States Operations Crane-U.S.A. New York, New York R. L. Biller, Vice President 4 General Manager Hydro-Aire Division Burbank, California B. J. Barnes, Vice President 4 General Manager CF8.I Steel Corporation Pueblo, Colorado C. C. Crawford, President Huttig Sash & Door Company St. Louis, Missouri R. F. Eson, President Canadian Operations Crane Canada Limited Montreal, Canada R. S. Reade, President International Operations Crane Australia Pty. Limited St. Marys, Sydney, Australia P. J. Farrell, Managing Director Crane Ltd. London, England Leslie V. Chater, Chairman J, M. Fraser, Managing Director Crane S.A. Paris, France Leon Skarniak, President Crane-Deming de Mexico S.A. Monterrey, Mexico Luis Obeso, Genera! Manager Crane Nederland N.V. Deventer, The Netherlands G. J. de Horn, Managing Director Crane-FISA, S.A. Bilbao, Spain A. J. Pijufin, General Manager 120th Anniversary This year Crane marks its 120th Anniver sary. Richard Teller Crane built the "R. T. Crane Brass & Bell Foundry" In Chicago in 1855 and, on July 4th that year, poured his first heat. From this 14 x 24 foot foundry specializing in brass castings, the Company has grown to employ 25,000 people in 46 plants In eight countries and over 100 company-owned wholesale outlets in North America. CRTX 0307 ^rane Co. Annual Report 1974 financial Highlights saso - net Sales per Share 200- 225.51 1974 Saies............................................................ Income before income taxes................... Net income.............................................. Cash dividends......................................... Net working capital................................ Total assets.............................................. Common shareholders' equity . . . . Common shares outstanding at year end $1,144,031,000 97,354,000 56,133,000 7,221,000 180,717,000 607,947,000 219,556,000 5,030,491 * 1973 $947,093,000 32,558,000 20,577,000 4,940,000 146,942,000 587,266,000 174,112,000 5,007,965 150124.06 o- 1970 1971 1972 1973 1974 $12- Net Income per Share 10- 11.05 I Ratios at year end: Net income to sales............................ Common shareholders' income to average equity............................ Current ratio......................................... 4.9% 28.5% 2.1 Per Common Share: Net income......................................... Cash dividends..................................... Common shareholders' equity . . . $11.05* 1.40 43.65 ' Net income per common share would amount to $8.67 ($3.08 in 1973) assuming conversion of subordinated debentures. ^Adjusted for 2% stock dividend in February, 1974. 2.2% 12.2% 2.0 3.93 2- 01970 1971 1972 1973 1974 $45- Shareholders' Equity per Share 40- 43.65 $3.93t .93t 34.09t ' 35- 3027.04 25- 25.51 30.56 34.09 'J- 20- 15- 10- 5- 01970 1971 1972 1973 1974 CRTX 0308 Consolidated Statement of Income for Years Ended December 31 Net Sales................................................................................... Operating Costs and Expenses including depreciation of $34,879,959 ($30,162,531 in 1973): Cost of sales..................................................................... Selling, general and administrative................................. Operating Profit..................................................................... Other Income (Deductions): Interest--net.......................................................................... Gain or (loss) on disposal of capital assets--net.... Dividend income on investments..................................... Miscellaneous--net............................................................ Income Before Income Taxes.............................................. Provision for Income Taxes................................................... Net Income.............................................................................. Net income per common share: j On average shares outstanding............................ Assuming conversion of debentures................... 1974 $1,144,030,532 921,266,824 101,878,527 1,023,145,351 120,885,181 (14,280,565) . (8,159,582) 1,181,285 (2,271,713) (23,530,575) 97,354,606 41,221,204 $ 56-133,402 $11.05 8.67 1973 $947,093,335 807,808,174 88,311,712 896,119,886 50,973,449 (16,328,030) 6,697 1,084,751 (3,178,949) (18,415,531) ' 32,557,919. II,981,098 $ 20,576,820 $3.93 3.08 Consolidated Statement of Earned Surplus for Years Ended December 31 1974 1973 Balance at Beginning of Year.............................................. Net Income.............................................................................. Dividends: Preferred shares--$3.75 per share..................................... Common shares: Cash--$1.40 per share ($.93 in 1973)............................ Stock--2%, market value of 99,944 shares (101,281 in 1973)............................................................ Excess of Cost Over Par Value of Reacquired Shares--Net: 1,081 preferred (1,995 in 1973) and 433,888 common (170,000 in 1973) reacquired, less 36,324 issued under stock options (260 in 1973)................................ Balance at End of Year............................................................ $ 104,083,802 56,133,402 160,217,204 97,073 7,123,585 1,764,011 $ 91,330,197 20,576,820 III,907,017 106,120 4,833,542 2,122,850 6,639,041 15,623,710 . $ 144,593,494 760,703 7,823,215 $104,083,802 See Financial Review. Crane Co. and subsidiaries CRTX 0309 Consolidated Balance Sheet at December 31 ASSETS Current Assets: Cash....................................................................................... Short-term investments....................................................... Accounts receivable, less allowances of $2,550,489 ($2,110,053 in 1973)....................................................... Inventories, less LIFO reserves of $47,307,087 ($35,007,170 in 1973), at lower of cost or market: Finished goods........................................................... Work in process........................................................... Raw materials and supplies......................................... Prepaid expenses................................................................ Total current assets............................................. 1974 $ 14,369,156 37,470,229 131,293,660 71,018,203 54,678,894 34,730,354 160,427,451 3,112,336 346,672,832 1973 $ 15,492,229 22,468,552 126,449,350 69,657,563 36,429,335 24,547,981 130,634,879 2,641,833 297,686,843 Investments and Other Assets: Investments at cost: , Southern Pacific Company, 300,000 common shares (500,000 in 1973)........................................................... Outlying lands................................................................ Miscellaneous........................................ Other assets......................................................................... 13,173,146 1,241,874 366,152 14,781,172 2,361,743 17,142,915 21,480,599 1,244,581 342,556 23,067,736 2,754,115 25,821,851 Property, Plant and Equipment at Cost: Land.................................................. Buildings and improvements . . . Machinery and equipment .... Less accumulated depreciation 18,198,017 124,993,970 401,248,313 544,440,300 300,308,885 244,131,415 $607,947,162 16,755,412 124,108,618 433,382,207 574,246,237 310,488,671 263,757,566 $587,266,260 Crane Co. and subsidiaries CRTX0310 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt................................ Loans payable to banks....................................................... Accounts payable................................................................ Accrued payrolls, taxes and other liabilities................... U.S. and foreign taxes on income........................... . . Total current liabilities.......................................... Long-Term Debt (see details on page 7)................................. Deferred Income Taxes............................................................ Reserves and Other Liabilities.............................................. Minority interest in Subsidiaries.............................................. Shareholders' Equity: Preference stock of Glenfield & Kennedy Holdings Lim ited, 5%%......................................................................... Cumulative preferred shares, 3%%, par value $100 (redeemable): Authorized--55,144 shares (60,509 in 1973); outstanding--25,761 shares (26,842 in 1973) after deducting 29,383 shares in treasury (33,667 in 1973) . ..............................................:...................... Serial preferred shares, par value $5: Authorized--600,000 shares......................................... Common shareholders' equity: Common shares, par value $12.50: Authorized-- 20,000,000 shares; outstanding--5,030,491 shares (5,007,965 in 1973) after deducting 1,244,236 shares in treasury (810,348 in 1973)..................................... Capital surplus................................................................ Earned surplus--$33,163,027 ($8,680,801 in 1973) is not restricted under a long-term debt indenture . . Total common shareholders' equity................... Total shareholders' equity................................ 1974 1973 $ 4,768,981 18,991,121 55,111,853 48,669,613 38,414,115 165,955,683 175,150,939 7,001,044 24,641,434 10,745,496 2,320,000 $ 6,311,987 25,089,348 66,303,607 49,994,040 3,045,378 150,744,360 211,887,774 6,118,342 20,649,525 18,749,750 ' 2,320,000 2,576,100 2,684,200 62,881,138 12,081,834 62,599,562 7,428,945 144,593,494 219,556,466 224,452,566 $607,947,162 104,083,802 174,112,309 179,116,509 $587,266,260 See Financial Review. CRTX0311 5 Consolidated Statement of Capital Surplus for Years Ended December 31 Balance at Beginning of Year................................................... Excess of subordinated debentures converted over par value of 320,146 common shares issued (19 in 1973). Excess of market value over par value of common shares issued as 2% stock dividend............................ Balance at End of Year.......................................... 1974 $ 7,428,945 4,138,178 514,711 $12,081,834 1973 $ 6,571,800 308 856,837 $ 7,428,945 Consolidated Statement of Changes in Financial Position for Years Ended December 31 1974 1973 Source of Funds: Operations: Net Income.......................................................................... Depreciation..................................................................... Other, net.......................................................................... Reduction in investments................................................... Disposals of property, plant and equipment.................. $56,133,402 34,879,959 4,035,959 95,049,320 8,286,564 30,574,163 133,910,047 $ 20,576,820 30,162,531 6,944,145 57,683,496 523,175 15,959,706 74,166,377 Application of Funds: Additions to property, plant and equipment.................. 45,827,971 Reduction in long-term debt.............................................. 36,736,835 Reacquisition of shares less options exercised and stock issued for converted debentures-....................... 3,576,687 Cash dividends......................................... 7,220,658 Reduction in reserves, minority interest and other. . . 6,773,230 100,135,381 Net Source (Application) of Funds........................................................... $33,774,666 48,314,953 32,815,794 3,111,409 4,939,662 2,536,022 91,717,840 $(17,551,463) Increase (Decrease) in Components of Working Capital: Current assets: Cash and short-term investments................................ Accounts receivable....................................................... Inventories.......................................................................... Prepaid expenses...................... Current liabilities: Current maturities of long-term debt........................... Loans payable to banks................................................... Accounts payable............................................................ Accrued payrolls, taxes and other liabilities .... U.S. and foreign taxes on income................................ Increase (Decrease) in Working Capital................................ $13,878,604 4,844,310 29,792,572 470,503 48,985,989 $ 6,831,123 7,428,811 (5,613,254) 656,541 9,303,221 (1,543,006) (6,098,227) (11,191,754)' (1,324,427) 35,368,737 15,211,323 $33j774j666 (266,113) 7,361,964 18,007,967 1,520,185 230,681 26,854,684 $(17,551,463) See Financial Review. Crane Co. and subsidiaries CRTX0312 Details of Long-Term Debt at December 31 Crane Co.: QYz% Sinking fund debentures due ,1992, $2,000,000 due annually, after deducting $5,246,000 in treasury in 1974 ............................................................................... Miscellaneous..................................................................... Subordinated debentures: 7% Sinking fund debentures due 1993, up to $1,000,000 due annually, after deducting $3,897,000 in treasury in 1974 ............................................................................... 7% Debentures due 1994 ................................................... 5% Convertible debentures due 1993, convertible at $25 per share (289,616 common shares reserved in 1974), after deducting $5,844,000 in treasury in 1974 . . . 5% Convertible debentures due 1994, convertible at $28.75 per share (664,532 common shares reserved in 1974), after deducting $31,377,000 in treasury in 1974 . CF&i Steel Corporation: 8% First mortgage and collateral trust bonds, sinking fund series due 1983, $1,000,000 due quarterly . . . 4%% Convertible sinking fund debentures due 1977 (called for redemption in 1974) ................... Huttig Sash & Door Company: 8%% Notes payable to banks Foreign Subsidiaries: Crane Canada Limited sinking fund debentures: 5%% (collateralized by a general claim on property and assets), due 1985, $440,000 due annually, after deducting $36,000 in treasury in 1974....................... Crane Ltd. (England): 13%% bank term loan due 1977, fluctuating with bank rate (14%% in 1973)......................................... 13%% bank term loan due 1978, fluctuating with bank rate......................................................................... Glenfield & Kennedy Holdings Limited: 5%% unsecured loan stock due 1982....................... Miscellaneous................................................................ 1974 $ 30,754,000 317,167 31,071,167 15,307,400 52,077,000 7,240,400 19,105,300 93,730,100 124,801,267 33,000,000 ............ -- 33,000,000 6,600,000 4.176.000 1.740.000 2,931,021 1,902,651 17,349,672 $175,150,939 1973 $ 33,848,000 475,910 34,323,910 17,978,400 52.077.000 16,072,600 32.766.000 118,894,000 153,217,910 37,000,000 3,692,500 40,692,500 1,500,000 7.004.000 4.176.000 3,355,581 1,941,783 16,477,364 $211,887,774 CRTX 0313 Financial Review and Accounting Policies Consolidation The consolidated financial statements include all subsidiaries. International balance sheet and operating accounts have been translated at current rates except for fixed asset and equity accounts which were trans lated at historical rates. Unrealized exchange gains or losses are credited or charged to a reserve for future foreign currency valuation, which reserve was decreased by $32,000 during 1974 and increased by $558,000 in 1973. Extraordinary after-tax losses of $7,777,000 in curred in 1973 in connection with closing certain plants by CF&I Steel Corporation, a consolidated subsidiary, were charged against the deferred credit from acquisi tion reserve, established at the time of acquisition, and minority interest, and thereby excluded from Crane's consolidated net income. In 1973, $2,633,000 of the de ferred credit from the CF&I Steel Corporation acquisi tion was amortized to cost of sales. Subsidiaries operating outside the United States and Canada had net sales of $82,367,000 in 1974 com pared with $75,762,000 in1973. In1974, net income from foreign operations amounted to $42,000 compared with $1,509,000 in 1973. These subsidiaries represented 12.9 per cent of shareholders' equity in 1974, down from 15.9 per cent in 1973. Plant Improvement In 1974, $45,828,000 was invested in improving production facilities, principally at the Pueblo, Colorado steel mill and other domestic facilities. The cost of property, plant and equipment is de preciated over estimated useful lives on the straightline method. Generally, for income tax purposes, depreciation is determined by accelerated depreciation methods as permitted under tax regulations and de ferred income taxes are recognized for the difference. Research and Development The Company's research and development activi ties are directed primarily toward improvement of exist ing products and development of new products in the Company's lines of business. Costs incurred in the de velopment of new products and of changes to existing products are expensed as incurred. Pensions Pension costs charged against operations lor the retirement plans maintained by the Company and its subsidiaries were $38,945,000 for 1974 compared with $23,715,000 for 19.73. In connection with a CF&I Steel plant closing dur ing 1974, $11,500,000 of vested pension liability was charged to "Gain or (loss) on disposal of capital assets -net". This charge was partially offset by $3,033,000, representing the excess of equity over cost of minority shares purchased. The increase in pension costs is due to higher benefits granted to employees and retirees during the year and to an acceleration of amortization of prior service costs to a 10-year basis, the effect of which In creased pension costs by $4,550,000 before income taxes. Current service and' interest costs are funded annually, and prior service costs are funded on a 10year basis. At December 31, 1974, vested benefits'exceeded the total of pension plan assets and balance sheet accruals by $172,000,000 ($97,000,000 at December 31, 1973) before future income tax benefits. This Increase was principally caused by the full application of the benefits vested as a result of the August 1, 1974 CF&I A', Steel labor contract. Miscellaneous Deductions Components are as follows: Minority interest Loss on disposal of investments Start-up and phase-out costs Other Gain on repurchase of debentures Long- and Short-Term Financing I974 1973 (In thousands) $1,722 $1,7Bn 2,148 . -- ___ 89 3,957 IL685) $2,272 2,577 ___ 29 4,383 11,204) $3,179 Long-term debt was reduced by $36,737,000 dur ing 1974 compared with a net amount of $32,816,000 during 1973. The 1974 decrease was accounted lor principally by conversion of debentures of $8,141,000, and repurchases of debentures of $23,803,000. At December 31, 1974, the principal amounts of long-term debt repayments required for the next five years were $4,769,000 in' 1975; $4,812,000 In 1976; $9,741,000 in 1977; $8,390,000 in 1978; and $7,097,000 in 1979. * 8 Crane Co. and subsidiaries CRTX 0314 f At December 31, 1974, there were $71,000,000 of mused short-term credit lines available with various Jomestic and foreign banks, and such lines are subject o annual review. The Company's cash management system is such that cash balances recorded in its accounts are substantially less than actual cash on deposit in banks. This excess, commonly referred to as .loat, is used by the Company to satisfy its informal practice of maintaining compensating balances on de posit with banks. Reserves and Other Liabilities A summary of reserves and other liabilities follows: 1974 1973 (in thousands) Pension and wage benefits $20,728 $16,358 Relining and rebuilding of blast furnaces 1,499 . 2,047 ruture foreign currency valuation 689 ' 721 Deferred credit from acquisition 211 Miscellaneous 1,725 1,313 $24,641 $20,650 The increase in the reserve for pension and wage benefits was due principally to recording the vested iension liability arising from the disposal of a plant. Income Taxes A reconciliation of consolidated income before in come taxes to the provision for income taxes (federal, state and foreign) is as follows: 1974 1973 (in thousands) Income before income taxes $97,354 $32,558 Permanent tax adjustments: Depletion 1,571 1,292 Original issue bond discount 1,015 1,080 Nontaxable credit on excess of equity over cost of minority shares acquired 3,033 2,633 Nontaxable domestic dividends 793 921 Nontaxable pension reserve 926 1,587 Minority interest (1,722) (1,780) Other 156 989 5,772 6,722 Taxable income for accounting purposes 91,582 25,836 Tax @ 50% (composite rate) Less investment tax credit realized 45,791 12,918 4,570 937 Provision for income taxes $41,221 $11,981 The provision for income taxes is composed of the following: 1974 1973 (in thousands) Deferred taxes: Tax effect of timing differences: Depreciation Pension expenses Loss carryforward Plant closing costs $ 3,983 -- -- (2.946) $ 3,504 1,111 2,900 -- Other (60) 231 Total deferred taxes Current income taxes paid or payable 977 40,244 7,746 4,235 Provision for income taxes $41,221 $11,981 The above provisions include .foreign taxes of $5,319,000 and $3,209,000, and state taxes of $3,288,000 and $1,115,000 in 1974 and 1973, respectively. United States income taxes have not been pro vided on undistributed earnings of foreign subsidiaries, since foreign tax credits available on any portion of these earnings not required for indefinite reinvestment are such that no significant tax would be payable upon distribution. Leases Rental expense was as follows for all leases for the years ended December 31,1974 and 1973: 1974 1973 (in thousands) Rentals on noncapitalized financing leases: Minimum $ 4,847 $ 5,440 Contingent 701 438 Rentals on operating leases: Minimum Contingent 8,137 7,859 311 1,084 $13,996 $14,821 Rental expense has been reduced by rental in come from subleases of $1,514,000 during 1974 and $1,363,000 during 1973. Financing leases are defined as those in which the initial term of the lease substantially covers the useful economic life of the property or assures recovery of the lessors' investment. All others are considered operat ing leases. V' CRTX031S 9 The Company and subsidiaries lease buildings and equipment under noncancelable leases providing for annual rentals as follows: Total Operating Leases Financing Leases Machinery Machinery and and Buildings Equipment Buildings Equipment 1975 $ 7,887 1976 6,990 1977 6,187 1978 5,497 1979 5,342 1980-84 22,767 1985-89 20,052 1990-94 14,229 1995-beyond 4,306 (in thousands) $1,742 $1,441 $ 813 1,497 715 1,099 1,260 232 1,274 1,037 42 1,338 860 9 1,513 3,042 6 6,964 1,593 -- 5,872 21 -- 3,109 - -- 2,559 $ 3,891 3,679 3,421 3,080 2,960 12,755 12,587 11,099 1,747 The above amounts have been reduced for rental income from noncancelable subleases by approxi mately $1,209,000 in 1975 and lesser amounts there after (total reduction $4,166,000). Certain of the leases may be renewed for periods of from 3 to 20 years and provide for an option to purchase or for annual rental payments of minimal amounts. The estimated present values of the net fixed mini mum rental commitments for all noncancelable financ ing leases, net of noncancelable subleases, are as follows: December 31 1974 1973 Buildings Machinery and equipment Subleases Net present value (in thousands) $15,617 $16,268 31,626 31,797 (2,108) (2,807) $45,135 $45,258 The weighted average interest rate used in the computation was 6V4 per cent and ranged from 4Vz per cent to 14V2 per cent. If all financing leases had been capitalized, net in come for the years ended December 31,1974 and 1973 would not have been significantly affected. Stock Options A summary of option transactions under all plans follows: Outstanding January 1,1974 2% Stock dividend Options granted Options expired Options exercised Outstanding December 31,1974 Number of Shares 85,952 1,647 46,750 (13,179) (36,324) 84,846 Price per Share $14.90-26.16 19.00-31.25 16.82-26.68 14.90-24.26 $15.44-31.25 At December 31, 1974, options for 29,139 shares were exercisable and 4,018 shares were available for grant. In 1973, options for 11,000 shares were granted and options for 260 shares were exercised. All shares and per share statistics have been adjusted for the 2 per cent stock dividend in 1974. None of these are com pensatory plans requiring charges to income. Litigation The litigation with American Standard, Inc. arising* out of the merger of Westinghouse Air Brake Compan^ continues. In December, 1974, the Court of Appeals re versed a lower court decision and held Crane without liability to American Standard, Inc. for so-called "in sider profits" arising out of Crane's forced sale of Standard stock received on consummation of the merger of Westinghouse Air Brake Company. There also remains pending the lawsuit brought by Crane against American Standard and Blyth & Company, Inc., in which the court has previously found violations of the Securities Exchange Act of 1934 by the defendants and directed the District Court to make an assessment of damages. CRTX0316 AA Report of Independent Accountants To the Shareholders of Crane Co. We have examined the consolidated balance sheet of Crane Co. and subsidiaries as of December 31,1974 and 1973, and the related consolidated statements of income, earned surplus, capital surplus and changes in financial position for the years then ended. Our examinations were made in ac cordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We did not examine the financial statements of CF&I Steel Corporation, a consolidated subsidi ary, which statements were examined by other independent certified public accoun tants whose reports thereon have been fur nished to us. Total assets and net sales of CF&I Steel Corporation constituted approxi mately 47% and 38%, respectively, of the related consolidated totals in 1974 (49% and 36% in 1973). Our opinion expressed herein, insofar as it is related to the amounts included for the foregoing subsidiary, is based solely upon the reports of the other independent certified public accountants. In our opinion, based upon our exami nations and the aforementioned reports of other independent certified public accoun tants, the financial statements referred to above present fairly the consolidated finan cial position of Crane Co. and subsidiaries at December 31, 1974 and 1973, and the consolidated results of their operations and changes in financial position for the years then ended, in conformity with generally ac cepted accounting principles applied on a consistent basis. New York, N.Y. January 27,1975 Quarterly Results for the Year (in thousands of dollars) Quarter 1st 2nd 3rd 4th _________ Sales_________ 1974 1973 $ 257,910 306,214 290,792 289,115 $ 214,916 239,958 244,068 248,151 $1,144,031 $ 947,093 Net Income 1974 1973 $ 7,130 15,746 16,275 16,982 $ 2,649 5,345 5,180 7,403 $56,133 $20,577 Market and Dividend Information--Common Shares New York Stock Exchanqe Price per Share Quarter 1974 1973 High. Low .Hjgh Low 1st $19% $15 $22'/* $18% 2nd 26 18% 19 14% 3rd 34 21% 20i/a 15% 4th 33 24% 197/a 15% 4 Adjusted for 2% stock dividend in February, 1974. (Includes a special dividend of $0.20 in the 4th quarter ($0.10 in 1973). Net Income per Common Share 1974 1973* $ 1.40 $0.50 3.10 1.01 3.20 .99 3.35 1.43 $11.05 $3.93 Dividends per Share 1974 1973* $ .25 .25 .35 .55 . $1.40t $.20 .20 .20 33 $.93t CRTX0317 11 $ Millions 300- Debt to Equity Relationship too- so- 0-- f (I II 1970 1971 1972 1973 1974 $ Millions 90 - Cash Flow Net income plus Depreciation 30- Oepreciation 70- Income 60- 91.0 40- 38.0 42.8 30- 20- 10- 0- 1970 1971 1972 1973 1974 Analysis of Summary of Operations Crane's basic businesses have been substantially broadened sin^j^ 1968 by the acquisitions of CF&I Steel Corporation in 1969 and Huttig Sash & Door Company in 1970. Prior to that time Crane was primarily in volved in the manufacture and distribution of fluid and pollution control, aerospace and building products in North America, and in the manufacture of fluid and pollution control products, principally in Europe and Australia. The acquisition of CF&I Steel Corporation in 1969 established Crane in the domestic steel business, serving primarily the Rocky Mountain area. At the end of 1974 CF&I Steel operated a fully integrated mill in Pueblo, Colorado with its own iron ore, coal, limestone and dolomite mines to sup ply the basic steelmaking facility. At the end of 1974 Huttig Sash & Door Company operated twenty-seven branch warehouses in the south, south east, midwest and southwest. Its principal customers are building material dealers and residential and apartment building contractors. Since 1969 the basic Crane business has made several changes. The investment in building products has been reduced with the discontinuance of heating and air conditioning products and cast iron bathtubs. The fluid and pollution control investment has been increased so that capacity at the end of 1974, particularly steel valve capacity, has been increased approxi mately 50 per cent. Crane Supply, the distribution arm of Crane manufac turing, has emphasized marketing of industrial products and distributing products to commercialbuilding rather than residential building markets. Wage and price controls were imposed during 1971, at a time when valve and steel prices were depressed. Thereafter, only partial recovery of cost increases was permitted, so the improved margins were not com pletely realized until controls were completely removed on April 30,1974. Demand for steel has been high since 1972. In late 1973, valve plants increased production to meet strong demand. Consolidated sales iTM creased 12.2 per cent over the prior year, principally in building and steel products. Aerospace business also increased due to an acquisition. In 1974, consolidated sales increased 20.8 per cent over 1973, due principally to the cessation of price controls on valve and steel products and strong demand for other Industrial products manufactured and dis tributed by Crane. This increase was net of reduced sales for building products and operations closed during the year. Depreciation expense increased 6.7 per cent between 1972 and 1973 and 15.6 per cent between 1973 and 1974. This reflects, in part, the Com pany's authorized $236,000,000 capital program, of which approximately $166,000,000 was spent in the steel business over the past five years. Operating profit increased 45.4 per cent between 1972 and 1973, and 137.2 per cent between 1973 and 1974. In 1973, this improvement resulted from the strong demand for steel products and building products. The 1974 improvement was primarily due to elimination of price controls, combined with heavy demand for valve and steel products by energy-related and other heavy industries, and elimination of unprofitable and marginal oper ations. The decline in building products during the second half of 1974 only slightly reduced the improved operating margins. Income before taxes increased 87.6 per cent between 1972 and 1973, `and 199 per cent between 1973 and 1974 as a direct consequence of the improvements in sales and operating profits. Income taxes increased 144.5 per cent between 1972 and 1973, and 244.1 per cent between 1973 and 1974. Income taxes for 1973 were 36.8 per cent and for 1974 were 42.3 per cent of income before taxes. Perma nent tax savings are essentially at a fixed amount so that as income beforl income taxes increases, the percentage of tax to income increases. 9 onr( citheiWIarioe CRTX0318 Five Year Summary of Operations (in thousands) 1970 1971 1972 1973 1974 Net Sales (1).............................................. Depreciation.......................................... Operating Profit..................................... Interest Expense................................ Income Before Income Taxes . . . Income Taxes.......................................... Income Before Extraordinary Credits . . Extraordinary Credits............................ Net Income.............................................. income per Common Share (2) (3) Primary Income Before Extraordinary Credit. Extraordinary Credit....................... Net Income..................................... Average Number of Shares .... $680,207 22,459 20,039 20,639 2,841 5,414 8,255 -- $ 8,255 $ 1.48 -- $ 1.48 5,483 $791,508 26,837 30,656 20,430 13,458 (3,169) 10,289 873 $ 11,162 $844,395 28,277 35,050 19,476 17,354 (4.901) 12,453 2,020 $ 14,473 $947,093 30,163 50,973 19,406 32,558 (11,981) 20,577 -- $ 20,577 $1,144,031 34,880 120,885 18,933 97,354 (41,221) 56,133 -- $ 56,133 $ 1.88 .16 $ 2.04 5,418 $ 2.31 .38 $ 2.69 5,333 $ 3.93 -- $ 3.93 5,206 $11.05 -- $11.05 5,073 Assuming Conversion of Debentures Income Before Extraordinary Credit. Extraordinary Credit....................... Net Income..................................... Average Number of Shares .... Dividends per Common Share Cash (3).............................................. Stock................................................... $ 1.21 -- $ 1.21 7,817 $ .75 2% $ 1.54 .12 $ 1.66 7,466 $ .77 2% $ 1.86 .28 $ 2.14 7,329 $ .80 -- $ 3.08 -- $3.08 7,060 $ .93 2% $ 8.67 -- $ 8.67 6,522 $ 1.40 2% (1) In early 1971 the Company's investment in Huttig Sash and Door Company was increased from 55 per cent to 87 per cent and from 1971 this subsidiary was included in the consolidated financial statements, whereas previously the equity in the earnings was reported. The contribution in 1971 was $70,530,000 of net sales and $2,011,000 of net income, compared to equity in 1970 net income of $525,000. (2) After Preferred Dividends. (3) Adjusted for stock dividends and the 2 for 1 stock split in 1972. Analysis of Net Sales and Operating Profit (in thousands) 1970 1971 1972 1973 1974 Amount % Amount %_ Net Sales Crane Domestic .... $285,443 CF&l Steel Corporation . 242,300 Huttig Sash & Door Company 42 35 -- $291,515 37 261,719 33 70,530 9 Crane Canada Limited . . International Operations . 86,301 13 66,163 10 98,337 12 69,407 9 Total Net Sales . . . $680,207 100 $791,508 100 Operating Profit Crane Domestic .... $ 5,163 20 CF&l Steel Corporation . 13,696 54 Huttig Sash & Door Companyr _ -- Crane Canada Limited . . International Operations . 2,161 9 4,156 17 25,176 100 Corporate....................... (5,137) Total Operating Profit . $ 20,039 $ 6,136 17 17,193 49 4,527 13 3,706 10 3,955 11 35,517 100 (4,861) $ 30,656 Amount % $299,389 282,039 84,300 102,324 76,343 36 33 10 12 9 $844,395 100 $ 7,776 15,304 6,419 5,112 5,202 20 38 16 13 13 39,813 100 (4,763) $ 35,050 Amount _% $319,423 342,814 93,904 115,190 75,762 $947,093 34 36 10 12 8 100 $ 9,433 27,016 9,062 6,452 4,551 17 48 16 11 8 56,514 100 (5,541) $ 50,973 Amount % $ 377,312 438,721 89,762 155,869 82,367 33 38 8 14 7 $1,144,031 100 $ 28,532 22 75,261 59 7,253 6 13,437 11 3,025 2 127,508 100 (6,623) $ 120,885 CRTX0319 Fluid and Pollution Control In fluid and pollution control ^ markets, Crane offers one of the ' broadest lines of valves, pumps and water and waste treatment equipment available from any manufacturer today. These products are used by industries and munici palities throughout the world to control, govern, transfer, filter and clarify the flow of all types of fluids. Crane Domestic Sales and.eaminas hit an all-time hiah In 197a for Crane products used in fluid and pollution ccrt.c1 markets. The demand for energy-related and heavy industrial products increased sharply during the year. The petroleum, chemical, steel, power, and pulp and paper markets were particularly active. Valve, sales.weca the biahest in the ComDAny's rustorv. j.ne. Rxirsmeiv strona nemand for steel valves end. im provements made in several orrrU'ct^ci facilities durina the past iwq ye.ars-'i,r-e the main reasons for ^-cuienT performance. Increased capital spending by thj[ chemical process industry resulted i* a significant rise in orders for Chem- pump leakproof pumps. This product line is also finding growing acceptance in nuclear power and general industrial applications. Deming sales to municipalities and industrial pump markets were also up. New products introduced included sewage pumps which strengthened Deming's position in the pollution con trol market. Orders and shipments from the Cochrane Environmental Systems op eration were at a record high. There is a growing demand for pollution control equipment by municipalities and indus try, and interest in ozonation is increas ing rapidly. A Cochrane ozonator was introduced, and initial orders were re ceived. A packaged waste treatment system for industrial applications was also developed. Crane Supply Company serves in dustrial markets in the United States through its 59 branches, distributing < Crane supplied 139 Deming pumps for a new pollution control system installed at an aircraft manufacturing plant. These pumps handle oils, acids and other chemical wastes, transferring fluids from one stage of treatment to the next. Some of the pumps meter fluids and feed chemicals into various treatment stages. CRTX 0320 ane valves, pumps and fittings as all as related products purchased am other manufacturers. During re lit years this Division has steadily imoved its performance and registered cord sales and earnings in 1974. Overall, capital spending in prinpal market areas is expected to re am strong in 1975. Since Crane offers oducts to handle the majority of poltion control requirements as well as lives and pumps used in the systems, .e Company is in a position to inease its participation in this field. The jtlook for Crane valves and pumps is vorable in the chemical processing id petroleum industries. In the nu.ear power field, Crane is a major jurce of a broad line of products built nuclear standards. The Company's gh backlog of orders and strong arkets for major product lines should jsult in another good performance 1975. need for valves used in petroleum proc essing led to excellent performance in France and Spain despite sharp cost increases. With a strong order backlog, both operations should have good resultsinWS. Crane Australia turned in a strong performance due to increased capital spending in that country, and the fore cast for the coming year is good. Sales and earnings were up in Mexico, and continued growth and expansion are expected there. rane Canada Canadian operations had a record jar in 1974 as the country's economy imamed at a good level despite a ghtening mbney supply and rising inirest rates. Demand for iron, steel and jass valves was strong, reflecting the 5ivity in municipal waterworks, shipuilding and industrial.. construction, rane Supply Division, the wholesaling aeration which serves these markets, so showed substantially increased ales and earnings. Capital spending is expected to amain strong throughout 1975, providig a good market for valves and other idustrial products in Canada. irane International In the United Kingdom, Crane Ltd. offered from inflation, price- controls, igh interest rates and labor problems, owever, the Company has a strong acklog, particularly in steel valves, fith some easing of price controls and n improved labor climate, 1975 should how a favorable recovery. Inflationary pressures were felt iroughout the European operations ast year. An unprecedented worldwide $ 1. This specially engineered spherical steel slide valve, designed to withstand temperatures up to 1450F, will divert production gases into a de-polluting unit at a Texas oil refinery. 2. Manufactured in France, this 2500 psi stop check valve is for water service at a power plant in Italy. 3. Iron and copper are removed from boiler condensate with three Cochrane filter and ion exchange units installed at a pulp and paper mill in Nova Scotia. Crane steel valves are used to control "flow. 4. Crane gate valves regulate the flow of fuel oil to the burners at a glass-making plant in England. 5. The use of Chempump pumps to circulate freon through a heat exchanger in this refrigeration system eliminated leakage. CRTX 0321 15 Steel $ CF&l Steel Corporation serves the transportation, construction, petroleum, mining, metalworking and farming and ranching markets, primarily in the rapidly growing Rocky Mountain area. A vertically integrated steel company, CF&l operates its own mines and quarries to supply coking coal, iron ore, limestone and dolomite. The Company owns over 350,000 acres of outlying lands in the Rocky Mountain area. CF&l Steel Corporation CF&l established record highs in sales and earnings in 1974, with capac ity production at the Pueblo plant re flecting the tremendous demand for steel products. " '` 1. In 1974, CF&l's tonnage of high strength oil country casing and tubing booked and shipped was approximately 30 per cent higher than in any previous year. 2. Smokeless charging is a major environmental feature of the new coke ovens. 3. Heat treating of grinding balls determines the steel's microstructure for hardness and wearing quality. CRTX 0322 < e W Sales of rail and accessories rose, id are expected to remain strong, here is a growing demand for imroved track performance, and the evelopment of energy sources in the estern half of the United States, F&l's primary market area, requires ew rail lines. The increasing use of nit trains, with heavier loads and igher speeds, also adds to the need >r track structure improvement. The demand for oil country casing .nd tubing used by the oil and gas inustries in exploration and drilling was t a high level, and the outlook for 1975 5 good. CF&l's policy of supplying idependent oil operators through disibutor stocks has met with wide pproval. Continued increase in the tonnage <f ores processed in the United States esulted in rising sales for grinding -alls and grinding rods. Use of grinding alls by the cement industry remained t record levels and CF&I maintained tn excellent share of this market. Sales of hot rolled bars for manu^tured products used in agriculture, ^iing and petroleum operations are ixpected to continue strong. There was also high demand for he entire wire product line, and with iF&l's strong position in the agriculure market, the outlook continues to ie excellent. CF&I continued its program to im prove air and water quality in the Pueblo area, resulting in an expendi ture of $3,834,000. This included a basic oxygen furnace emission control sys tem and- the start-up of a new coke battery. Water brought into the Pueblo plant is reused several times, then treated to meet all state and federal standards before it is discharged. In 1974 CF&I ordered its first con tinuous caster. It is expected to pro duce 300,000 tons of billets annually and will be tied in directly to the 125ton electric furnace that went into oper ation late in 1973. A second electric furnace, identical to the first in size and capacity, has also been ordered and is expected to come on-line late in 1976. CF&l's blast furnaces were modi fied to use coke plant tar as a fuel, thereby fully utilizing energy produced within the Pueblo operations. The rod mill was also modified to operate on oil as well as natural gas and coke oven gas. This provides additional flexibility in the event of future fuel shortages. Subsidiaries The development of Minnequa In dustrial Park progressed at Pueblo. One new industry started operations and another is expanding its facilities. CF&I Engineers, Inc., which de signs and manufactures machinery used by the sugar industry in this coun try and overseas, had a good year. Demand for equipment to provide ad ditional capacity and better overall re covery of sugar from beets and cane continues strong. :acilities Facilities installed during CF&l's 1968-73 capital spending program eached full production in 1974. The lew electric furnace shop, coke ovens ind improved sinter plant achieved or ixceeded rated performance early in he year and contributed significantly to .mproved profit performance. Expenditures of $29,927,000 were nade during 1974 to further ensure continued profitable operation.1 2 1. CF&I rail, tie plates and other accessories are used throughout the Department of Transportation's High Speed Ground Test Center in Colorado where research is conducted on advanced ground transportation equipment. 2. When the new electric furnace went into production late in 1973, it replaced the open hearth furnaces built in 1902. These were razed last year, yielding 15,000 tons of steel scrap to be charged into CF&I furnaces. CRTX 0323 17 Building Products ^ Crane manufactures and distributes plumbing products in the United States and Canada and heating in The Netherlands. It also distributes heating products in North America. Its subsidiaries, Huttig Sash & Door Company and CF&I Steel Corporation, also serve the building and construction industry. Crane Domestic During the first half of 1974 plumb ing sales were at a high level. Although the commercial plumbing market re mained relatively strong throughout the year, total business during the second half declined, reflecting the sharp drop in new housing starts. During the year Crane introduced a complete line of fiberglass bathing units and a heavier enameled steel tub. Initial customer reaction to these new products has been good. Crane Supply Company distributes Crane manufactured plumbing and valve products as well as plumbing ac cessories, heating and other relate items for the building and constructTM markets. Its activities are proportion ately greater in the commercial build ing field, and thus the 1974 results were not seriously affected by the slump in housing starts. Although some improvement in housing starts may occur in 1975, it is difficult to predict the timing of any major upswing in the residential market. Crane Canada Residential, commercial and insti tutional building activity held up well during 1974 despite a decline in hous ing starts and new construction awards during the second half. Several new plumbing fixtures were introduced, in cluding a wheelchair lavatory and a fiberglass sitz bath for hospital and paraplegic use. The performance of the Crane Supply Division in the building prod ucts field was outstanding. Results in 1975 will depend on the level of activity in the Canadian construction market, f Crane plumbing was chosen for the Blue Cross, Blue Shield building in Denver, Colorado. CRTX 0324 Bch appears to be stronger than in e United States. rane International Sales of malleable fittings and cen- jl home heating in The Netherlands ere down last year because of the cession in that country. A low level of ctivity is expected to continue through ie first half of 1975. luttig Sash & Door Company The major portion of Huttig's usiness is in the manufacture and disibution of millwork and building prodcts for residential and apartment onstruction. The Company's branches re located in the south, southeast, .lidwest and southwest. Sales and arnings were slightly below the 1973 acord results because of the decline i housing starts. Huttig is giving increased attention a the'sale of products that relate to nergy savings, such as insulated winiows and insulated steel entrance sysems. These are gaining wider accepwce and are expected to add signifiJntly to sales volume in the future. While the long-term outlook for -luttig is favorable, 1975 results will lepend upon the availability and cost >f mortgage funds for residential and apartment construction. CF&I Steel Corporation CF&I supplies structural steel and dozer and scraper blades to the build ing and construction industry in the western United States through dealers and original equipment manufacturers. Oealer sales were up, and a moderate increase is expected this year. Fountain Sand & Gravel Company results were disappointing because construction activity was down during the second half of the year. This CF&I subsidiary began construction of a lightweight aggregate plant in Pueblo, and will utilize coal washery wastes from the steel mill in this new product line. J 1. Crane Supply Company furnished all the plumbing fixtures in the new St. Joseph Hospital East in Memphis, Tennessee. 2. CF&I Steel supplies a variety of hot rolled bar and structural products used in commercial and industrial construction throughout the Rocky Mountain area. 3. Window units are assembled and finished at Huttig's Rocky Mount, North Carolina, facility. CRTX 0325 Aerospace and Aircraft Products The Hydro-Aire Division designs and manufactures brake control systems, fuel and hydraulic pumps, controls and other accessories and systems used throughout the aerospace industry. Crane Domestic Hydro-Aire posted its second con secutive year of record sales and earn ings in 1974 despite serious material shortages, higher costs and longer lead times. New foreign sales accounted for the major portion of the increase in business from both military and com mercial airplane manufacturers. This also stimulated spare parts sales to support overseas flight operations. The small twin jet and turboprop aircraft sector of the general aviation market is expanding 15 to 20 per cent yearly, spurred by sales to developing nations and new applications in petro leum exploration, geodetic research and interurban transportation. Hydro- Aire's foothold in this market is firmly established and growing, particularly with certification during 1974 of the new Invermotor fuel pump and com bination power brake and anti-skid sys automatic braking, which provide for smooth, automatic stopping of the air craft after landing. It is an important tem on several aircraft. safety system when bad weather, and Selection of Hydro-Aire's brake short fields are involved. control system for the NASA Space Continuing its search for new prod Shuttle was one of the Division's most ucts applicable to the safe operation of significant accomplishments during the aircraft, Hydro-Aire has developed a year. In addition, Hytrol Mark III anti new wheels-rolling and take-off monitor skid systems were installed in five U.S. for large multi-wheel aircraft. This sys military aircraft which are undergoing tem will monitor the performance of flight tests. The Boeing 737 and 747 wheels and brakes during take-off, and aircraft and the latest Douglas DC9 air notify operational personnel of poten craft are also fitted with these systems. tial problems so that immediate cor The Douglas DC10 is undergoing certi rective action can be taken. fication for selected deceleration and1 2 3 A high level of new project activity and a healthy backlog portend another successful year for this Division for 1975. 1. The Space Shuttle, under development by NASA as a workhorse spacecraft, will incorporate Hydro-Aire brake and skid control sub-system equipment that controls its stopping capability during the landing after a mission in orbit. 2. Over 8S per cent of the parts Hydro-Aire manufactures are fabricated with tape control machinery. This provides accuracy that meets the aerospace industry's close tolerances. 3. A component of the auto-brake and anti-skid system installed in the Boeing 747. CRTX 0326 irectors wgdon P. Cook esident, Langdon P. Cook 4 Co.. Incorporated Municipal Bond Dealers homas M. Evans hairman ol the Company homas M. Evans, Jr. iriner, Freiday 4 Co. Stockbrokers 'ante C. Fabiani 'resident ol the Company ohn D. Garrison artner, Lord, Day 4 Lord Attorneys at Law -ruce A. Gimbel 'hairman, Gimbel Brothers, Inc. Department and Specialty Stores .awls 8. Harder Chairman, International Mining Corporation Mining A. Lapham director, Bankers Trust New York Corp., Bankers Trust Company, H. J. Heinz Co., Mobil Oil Corp., and other companies. -rederic A, Potts }irector and member ot Executive Committee, The Philadelphia National Bank Banking losepn V. Quarles 3resident, Simmons Company Manufacturing Samuel R. Sutphin Personal Investments Crane, CF&I, CF&I Steel, Chempump, Cochrane, Deming, Hydro-Aire and Hytrol are registered trademarks. Officers Thomas M. Evans Chairman Dante C. Fabiani President B. Jack Barnes Vice President 4 General Manager-- Hydro-Aire Division Rudolph L. Biller Vice President 4 General Manaqer- Crane-U.SA. William C. Dackis Vice President 4 Assistant to the president Robert S. Evans Vice President-International Operations Eugene L. Hannon, Jr. Vice President 4 General Manager- Crane Supply Company Jack L. Huss Vice President 4 General Manager-- Plumbing Division John C. Klein Wee President 4 General Manager- Engineered Products Division James F. O'Brien, Jr. Vice President--Finance Norman Pacun Vice President, Secretary 4 General Counsel William H. Roberts Vice President 4 General Manager-- Valves 4 Fittings Division Mark R. Weil Vice President--Facilities 4 Peal Estate Jonathan C. Henshaw Treasurer R. Kenneth Whitley Controller Stock Listings Crane Co. common stock is traded on the New York and Pacific Coast Stock Exchanges. Stock Transfer Agents Morgan Guaranty Trust Company New York, New York 10015 Continental Illinois National Bank and Trust Company of Chicago Chicago, Illinois 0690 Registrars of Stock The Chase Manhattan Bank, N.A. New York, New York 10015 The First National Bank of Chicago Chicago, Illinois 60690 Bond Trustees and Disbursing Agents First National City Bank New York, New York 10015 Bank of America National Trust and Savings Association Los Angeles, California 90054 Auditors Ernst & Ernst New York, New York 10005 Executive Offices Crane Co., 300 Park Avenue New York, New York 10022 Equal Employment Opportunity Policy Crane Co. is an equal opportunity employer. It is the policy of the Company to recruit, hire, promote, and transfer to all job classifications without regard to race, color, religion, sex, age, or national origin, except where age or sex is a bona fide occupational qualification. CRTX 0327 CRANE CO. 300 Park Avenue New York, N.Y. 10022 CRANE _________________ Fluid and Pollution Control Steel Building Products Aerospace and Aircraft Products