Document baJQr5vD1o9jm0d5xwx108p2k

A v ; ; : /. . V'-y - J -'.i .iv/, ..*,* ?, L/VV-w- .f"nv>U/:j-.1.,' ': I ;/V.Xa . CRTX 0648 1 402.000 shares at an average ' unit for 29 years and President; price of S30.51 per share. Crane/ for 16. The team he has put has long had a policy of repur together is as strong a manage- ; ;. chasing shares at appropriate . ment group as any in the aero- . . limes. When adjusted for stock space industry, and their con-.' : ' ' splits and stock dividends, there . tinued excellent results reflect the. ./-. ` has been a steady yearly decline strong market and proprietary . /. '/ . over the last 27 years in the products they have developed; . number of shares outstanding. , over the years. - :. Our efforts to redeploy capital to earn higher returns for share/ . holders continued. The success of Crane Canada, under Gordon . Kelly's Icmlcrship, continued to ; show improving results, primarily ... these efforts was recognized by the 26CA appreciation in our due to a strong plumbing market . and increased market share. . / './ ' stock price in 1986. This appre-; Gordon has been President of - :: ciation combined with our divi- ' Crane Canada forII years and 1 ' dend, which was increased 12% / an employee for 42 years. Since * / . Letter to Shareholders in June to $ 1.20, as well as the - he is only 57 years old this} 3 for 2 stock split declared in - / achievement is remarkable. His _ . March, gave a total return to: ; longstanding commitment to, , ~~ v . shareholders of approximately / quality and service has been a - ~ . 31% during the year. : key to CanadaViiripn>viri^v-j*{ We want to be in businesses/ / results over the past four ycainCMv.. which have high shares of niche Jack Fraser,1 Executive Vice presr-- } ',' ' markets that do not require large ; ident of Crane, took direct*-:. .}'-* amounts of continued capital;... / responsibility of the U-S/indusv-.:} ' spending and are not burdened trial valve business in August of.-'" by high fixed costs. The key to ; 1986, Jack has been with Crane. success in these businesses is,, ' for 17 years and was, priorjo ;.. - } aggressive, capable, committed. taking his present position in . .} - management. Ultimately our suc 1985, Managing Director of the - 1980 was another strong year for cess as managers will be deter United Kingdom operations.. ;;'} . Crane Co. Sales, operating profit, ' mined by our ability to increase While results were a disappoint-:- ./ and income before tax all showed;, shareholder value.. - . ', ment for the year, three plant; strong improvement front 1985,. ' excluding the one-time reitruc- turing charge in 1985 of $25.4.; million before tax. The most important numbers were earnings . per share or $2.80 and cash How. per share of $5.76. We are also ;' proud to have achieved a 23%/: . . /return on book equity, exceeding our goal of 20%. ; . S Crane is a decentralized com- pany. We arc committed to he an - , efficient, low cost, lean organiza tion. One of our key goals is to keep corporate expense under 1% ' of sales. We are currently report-. ing six business segments. Kach . business Unit within the segment-s has profit responsibility. : .a ; closures, staff reductions, and /. } product moves began to underlying improvement during}//, 15 the fourth quarter. Despite weak-r /V-L ness in the original equipment%/>: business for industrial valves in the primary markets, the valve }} -;. sercieggroup/which handles r' -if; repairs and parts, had signifi/, , . icantly improved results <mtg," / In addition, our .financial position.;:. In the Fluid Systems arid Con/;;./.' 1985,helpcd by the acquisition in, i improved with the reduction of}/. . trols segment, Hydro-Aire had: / .1985 of Mark Controls'; repair 5,, f ' / // ` Inngriemuleht by $43,8 million;-: und Itiereuse in equity by $ 15.5.., million after repurchasing ; -' . ! mtiinuedinercasesin siilcs niitl/f earnings. Jack Himics, I'residcnt/ of Hydro-Aire, has been with this}; biihihewi;/ Defense arid Sjwcialty Systems^, } President; Mel Appcliriani has *' . "- : complex groupdf engineered and / .. *! -.'/V !" ` Financial Highlights . ' Crane Co. andSubsidiaries .. On thousands) ' Net Sales ; ` Operating Profit* Income before Taxes Income Taxes Inwtmu?--Continuing Operttiions 1982 $1,204,236 $1,098,848 $792,212 $771,679 $763,563 91,352 44,364 48,728 23,792 5,534 . 72,225 (33,847) $ 38,378 $ 262,263,2030 (8.633) 17,597 414,910,9404. (10.939V $ 30,%5 ' ' 44663,63655 <19.98X1 $ 26,377** , 2266,,991144 1L624) $ 19.290** Per Share:! - ; -..V ., ; . Income--Continuing Operations' Cash Dividends Declared' ; . . Average Primaiy Shares Outstandingf . $ 2.80 ' 1.17 13,719 r ., . , $1.28 1.07 . , 13,729 . - . $ 2.09 1.05 14,822 *AdjuMedfor503 stock distribution in 1986 and 2% Mock dividends in priwycaiv. ' . 'Include* non-rcctniing rcslructurinp costs in the amount of$25,428 in 19X5 as well as cer- ' tain tttlHTnrfaYsirK-alitKn to conform {rioryvatx with the 1986 presentation.. . 'Kscludes toys on discontinued operation* ofS155,4.17 and S22.6.1.1 ($8JI and $1.42 pcr': . share.in I981and 1982.respectively.'-; '/V : :- $ 1.66** 1.03 15,91; $ 1.21?*; 1.01 15.922 Continuing Operations. Sales (in millions) jumi ; - Operating Profit (in millions)^ Hi. , 83 . . 84 : Hi - 86. 0 14115 j*Mutt UMat am.- lij f rMUrtnytnmMBrinywjv' v: CRTX 0651 technologically advanced motion control businesses. Mel became President'of this group when it was formed in 1985. He has been a senior manager and an . . employee in the defense-related operations for 34 years. The team of managers he has built up over the years is strong. Mel manages (his group with nn eflVeiive. tlccciitriili/cd. imiiiugeinciu-by- objeetive system with ROl very much in mind. During the last quarter of 1986, Resistotlex/ ; Defense moved to a new plant in Jacksonville. Florida and started up production. The Electronics business moved out of St. Louis ing and continued weak capital spending, but nevertheless 1987 should still be a good year. Back log, a key indicator of future profitability, was greater at the end of 1986 than the end of 1985 and the actions taken during 1986 should produce improved results beyond 1987. . MereliiimlWng Systems Presi dent. Bob Muller, achieved a remarkable turnaround at National Vendors, the primary business in this segment. National Vendors had lost money prior to Bob's appointment as President in early 1985. In fact! National ` (from left) R. Kenneth WWtlqii^tij WeePresident*;, f 777! Finance & Chitfi:*.i>H' Financial Officer; Paul R. Hundt, Vice f'/' - President, Secretary^.*' A Central Counsel;i; Kotxrt S. Evanx, : Tirnman, Chief ' Fxmtiw Officer A ; .'-7; President; Michael 1.7; Ruilhcl, Controller; 7/r\;. (enud E. Dorsey, ! > Treasurer; Richard R... ' Phillips, Vice .` President, Human ' ` Resources ; ; ' ' ; to Highland, Illinois with greatly. ;;. Vendors lost money at the rate of ';;} reduced costs! and was integrated.7 $500,000 to $600,000 per month ;. - V-.r ; v ltd mid reducing costs. Unldytm-;!- line of priHluets and started upa'-w;;:.;V.; mies/Phoenix became the leader.;,7 new business.This turnaround to:.. 'V;.'in Faserordnance initiation arid. a consistently profitable opera-/. !( . ;. ; will continue to develop this - tion has greatly increased its 7 ; . V; 7. - promising technology in the-.... /. value to the company!-; . ;../! 7 future; This group is facing pres-7 7 .: v:7 7 2 i!' ;; .|s:/. ; ! sure from reduced military spends;.; ^.7>7-'^'7'!-''77v7.7!L7f tire? letter to Shareholders (awrimu-Ji Millwork, with four branches in New England and one in New ' York, was the biggest acquisition and gave Huttig an excellent which we feel will allow us to -' .. achieve higher returns with alter native investments. However, we ' must receive fair value for those position in the strong housing businesses. We will not make : ,, market in New England. Another poor financial decisions for the . step in vertical integration will be sake of strategic plans. achie* ed with the completion of the new wood window manufac turing facility in Rock Hill, South Carolina in March, 1987, Htiltig expects to huve continued excel lent results due to its position in single family housing and the . repair and remodeling sector. Crane enters 1987 with excellent, experienced management in its . . operating units. At headquarters, . in Jumimy of 1987, Dick Phillips was elected Vice President of Human Resources and Tom Spencer, Vice President of Cor- : potato Planning. Crane is dedi Medusa Corporation, under the . cated to recruiting, retaining and/ . . leadership of Dan Somes, a 12 motivating the best operating . - During January of 1987 Bob year employee of Medusa, had ' management,'.': , ./ . r accepted the additional respon _ the greatest improvement of any sibility of running the Engineeredj of the Crane businesses. . Materials segment. Results in;, Increased capacity utilization at this segment in 1986 were ' the Charlevoix cement plaut In February," the Board of Direc-; ", ; tors appointed Boris Yavitz, the^w,.; Paul Garrett Professorat therjsx;/;;: Columbia Univiraty Graduate^;' disappointing due to a weak v ' combined with improved prices - School of Business, a Dirwtor.S/ ^; - market for truck trailers and .":'c:... and increased market share for We are very pleased to have this/;-;{; increased competition. Continuedj the Wampum plant, improved low capital spending in the them- ' cement results dramatically. The distinguidiedmem^pf^^T.`^4 business and academic communi-.. , :; ical process industry hurt Resislov- ; aggregates business continued its llexfUnder Bob's leadership, the'.- improvement, with additional . ; tcmnioveaemwjloybnriimntahcrardkurekswtetssittuhwenxmidilslomtbirneeogrteeopmrcdopfetdh'vcuaeccs-ltiossp,b-;.:-in?;t.-. ciipncity at the vety profititble.. Thontusville Industrial minerals business being a major factor. We expect that 1987 will con- ; manufacturing efficiencies. Thes;'ee- tinue to show improvement at Medusa largely because of the.. ; changes should bring better . .', ties as part of the Crane tcamr.:' ; ; .1 would like to thunk nil tnir :r:'::l employees who huve contributed to the strong 1986 results and., if;/ / positioned Crane for continued: improvement and growth in 1987 '. fand beyond. J . .. V.': %i:-i : results its old fianc1to9r8y7a. tRtehseisetnodfleoxfs1o9l8d6-:>;f,; increased distribution capabilities of the Charlevoix plant and capi however the gain on the sale wais; tal expenditures that have been offset by a provision to cover / ;; and are being'made to reduce' costs of moving in 1987. - ; . - costs and improve quality. >< : . Crane has the financial strength : Stuart Wells, President of Huttig',\/ .to grow byacquisition. We will jv - . r.s. Evans, , Sash & Door forthc last nine : ";y continue to look for businesses . Chairman. Chief Executive Officer'.-"-:' years, continued to implement hifsr"/which'strengthen bur existing :i,.: and President>.; Vl{. V. * l growth'strategy with great sucrv units; firour objective of growing ; . cess in 1986. Itwasarecord yeahrf'fin the industrial, engineeied prod-; : February 21,1987rc.'j-`j--?,^.; ; insalesand earnings.; Huttig:;;^s;^. 'ucts nichemarkctswhere man-; Kaddedseven branches during <iv'!agemeni can make asignifieunl;.; > ,r;* 1; if?;"' J..- '-t 1986 for iftotal of 41. Hiirhor. vc.";. difference,-und mid tocumlngs;: '; p'er share. We would consider seli- -./.ing certain businesses which do ; i- - hot fit oh a long term basis and Fluid Systems and Controls-/: This segment is composed of continuing effort to be the leader: operations that design, develop,' in its major product lines, new ' manufacture and distribute indus concepts in fiber optic sensing trial fluid control products and and advanced digital electronics ' systems for aerospace, process are being engineered into new ' and construction markets. designs for future aircraft. ;.' . Domestic , Research and development Hydro-Aire is one of the fore included the acceleration of work most designers and manufactur on high-ptessure hydraulic appli ers of aircraft brake control sys- ' cations in anticipation of new terns, fuel bonst pumps and military requirements, , . - ;. hydraulic valve equipment for The nmrket for vulves und fit* commercial, commuter, military tings in the United States . . " and general business aircraft. In remained weak in 1986 and coii- 1986, with the commercial air tinued to be further aggravated ' craft market expanding and milt- by high levels of imports. The; ' tary demand remaining strong, major consolidation and restruc-," the division had another excellent turing of the U.S. Valv Division, year. . announced in late 1986, was forr v The division won a significant;. the most part completed in 1986.' - contract to provide the brake The plant operations at Indian . , , control system for the new; ' Orchard, Massachusetts and;!' . ' p Boeing 747-400 airplane. The':' / Chattanooga; Tennessee wercP- y closed and the production lines',- V system,'developed for this extremely large commercial air- , transferred to Rogers, Arkansas'. 1 craft, required the engineering of and Washington, Iowa. The;4- ."5 specially-designed equipment - Aloyco stainless steel valve line7.-, using Hydro-Aire's latest digital was also moved to Rogers fromT' antiskid and torque feedback . .. controls.'As putt of this division's Linden, New Jersey, To heller / ' utilize our North American , / 1 p manufacturing facilities, bronze >4 valve production at Rogers was"; '., consolidated into the Brantford, H P Ontario plant All of these actions';; plus changes to systems and ; ; v P organization have set the staged fP; for an improved operation where/P customer demand Can be met on / a profitable basis/ Crane Valve ? / Services, with the addition of thefy former Mark Controls operations/-; acquired during 1985, had a vciy/P good year in J986 and continues^ to offer attractive bp^rtunities%Pp for growth and profit.in 1987 and>i' beyond.ppppP IlydrmAin Killpm*/i:f. .:PP ;'v y :'P V:/ >7 '/'y rjrjv" -.'svyidsetetmh:efaob..rrathtke.e Betyoa^enii^ntgra.lt^/ *-- v v '&.Z': '' -./?'-, V: v.' 4.t , 747^m :- : : M:A CRTX 0654 7 :p 4 cSlSSS!!? Cochrane Environmental Sys- and Quebec with high demand ' `; . terns engineers and markets for waterworks valves and ' . water and wastewater treatment hydrants, and the additional pro-. , ' . equipment Tor the pulp and ductioii of bronze valves for the . . . . . \ paper, power generation, chemi- U.Si market. This was offset to a . ; ; . cal and other industries. Major ` certain extent by low demand for ': * ' efforts were made during the . industrial valves, particularly in ;' - year to reduce the cost of equip* the oil and gas industries. \ ment through engineering and : manufacturing improvements. ;, Crane Supply in Canada is a major distributor of valves and -; ' , These changes plus the introduc- relnietl industrial pnuiuets, pipe. * . ;. :,. .' lion of new products, Mich ax air , automatic hackwashing filter, are . . expected to improve performance plumbing:, and heuting products. Sales overall in 1986 remained . ;. ; . ' . in 1987. strong; hovever. results in the . energy producing areas of west- \- . . Crane Supply in the United . cm Canada, traditionally a strong- . ; . . States, a wholesale distributor of hold for Cranc Supply, were ' ' ,; ' ^ industrial and plumbing products, impacted adversely by the oil {... . Chempump. a leading mariufac-- was sold in February 1987. : , price decline and the drop in . . . j /- ' turer of leakproof canned motor- ' Canada exploration activity. 'j- pump^ haJsa'cs slightly ahead^'v Cranc Canada Inc serves the;:^ '-j- International - . of last year. Capital expendituros-p fusing and commercial con-: -r' In the United Kingdom; Crane.^ f; ' !n!,sm;,Jormarket,thechemical/ structionmarkctsaswc,,as|hc ... Limited manufactures'^and sup-;/;, .- //-:;; lnlU^',TUC ,ubclsk,w- Ar; industrial sector through the ' plies valves, pipe fittings and cen* I9K6h.ghhght was the largest;, manufacturc and distribution of:: trifugal pumps to'thc.U^^nd-^V^'.'^ , single contract obtained by this . ,U(nbing f|X|urcs and rc,atcd ", export markets. The demand mtsfc-i-gig .--. .division for specially-designed, y productSi and industrial and V . weak for the division's productsV; V nuclear pumps for the Navy; . coinnlerciaI valves, pipe and fit- -, in 1986. The fall in world oil pri - against which shipments hitye . fings, jjh|cs lim| pnillts in 1986 . ees and politieul instability In the.^;;v>;; . started.;. . .. / ; Werc well above lust year's,-. Middle East affected its export f ' \ ; Doming manufactures standard . reflecting a generally strong:' , . markets. Managcmcm'ctTorts / .. pumps for general industrial use,; ' market for the company's prod have concentrated on obtaining -.., - Considerable attention was given .' ucts. The exception was the con-- new markets and reducing manu- : J;: . during the year to strengthening; tinued softness in the oil. gas and-. factiiringcosts, j ' - ..' y - ' . > its marketing organization and . distributor network. More cflccy. mining markets... ' Canada's Plumbing Division has ^ Crane Australia Pty.. Limited,: manufactures and supplies valves r; - ' ;-d ' - live programs on quality control^ haJ particu,arly slroil,, results]^ in Australia, New Zealand and ' an<* *m*tmie delivery to custo-. . during the last several years due./-; related markets. Although the'j , mers have been implemented to ,u hj|t levels of housing starts -T.. ' ovciall economy was not buoy-'... . ^ , - assist in improving future market .. and M,me jajns ;n market share. ant. Australia had higher sales;. .V;: ..penetration.- -y The introduction of new products;. and profits in 1986/v/ ' . -'/} v^'4-.s continues to be an important `sourcepfsalesforthisdivision'.,A.? ' v..-v-v'-'*- '-'j The operation iri Mexico, which Tj/g,,!-- produccd a' line of small indusfi^yj^ii ^ new line ofaciylic bathtubs, was/;/ trial pumps, .was sold in I986.y;'' 1;: particularlysucccssfu) iii 1996*&. './/a,: The Valve Division sitics in 1986',;; /ry'-'V ; l ; i; 0' / / wereluvoruhly affectedby uhigh/ *V level ofconstruction in Ontario >; i ; .- CRTX 0655 Tomahawk Armored Box ' Resistoflex/Defense is the lead- .' ` Launching systems being ing separable fittings manufac- .; : received in 1986. Electronics ' turer for high pressure fluid ?..'?; . ; operations have been relocated to. applications, primarily in militaiy ;' . provide enhanced, low-cost, in aircraft 1986 shipments and , house capability for the various results were slightly below expec- ' '. defense related operations. tations, however the current * . The Unidynamics/Midwest divi. sion significantly increased sales ofequipment to the U.S. Navy in 1986 for the LDH-1 Amphibious Assault Ships. This equipment consisted of special doors and closures, cranes, hoists and new products such as package con veyors and special-duty winches. backlog remains strong. To . ; , improve manufacturing costs and , . efficiencies, this operation has been reloaded to Jacksonville. Florida. Full operation at the new location, when completed early in . . 1987, will greatly enhance this business's competitive position:: ;? Specialty Systems . A- './a;.//'?.-/ In 1986 a $2.5 million program Ferguson Machine Company and;// :; * Defease and Specialty Systems; was awarded by the Navy to ; . its related operations develop;??;;. '?:,??; upgrade control systems for Navy design and manufacture inteimit-?f ship elevators. More aggressive tent motion control systems and .marketing activity and the devel machines for automated pitauc^&K/-: opment of new control systems ' ,'tlon. Its position as a worid leader7??- for tower elevators and innova- . was strengthened by the acqiiisi-v ?;/?. live designs for rack and pinionr .tion of PickOmatic Systems, Inc?/-??/ elevators should mean opportuni a producer of cam-actuated parts? / - . ties for growth in 1987. . '. . , handling equipment. The world-?; ;/ : This segment is composed of ' ? .. operations that engineer, develop uml munufueture motion control products for aerospace, defense; , and industrial automation ' . ] Unidynamics/Phoenix designs and. manufactures precision ord nance and related clcctromechd- . nicul and electronic devices for wide markets are served through?;; ' : ? manufacturing plants located in/"' the United States, Belgium and ;:;?'; ..?/ Germany.- r ; _ markets.. r- A???;*.A??? the Departments of Energy and- : Overall this group had improved. Defense. This operation is vety - results in 1986.'nie majorA?.? ??? '.? ? . Defense Systems;;; Unidynamics/St. Lciuis designs' dependent on government con improvement was at HPM. wherc . .?'; ? tract awards for product research machine tool retrofitting and.! . , .. and manufactures handling and*, and development. To ensure its - rebuilding was discontinued.;;; ?, ' ?. ' A launching systems for naval ship-, competitiveness in obtaining ' HPM is now concentrating on / . . .: . board and other militaiy applica : these awards, emphasis was , producing precision rotary posi-?> /. tions, plus certain specialty appli-' placed in 1986 on improving . ' tioning products which integrate-V.; .; cations of these systems for i efficiency and cost-effectiveness with the various Ferguson prod- ' - ?; .: . industrial use. The order backlog throughout the operation^ . ucts and systems. :.... for this operation is substantially.^ ; 1 ^'ab^e.!985;I^els;withnew^a . orders for Tactical TowedArray;; ' Phoenix received contracts for '. laser.ordnance initiation systems hardware, ofover.$33 million. >~ ' Given the acquisition and the-)?;; A .*:/'.i "efforts made in; 19.86 to ratibhat|;i;C; ;;_ize manufacturing; particulariy in|;fg;j4:i '.New technology;particularly?;:; *f:: ?the UhitedStatc^ I987;shouId'^;5??;?i " involving the use of lasers;'will M - providethebasisfiirfuture ; growth. This unit huis also.devcli g oped technology on micro: / " Q ' processor-controlledelectronic?; - sequencers for ejection seats in/-"? /high-performance aircraft:/:;;. CRTX 0657 CRTX 0658 Engineered Materials This segment produces fiberglass Another development is the pul- reinforced panels and structural truded grid system which will be- walls; specialty fluoropolymers used for suspending FRP ceiling for pipes, valves and fittings; and panels in highly corrosive environ microwave substrates and ments. The addition of these hew capacitors. . products will improve both sales Dyrotech Industries is a major and profits in 1987. /.. ... r producer of fiberglass reinforced Resistofiex products are used to" panels (FRP) and structural control and move corrosive or walls. In 1986 the emphasis was ; toxic substances, primarily in the on new products and markets to process industries, The chemical stimulate growth and compensate process Industry (CPI) continued for a slow transportation market. to be depressed throughout 1986. A major new product, a smooth, . Increased demand in the pharma specially formulated FRP panel, ceutical and electronics areas - is expected to capture new . offset the CPI downturn. In 1987. markets where an "automotive" Resistofiex is looking to improve' type appearance is desirable. This its market share through market-, special, smooth FRP panel will ing of products such as its pat-; ; be marketed in the revitalized ented High Integrity Flanged Pip recreational vehicle marketplace ing System. This redundant.; . ` and the sign and construction scaling system prevents leakage markets, often replacing alumi-. ; of hazardous fluids in plastic* ' num. Continuing growth is ex- ; lined pipes by monitoring and- pected in the building products . containing any leakage that; ; ; area with the introduction of ; ' might occur.;; Gtasbord.Firc X panels with a During 1986 Polyflon cohcenV:;; higher Class "A", fire rating . . trated on developing new custtK ' compared with Glasbord-P's; mens for its microwave substrate; ' *'C" lilting,K';: ; systems und adding new high-vol- tuge/high-frequency capacitors to its line. Excellent growth is antic ipated in military electronics, . Polyflon's major market. / * A writ#ofhigh />; age, low losxituHh;^:magnetic RFcopaci-j` tors manufacturedby' \ .1 / ,.v CRTX 0659 * ,, - ; jtiunpoiinq .OjOBtJBfiqiUtxtY- $> ' V:swvb'ui (eiaisuiuioa iqSji; ;T'j" PUB SU!|3pOUI3J *1U3lU33G|d3i 3tp . Ul UOIlBJ)3U3d J3t)linj UO p33B[d 3q him sisBqdms 9uii33{JC(q , '4861 inpaicqdxoaqo|snuij; M = *U03, II!*.`SU0JJB30I M3U JO Sill * io uoiqsinbaB aqi qSnojqj ^ s-, -'J3qji3`ssiiiuniioddo uoisucdxg L 'r-J. 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E.sn|d jsE3qiio|q qsss MopuiM puB isaMpi'w'.-:. aqiiuiipjjBfluaaiKWuopiqndod2 _ __ saSiBjsqi sapnpui jBqi tooiuisi j tiaqiBiu b SjnnHaAii qjo\ Majqy &&Vvi''.'/asnaw^S P"E aufBjq `puBiuoj; -y.;> sianpoid^eiaipue.^aoMuttuAuedusoQ y. jojoinquisipjofBuibsiSiwih ;MOQpqsesfii|*n||?^ Zr-y.-:' nn3l!33UU03 *pJOJtJBH tlUOUU3^7 V*uoi3uifing tsjiDsnqaEssEjAi `uoj* 1 -spaufsaqainiiiq assqj, 'uoiibooi . ;y 3{llnH ^UB paotuas ^isnoiA : *aid jou laqjBiu a `isBsquojq aqi; m^y,k jo snwn.uoiianjisutMi |n|iuapisw:: - pirn uaiiBijiiqeqaj `iuppoiiiaiiV Suoiis aqi in snms uoijnqujsipr .jfil^lEuoiiippaaAijpajmbaB^gjiWHl aaquiaidas UI *M!stK>3S!AV ^a.i p|s?/w.: U33JQ pire oatxspq M3{q `antuonb'; -nqjv ui pdSBqamd sjsm SJ3JU33' $0?:.r:: uoiwquisjp9861 "! *1^3 `P3AJ3Stujaq iou aj3M isqi siaqjBui. :/ JfuBui.ojui uotsuedxa aiqe .. -jydid mbs iBq JBslt B OS|B SBMy . I] siijcud pus ssjes qioq ui SiiinH : r'!, v. joj seat pj033j b sbm 9861; CRTX 0661 Medusa had a significant * . increase in sales and, mote ::V " importantly, operating profits ' 7- were two-and-a-half times the . 7 ; prior year's. The sales increase ., . was the result of a strong con- :r struction market with increased :/ 7; ' cement shipments in Michigan, ' ' . Illinois, Ohio and western Penn- - 7 ;" sylvania; arid extremely good 7 7 ;'. Medusa Corporation aggregate shipments in Ken* , ` tucky, North Curolinu and ., . 7. Missouri. This volume increase, combined with low incremental-7: costs, the successful effort to - kV; . - 7 reduce operating costs, and some selling price increases, were the ; - major factorsbehind the signifiSv/ 777 Over 100,000 tons ofMedusa cement, . cant profit improvemehtf;#^^ teas usedin construction ofthis waste- ; Major capital spending prqjectsfry^Jyy water treatmentplant:!:; 7 ,, were started in 1986,which,"whei|'||j^ Medusa produces poniand and;. . completed during 1987 andgi^^vt; masonry cements and aggregates ' 1988, will allow the Char|evo|^S3>?fl; and provides highway construe- : Michigan plant to"iiiaitoaii|^^^2 tion services to government ,7 additional 300,000 toiK agencies. Medusa serves the /. cemcntThis will mean that fdtf\ -7' : eastern halfof the United States -: ..the first time the full production" j r _ , with its principal markets in the capability of this plant can be?/i ~ Midwest and Southeast regions. 7 utilized. The expenditures involved building new terminals and expanding another, plus the addi-v ",':v tion of a new barge to provide :' the needed transportation capaV-'' . 7 . bility. The barge arid the riew?;v7.7 <y^. terminal in Toledo, Ohio will completed in 1987. Several otherifV'' ~ . capital investment were made in 1986 to reduce costs; improved. - product quality, arid expand the- ' > distribution systcm.V7j ^; !il 7 7\: - ' Looking ahead. Medusa' expects theconstractioritriarkettoj-'.^:,; - ^ 'remain strong in.l987:.This^.U^v;f^ ' combined with the icajMtal&^^g^ r:.improyements'madejn;1986'andg^^ / (Fromiefi) Jotm^^Ksiiseri tintMan-'`"Sv th'ose coming on line in'198'^^5rf?^'l Sfeglirtrd;SSecnfaqr-^rbaRp'-:-?-f77 points to anolheryear v"d(kiunlCamtU7(iutman,Srofor Vft; ;\. y-7.. ;.:v./ . -DanSotn,fVfii*n^ In control room of:. 7-7 ?y..7 -Medusa Corporation;Nghlfautomated ~.~y v7;^77? 7: ;:7 V. BRrriaiinnRBaiimmmiirii,.VP.z-CChhaarlteittooiizx.,MMicichhiiggan i ' 7 .. >; l-.-..' improved profitability; The decHn*l|i!p! ing value ofthe U.S. dollar couId:->yt; *5 also help stabilize cement prices.; :^/;' ' ''CotmiBtr&Assi.^i-,;7 by decreasing imports.!j7.y -7 V' ; Treasurer; Elbert ,;:; , 7 ;:: V-- > CRTX 0663 Merchandising Systems National Vendors' '.new electrtmic I ingmacMmBmriC^tki^-:^^^ ; hitfftrck iwfcfcT'j.tsT-l Robert Muttrr (of /<//>, President of . line and the new Refreshtron , /5 > . Merchandising Systems, with Art - Three. The latter is a machine- ' '" Ktopstrin. P/onl Manager, discussing V' . production scheduling a St. trnis, , , Missouri Sultana! Vendors'plum. : '. that vends freshly brewed coffee^ canned cold drinks, snacks and , candies all ihonc high-tech. unit.p'' % . National Vendor^ the'major;-; 'The laundry and amusements^ v:/ * -C component of this segment; is a . operators were also approachedi= / " /; leading manufacturer ofauto-; with a new line ofdollar bill matic merchandising equipment;, changers and a generic line of^> >; -V for use by.food vending service ., \ equipment including snack'sind-uV-';-. operators in the United States. cigarette machines. These new '; ' ; : : Canada and the United Kingdom. market penetrations were aeconii\ ;f5; The equipment is uyuiluhlc in six : piishud with National Vendors' v |f ^ r; . bnsic catcgbriesisnack, hot and f existing sales force and a newly - ; V -.V;;. cold drink, food, cigarettes and 5 Established distributor network.'- ' 1' ; - ; f:. currency changers.> . In addition to other new product r " :V' ';' \ In a thrust to gain additional.;; , introductions,'customer seivicci ; *' i (Volume, the office service mar: *' . was reorganized to provide faster; Sket was entered with the com- ` parts delivery through the consolii^.;.'1 pletely redesigned Refreshtron; dation of the parts department ' ; ; " . -(i;-, `;.t` and the addition of an automated V;; ," ; parts delivery system.' r=y. yana % i ^^^The'td^'ncUbn^plusn^maivV^X . 'T' <keting and distribution policies ;- ; -. :'- A;; and cost-reduction prngrams;4?^:Ci^^;?:.-^ Sm "t y * - V C * I J i n t ^.European market with a line of' rffully electronic coin acceptors.' (.'andchangers;V; r Consolidated Statements ofIncome Crane Ca andSubsidiaries For Years Ended December 31 (In thousands) ' 1986 1985 ' 1984 'I y Net Safes , ._ . . $1,204,236 . $1,098,848 5792312 ;;;;; , . Operating Costs and Expenses / ,, Cost of sales - ' . Selling, general and administrative . Depreciation ;' . . r, Non-recuning restructuring provision 932,014 153321 27,649 855353 ' 626.429 142,969 : 93377 30,734;; . 23,178 m V 25,428 1,112,884 1,034,484 " ~743,4H4 . /; Operating Profit . 91352 44364 : 48,728 OtherIntnmc(Deductions): , , . .' Interest expense--net of interest income or ' ; ; . : : $4378. $4,060 and $5,815 in 1986.1985 and 1984 ' ttc ;'y. -Miscellaneous--net ; . .. \ ^ ... - ... . . . .. . V;. . .. ..... - . (22,995) 3368 (19,127) . . (24.908) 6,774 : . (18,134) Incan*licftH*anms.'^' ,j'i- :j.V;*?. " "V 72325. ; 26330 . $PlH*ifetonforlooiiiie11^7;;-\'vV--*; 33347 : ;;.i:H:>:.8333'- % (10386) 3362 ` (6324). ; ; " -10339^'! Nettaw*:*..': V' :/ $ 38378 ':.:;';$;:Vl7397;' V-^? "$3(Wi65f^|f^|. Net income per share: " ' ; f Primary: [' ,Fully Diluted . V:' - ! V''! ' : ;/ V. ' . . $230 : : ^ $138'. :K;S$239t'S'^S;? 1 233 Vy 137;' ' ; ^ ..234--':;7:;::.i ^Average primary shares oulstumilrig y ::'- / y.%. 't,See Financial Review'rC ` 'yl'S-'.i'K'-. ; r; :: 13,719 * * " . . . , 13,729 '*; r;' y. ; y 14,822-" 1 -Vr ;;y'V'<%.- x.- ; j \g- .X?; : \\'~ Consolidated Statements ofRetained Earnings Gone Go.'andSubsidiaries For Yean EndedDecember 31 (In thousands except share data) Balance at Beginning of Year 1986 $ 65302 ' Net Income - ' ' - ' '' 38378 Dividends Declared: . : Preferred shares . , ' '. " .. . Commonshares:'' ; Cukh-=$1.I7 per khare ($1.07 in 19H5 and $1.05 in 1984) Stock--2% (market value of 179,901 shares in, 1985 and 204324 in 1984) ; . Excess of Cost Over Par Value of Reacquired ; .. . Common Shares--Net (through June 30.1984); ; . ,. ' ;.. 862J837 shares in 1984 reacquired V . .^ less 1,242 issued understock options in 1984 Distribution of CF&I Steel Common Stock . 104,180 . Balance at End id Year ; v .. : 15383 . $ 88397 1985 $123,057 17397 .140,654 ...S 2 14,626 5,820 , 1984 $138,256 30,965 169^21 .6 ; 15394 6331; 54,404 . ; .24333;: 74,852 =? ' 46,164 $ 65,802. v>;- ConsolidatedStatements ofCapital Surplus /' ' . For Years Ended December31. (hi thousands except share data) 11998866' . .1985 'S :V 1984- ;ItaimnatBqtfimliiRorVcar.^>/'v;:V. S; Par value of.4369,495common shares Issued/'., . .. 5$ 951,221 : $ 524189 'v S $64,736. ^ r;~ :n.a50%distribiitiim^.-.v''^>fvv ; ;'% :-V . (28359)' 7./ , ^ Itxccss ofdebentures converted overpar value of 30,479 - S': common shares issued (101,747 in 1985 and 18,475 in 1984) , 125 ;V:-v <-.1wS-TS S-V .141;.' :0- Excess ofmarket value overpar value ofcommon shares .;. issuedasa2%stockdividcnd ; /S-'-.V S' ; S \::.'S439s''; -S; : -4.955 " Excess ormarket value over par value of 190,742 common ; ;S ' . -. shares reacquired under pension reversion . , ; i ?;. . --\^r; \S\ \(5365) 7. S - Excess ofcost over par value ofreacquired.;' b'.vr" ;v. : . shares since July 1,1984--preferred, none (1,651 in 1985 and . noncin 1984),401373common(33,700in 1985and SS; ` 550,100 in 1984), less 61,700 common issued under stock options (2,601 in 1985 and none in 1984) . ((88332255)) (909) . `(17,743). - Excess of market price over par value of 13,202 - ..S - ' S''. shares issued as a contribution to UniDynamics Employee' s . S* , .S.:S;-;V te SS Benefit: Plan(13355 in I985)4Sj^..7 i:;' * i; .; Sv 288 s^s^^iiSvrs' 7 S-S'-Vt $ 14350; 77.S. $. 5I321>S; -' $ 52,089i: Consolidated Balance Sheets At Daxmbrr 3! (In thousands except share data) Assets : . ' *" ; , Current Assets;- : .. '. . , ' ' ' " ' ` Cash " - ' ; Short-term investments, at lower ofcost or market Accounts receivable, less allowance of $2,409 . ($2,967 in 1985) . . - . Inventories, ut lower of cost, principally LIFO, or market: . replacement cost would be higher by $50395 ($49,070 in 1985):;. . Finished goods .. . V. ^ Work in process, Raw materials and supplies :/ . .. Other current assets :.V- . t .-'TotalCurrent Assetsyi...' `. 0; Property,PlantimdEqulpmentatCost: > " ` 1- Buildings and improvements * . v ' .' Machinery and equipment 's- ' ' ' Less accumulated depreciation'- ' . Other Assets;:; ' Av;..V , , ; Construction funds V- - V- Intangibles less accumulated amortization of $6,642 ;' ($1,925 in 1985) :f y ; V Other.- \; 9K; ' : '4 , 1986 . , . ... . 1985 .. , ' - '? ' . , . i`. ' _ *' 6.445 .,, $ 15,845 . 10,277 , 33,291 -- ' '. . . . . 146,J05 151.665 ' ;-'-- ' ... . ^ / 104,628 ./ ` ^ 4M27 / ` 34,906 . . ' 87366 ' 42356 . 31,690 >'^3 ; . 180,961 162312,..- r. n,6i8 : ; 12.701;' .-/ 355,606 . \ ;.'.;.37W)14*''*^js^ 22,009 y - - i: 19^04."-J-' S 131,018 - 121.920 - : 388,962. -372^48^^::r 541,989 .;'.513872f^i5}^: . 320358 ' 3oi;ikh>":-> ; 221,63i . 12308 il395i!|-^| ' 15,740 ' 11305 ; ,; 12,859 j .' ... Cnme Ca. andSubsidiaries liabilities and Shareholders' Hquity Current liabilities: Current maturities of long-term debt Loans and notes payable ' Accounts payable Accrued liabilities , . .. U*S, and foreign taws on income Total Current liabilities .. - \ -. ' ': - 1986 . -- $ 10,106 '. 22,001 ' - 55,177 .. . . . 76,703 MM 167471 - 1985 '' `r $ 10,747 v 14,714 . 47362 73,191 18,881 : - '. . .; ; - 164,895 . , : Long-Term DebtV ' 232,087 : V275318 ; V ` I'-';-, Reserves'and Other liabilities . ; .i ' *. . v- ' _ ' 29,114 25373 'Deferred Pension Credit ' Deferred Income Taxes' ` V; ` ' f\. : '[ ' J "_;^:^3(M>72B^ ''*' **- * ^4 , ^ ~ ''** v" 'iV ' 19,137 Common Shareholders' Equity: - " .. ' ' /< v .V;V/ ' Common shares, par value $6,25; :V . ` . : .. Authorized 4(1,000,(1(11)shares. '. . . J-: ' .; ^ ; Outstanding -- 13.369,528 shares (9.096525 in 1985)' . ... .; after deducting 7,406.699 shares in treasury (7.018,028 in 1985) ' ..Capitalsurplus ;J:'V: - V''--"; ./' J' ' Retainedeamings ; -;y\ y W;'-': V V . Currency translation adjustment" ' v';. , 83460 56.853.. :. 14550 -V ' 51521 -* ` /'-V - 88597 V - ' 65302.' (13376) V.K . (16379) >,' L' : V' ; Total Common Shareholders' Equity . - : \ ; .' : / - ; .. 173,031 157,497V ; . r rjrH-' . -.~Vv vr- V -- - $650312 V V $659,686; . Consolidated Statements ofChanges in Financial Position Crane Co. andSubsidiaries , For Yean Ended December 31 (In thousands) " 1986 1985 ' :. 1984 . Funds provided by operations: . Net income - Depreciation . ` Pension reversion amortization . Deferred income taxes . ; / Other--net. . - . ' ., ' . . $ 38378 S 17397. $ 30,965 ' 27,649 30,734 . 23,178 . (4,060) (3,989) - *_' ' ., 9372 (479) ; (169), 7340 . 18,784 ; 2326, , / Funds from operations '...' Cupllul expenditures. . . . ... Disposals of property, plant and equipment, net of foreign currency adjustments .- . .. , , ;V , Decrease in operating working capital :; ; (Increase) decrease in other assets-; . .' . ; ' :: Increase (decrease) in reserves and other liabilities - . T Currency translation adjustments :>. - : . . 79,079 (25,788) 62,647 (18.890) 56,600 (14,465) 3,625 4361 (3380) 10,020 3,003 (2323)};. . . 4337 , : 25,430 ;; 7323 ' (3,729) ; : 22o?; . . (1,979) (3353) : r. 4379 .- , (7,058);:r 20 Net funds provided by operations . 71320: .' -. 65335 v.;.->. :-.43,I04:% ; ; Financial sourcesfuscs) of funds: '' / Acquisitions?;.' Divestitures .V . yVv. Long-term debt:' ,.; ;"v: ?-:? '.W VVVV;:;;v- --r New debt v: ; ;i ; ; -'-V Repayments?.^ - Increase in long-term investments -.': - ' Increases to reflect UniDynamics* final appraisals' , : . under 338 election, net of working capital change / . Decrease m'investments held for disposal::. . v. '. -v V (31,934) ;J..-y(20W99)-Xi: . 870; :-i:'.-15381;C^iSr:?838ffi^ ' .`v' 17374 . . 124382 ': :.:;:}r'.789?';? (60360) ' (27348); :? (62367)1if< (5,000) ' - ' - -r; v;. ,-j: /-'/i:- 'V / ^ . (4^068) . * '--':\-V v. - .: - **iidami wniwrighte"'-; T 5,0.11 ;; 21,440 ; ; 29,274 -!? ^v;K.CIf&ISicclCn>ruilon;; * -- .:. 54,404 f : Reaequisition of shares less options exercised >;' (10383):. ".S-: (783) 'Vv (51300);. Conversion ofdebt to common shares;--7 . ` 319 ; 1,445 -.. 258 ' Craiic shares received under pension reversion : . \ -- - V' H (7357)^ /.' ' ' ' Pension asset rcvcraon.net ofdeferred tax, - - r > ; ,,--; -,20358 V: Distribution ofCF&I Steel to shareholders , .' - ' : (54,404) V -',?" '' '' : Cashdividends O V-.'. '; (15,883) . (14,628) ' " " (15300);:? 3^;:': Net financial uses . \ ; (103,634) > ; Decrease in cash and short-term investments ; . ' . .. : (32,414) T ` ^ Cash and short-term investments at beginning of year \ . 49,136 .: Cash and short-term Investments at end of year . , - $ 16,722 (75,609)? ; ,: (90,160) ^ . (10,074) .-:u - (47,056); : 59310 ? 106366V? ;49,136-; v $ 59310 is? ; See Financial Review V"' ` " > - ' - . <- . - .'ifv ~ .-3^' " ' y ` -y. ;;>? ' " -*V,-J" '-^?*'*:' . ' vv- * ` --- .. ; r* ,vv/--. _.i. " ' ' '...ti.'v . ` / ,* CRTX 0669 V Financial Review Crone Co. andSubsidiaries Accounting Policies . ' Principles ofConsolidation-The consolidated financial statements include all subsidiaries. All significant inter* company items have been eliminated. Certain prior year amounts have been reclassified to conform with 1986 presentation, including the Statements ofChanges in Financial Position. , .. , ' . /frmrm-Revenues are generally recorded when title passes to the customer. Revenues on long-term contracts are recognized under the pereentagc-of-completion . method ofaccounting and are measured principally on- either a cost-to-cost or a unit ofdelivery basis. These ` contracts represent approximately 5% ofsales in any oncyear.? . ' .. ' ft/iwrirftw*Inventories tire Muted principally ut the . Piwinn (V/rnwy-Currency iranslutlun adjustments Tor ,: lower of cost or market on the last-in, first-out (UFO) .. the years 1986,1985 and 1984 were credits of. .. method of inventoty valuation. The effect of inventory $3,003,000 and $4,279,000 and a charge of$7,058,000,; ; . quantity reductions was a reduction in cost of approxi-. respectively. Subsidiaries operating outside the United; . ;*: mately $600,000, $1,500,000 and $2,000,000 in 1986. States and Canada represented approximately 15 per- *;' . 1985 and 1984, respectively,: . ' : - ; cent ofcommon shareholders' equity at December 31, ' . Property, Plant and Equipmatt-Dcprcdalion was pro- : 1986.. - ' , vided at accelerated rates primarily using the double ^ Reucquisition ofSharer-Commencing July 1,1984 the . ,v. ; declining balance method for property, plant and . excess ofcost over par value ofreacquired shares has ?: ' equipment acquired prior to 1985. Acquisitions made/?' been charged to capital surplus in accordance with V . 2Hk ` substtjuent to 1984 arc being depreciated using the ' _ changes {n the laws ofthe state of Illinois, the state of^-f: incorporation at that time: Under the lawsof Delaware#v the present state ofincorporation, the company cbn^^-!B?V';: Iniungibtes-Casi in excess ofnet assets acquired is being . tinucs to charge capital surplus for such excess.^ i?/?-'"^r- - amortized oh a straight-line basis principally over forty : Acquisitions. years; Other intangible assets are being amortized on a In 1986 the company acquired PickOmatic, aproducer;?v ? straight-line basis over their estimated useful lives which of cam-actuated parts handling equipment as an addi-i::~:"/- average five years. tion to Defense and Specialty Systems, and seven distri-V - liwonw ranw-lnvestment tux creditstirorecorded usn ^ reduction of the prevision for income taxes In the ycur. /:'.. y- the related assets are placed in service. United States v'V: income taxes have not been provided on undistributed ' f. button centers In the New England,.northern New Yorki-i f:-Wisconsin und New Mexico markets' us additions to/.'". . Huttig Sash & Door. These acquisitions did not have a material cficct oh the results ofoperations in I986.V. ' " ife ' ; earnings of foreign subsidiaries since these earnings will { In February 1985 the company acquired UniDynamics - . . . .|i be required for indefinite investment and any dividends ; Corporation, a diversified manufacturer ofdefense and V: - ;v expected to be paid will be covered by foreign tax credits. specialty systems, engineered materials and mcrchan-;'; g^.jAVr/mwneftTS/iurr-Primaryineomcpersharccalcula-/V:. tions are based upon the weighted average number of, v dising systems for $192,258,000 (including working capital of $95,042,000). The acquisition was accounted ' 1' common shares outstanding after giving effect to dilu- - -- , five stock options. Fully diluted income per share gives HfTl '* effect to theassumed conversion ofconvertible deben- ` lures and the effect ofdilutive stock options All share information has been adjusted to reflect the 50% stock ... .vvv\; fV V. f\ v' *T'`i*'* ".i $ -r.:*r ' ' 'v' ,vs 'v " . 'T"TV' ' ' ;v - . 5 W.'-'rvt.V'. CRTX 0670 Financial Review (nmnnunl) Y ' 22 4 for as a purchase and an election under Section 338 of the Internal Revenue Code was filed in July 1986. The ing from the reversion of surplus assets in 1985 for the / pension plans covering non-bargaining employees ofthe - -. ' 1985 financial statements include the accounts of Uni Dynamics from February 1,1985. The following pro company and its subsidiaries, Huttig Sash & Door Com-4 .4. pany and Medusa Corporation. .. . ' 4 ' ,; forma results reflect adjustments as if the acquisition had occurred as ofJanuary 1,1984. . , Pension costs were determined in accordance with'. . . Accounting Principles Board Opinion No. 8. The com* (In thousands)' I9H3 pany will lulupt the Financial Avcuuniinp Siamfurds v ' ' 4 Hoard's Statements Nos. 87 and 88 in 1987. The effect. Net sales ,, $1,127,645 $1,173,261 of this change in accounting will increase pension costs Operating profit .. 46.683* . 68.891 approximately $4,500,000 primarily due to the fact that.- ;. Net income $ 17.9181 $ 32.421 the pension reversion credit amortization will no longer. '; V-"i Net income per be available. Approximately $11,000,000 of the unamor-. . common share' tized credit, net oftaxes of $10,200,000,'wilt be ..... : . included in income as a cumulative effect of a change ih<4'\' `Includes non recurring restructuring costs in the amount <if S2S.428 accounting in 1987. The balance ofthe credit, approxi-4? in 1985. - - : V-./' - ---44 -- .4; . matcly.$11,000,000, will be set up as a liability to prifcf0i Other acquisitions during 1985 include the valve service . vide for the.unfunded projected benefit obligation as operations ofMark Controls, a quarter turn valvcdis-tributeand the Alqyco specialty stainless steel valve Iinfc3 f&Wi- :[f Investments Held for Disposal: The UniDynamicsprincipal pension plan.bad more.fe^r^r / .v." ..In May 1985, the company distributed to its share- : : , ;-4. 4 ....holders its common stock investment in CF&I Steel ! - assets in the fund than were required to fund the pension^ benefits earned to date. In view of the over-fundingjS ; ,3, 4^4 S . . Corporation resulting in a one-time reduction of 4 guaranteed annuities were purchased for all benefits^ 4'"' `. $54,404,000 in retained earnings. The company, con- , earned as of December 31; 1985. All active participants^;' linues to hold for disposal certain land and water rights . were transferred to a new plan having identical benefits > . > a purchased in 1983 by the company from CF&I in com. in the old plan as ofJanuary 1,1986, The company-;',, siderullon for the surrender by the company of u- \ ; expects to receive upproxinmiely $ 18,000,(HU) which} ~ .4 ; $50,000,000 secured note receivable from CF&I. The had been set up as an asset under purchase accounting. . ;; sale of the remaining land and water rights is expected ,: . 4 1 to be completed during 1987 and any proceeds net of As of December 31,1986, $15,500,000 had been ;,, `' received.c. ' .44 . ' costs incurred in excess of $50,000,000 will be paid to ,;. A comparison at December 31 ofaccumulated plan - : CF&I as additional consideration. 4;4.4;.,, 4 4. ' ` benefits and net assets available for benefits for the 4 - . PensIonsV;:.' 7-''4:.'-3 4:.'44.3 company's pension plans is prerented below:. '... 4 j. '4;: The company and its subsidiaries have pension plans- '/ , v, 4.! which cover substantially all of their employees. Pension * (In thousands). .1985- 44 ; expense ($1,844,000 in I986. $3,015,000 in 1985 and Actuarial present value of- ~ 4 ? . . --3 - * *' 4 l$l,821j000 in 1984) is actuarially determined and accumulated plan benefits^ .- " 3-, 5 V- - ' includes normal cost and amortization of prior service : \ Vested/; . 4. :- '.$ 78,9144;. $.88,102:; .. 'r , 505,5 over periods not exceeding forty years. .Thc>y;A rNonvestcdC -. ; 4 4.-34 3^8434- -:43^66.^4^44 j 4 v.1.4 assumed rate of return on investments is 8% for allv." :44 ' . -;-- 4-r $ 82*4984.;:$ 9U68^&T?1 4-'. :i ' years. PcnsK*n costs in 1986 and.I985 are reduced by ,*1* amortization over a fen-year period ofcredits result-^ r-': -3'v~rr?"~yr rNet assets available:- '-1:- W3 ;4-'l s: 4;v forbehefiuf: - Vi-! 4^%^ $125^55^4 $138^95^1 ^ ^^4 1 ^ ^ 3^ - ^ ` ." /* ;U?' VS - V. '4 -4 " 'tv Crane Co. andSubsidiaries The weighted average rate of return assumed in deter mining the actuarial present value ofaccumulated plan benefits was approximately 8 percent for 1986 and 10 ' percent for 1985. The change to 8 percent in 1986 increased the present value ofaccumulated plan benefits by approximately $9,000,000. .. The cost ofproviding health care and life insurance benefits on u viulms paid busts for certain retired employees was approximately $2,100,000 and , $2300,000 in 1986 and 1985, respectively. Miscellaneous--Net ' ' ., ' For Years BidedDecember31 ' (In thousands) - .. ; ; . . ' .1986 1985 . 1984 Accrued Liabilities At December 31 (In thousands) 1986 Payrolls and . - .. employee benefits $30217 Insurance . 8261 Interest . , 6337 Sales allowances ' 5,434 Dividend payable . 4,039 Restructuring and closure costs ' . 3,770 Taxes other than income 3,697 Other;.. . ' 14,848 $76,703 1985 : . $25,874: 8,028. 6,928 5,065 .-- " 11254 2,928 : 13,114 $73,191 Recovery related : . r~- . ' Reserves and Other Liabilities ;;>V, : to land sales;.C-_V,. $3300 -> $4,000 . $ . --. Gain on disposal bf--V:;" ; . .At December31 (In thousands 1986-; u :.!985$ ' capital assets-^-n-et v 1,178V 1,090 2,745 ' Pension and wage benefits ;-:;s--v, $I0,905;> : .$ .2227-Sj *VT Minority intercsl;c>r;-^' |952>X >v (627) Gain on rcpurchasc l^T -. '. V-V./:; (616). Restructuring andr-.;.- - ; ; V;--ti ; "') '.`1^1 closure costs' : .? -: 'V - \ - ' 7,876 v 14,174*: ' of long-term debt^>~; .48 " '1.460 -' 2362 ' Minority interest; . ' r > V 73183:; ? . 6.851'-V Other- v~, v-V*; 94 , : 851;, (829) Miscellaneous:. ;. ,, - .' 3250 , 2,121:1 $3,868 $6,774 - $3362 $29,114 $25,473. Restructuring ofOperations V Short-Term Financing ;, ' In December 1985. the company made a provision of . At year-end there were available with domestic and for $25,428,000 before toxes for restructuring and closure. eign banks $78314,000 in short-term credit lines of. .: ofeertainoperations;;; r.::-' '[ \ which $56313.000 were unused at that time. Average ; The provision was made for the costs relating to reloca tion ofeertain product lines revaluation of affected plant and equipment, employment related costs indud-' ing an estimate ofthe present value of unfunded pension >. costs and other benefits ofaffected employees plus a . compensating balancerfbr lines ofcredit in effect at ---- December 31,1986 were $1265,000 which were satis-* tied by compensating balances in the company's bank :;: . accounts. Such compensating balances reflect informal agreements and are not restricted as to withdrawal > -' < provision for the.continuing costs until the relocation,. - . ; corisolidation. br closure has been completed. See Analy sis by Segment for breakout by segments.' V fT': V*V' 4 " ' w life Ji> 1. 1 A'"': ` - '' 't-' CRTX 0672 *' `(^V* FInancl*lRavf*w(nxBmuedj- Long-Term Financing the scheduled payments ofprincipal and interest on the . At December31 (In thousands) 1986 1985 .: SI0,606,000 outstanding principal amount of the com- -_ pany's 6V5% Sinking Fund Debentures due 1992 not. Crane Co: . Senior debt: -. - V held in the company's treasury. This in-substance de* ; feasance resulted in a pre-tax gainof$1292,000 in 1985/. 8%% Convertible senior At December31,1986there was $10,606,000outstanding.. debentures due 2005, - convertible at . Covenants contained in the company's bank credit - .ft . $28.80 per share $ 75,000 $ 75,000 ' agreement and convertible senior debt indenture .: - ~ Rank credit agreement duo (i) reside! payment ofcash dividends (ii) require the - 1990-$75,000 uvullubfe 40,000 company to maintain working capital of at least , Subordinated debt - $150,000,000 (iii) require a minimum consolidated net ; ' 1016% Sinking fund . worth (at December 31,1986 SI 1,957,000 was unre-.; /.ft ft . debentures due 1994 31,934 36534/-. strutted) and (iv) restrict the amount of funded debt ftft-ft.'Oft - -7% Sinking fund V ft\ft which may be outstanding at any time. - :t ' ft ,. debentures due 1993 V ' -ft' 7% Debenturesdue 1994 , ;f > * -ft 5% Convertible debentures- . ... due 1993and 1994. . * ". v ' " .' >? convertible at $833;';,ft-.;' 8,733 10,094 . At December 31,1986, the aggregate amount ofsubsidy 48,032 ft. 48259 ' / " V ft ' ft- - I-ft./ ; to$958.?-:;-.' . 1,753 ft... ' 2,072 ; manufacturing facilities, vehicles and equipment .. '; -ftft' .Other, principally capitalft! zX: capital and operating leases with terms of '2'~ ft lease obligationsvs/ft. ft* 5292 J V*v- - -. ' Total Crane Co. / ; ft ftft ! 170,844 i! / *.- Subsidiaries://' .' - / 6,014 ft 217,973 ft of from three to twenty-five years and provide'either anr^fil^yt, ft option to purchase or reduced annua] rental payments of % minimal amounts. Future minimum payments, by ycar;';/ ftft ft'; ` *; " . ; .. 9WZ> Sinking fund ' ' ? debenturesdue 1999.-'. I-. Floating rate bank loans. .'. T4253 and in the aggregate, under these leases with initial ori ft'ft-' ft;,i ft 14253; remaining termsofone year or morc,consisted ofthe/ft. ftft following at December 31,1986; . ft V -: - ; <4.' -' ft ' fv' ;-' .V / ' "jw/i due I99li;ftft ...r ' United States/^ ' f. i United Kingdom /: 7,500 4JSSI --ft'; Minimum-rftft?- '/* ' Capital Operating Sublease V-\ .'ft- 3.982; . (Inthousands) Leases'; Leases;*. Income;*? >ft :. ` ; industrial Revenue Bonds ; ? : 23,078 ft.: . .. 26,785 ft V . -.. :. ', Other, principally capital. . ft .:> ft 1987 , : v $ 4,751., $12,074 > ' .. . ft; > lease obligations: - ft - 11,860 :ft . 12525| 1988*0*!'.., 1258r;'.&9268!ft'* 387.?? 11,139 ' ' i Vtft'" ftft ; Total subsidiaries1-/.,ft ft- ft 1989!ft:ft . "2,089:- '; 7,020/ft/: 263 ft! ft 8,846 ft ' 61243 /ft 57545ft .V1990 ' ; i 1,986 ! . 5.156 : 232/ 6310 -- ' '% ft -v h- $232,087?ft $275518/ 1991. - 1573 : 4,084 ft :: 165;V 5,892'- ' - " Thereafter- . 14227 15,005 - 763-ft 28,469 : Sir,. > At December 31,1986, the principal amounts of long-;. ;/ ! Total minimum . "ft;. ftftftft' term debt repayments, net of amounts held in treasury,?..; ft- lease . , = y ' ' ft required for the next five years were $10,t06,000 in ?; V:- payments:; 27,284 . $52,607. 1987, $14,759,000 in 1988, $12340.000 in 1989,; : $1 1,472,000in 1990and$17.650,000in 199L.^; .Interest'!!; (9276) $2,597! $77294-' ' Duririgj985 the company icrrated ah irrevocable trust.,-'!; ofdirectUnited Statesgovemmtmt obligations tosatisfy/ $18,008 CRTX 0673 Flnenctel Review fcormnutd) ^Uv'-' V . ` Research and Development . Auditors'Opinion Product development and engineering costs aggregated. Deloitte "- approximately $11,200,000,$10,700,000and $7,700,000 in 1986.198S and 1984, respectively. In addition, Haskins+Sells ^ ;.'; ;- approximately $6,800,000 and $8,400,000 was received in 1986 and 1985, respectively, for customer sponsored - To the Shareholders ofCrane Co. . . research and development relating to projects within We have examined the consolidated balance sheets of - ; Defense and Specialty Systems., . . . . . . Crane Co. and subsidiaries as of December 31,1986. . . -; Stook Option* ` . A summary of stock option transactions follows: - and lOSSnndiherclHietlconHtlidiih'tlhiiiicmenisttf . ... . Income, retained earnings, capital surplus, and changes ... in financial position for each of the three years in the -: ' Number - period ended December 31,1986. Our examinations ' ; of Shares were made in accordancc'with generally accepted audit- .. ; -Outstanding January 1.1986 " , ' . .' 50% Stock distribution ; /, Options granted -.' /' ' . - ;. '. . 251318 164313 122300 ing standards and, accordingly, included such tests ofthe , ; accounting records and such other auditing procedures as wc considered necessaty in the circumstances. , ,1 V.-- ; Options expired.. j 12322: In our opinion, such financial statements present fairly- 1 - ; .Options exercised - ' ?' - -- ' 61,700-. the consolidated financial position ofCrane Co. and a; ? :1" Outstanding December 31; 1986 .><., < : > . 464,209 } subsidiaries at December 31,1986 and 1985 and thc-> ^ consolidated results oftheir operations and changer . <j their financial position for each of the threcycars in th^SgSkt* At Dcmber,31; 1986,'options for 104,163 shares were? period ended December 31,1986, in conform^ witlt?C:?^^' ; ! ; exercisable and 215,718 shares were available for grant.-. generally accepted accounting principles applicd.ori alfj&f>v.Jr :o Shares and per share prices (ranging from $19.19 to' vr>; consistent basis/-'- .;://C/ ; > $31.63) have been adjusted for the 50 percent stock disr; ji. tribution. In 1985, options for 2,601 shares were exer- C . A ' it' tt ^ -*-f'AA cised. The plan is riot a compensatory plan which would ! ' -; Jy i- .require a charge to income. > *, ; r ". . - New York, New Yttrk >!' y Common Share Purehue flight* Junuury 26; 1987. , .V;:^:.Thc company adopted a Common Share Purehusc' . ? ?- V ! : - "Rights Plan effective May' 19,1986. Under the plan, a. m right was distributed to the holder of each share of the.'; i'.v company's common stock on June 5,1986 The rights :.-v. : were not exercisable when granted and may only q ; - become exercisable tinder certain circumstances involv-;. >n actual or potential acquisitions of the company's;: V. ; - common stock by a person or affiliated persons,- .; ' Depending upon the circumstances; if the rights become f.,.'t~ f.' exercisable, the holder may be entitled to purchase =; ; shares ofthe company's common stock, or shares of common stock ofthe acquiring pcrson..Thc rights will remain in existence until June 5.1996, unless they arc;.:;: exercised or redeemed..^:. ~ - `V < Analysis by SegmenlofBusiness;-- . ,-X Ait analysis ofsales,operating profit assets,capital.;? . ` ^^'Jv'expendittrrcs and depreciation appears on pages 30 and:;': ' .. ; r,- / ' * - '- -v ' V* - f'v *r y/- *. y". Five Year Summary ofSelected Financial Data ; Crane Co. andSubsidiaries ' : , Yarns tuulai December 31 (In thousands)' 1986 1985 1984 1983 1982* : Net Sales Depreciation - . $1304336 $1,098,848 $792312 $771,679 $763563 . 27,649 30,734 23,178 .25,488 31351 . - .. Operating Profit** , Interest Expense , . 91,352 ; 44364 48,728 . . 23,792 7- . 5534 -7 . .' . 27373 : , 28,968 16301 . 2I59I . 26,750- . Income before Taxes . .* . Ineume Tuxes ' : . 72325 (33,847l_ 26330 . <8,6W) 41,904 . 46365 <10.9391 (IMH); 26,914 (7,624) : Income -- Continuing Operations . $ 17397 $ 30,965 $ 26377 $19390, 7. . Income Per Common Share -- \' 7 Continuing Operations: ; _ " .. .. ' *' ' r"< ' ^ - Primary- ' ' $230 , ' 7 $1.28 Fully Diluted ; - 233 *-27 - 7 r7'.. . . . . $2.09 . $1.66 $131: . : 7; 2-4 , , 1.61 :7:-7 U9.. -7;- 7. ,-:`a Dividends Declared Per Common Share:,-.. 'i. Casb.'5<J;,-'.V. ; , it a'-j- C7/:$M77' . $1.07 7 . $1.05 y.- '' ' ' 1 - - V ' $1.03 777$i.oi-'*-. & , ;*.** ..'ty i\ V;/StOck:>r';\7.' <;_-7 .if.. .-. 2% . . 2%\y 2%; :. : Asscts^7;.;`:-V-:7-v^:'f;; / 7 $650,8127.K; $659,686;^ $460,421; 7 ''$575.9I6-V?.`$72^57-:vW5- gr.yw i{ ij.- :* -l;: 'Ixing-TcrmDebt'--.; `;7.7 ;/$232,087ii-^""v: $275,918 [S' $138524;:'; $2023327- ' '!- 4 (V-..; `ReMutcJ to renect sejintew held fi>r disposal :, : -j--, - 17 ' ' '* .: ,; ; ; yy- V** , ' `v.` "V*..' **lneliKh>mm-iwuTrinp restructuring costs in thcamount >f $25,428 in 19X5 as well as certain other reclassifications lo conform prior.t;'..: ' _ , ., - r " - jvars wilh Ihc l*rX6 prescnlalion- V >\ >.. iV: ofV: J. / . 7' \. . ' S ` ` ' V'. :; I<\ Quarterly Results for the YearmuHimth^y} y-V' 7" 77" ^,V / .(In thousands)'. -.: ; . , Net5 Iv-'I'; Quarter--,:. 7, .Sales'- ' *V*> 7; 1986 77.7.:;-:;. ;7- :r; 7' Isfe:. -,' . J u : T':-$':259390ir;'f 7 2nd . ; ' -' V "7: ' 310,763 7 "tp:> ' 3rd.;`:f'::-7'?7.',: ; 7 -323.122;, - '' ' L " 4th'..;r - 7:.-; : : 311.061,' Gross : " Pnifrt ' ; .'i'7 - $ 49,123: - ' - . . 64.935- : 66397' - ' .. 66,159 - Net Income' . - : - Net Income (Loss), . 7. ' (Loss)' v. .! Per Common Share ;r , - 7- >' - ' $ 4331 .; $3f.-'7-7:;.- ' * i . I Ic047- - 1251 r-':' / : ;<9i 7; 7 7-.;. '. '*.,* 10589 : : 7 - v V.-.78 * '''; 7 CRTX 0675 Management's Discussion andAnalysis of Operations and Financial Condition . . Results ofOperations .. Defense and Specially Systems had sales slightly above . ' The operating results of 1986 showed substantial . last year. The decline in earnings from last year was due . ; '=. ; . . improvement over 198S, reflecting the continued' . to the timing of production phases on several major con- i ; . strength of the major markets the company serves, par* ticulariy the residential and commercial construction and tracts. Earnings in 1985 included a $1 million charge for . relocating a facility. In 1986, this segment acquired. V; : y- aircraft components markets. The acquisition of PickOmatic Systems, Inc., a producer ofcam-actuated - UniDynamics Corporation in 1985 extended our . , . parts handling equipment Although business competi- . v - markets into Defense and Specialty Systems, Engineered . tion is expected to be strong, the continuing program of V' Materials nnd Merchandising Systems, The results of broadening the product bene an well an the segment's ' '' ' these segments have been included in the consolidated results from February 1,1985. . ,, strong technical position, should cuntinuc to improve its . position in the markets served. ' - ' Fluid Systems and Controls domestic operations* con Engineered Materials performance in 1986 was below . , . . \..' ' ; tinued increase in sales was due to strong demand for its the prior year primarily due to the continued weakness: ;.v ^ -, - . - - aircraft components, as well as the inclusion for the full. . ofthe transportation market The continued low levels of .' ;t f 28 i ,. year ofthree small acquisitions made in 1985 in its valves business. An increase in earnings from the higher. sales level of aircraft components was offset by the I- > impact of reduced margins in the. industrial valve and-v. pollution control markets. The costs associated with the ?. capital spending by the chemical process industry served _ . by this segment also adversely affected the 1986 and . v. / '^ 1985 results. The 1985 results included a charge of $4.5j-. .million for the closure of certain operations, which was -Jr completed in 1986. New products to be introduced in ' restructuring ofthe domestic valve operations reduced^ : -|985 operating profit by approximately $16 million.;. ; '' : , d&s'-r-. . ' . - . '. Canadian Fluid Systems and Controls operating results ,' V; > improved significantly over the last two years, particu- ' lariy in plumbing products due to the high level ofhous--. : ; ing starts This was partially offset by the reduced ; ; ... ` demand for energy-related industrial valves The impact. ofcost reduction measures and implementation of - manufacturing efficiencies during the last three ycurs are i'1.1 ; reflected in the improved operating rcsullsjv ; Merchandising Systems earnings improved significantly^^ from 1985, although sales decreased from last yeariThe^S?ft tower sales are due to the sale ofthe segment's Uniyebal^i^i: Nolin operation in 1985. The significant improvement profitability was due to new product intnxlticlioiaiitui^^.^jfJ^i well as the impact ofcost reduction measures andsry':;^?:f.5:^f:i, manufacturing efficiencies Implemented over the last C; r ^ two years.. ; \ V "I - . International Fluid Systems and Controls sales and oper ating profit continued at low levels primarily reflecting weak demand and the impact ofcompetitive pricing for; : v-'v,- valve and fitting pfoducts-The. 1985 operating results. . . > - were impacted by a provision of $1.4mitlion for the dis-- y. r- V :-.' posal of an operation, which was completed in 1986.". ' Huttig Sash & Dooroperating results for 1986 were the ' ::i\ highest in their history. In addition to two branches.' 1 acquired early in 1986, Huttig expanded its operation. " , into market areas not previously served, with its acquisl- - - \ tion in late 1986 of five branches located in the strong . .\ replacement, remodeling and residential construction - .. ; ; areas of the Northeast Any adverse effect of fluctuations " ` ' in new residential construction or reduced margins in the : * - farm belt and energy producing states should be by the expanded market base served by Huttig. ;;x ivK* Chute Co. andSubsidiaries ; ' ' /: " ` Medusa sates and earnings improved significantly over Liquidity and Capital Resources . | ' 1985 and 1984 levels. The sales increase was a result of ' the strong construction market in the upper Midwest The increase in volume coupled with lower operating costs and improved margins were major factors contri The company has depended primarily upon earnings and bank borrowings (including short-term credit lines) to furnish capital to finance operations and working cap- .: . ' - > ; . . buting to the strong performance in 1986. Capital spend ing projects to provide new distribution terminals and. tal. The company has utilized proceeds from the sales of capital assets, including assets held for disposal, over the ; ' - additional transponingcnpahililieMnihp Great I,(ikes, tlmt begun in 1986, should result in Medusa muintulning a strong position in their market last three years to help fund construction and repay debt, During 1985 the company Issued $75 million Convert!* blc Senior debt due 2005 as well as entered into a $75 million bank credit agreement At December 31,1986, . y 7- . !. ' ' Net interest expense was below the 1985 level but signif- this available credit facility was unused compared with. ';/./- . icantly above 1984. The reduction in 1986 was due to . year end 1985 when $40 million was drawn down. The - -; . ' ,, . : lower average debt outstanding and interest rates, par-; reversion of the excess pension fund assets of UniDy- . y. , . ' i . ; /. tially offset by lower investment income. The increase : namics was completed and $155 million ofthe $18 mil-;'/ 7 / ' ; from 1984 was due to the debt incurred in connection ;. lion was received in 1986. In 1985 the company and its;C/\7;.'i itwith the acquisition of UniDynamux ' ,;: . subsidiaries, Huttig Sash & Door and Medusa Corpora'f77/"'2g':\7V>3.V ; During 1986 excess land and facilities, primarily in ; tion, completed a reversion ofexcess pension fund assets,f/7/^. ti,'Medusa, were disposed ofat pre-tax gains of $1.2 mil-: resulting in the company receiving $40 million of ggs'jf/lion. Similar actions in 1985, primarily in Fluid Systems plus assets before tax.Vrv .y.r: ^ 7 andControls, rcsultcdinpre-tax gainsof$l.l million; 7 . The company had cash and short-term investments of^/'- 7 ; V ; - Miscellaneous income in 1986 and 1985 included re-,;.'. $16.7 million at the end of 1986. In addition, there was/* - * ''-7 - coveries of $35 million and $4.0 million respectively, ~ available $75.0 million under the bank credit agreement 77 s from the sales of land and water rights held for disposal/; and $565 million of unsecured credit lines, v. : 77/. _ - . Depreciation expense decreased $3.1 million from 1985 ' In May 1985 the company distributed to its shareholders * * v sj-.- - primarily due to.the reduced levels ofcapital spending . its common stock investment in CF&l Steel Corporation * i; ; during the several years prior to 1986 and the change in resulting in a reduction of $54,4 million in retained cam*- , ; depreciation method* from accelerated in straight-line:/ . ing*. The hulunce of the lund und wuter rights, now Ic x - for ull additions during and subsequent to 1985.;. :, thun $4 million, purchased from CF&I in 1983 for $50 . Income taxes fur 1986 were significantly above 1985.:- million, is expected to be sold in 1987. ;' |IV ' The increasedclfective tax rate 6f46.9%, compared - In 1987 the company will adopt the new FASB pension ' ... with 32.9% in 1985, was primarily due to higher realiza- accounting pronouncements. The accounting changes ' lion of foreign taxcredits in .1985 and lower investment will result in a one-time credit ofapproximately $11mil- . ? .. tax credits realized in 1986 due to the 1986 Tax Reform ; lion related to pension reversion and an estimated..;' 7 7/,;; ? , /, Act, as well as higher state.taxes in 1986. lmplementa-.7 increase in pension expense of $45 million/; - ; .{.):*i -V;-"J . tion of the United States tax law change should reduce ' iour effective tax rate for 1987 by approximately four-.; 7 pcrccntagcpointsfromthe 1986level. ,' 'V'-V- , 'vr,;/7- * ..'-I-* Analysis by Segment Crane Ca andSubsidiaries (In thousands) " 1986 1985 Amount . % . ` Amount % 1984 Amount Net Sales . Fluid Systems and Controls - Domestic. ' . Canada . International -, ... $ 242,948 151,915 61,294 20 $ 231434 13 139,068 5 61438 21 $ 223456. 28 / 13 130461 17 5 62,176 8 .; Total . Defense* Specialty Systems Engineered Materials Merchandising Systems - Huttig Sash & Door Company Medusa Corporation . - .'. 456,157 137,228 81418 79,511 289404 160418 38 11 7 7 24 13 431.640 127,475 75,963 85,491 240,133 138,146 39 12 7 8 22 12 416,093 --- ' ----- ' . 239404 136,915 33 '-- . ' 30 . 17 V;; . Total Net Sales : .... .......' ... $1404436 100 $1,098,848 100 $ 792412 . iqo.;/V V Operating Profit;/ '. .'-/. ] . .. .. Fluid Systems and Controls . . ' ' * ' ..V : -- JO Domestic- V WW " $ 33,017 ;1 32 $\ 16,106* 26 ; S^-24471:-;;/ Canada 11407 ' 11/ :-;//,9440r; .15 /V f 6,027-f:/:' : International'JVw'-.s-Vi-/; -y 2496:]. ..2/ ,/. .. 863* V .i\. -/ry; 3441^i: '2 - . -'Total--T-i.>y V. V- 47,020 >, . 45.-:.' / 26409 `. .- 42 : s6i^Ps^; ASVV--. Defense & Specialty Systems Engineered Materials' ; 12,165 . 2,965 12.v. .3 -14,478* i ,23:: (497)* : (1) -'iTr-Jiajsii(ii Merchandising Systems- ;-, 3,853 " " 3.-. (903) . V Huttig Sash & Door Company.. , . - : . 21462: 21 16,932 27 . 19,182:./] -;35^Vv. Medusa Corporation --.-': " 16408 / .16 : . 5,970 10 ./ 2,44in<. ' , ** - ' "' .'j * ` : 103473 100 - 62489.; 100 - .. 55462- 100 y/V Corporate / > . ' ` ' - (12,521) ,T^aI QpcratingFrofit' V $J1452__ Assets: .v .'-' -- Fluid Systems and Controls '. : .^ -Domestic> * " $ 89479: Canada; . /; V ;;]/.. .-'V.....;.-, - - .' . . 57434 Internationa)/- ~/ V- -' 37,454 Total':*: ' - " Defense & Specialty Systems- 184467 126,679 - i Engineered Materials -' - ' : . : - " 60,012 Merchandising Systems -'. - ` ' . . "V, / 51,478 : Huttig Sash & Door Company. . .;:/' ... ; : 103,046 V .'MedmaCoipotadoii'^'O.,^-^'.:. . 101470 / 627,952 14 9 29 20 10' 8/ ,17: 16 100 (17.925)* (6434) $ h4'.V8W,7..21.8il QMIV/an,, -~ . / k ' v' $ 86,743 . 15 50475- 9 / 40441;. V7 $ 69,912/ 21: -/-.. : ] 52,887 16. 35403/:- U-.y /;;.. 177.459.; 31 . 158,102; 48 106,773 - 18 / --. 69,093 . 12 . V --- . 48,806 / . 8 ' ' -- ' - 84,850 15 : 74,692 V- 22 93,908-- ' 16- V 97,895:= . 30 .. * ' 580,889:; 100 330,689:.:. loopy-; Investments Held for Disposal)/-/: ?. ..... . 2,081 y 7,112 ..Corporate/.. 4.v ./ 20479;/ *' ' . . 71,685:;./ Total Assets^'. $ 650412 `./j ' $ 659,686 : ' 'Reflects pre-taxdiaige forcosts ofrestructuring aid closure of certain operations' ' of$?M28 In 1985: SIG.I24 FIhM Syflcmr ind Contrris^DmnWte, 11,37ft Fluid-:]. '% SyntemsawlCoiimili-InunBiliKuil. SlflOQ Dsrcnw and Specially Syrtemv-- : $4,300 for Engineered M!wiuti and $2,428 Corporate.?* . V. 82,955--; V -C i 46,777/^ - $ .ii4, n60Aiiw2>p1VS CRTX 0678 jg iff iJnafjrxl* by Segment (continued) Fluid Systems and Controls; Domestic Canada International . ' Total - Defense & Specialty Systems Engineered Materials Merchandising Systems fliittig Sttslt & Door Company Medusa Corporation Corporate ', " Total Capital Expenditures 1986 . 1985 1984 : $ 1,721 $ 3.778 $ 3,016 . 2,718 1.824 1,185 1,101 1.765 1,785 5^40 7367 5,986 3,050 2.082 . -- 527 . 2349 , -- 1,414 1,308 . tsr 4,489 2,232 2.152 . 10,707 61 2,490 ' 6327 1,062 _ $25,788 $18,890 $14,465 Crane Ca andSubsidiaries' Depreciation 1986 1985 ` 1984 $3,990 1,256 2,089 7335 3,916 2,098 1,170 1,640 11358 232 $27,649 $ 4.964 $ 5,145 1,045 - 1390 2356 1,877 8365 8312 2,323 1,624 1335 12,602 678 $30,734 _ _ 1342 13324. --... $23,178 -; Quarter '- - r- ' 1st - . 2nd i. ' 3rd<- ; 4lll ' ' . \ HIGH LOW; . . . HIGH - ' $32 : $24% ' ; $23% 33% 3oy. 29.- 25% 26%..- : 26% V - 36% 27%: 27% LOW ' $21% 32 -23%. ; 23% - > $ 37 .30-; ' ,30 ; .30 : $ 37 37 , .27 . .26 ~V -' - .... . . Operations' t- Fluid System* and Controls Defense & Specialty Engineered Materials . New York, New York Systems .... Joliet, Illinois '. J.M. Fraser, President . St. Louis, Missouri R.J. Muller, Jr,,.President Chempump Division Warrington, Pennsylvania M. Appelman, President Unidynamics/Midwest Dyrotech Industries, Inc. . Joliet Illinois . . . Cochrane Environmental Systems ' Division -. King of Prussiu, Pennsylvunlu St Louis, Missouri Unidynamies/PImtmix Phoenix, Arl/.onu Polyflon CompanyNew Rochelle, New York Rcxlsiodex Company Rosclund, New Jersey . . ' - Deming Division Salem. Ohio . , ; - Unidynamics/St Louis : , St Louis, Missouri Merchandising Systems - . St Louis, Missouri . V , y..`_ ' Hydro-Aire Division Resistoflex/Defense; R. J.Muller,Jr,President Burbank, California- - Jacksonville, Florida-' National Vendors ' y. ' " . St Louis, Missouri- ; . 32 Midwest Fittings .- . . i ' ' : Ferguson Machine Company, St Louis, Missouri .. ; . St Louis, Missouri . ' National Rejectors, Iiic^ GmbH -.: : . Buxtehude, West Germanyi;/ / / W: Valves & Fittings Division . / King of Prussia, Pennsylvania: . /;' ' Fergiison Machine Company.SABraine-Ie-Chatcau. Belgium >7 Huttlg Sash & Door Company^: : Chesterfield, Missouri^!"'/a; ,y , Crane Australia Pty. Limitcd / / : HPM (High Performance - S. P. Wells, President *** Sydney, Australia^ . Crane Canada, Inc.; - Montreal.Canada/?" " . /; Machines)?;y MedusaCorporatfon;&^ ' Sterling Heights* Michigan/: : Cleveland,Ohio-' ;?;>' ; 'PickOmatic System^ Inc,. / . , D. E. Somes, President.' j :' Crane Ltd.;-/ "'. 4 :v'. London, England/; ' . - . Sterling Heights, Michigan! , '?*' ..... "V* j "' r T -;.' , l|pr>- i1 \ 'r<'J'-., J~* _ /./!: * " . ' y'*v SiffrViV-'. / i -y 'cJi i\. . i* . . .`* CRTX 0680 mm Directors Corporate Officers E. Thayer Bigelow, Jr. .> Chief Financial Officer, Timet' Inc.; Information and Entertainment Robert S. Evans Chairman, Chief Executive Officer & President Waller J.P. Curley ` . Jack M. Fraser Private Venture Capital Investments Executive Vice President Robert S. Evans' Chairman, Chief Executive Officer - A PtonUlcM ol the Compliny ' Paul R. Hundt . Vice President. Secretary A General Counsel . ' Dante C. Fablani < > .- Retired President of the Company Richard S. Forte General Partner, Forte Cashmere Company; Importer aftk^ Manufacturer ' ' Robert W. Lear3 Director of various corporations , Dwight C. Minton *.i Chairman & Chief Executive Officer Church & Dwight Co., Inc.; Chemical Manufacturer Charles J. Queenan, Jr.1 * 3 Partner, Kirkpatrick & Lockhart,. Attorneys at Law R. Kenneth Whitley Vice'President-Finance & Chief Financial Officer Gerard E. Dorsey Treasurer ': Michael L. Raithel Controller ' Corporate Vice Presidents B. Jack Barnes William C. Dackis Robert R. Foster . Richard B. Phillips Thomas F. Spencer . .. . Arthur A. Seeligson,'Jr. Independent'Oil Operator; Investments / Boris Yavitz , The Paul Garrett Professor Columbia University, , Graduate School of Business (Elected February, 1987) ' 7 ' i Member of the Executive Committee . 2 Member of the Audit Committee 3 Member of the Organization and Compensation Committee _ : * ' . ' " Executive Offices tjahe Cb. . . 75V Third Avenue * New York, NY, 10017 ' Telephone; (212)415-7300 Form 10-K . ,. ' Copies of Form IQ'K for (9R6 as filed with the Securities and .. Exchange Commission are available upon written request from the Secre tary's Office at the address above. Annual Meeting . ' The Crane Co. annual meeting will be held at. lOtOO a.m. on Monday, April 27, 1987 in the First Floor Meeting Room of the Bankers Trust Building, 280 Park Avenue, New York. N.Y. 10022. ' Stock Listings . Crane Co. common stock is traded on the New York and Pacific Stock Exchanges. ' Stock Transfer Agent. Morgan Guaranty Trust Company of New York- New York, New York 10015 ' . Registrar of Stack 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 . Mellon Bank, N.A. 4 *^1 Pittsburgh, Pennsylvania 15258 Auditors-' . .. Deloitte Haskins & Sells ' New York, New York 10048 , .. ' . ,` ' - . '. ` Equal Employment Opportunity Policy Crane Co. is an equal opportunity employer. It is the pqlicy of the' company to recruit, hire, promote " and transfer to all job classifications ' without regard to race, color, reli- ' gion,sex, age or national origin.r > CRTX 0681