FORM 10-K405 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 ----------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 1-1657 ------ CRANE CO. ------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-1952290 ---------------------------------------- --------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No) 100 First Stamford Place, Stamford, CT 06902 ---------------------------------------- --------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 363-7300 ------------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ----------------------- ------------------------ Common shares, par value $1.00 New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: 7 1/4% senior notes due June, 1999 8 1/2% senior notes due March, 2004 ------------------------------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes X No _____ ----- Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) Based on the closing sales price of January 31, 1996 the aggregate market value of the voting stock held by nonaffiliates of the registrant was $1,194,520,787. The number of shares outstanding of the registrant's common stock, $1.00 par value was 30,145,635 at January 31, 1996. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Portions of the annual shareholders report for the year ended December 31, 1995 are incorporated by reference into Parts I, II and IV. Portions of the proxy statement for the annual shareholders meeting May 6, 1996 are incorporated by reference into Parts I and III.
PART I ITEM 1. BUSINESS -------- Crane is a diversified manufacturer of engineered industrial products and the nation's largest American distributor of doors, windows and millwork. Founded in 1855, Crane employs over 10,000 people in North America, Europe, Asia and Australia. STRATEGY The company's strategy is to grow the earnings of niche businesses with high market share, build an aggressive and committed management team whose interests are directly aligned to those of the shareholders, and maintain a focused, efficient corporate structure. ACQUISITIONS In the past five years, the company has completed twelve acquisitions. During 1995, the company completed three acquisitions at a cost of $9.4 million. In February the company, through its Barksdale subsidiary, acquired Unimess GmbH, a German-based manufacturer of a full line of solid state pressure switches and transducers, level switches and indicating systems, and flow measurement and control components for specialized instrumentation requirements in numerous industrial processes. In the fourth quarter, the company acquired Process Systems, Inc. based in Michigan. Process Systems is a manufacturer of vertical turbine pumps and accessories for industrial applications. In November 1995, the company acquired Kessel PTE Ltd., a fluoropolymer plastic lined pipe manufacturer with facilities in Singapore, Malaysia and Thailand. The company completed three acquisitions in 1994 at a total cost of $240 million. The company, through its wholly-owned subsidiary Huttig Sash & Door Company, acquired a moulding and millwork manufacturing operation in Prineville, Oregon in May 1994. In April, 1994, the company purchased Mark Controls Corporation, a manufacturer of automatic and manually operated valves, and specialized instruments and controls, for commercial and industrial customers. The company acquired ELDEC Corporation in March 1994. ELDEC's products are used worldwide on all major commercial and business aircraft and include: position indication and control systems, proximity switches and components, true mass fuel flowmeters, and power conversion components and systems. In 1993, the company completed five acquisitions at a total cost of $106 million. In December, the company acquired Burks Pumps, Inc., which has manufacturing facilities in Piqua, Ohio and Decatur, Illinois and provides engineered pumps for an array of specialized commercial, industrial and municipal fluid handling applications. The products are marketed under the Barnes, Burks, Weinman and Prosser brand names. Also included was a line of tank cleaning equipment sold under the Sellers brand name for the industrial clean- in-place market. This acquisition substantially increased Crane's involvement in niche pump markets. In October 1993, the company acquired Filon, a manufacturer of fiberglass- reinforced plastic (FRP) panels. Filon was integrated with the company's Kemlite unit in the fourth quarter of 1993. The Filon acquisition significantly expanded Kemlite's position as a supplier of FRP panels to the recreational vehicle market. In April and May 1993 Huttig Sash & Door Company expanded its nationwide millwork distribution by acquiring Rondel's Inc., a millwork distributor serving the eastern Washington/western Idaho region, and the Whittier-Ruhle Millwork Company, serving the Mid-Atlantic region. Perflow Instruments, Ltd., a British manufacturer of pressure and flow measurement equipment, was added to Crane Ltd. in 1993. /1
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- In 1992, certain assets of Jenkins Canada, Inc., a manufacturer of bronze and iron valves, were acquired as an addition to the company's North American valve unit. DIVESTITURES In the past five years, the company has divested three businesses. In December 1994, Huttig sold its window manufacturing business for $2.4 million. The transaction excluded real estate and receivables. In July 1994, the company sold Modulinc, the fiber optic channel product line of ELDEC. In April 1993, the company sold its precision ordnance business, UniDynamics/ Phoenix for approximately $6 million. LONG-TERM FINANCING In June 1994 the company sold $150,000,000 of 7 1/4% notes that will mature on June 15, 1999. During March 1992 the company sold $100,000,000 8 1/2% notes that will mature on March 15, 2004. BUSINESS SEGMENTS See pages 28 and 29 of the Annual Report to Shareholders for sales, operating profit and assets employed of each business segment. FLUID HANDLING The Fluid Handling segment consists of valve, pump and water treatment businesses. The Crane Valve business with five manufacturing facilities in North America, as well as plants in the United Kingdom, Australia, Norway, China and Indonesia, sells a wide variety of commodity and special purpose valves and fluid control products for the chemical and hydrocarbon processing, power generation, marine, general industrial and commercial construction industries. Products are sold under the Crane, Jenkins, Pacific, Westad, Flowseal and Center Line brands. Crane Pumps has six manufacturing facilities in the United States located in Ohio, Illinois, Pennsylvania, West Virginia and Michigan. Pumps are manufactured under the Deming, Weinman, Chempump, Burks, Chem/Meter, Barnes and Process Systems brand names. Pumps are sold to a broad customer base which includes chemical and hydrocarbon process industries, automotive, municipal, industrial and commercial wastewater, power generation, commercial heating, ventilation and air-conditioning industries and original equipment manufacturers. The water treatment business has a manufacturing facility in Pennsylvania and serves the water and wastewater treatment market. Its products are sold under the Cochrane name. This group employs 3,200 people and had assets of $261.2 million at December 31, 1995. The Fluid Handling business continued to focus on reducing product costs. Crane has established a low cost base of suppliers in China, South Korea, India, Mexico, Romania and Poland. Cellular manufacturing techniques were successfully implemented at Crane Ltd. in 1995 and are planned for our Brantford, Canada bronze valve facility in 1996. Two valve manufacturing joint ventures were established in the Far East in 1995, one in China and one in Indonesia. Both were manufacturing and shipping valves in the fourth quarter of 1995. Crane acquired Process Systems Inc., a manufacturer of industrial line shaft turbine pumps in the fourth quarter of 1995. This company, with annual sales of $9.0 million, will be integrated into Crane's existing vertical turbine pump business in 1996. Products in this group are sold directly to end users through Crane's sales organization and through independent distributors and manufacturers representatives. /2
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- AEROSPACE The Aerospace segment consists of ELDEC, Hydro-Aire, and Lear Romec. The group employs 1,500 people and had assets of $166.6 million at year end. The order backlog totaled $211 million at December 31, 1995, slightly above the prior year level. ELDEC designs, manufactures and markets custom position indication and control systems, proximity sensors and components, true mass fuel flowmeters, power conversion components and systems for the commercial, business and military aerospace industries, and military marine and telecommunications markets. These products are custom designed for specific aircraft to meet technically demanding requirements of the aerospace industry. ELDEC also has a $5.0 million 47% equity investment in Powec AS, a Norwegian manufacturer of power conditioning products and systems, whose products are complementary to the products and complex power systems engineering capabilities at ELDEC. This accelerates the transfer of our Aerospace power conversion technology to the commercial wireless telecommunications market. Hydro-Aire designs, manufactures and sells anti-skid and automatic braking systems, fuel and hydraulic pumps, and coolant pumps and systems, hydraulic and pneumatic valves and regulators, actuators and solid state components for the commercial, business and military aerospace industries as original equipment. In addition, the company designs and manufactures systems similar to those above for the retrofit of aircraft with improved systems and manufactures replacement parts for systems installed as original equipment by the aircraft manufacturer. All of these products are largely proprietary to the company and, to some extent, are custom designed to the requirements and specifications of the aircraft manufacturer or program contractor. These systems and replacement parts are sold directly to airlines, governments, and aircraft maintenance and overhaul companies. Lear Romec designs, manufactures and sells lubrication and fuel pumps for aircraft, aircraft engines and radar cooling systems for the commercial and military aerospace industries. Lear Romec has a leading share of the non- captive market for turbine engine lube and scavenge oil pumps. Lear Romec also manufactures fuel boost and transfer pumps for commuter and business aircraft. /3
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- ENGINEERED MATERIALS The Engineered Materials segment consists of five businesses: Kemlite, Cor Tec, Resistoflex, Polyflon and Crane Plumbing. This group had assets of $100.6 million at December 31, 1995 and employed 1,200 people. Order backlog at year end 1995 was strong at $22.5 million. Although down significantly from the inflated level at year end 1994 which was caused by anticipated fiberglass shortages, this backlog is historically high compared to normal order backlog levels. Kemlite manufactures fiberglass-reinforced plastic panels for use principally by the transportation industry in refrigeration and dry van truck trailers and recreational vehicles. Kemlite products are also sold to the commercial construction industry for food processing, fast food restaurant and supermarket applications, and to institutions where fire rated materials with low smoke generation and minimum toxicity are required. Kemlite sells its products directly to the truck trailer and recreational vehicle manufacturers. Kemlite uses distributors to serve its commercial construction market and some segments of the recreational vehicle market. Cor Tec manufactures fiberglass-reinforced laminated panels serving the truck and truck trailer segment of the transportation industry. Cor Tec markets its products directly to the truck and truck trailer manufacturers. Resistoflex is engaged in the design, manufacture and sale of corrosion- resistant, plastic-lined steel pipes, fittings, tanks, valves, expansion joints and hose used primarily by the pharmaceutical, chemical processing, pulp and paper, petroleum distribution, ultra pure water and waste management industries. It also manufactures high-performance, separable fittings for operating pressures to 8,000 PSI used primarily in the aerospace industry. Resistoflex sells its industrial products through distributors who provide stocking and fabrication services to industrial users in the United States. Its aerospace products are sold directly to the aerospace industry. In the fourth quarter of 1995, Resistoflex acquired Kessel PTE, Ltd., a plastic-lined pipe manufacturer with facilities in Singapore, Malaysia and Thailand. This acquisition will provide Resistoflex with immediate market access to the rapidly expanding Asian chemical process industry. Polyflon manufactures radio frequency and microwave components, capacitors, circuit processing, and antennas for commercial and aerospace uses. Crane Plumbing manufactures plumbing fixtures in Canada. Its products are sold through distributors in Canada and it has a large share of the Canadian plumbing fixtures market. /4
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- CRANE CONTROLS This segment includes five businesses: Barksdale, Powers Process Controls, Dynalco Controls, Azonix, and Ferguson. The companies in this segment design, manufacture and market industrial and commercial products that control flows and processes in various industries including the petroleum, chemical, construction, food and beverage, power generation industries and transportation. Crane Controls had assets of $128.5 million at December 31, 1995, and employs 800 people. On December 31, 1995, Crane Controls had a backlog of $26.2 million, equivalent with last year. Barksdale manufactures solid state and electromechanical pressure and vacuum switches, pressure transducers, temperature switches, and directional control valves which serve a broad range of commercial and industrial applications. It has manufacturing and marketing facilities in the United States and Germany. The February 1995 acquisition of Unimess GmbH brought a full line of solid state switches, transducers and indicating systems to Barksdale, complementing existing German and United States product lines and market channels. Powers Process Controls designs, manufactures and markets microprocessor- based process controllers and instrumentation, pneumatic actuated control valves, self-contained temperature regulators, water mixing and thermal shock protection shower valves and plumbing brass for industrial applications and the institutional construction industry. Dynalco Controls designs and manufactures rotational speed sensors, monitoring instruments, and ignition and air to fuel control systems. Dynalco's products are used worldwide by industries in a variety of applications, including stationary natural gas engines, power generation, oil and gas production and transmissions, and agriculture equipment. Azonix manufactures high precision data acquisition, control systems and operator interfaces for a wide range of industries which require equipment to withstand harsh environments. Ferguson designs and manufactures in the United States and through Ferguson Machine S.A. in Europe, precision index and transfer systems for use on and with machines which perform automatic forming, assembly, metal cutting, testing and inspection operations. Products include index drives and tables, mechanical parts handlers, in line transfer machines, rotary tables, press feeds and custom cams. The products in this segment are sold directly to end users, and engineering contractors through the company's own sales forces and cooperatively with sales representatives, stocking specialists and industrial distributors. MERCHANDISING SYSTEMS The Merchandising Systems segment has two operating units: National Vendors, the industry leader in the design and manufacture of a complete line of vending merchandisers for the food/service vending market; and NRI, which manufactures electronic coin validators in Buxtehude, Germany for the automated merchandising and gambling/amusement markets in Europe. National Vendors products include electronic vending merchandisers for refrigerated and frozen foods, hot and cold beverages, snack foods, single cup individually brewed hot drinks and combination vendors/merchandisers, designed to vend both snack foods and /5
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- MERCHANDISING SYSTEMS (CONTINUED) hot/cold drinks, or snacks and refrigerated/frozen foods in one machine. National Vendors manufactures its products in a 463,000 sq. ft. state of the art facility in Bridgeton, Missouri. National Vendors' products are marketed directly to customers in the United States and Europe by company sales and marketing personnel, and in other international markets through independent distributors. Merchandising Systems employs 1,150 people and had assets of $88.9 million at year end 1995. Order backlog totaled $14.7 million at December 31, 1995, which is normal for Merchandising Systems. In 1995, National Vendors expanded its international distribution and now has six distributors in Latin America, five in the Pacific Rim, and six in the Middle East. International sales, particularly in Europe, but also in Latin America and the Pacific Rim, will be key to future growth along with continued new product introduction. WHOLESALE DISTRIBUTION The company distributes millwork products through its wholly-owned subsidiary, Huttig Sash & Door Company ("Huttig"). These products include doors, windows, mouldings and related building products. Huttig assembles certain of these products to customer specification prior to distribution. Its principal customers are building material dealers, building contractors and home remodelers that service the new construction and remodeling markets. Wholesale operations are conducted nationally through forty-six distribution centers throughout the United States, in both major and medium-sized cities. Huttig's sales are made on both a direct shipment and out-of-warehouse basis entirely through its own sales force. Huttig has a manufacturing plant in Montana, where it produces certain of the above products and other finished lumber, the bulk of which is sold directly to third parties, some of whom compete with Huttig branches. Huttig acquired a specialty moulding and millwork manufacturing operation in Prineville, Oregon in 1994. The majority of the moulding products are sold to third parties but Huttig is the largest customer. Valve Systems & Controls is a value-added industrial distributor providing power operated valves and flow control systems to the petroleum, chemical, power and general processing industries. It services its customers through facilities in Texas and Louisiana. Crane Supply, a distributor of plumbing supplies, valves and piping in Canada, maintains thirty-six branches throughout Canada and distributes Crane manufactured products in that country. Crane Supply also distributes products which are both complementary to and partly competitive with Crane's own manufactured products. OTHER The other segment consists of Crane Defense Systems, which is the only Crane business focused on defense industry products. Crane Defense Systems is engaged in the development and manufacture of specialized handling systems, elevators, winches, ground support equipment, cranes and associated electronics. These products are sold directly to the government and defense contractors and represent less than 1% of 1995 sales. /6
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- COMPETITIVE CONDITIONS The company's lines of business are conducted under actively competitive conditions in each of the geographic and product areas they serve. Because of the diversity of the classes of products manufactured and sold, they do not compete with the same companies in all geographic or product areas. Accordingly, it is not possible to estimate the precise number of competitors or to identify the principal methods of competition. Although reliable statistics are not available, the company believes that it is an important supplier to a number of market niches and geographic areas. The company's products have primary application in the industrial, construction, aerospace, automated merchandising, transportation, and fluid handling industries. As such, they are dependent upon numerous unpredictable factors, including changes in market demand, general economic conditions, residential and commercial building starts, and capital spending. Because these products are also sold in a wide variety of markets and applications, the company does not believe it can reliably quantify or predict the possible effects upon its business resulting from such changes. Seasonality is a factor in Huttig and the Canadian operations. The company's engineering and product development activities are directed primarily toward improvement of existing products and adaptation of existing products to particular customer requirements. While the company owns numerous patents and licenses, none are of such importance that termination would materially affect its business. Product development and engineering costs aggregated approximately $51,900,000 in 1995, $46,400,000 in 1994 and $18,400,000 in 1993, respectively. Included in these amounts were approximately $12,600,000 and $9,500,000 received by the company in 1995 and 1994, respectively, for customer sponsored research and development. The increase in 1995 was mainly due to the ELDEC acquisition. The company is not dependent on any single customer nor are there any issues at this time regarding available raw materials for inventory. /7
PART I (CONTINUED) ITEM 1. BUSINESS (CONTINUED) -------- Costs of compliance with federal, state and local laws and regulations involving the discharge of materials into the environment or otherwise relating to the protection of the environment are not expected to have a material effect upon the company's capital expenditures, earnings or competitive position. ITEM 2. PROPERTIES ---------- <TABLE> <CAPTION> MANUFACTURING FACILITIES* NUMBER AREA - ------------------------- ------ ---- <S> <C> <C> Fluid Handling United States 14 1,318,000 sq. ft. Canada 2 140,000 sq. ft. International 7 910,000 sq. ft. Aerospace United States 3 536,000 sq. ft. International 1 7,500 sq. ft. Engineered Materials United States 7 689,000 sq. ft. Canada 3 601,000 sq. ft. International 2 11,000 sq. ft. Crane Controls United States 7 423,000 sq. ft. International 2 53,000 sq. ft. Merchandising Systems United States 1 463,000 sq. ft. Other International 1 197,000 sq. ft. Wholesale Distribution 2 888,000 sq. ft. Other 1 113,000 sq. ft. - ---------------------- </TABLE> *Includes plants under lease agreements. <TABLE> <CAPTION> Leased Leases Manufacturing Expiring Facilities Number Area Through - ------------- ------ ---- -------- <S> <C> <C> <C> United States 8 433,000 sq. ft. 2017 Canada 1 12,000 sq. ft. 2000 Other International 7 83,000 sq. ft. 2013 </TABLE> Fluid Handling operates four valve service centers in the United States, of which two are owned. This segment operates internationally six distribution and six service centers. /8
PART I (CONTINUED) ITEM 2. PROPERTIES (CONTINUED) ---------- Crane Controls operates one distribution center internationally. Merchandising Systems operates eight distribution centers in the United States and six internationally Wholesale Distribution has forty-six Huttig branch warehouses in the United States, of which twenty-seven are owned. The Canadian wholesale operation maintains thirty-six distribution branch warehouses in Canada, of which sixteen are owned. Valve Systems & Controls operates three leased distribution facilities in the United States. In the opinion of management, properties have been well maintained, are in sound operating condition, and contain all necessary equipment and facilities for their intended purposes. /9
PART I (CONTINUED) ITEM 3. LEGAL PROCEEDINGS Neither the company, nor any subsidiary of the company has become a party to, nor has any of their property become the subject of any material legal proceedings, other than ordinary routine litigation incidental to their businesses, except for the following. On February 28, 1991, the company was served with a complaint filed in the U.S. District Court for the Eastern District of Missouri naming the company and its former subsidiary, CF&I Steel Corporation ("CF&I"), as defendants and alleging violations of the federal False Claims Act in connection with the distribution of the company's shares of CF&I to the company's shareholders in 1985. A subsequent complaint with substantially similar allegations was served on the company on September 22, 1992. The two actions have been consolidated by the court (Civil Actions Nos. 91-0429-C-1 and 4:92CVOO5144JCH). On June 1,1993 the district court dismissed the case for lack of subject matter jurisdiction under the False Claims Act and the plaintiff appealed. On November 16, 1994, the U.S. Court of Appeals for the Eighth Circuit reinstated the action. The company's petition for a writ of certiorari to the U.S. Supreme Court was denied on or about June 16, 1995 and the case has been returned to the District court to further proceedings. The case was brought in the name of the U.S. Government by a private individual (the "relator") and involves allegations of a conspiracy between the company and CF&I to cause the Pension Benefit Guaranty Corporation ("PBGC") to assume certain unfunded liabilities under a CF&I pension plan (alleged to have been approximately $270 million), to prevent the PBGC from obtaining any reimbursement from the company and to publish and file misleading information in furtherance of those alleged objectives. The suit seeks treble damages and attorney's fees. Discovery in the case has been substantially completed. The company believes that the allegations are without merit, and has filed motions for summary judgment and judgment on the pleadings. Although the Department of Justice has declined to intervene in the action, the relator may proceed to trial, which is currently scheduled for June 1996. The company has vigorously defended itself in the litigation and will continue to do so, and believes that it will ultimately prevail. The following proceedings are not considered by the company to be material to its business or financial condition and are reported herein because of the requirements of the Securities and Exchange Commission with respect to the descriptions of administrative or judicial proceedings by governmental authorities arising under federal, state or local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. In a letter dated October 15, 1992 the office of the Attorney General of the State of Ohio advised Cor Tec, a division of Dyrotech Industries, Inc. which is a subsidiary of the company, that Cor Tec's plant facility in Washington Court House, Ohio, had operated numerous air contaminant sources in its manufacturing process which emitted air pollutants for an extended period of time without the required state permits and in some instances in amounts exceeding the limits allegedly allowed under applicable rules. The Ohio Attorney General's office also alleged that certain contaminant sources at the Cor Tec facility were installed without obtaining permits to install. The main air contaminant in question is styrene, a volatile organic compound that is alleged to be a carcinogen. In 1993, Cor Tec constructed an emission control system in its plant which included the installation of a hood, vent and incinerator to capture and incinerate the styrene emissions. At a meeting in Columbus, Ohio on March 4, 1993 the Attorney General's office proposed that Cor Tec and the company sign a Consent Decree which would include general injunctive relief and civil penalties in the amount of $4.6 million which Cor Tec has refused to do. In a letter dated July 17, 1995 the Attorney General's office of the State of Ohio delivered a draft Complaint to Cor Tec (Court of Common Pleas, Fayette County, Ohio) alleging failure by Cor Tec to obtain various permits to install and to operate sources of contaminants and also alleging violations of air emissions standards, for periods 1974 to 1993. Penalties of $25,000 per day for each violation are demanded in the draft complaint. In a letter dated November 9, 1995, the Attorney General's office presented a civil penalty demand for $1.8 million and, by letter dated February 1, 1996 the Attorney General's office presented a draft Permit to /10
PART I (CONTINUED) ITEM 3. LEGAL PROCEEDINGS (CONTINUED) Operate the principal equipment in the Cor Tec facility that generates the styrene emissions. Cor Tec has responded in writing that, among other things, (i) the rule upon which the state's demands are based was not adopted in accordance with applicable statutory directives and is, therefore, unenforceable, (ii) Cor Tec has nevertheless complied with the rule as it is currently applied by the state, (iii) the penalties sought by the state are wholly out of proportion with the nature of the alleged violations and (iv) the proposed Permit to Operate does not comply with the emission limit criteria specified in the applicable state rule. Cor Tec has proposed revisions to the proposed Permit to Operate to conform to the applicable state rule and actual technical operating parameters. Cor Tec continues to believe it has adequate defenses to the allegations made by the Attorney General and it plans to vigorously resist paying any damages, fines, or penalties. On July 12, 1985 the company received written notice from the United States Environmental Protection Agency (the "EPA") that the EPA believes the company may be a potentially responsible party ("PRP") under the Federal Comprehensive Environmental Response Compensations and Liability Act of 1980 ("CERCLA") to pay for investigation and corrective measures which may be required to be taken at the Roebling Steel Company site in Florence Township, Burlington County, New Jersey (the "Site") of which its former subsidiary, CF&I Steel Corporation ("CF&I") was a past owner and operator prior to the enactment of CERCLA. The stated grounds for the EPA's position was the EPA's belief that the company had owned and/or operated the Site. The company had advised the EPA that such was not the case and does not believe that it is responsible for any testing or clean-up at the Site based on current facts. CF&I also has received notice from the State of New Jersey Department of Environmental Protection, Office of Regulatory Services ("NJDEP)", advising CF&I that an investigation by the NJDEP had identified what was considered an existing and potential environmental problem at the Site. As a past owner and operator at the Site, CF&I was notified of the NJDEP's belief that further investigatory action was needed to identify all potential environmental problems at the Site and thereafter formulate and implement a remedial plan to address any identified problems. The NJDEP has subsequently requested information from CF&I, and CF&I has cooperated in providing information, including results of tests which CF&I has conducted at the Site. The EPA identified sources of contamination, which must be examined for potential environmental damage, including: chemical waste drums, storage tanks, transformers, impressed gas cylinders, chemical laboratories, bag house dust, rubber tires, inactive railroad cars, wastewater treatment plants, lagoons, slag disposal areas, and a landfill. On November 7, 1990 CF&I filed a petition for reorganization and protection under Chapter 11 of the United States Bankruptcy Code. The EPA has disclosed that two surface clean-ups have been performed at a cost in excess of $2,000,000 and a further surface clean-up has been announced at an estimated cost of approximately $5,000,000. On July 1, 1991 the company received a letter from the EPA providing an update of the clean-up at the Site. The EPA's July 1, 1991 letter describes a proposed third phase of the investigation, including a Focused Feasibility Study which defined the nature of contaminants and evaluated remedial alternatives for two portions of the Site. The estimated cost for the preferred remedy selected by the EPA for these locations is $12,000,000. In the bankruptcy proceeding of CF&I the EPA was allowed an unsecured claim against CF&I for $27.1 million related to EPA's environmental investigations and remediation at the Roebling Site. Based on the analysis above, the company does not believe it is responsible for any portion of the clean-up. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of 1995. /11
PART I (CONTINUED) EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the registrant are as follows: <TABLE> <CAPTION> Officer Name Position Business Experience Age Since - ---- -------- ------------------- --- ------- <S> <C> <C> <C> <C> Robert S. Evans Chairman and Chief Chairman and Chief 51 1974 Executive Officer Executive Officer of the company since 1985 and previously President of the company L. Hill Clark (1) President and Executive Vice President of 51 1994 Chief Operating the company, previously Officer President of Lear Romec, and previously held various positions within Allied Signal Inc., a diversified manufacturing company Robert J. Muller, Jr. Executive Vice Executive Vice President of 49 1988 President the company Augustus I. duPont (2) Vice President, Vice President and General 44 1996 General Counsel Counsel of Reeves Industries, Inc., and Secretary a manufacturer of apparel textiles and industrial coated fabrics, from May 1994 to December 1995; Vice President, General Counsel and Secretary of Sprague Technologies, Inc., a manufacturer of electronic components, from May 1987 to December 1993 Anthony D. Pantaleoni Vice President Vice President - Environment, 41 1989 Environment, Health & Safety of the company Health & Safety Richard B. Phillips Vice President Vice President - Human 52 1987 Human Resources Resources of the company David S. Smith Vice President- Vice President - Finance 38 1991 Finance and and Chief Financial Officer Chief Financial of the company, previously Officer Vice President - Corporate Development of the company, and previously Vice President of Corporate Finance of Bankers Trust Company Michael L. Raithel Controller Controller of the company 48 1985 Gil A. Dickoff Treasurer Treasurer of the company, 34 1992 previously Assistant Treasurer of the company </TABLE> (1) Effective October 23, 1995. (2) Effective January 22, 1996. /12
PART II The information required by Items 5 through 8 is hereby incorporated by reference to Pages 8 through 31 of the Annual Report to Shareholders. ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 is incorporated by reference to the definitive proxy statement which the company will file with the Commission pursuant to Regulation l4A except that such information with respect to Executive Officers of the Registrant is included, pursuant to Instruction 3, paragraph (b) of Item 401 of Regulation S-K, under Part I. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is incorporated by reference to the definitive proxy statement which the company will file with the Commission pursuant to Regulation l4A. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 is incorporated by reference to the definitive proxy statement which the company will file with the Commission pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 is incorporated by reference to the definitive proxy statement which the company will file with the Commission pursuant to Regulation 14A. /13
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K Page ---- (a) Financial Statements and Schedule: Independent Auditors' Report 17 Schedule VIII Valuation and Qualifying Accounts 18 The consolidated balance sheets of Crane Co. and subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, changes in common shareholders' equity and cash flows for the years ended December 31, 1995, 1994 and 1993 and the financial review, appearing on Pages 8 through 31 of Crane Co.'s Annual Report to Shareholders which will be furnished with the company's proxy statement as required by Regulation 14A, Rule 14a-3(c), are incorporated herein by reference and are supplemented by the schedule on Page 16 of this report. All other statements and schedules for which provision is made in the applicable regulation of the Securities and Exchange Commission have been omitted because they are not required under related instructions or are inapplicable, or the information is shown in the financial statements and related notes. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended December 31, 1995. (c) Exhibits to Form 10-K: (3) Exhibit A-By-laws There is incorporated by reference herein: (a) The company's Certificate of Incorporation contained in Exhibit D to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. (4) Instruments Defining the Rights of Security Holders, including Indentures: (a) There is incorporated by reference herein: (1) Preferred Share Purchase Rights Agreement contained in Exhibit 1 to the company's Report on Form 8-K filed with the Commission on July 12, 1988. (2) Amendment to Preferred Share Purchase Rights Agreement contained in Exhibit 1 to the company's Report on Form 8-K filed with the Commission on June 29, 1990. /14
PART IV (CONTINUED) ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONTINUED) (b) There is incorporated by reference herein: 1) Indenture dated as of April 1,1991 between the Registrant and the Bank of New York contained in Exhibit 4 to Registration Statement No. 33-39658. (10) Material Contracts: (iii)Compensatory Plans Exhibit B: There is incorporated by reference herein: (a) The forms of Employment/Severance Agreement between the company company and the executive officers (form I) and (form II) which provide for the continuation of certain employee benefits upon a change of control as contained in Exhibit C of the company's annual report on Form 10-K for the fiscal year ended December 31, 1994. (b) The E.V.A. incentive compensation plan for executive officers contained in Exhibit B to the company's annual report on Form 10- K for the fiscal year December 31, 1994. (c) The Crane Co. Restricted Stock Award Plan as amended through May 10,1993 contained in Exhibit A to the company's annual report on Form 10-K for the fiscal year ended December 31, 1993. (d) The Crane Co. Non-Employee Directors Restricted Stock Award Plan as amended through May 10, 1993 contained in Exhibit B to the company's annual report on Form 10-K for the fiscal year ended December 31, 1994. (e) The indemnification agreements entered into with each director and executive officer of the company, the form of which is contained in Exhibit C to the company's definitive proxy statement filed with the Commission in connection with the company's April 27, 1987 Annual Meeting. (f) The Crane Co. Retirement Plan for Non-Employee Directors contained in Exhibit E to the company's Annual Report on Form 10- K for the fiscal year ended December 31, 1988. (g) The Crane Co. Stock Option Plan as amended as of February 27, 1995 contained in Exhibit 4(a) to the company's Registration Statement No. 33-59389 on Form S-8 filed with the Commission on May 17, 1995. (11) Statement re computation of per share earnings: Exhibit B: Computation of net income per share. (13) Annual report to security holders: Exhibit C: Annual Report to shareholders for the year ended December 31, 1995. (21) Subsidiaries of the Registrant: Exhibit D: Subsidiaries of the Registrant. (23) Consent of Experts and Counsel Exhibit E: Independent auditors' consent. All other exhibits are omitted because they are not applicable or the required information is shown elsewhere in this Annual Report on Form 10-K. /15
SIGNATURES Pursuant to the requirements of Section l3 or l5(d) of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CRANE CO. ------------------- (Registrant) By s/D. S. Smith -------------------- D. S. Smith Vice President-Finance Date 2/26/96 ------- Pursuant to the requirements of the Securities Exchange Act of l934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. OFFICERS s/R. S. Evans ----------------------- R. S. Evans Chairman, Chief Executive Officer and Director Date 2/26/96 ------- s/D. S. Smith s/M. L. Raithel ----------------------------- ---------------------------- D. S. Smith M. L. Raithel Vice President-Finance Controller Date 2/26/96 Date 2/26/96 ------- ------- DIRECTORS s/C. J. Queenan, Jr. --------------------------- C. J. Queenan, Jr. Date 2/26/96 ------- s/M. Anathan, III s/E. T. Bigelow s/J. Gaulin ----------------- ------------------- ---------------- M. Anathan, III E. T. Bigelow J. Gaulin Date 2/26/96 Date 2/26/96 Date 2/26/96 ------- ------- ------- D. C. Minton - -------------------- -------------------- -------------------- R. S. Forte D. C. Minton B. Yavitz Date Date 2/26/96 Date ------- s/D. R. Gardner -------------------- D. R. Gardner Date 2/26/96 ------- /16
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF CRANE CO.: We have audited the consolidated financial statements of Crane Co. and subsidiaries as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995 and have issued our report thereon dated January 22, 1996; such financial statements and report are included in your 1995 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Crane Co., listed in Item 14. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Deloitte & Touche LLP Stamford, Connecticut January 22, 1996 /17
CRANE CO. AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (In Thousands) <TABLE> <CAPTION> Balance at Additions Balance Beginning Charged to at End Description of Year Cost & Expenses Deductions of Year - ----------- ---------- --------------- ---------- ------- <S> <C> <C> <C> <C> Year Ended December 31, 1995: Allowance for doubtful accounts $ 2,200 $ 2,433 $ 2,247 $2,386 Allowance for cash discounts, returns and allowances 1,493 13,885 14,166 1,212 ------- ------- ------- ------- $ 3,693 $16,318 $16,413 $ 3,598 ======= ======= ======= ======= Year Ended December 31, 1994: Allowance for doubtful accounts $ 2,054 $ 8,434 $ 8,288 $2,200 Allowance for cash discounts, returns and allowances 1,000 17,096 16,603 1,493 ------- ------- ------- ------- $ 3,054 $25,530 $24,891 $ 3,693 ======= ======= ======= ======= Year Ended December 31, 1993: Allowance for doubtful accounts $ 859 $ 2,747 $ 1,552 $2,054 Allowance for cash discounts, returns and allowances 812 11,839 11,651 1,000 ------- ------- ------- ------- $ 1,671 $14,586 $13,203 $ 3,054 ======= ======= ======= ======= </TABLE> /18
(Page 1 of 2) CRANE CO. AND SUBSIDIARIES EXHIBIT B TO FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995 Computation of Net Income Per Share (In Thousands Except Per Share Data) <TABLE> <CAPTION> Primary 1995 1994 1993 1992 1991 - ------- ---- ---- ---- ---- ---- <S> <C> <C> <C> <C> <C> Income before a change in accounting $76,337 $55,933 $48,893 $24,286 $44,993 Cumulative effect of a change in accounting - - - - (22,341)(a) ------- ------- ------- ------- -------- Net Income $76,337 $55,933 $48,893 $24,286 $22,652 ======= ======= ======= ======= ======= Per common share before a change in accounting $ 2.50 $ 1.86 $ 1.62 $ .79 $ 1.42 Cumulative effect of a change in accounting - - - - (.70)(a) ------- ------- ------- ------- -------- Net income per share $ 2.50 $ 1.86 $ 1.62 $ .79 $ .72 ======= ======= ======= ======= ======= Average number of primary shares 30,544 30,146 30,217 30,845 31,628 </TABLE> (a) Postretirement benefits other than pensions. /19
(Page 2 of 2) CRANE CO. EXHIBIT B TO FORM 10-K (CONTINUED) ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995 Computation of Net Income Per Share (In Thousands Except Per Share Data) <TABLE> <CAPTION> Fully Diluted 1995 1994 1993 1992 1991 - ------------- ---- ---- ---- ---- ---- <S> <C> <C> <C> <C> <C> Income before a change in accounting $76,337 $55,933 $48,893 $24,286 $44,993 Conversion of debentures: Add back interest, net of income tax - - 25 30 32 ------- ------- ------- ------- ------- Income assuming conversion of debentures before change in accounting 76,337 55,933 48,918 24,316 45,025 Cumulative effect of a change in accounting - - - - (22,341)(a) ------- ------- ------- ------- -------- Net income - assuming conversion of debentures $76,337 $55,933 $48,918 $24,316 $22,684 ======= ======= ======= ======= ======= Income per share before a change in accounting $ 2.49 $ 1.85 $ 1.61 $ .78 $ 1.41 Cumulative effect of a change in accounting - - - - (.70)(a) ------- ------- ------- ------- -------- Net income $ 2.49 $ 1.85 $ 1.61 $ .78 $ .71 ======= ======= ======= ======= ======= Average number of primary shares 30,544 30,146 30,217 30,845 31,628 Add: Adjustment to primary shares for dilutive stock options (ending market price higher than average market price) 79 14 - 18 55 Shares reserved for conversion of debentures - 90 187 217 231 ------- ------- ------- ------- ------- Total average number of shares 30,623 30,250 30,404 31,080 31,914 ======= ======= ======= ======= ======= </TABLE> (a) Postretirement benefits other than pensions. /20