8-K

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 22, 2004

CRANE CO.

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation)

1-1657	13-1952290
(Commission File Number)	(I.R.S. Employer Identification No.)

100 First Stamford Place, Stamford, CT.	06902
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (203) 363-7300

N/A

(Former name or former address, if changed since last report)

INFORMATION TO BE INCLUDED IN THE REPORT

ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURES

The following information is provided in order to update the information with respect to the Company’s asbestos liability contained in the Company’s previously filed reports:

Asbestos Liability

As of March 31, 2004, the Company was a defendant, among a number of defendants, typically over 50 and frequently in the hundreds, in cases filed in various state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:

	Year Ended December 31, 2003		Three months ended March 31, 2004		Three months ended March 31, 2003
Beginning claims	54,038		68,606		54,038
New claims	19,115		3,769		8,349
Settlements	(3,883	)	(237	)	(128	)
Dismissals	(664	)	(257	)	(162	)
Ending claims	68,606		71,881		62,097

Of the 71,881 pending claims as of March 31, 2004, approximately 25,000 claims are pending in New York and approximately 30,000 claims are pending in Mississippi. These filings typically do not identify any of the Company’s products as a source of asbestos exposure. A substantial majority of the New York claims have been placed on a deferred docket and are ineligible for trial on the merits without medical evidence of asbestos-related disease.

Generally, the Company has required evidence of exposure to asbestos-containing materials in products manufactured or sold by the Company, as well as medical evidence of asbestos-related disease, as a prerequisite to settling an asbestos claim. A significant proportion of the resolved claims against the Company have been dismissed without payment because these criteria are not satisfied. Despite this litigation posture, the Company has recognized that the number of asbestos claims pending against it continues to increase, and the settlement demands from asbestos claimants continue to escalate. The Company believes that federal legislation establishing a trust fund to compensate asbestos victims is the most appropriate solution to the asbestos litigation problem. The Company has been actively monitoring, studying and supporting developments in federal legislation during the past year and believes that there is a reasonable possibility that legislation will be passed in the current or next Congress. In addition, the Company continues to monitor and study the structured settlement transactions announced by certain other asbestos defendants. As the Company has stated previously, it will explore all feasible alternatives available to resolve its asbestos liability in a manner consistent with the best interest of the Company’s shareholders.

The gross settlement and defense costs (before insurance recoveries and tax effects) for the Company in the quarter ended March 31, 2004 totaled $4.1 million and $5.5 million, respectively, a significant increase over prior periods. New claims filed in certain jurisdictions also increased significantly during the first quarter. Historically, the rate of new claims and related costs has varied significantly from quarter to quarter. While one quarter is not indicative of a trend, if costs and new filings continue at this pace it could have an adverse effect on the Company’s estimate of its asbestos liability.

The Company’s total pre-tax cash payments for settlement and defense costs net of the Company’s cost sharing arrangement with insurers amounted to $3.8 million in the quarter ended March 31, 2004. Detailed below are the comparable amounts for the periods indicated.

(in millions)	Year Ended December 31, 2003		Three Months Ended
			March 31, 2004		March 31, 2003
Settlement costs (1)	$	11.9	$	4.1	$	1.8
Defense costs (1)		9.2		5.5		0.7
Pre-tax cash payments (2)		4.6		3.8		0.4

(1) Before insurance recoveries and tax effects

(2) Net of cost sharing arrangements with insurers

Cumulative aggregate settlement and defense costs (before insurance recoveries and tax effects) to date as of March 31, 2004 were $25.7 million and $27.8 million, respectively. The Company’s cumulative pre-tax cash payments for settlement and defense costs net of the Company’s cost sharing arrangements with insurers amounted to $12.1 million as of March 31, 2004.

These amounts are not necessarily indicative of future period amounts, which may be higher or lower than those reported. It is not possible to forecast when the cash payments related to the asbestos liability will be expended; however, it is expected such cash payments will continue for many years. Payment uncertainty results from the significant proportion of unasserted claims included in the estimated asbestos liability as well as variability of timing and terms of settlements and insurance reimbursement. It is expected that cash payments will increase in proportion to increases the Company has experienced in overall claim activity and settlement and defense costs. In addition, there will be periods during which cash payments increase because the Company’s insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage, and, consequently, the timing and amount of insurance reimbursement will vary.

The liability recorded for asbestos claims constitutes management’s best estimate, based on the Company’s past experience, of costs for pending and reasonably anticipated future claims through 2007. For claims that will be filed beyond 2007, management believes that the level of uncertainty is too great to provide for reasonable estimation of the number of future claims, the nature of such claims, or the cost to resolve them and, accordingly, no accrual has been recorded for any costs which may be incurred beyond 2007. A long-term liability was recorded to cover the estimated cost of asbestos claims through 2007 and a long-term asset was recorded representing the probable insurance reimbursement for such claims (approximately 40 percent of settlement and defense costs). The Company’s liability for asbestos-related claims before insurance recoveries, which is included in other liabilities, was $187 million and $193 million at March 31, 2004 and December 31, 2003, respectively, or $112 million and $116 million, respectively, after probable insurance recoveries. At March 31, 2004 and December 31, 2003 approximately 54% and 60%, respectively, of the asbestos liability represented the estimated cost of unasserted claims against the Company.

The Company’s asbestos liability is based on its estimated cost of pending claims plus unasserted claims through 2007. In determining this estimate, both average annual incremental claims and costs per claim are significant assumptions. Costs per claim vary depending on a number of factors, including the nature of the alleged exposure, the injury alleged and the jurisdiction where the claim was filed. The estimated liability for New York claims includes a substantial discounting of such claims due to the deferred docket noted above. This discount rate is significantly higher than the dismissal rate applied to substantially all other jurisdictions. The gross estimated cost of projected asbestos claims is reduced by approximately 40% representing the Company’s probable insurance recovery. In 2002, as a result of dramatic increases in annual incremental claims and claim costs, management changed the basis for these assumptions to an analysis of the past few years of experience as compared to the long-term historical averages previously used, which thereby increased the aggregate estimated liability. In 2003, the Company reviewed its estimate in light of a number of factors and developments including the New York deferred docket referred to above, the substantial reduction in the new claims filed in Mississippi and New York, the increase in new claims filed in other jurisdictions, the proportion of claims dismissed for lack of product identification and the increasing settlement demands from claimants. Future projections of these trends is inherently uncertain, and while the Company believes its current estimate of the asbestos liability is a reasonable judgment, there can be no assurance about future developments.

Estimation of the Company’s ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and

quantity of claims. The Company cautions that its estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on recent experience during the last few years that may not prove reliable as predictors. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, could change the estimated liability, as would any substantial adverse verdict at trial. A legislative solution or a structured settlement transaction could also change the estimated liability.

A significant portion of the Company’s settlement and defense costs are paid by its primary insurers and one umbrella insurer up to the agreed available limits of the applicable policies. The Company has substantial excess coverage policies that are expected to respond to asbestos claims as settlements and other payments exhaust the underlying policies, but there is no cost sharing or allocation agreement yet in place with the excess insurers. The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance payment, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method in which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships.

The Company determined it probable that approximately 40% of the estimated gross liability will be paid by the Company’s insurers. This determination was made after considering the terms of the available insurance coverage, the financial viability of the insurance companies, the status of negotiations with its insurers and consulting with legal counsel. This insurance receivable is included in other assets.

Since many uncertainties exist surrounding asbestos litigation, the Company will continue to evaluate its asbestos-related estimated liability and corresponding estimated insurance reimbursement as well as the underlying assumptions used to derive these amounts and the process of making the estimate. These uncertainties may result in the Company incurring future charges to operations to adjust the carrying value of recorded liabilities and assets, particularly if escalation in the number of claims and settlement and defense costs occurs or if legislation or another alternative solution is implemented; however, the Company is currently unable to estimate such future changes. Although the resolution of these claims is anticipated to take many years, amounts recorded for the liability under generally accepted accounting principles are not discounted, and the effect on results of operations, cash flow and financial position in any given period from a revision to these estimates could be material.

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 22, 2004, Crane Co. announced its results of operations for the quarter ended March 31, 2004. A copy of the related press release is being furnished as Exhibit 99.1 to this Form 8-K. In addition, a copy of the Crane Co. Quarterly Financial Data Supplement for the quarter ended March 31, 2004 is being furnished as Exhibit 99.2 to this Form 8-K.

The information is furnished under Item 12 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, and is not deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Crane Co.

/s/ Eric C. Fast

Eric C. Fast

President, Chief Executive Officer

and Acting Chief Financial Officer

Date: April 22, 2004

EXHIBIT INDEX

Exhibit Number
99.1	Press Release, dated April 22, 2004, issued by Crane Co.
99.2	Crane Co. Quarterly Financial Data Supplement for the quarter ended March 31, 2004.

EX-99.1

Exhibit 99.1

Crane Co. NEWS            

Contact:

Pamela J.S. Styles

Director, Investor Relations

and Corporate Communications

203-363-7352

www.craneco.com

CRANE CO. REPORTS FIRST QUARTER RESULTS OF $0.37 PER SHARE

STAMFORD, CONNECTICUT – April 22, 2004 - Crane Co. (NYSE: CR) reports first quarter 2004 net income increased 34% to $22.2 million, or $0.37 per share, compared with net income of $16.5 million or $0.28 per share reported for the first quarter 2003.

Sales increased $71.8 million, or 19%, in the first quarter 2004 to $448.3 million compared with $376.5 million in the first quarter 2003. The sales increase included approximately $42 million from acquisitions, $16 million from favorable foreign currency translation and $14 million from improvements in base businesses. Operating profit increased 37% in the first quarter 2004 to $38.7 million compared with $28.2 million in the first quarter 2003. The $10.5 million increase in operating profit reflects improved performance in all segments and includes $4.7 million from the recent acquisitions. Operating profit margin for the first quarter 2004 was 8.6% compared with 7.5% in the first quarter 2003.

The Company has furnished a copy of this press release to the Securities and Exchange Commission on Form 8-K, which includes updated information through March 31, 2004 with respect to the Company’s asbestos liability, including pending claims, settlement costs, defense costs and other information in the format contained in the Company’s Form 10-Q and Form 10-K.

Market Conditions

Market conditions strengthened at many of our businesses during the first quarter 2004. The Aerospace & Electronics Segment experienced both solid demand from the military market and favorable order trends from commercial original equipment manufacturers (“OEM”). In the Engineered Materials Segment, demand for fiberglass-reinforced panels to the recreational vehicle (“RV”) and truck trailer markets remained strong. Demand for European coin changing equipment and North American vending machines remained depressed for the Merchandising Systems Segment. The Fluid Handling Segment saw order trend improvement toward the end of the quarter, from both increased project orders and a more stable maintenance, repair and overhaul (“MRO”) environment. Demand in the important chemical process industry remained weak. Order backlog at March 31, 2004 totaled $525.7 million, a 16% improvement over backlog of $451.7 million at December 31, 2003, with increases across all groups and segments, particularly in Aerospace & Electronics.

Financial Position

During the first quarter 2004, the Company used $2.1 million in cash flow for operating activities versus generating $22.6 million in the first quarter 2003. This change was due to $25 million of additional working capital, primarily increased receivables, in support of the higher sales levels and a $3.4 million increase in asbestos cash payments. The Company invested $50.6 million for acquisitions and $23.5 million for the repurchase of 755,500 shares during the first quarter 2004. The Company paid $6.0 million in dividends to shareholders, and invested $5.1 million in capital expenditures. Net debt to capital was 29.9% at March 31, 2004, compared with 24.4% at December 31, 2003.

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Segment Results

Aerospace & Electronics sales of $119.3 million increased $31.9 million, or 37%, in the first quarter 2004 compared with sales of $87.4 million in the first quarter 2003. First quarter 2004 included $23.8 million in sales from P.L. Porter, acquired in late January 2004, and Signal Technology Corporation (“STC”), acquired in May 2003. Operating profit of $20.2 million increased $3.4 million, or 20%, compared with $16.9 million in the first quarter 2003, primarily due to $3.2 million in operating profit from the P.L. Porter and STC acquisitions. Operating profit margins were 17.0% in the first quarter 2004, compared with 19.3% in the first quarter 2003, attributable to unfavorable mix from lower commercial aftermarket spares volume compared with unusually strong spares shipments in the prior year first quarter, market pricing pressure and lower margins in the recently acquired businesses which have not yet been fully integrated into the Company.

Aerospace Group sales of $73.1 million in the first quarter 2004 increased $10.9 million, or 18%, from $62.2 million in the prior year first quarter, primarily due to $6.8 million of sales from the P.L. Porter acquisition and increased OEM shipments. First quarter 2004 operating profit was flat compared with the first quarter 2003, as positive P.L. Porter performance was offset by unfavorable mix from both stronger but lower margin military and commercial OEM volume and lower shipments of commercial aftermarket spares in the first quarter 2004 compared with unusually high spares shipments in the first quarter 2003.

Electronics Group sales of $46.4 million in the first quarter 2004 increased $21.1 million, or 84%, from $25.3 million in the first quarter 2003. STC accounted for $16.9 million of the sales increase. Operating profit increased 89% compared with the prior year first quarter, reflecting the STC acquisition and increased military/government demand for power solutions and supplies.

The Aerospace & Electronics Segment backlog was $320.0 million at March 31, 2004, a $42.8 million, or 15%, improvement compared with $277.2 million at December 31, 2003. This

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increase principally resulted from three large multi-year orders received in the first quarter 2004, specifically a $16 million order for a Federal Express retrofit program, with shipments beginning in late 2004, and $15 million for two follow-on microelectronics contract awards to the STC Advanced Integrated Systems Division, as well as $8 million in backlog at P.L. Porter.

Management now expects operating profit for this segment to be moderately higher in 2004, compared with 2003. The upward revision reflects the combined impacts of incremental business from the P.L. Porter acquisition, improving market conditions and continued operating cost discipline, which are expected to offset certain higher raw material prices and more challenging customer purchasing patterns and price pressures.

Engineered Materials sales of $69.0 million increased $6.1 million, or 10%, in the first quarter 2004 compared with sales of $62.9 million in the first quarter 2003. Segment operating profit of $15.5 million in the first quarter 2004 increased $2.6 million, or 20%, compared with operating profit of $13.0 million in the first quarter 2003. First quarter 2004 results reflect continued strong demand for fiberglass-reinforced panels in both the RV and truck trailer markets. Operating profit margins improved to 22.5% from 20.6% in the prior year quarter as a result of favorable product mix. Backlog at March 31, 2004 was $17.6 million, an increase of $5.8 million, or 49%, over the $11.8 million backlog at December 31, 2003.

Management now expects operating profit for this segment to be moderately higher in 2004, compared with 2003. The upward revision reflects additional strength in the RV market which is expected to offset higher raw material costs.

Merchandising Systems sales of $39.5 million in the first quarter 2004 increased $1.8 million, or 5%, compared with sales of $37.6 million in the first quarter 2003. Excluding $2.4 million of favorable foreign currency translation, sales declined slightly in the quarter for this

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segment. Operating profit of $0.5 million in the first quarter 2004 compared favorably to the operating loss of $2.1 million in the first quarter 2003, reflecting $1.5 million in lower severance costs in the European coin changer business and benefits realized from prior year workforce reductions. Crane Merchandising Systems (“CMS”) first quarter 2004 sales were slightly higher than the prior year first quarter due to favorable foreign currency translation. CMS operating profit was slightly below the first quarter 2003 which had more favorable cost absorption from higher inventory production in anticipation of a strike that was ultimately averted. NRI first quarter 2004 sales improved slightly compared with the prior year first quarter partly due to favorable foreign currency translation. NRI continued to experience operating losses, although significantly less than in the prior year first quarter. Severance costs at NRI in the first quarter 2004 were $1.2 million versus $2.7 million in the prior year first quarter, reflecting continued efforts to right-size the business. Backlog at March 31, 2004 was $11.2 million, an improvement of $0.9 million, or 8%, over the $10.3 million backlog at December 31, 2003.

Management continues to expect the Merchandising Systems 2004 operating profit to be above prior year reflecting reduced losses at NRI and strong cost control and new product initiatives at CMS. End market demand is expected to remain weak.

Fluid Handling sales of $203.9 million increased $30.4 million, or 18%, in the first quarter 2004 compared with sales of $173.5 million in the first quarter 2003. The first quarter 2004 increase included $18.0 million in combined sales from the Hattersley brand acquired in January 2004 and the pipe coupling and fittings businesses acquired from Etex in June 2003, and $12 million in favorable foreign currency translation impact. Operating profit of $8.7 million in the first quarter 2004 increased $1.3 million, or 18%, compared with $7.4 million in the first quarter 2003, from increases at Crane Ltd., Pumps & Systems and Crane Supply. Operating profit margins were 4.3% in both the first quarter 2004 and first quarter 2003.

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Valve Group first quarter 2004 sales of $113.3 million increased $10.5 million, or 10%, compared with sales of $102.9 million in the prior year first quarter. The sales increase included $7 million from favorable foreign currency translation. First quarter operating profit was even compared with the first quarter 2003. Benefits from prior year cost reduction initiatives and improved orders should strengthen margins in the second quarter.

Crane Ltd. first quarter 2004 sales more than doubled to $28.4 million from $12.0 million in the prior year first quarter. The acquisitions of the Hattersley valve brands in January 2004 and the pipe coupling and fittings businesses acquired from Etex in June 2003 provided sales of $18.0 million which, combined with favorable foreign currency translation of $1.3 million, offset weakness in base business sales. Operating profit increased 22% on higher volume from acquisitions and realization of synergies from consolidating manufacturing of acquired product lines into existing facilities. First quarter 2004 sales in the pump business were 5% above the prior year first quarter on strong demand from several new large customers. Operating profit margin was 10.6% for the first quarter 2004 compared with 7.8% in the first quarter 2003. Crane Supply sales in the first quarter 2004 increased 11% from the first quarter 2003 due to $3.6 million in favorable foreign currency translation, which offset volume shortfalls due to weather impacts on the construction industry across Canada. Operating profit improved 19% due to strong margin and cost discipline. Resistoflex-Industrial sales and operating profit declined in the first quarter of 2004 as this business continued to suffer from weak demand in the chemical process industry. Total segment backlog at March 31, 2004 was $164.0 million, an improvement of $23.8 million, or 17%, over the $140.2 million backlog at December 31, 2003.

Management continues to expect a strong increase in operating profit in 2004. During the first quarter 2004, the Fluid Handling segment experienced some improvement in orders for both project and MRO business, which is expected to continue. The Company has been and will continue to implement price increases to offset increasing raw material costs, but expects a net

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negative impact from higher raw material costs on operating performance in the second quarter 2004 and possibly beyond. However, the combined benefits of improving markets, realization of cost reductions achieved through facility closures and severance actions, and continued focus on productivity improvements should offset higher commodity costs.

Controls sales of $16.8 million increased 10% in the first quarter 2004 compared with sales of $15.2 million in the first quarter 2003. Operating profit more than doubled to $0.9 million from $0.4 million in the first quarter 2003. Sales and operating profit improvements were attributable to increased demand for air suspension valves and pressure and control valve orders into the hydraulics market at Barksdale and for products sold into the oil and gas exploration markets at Azonix. Backlog was $13.0 million as of March 31, 2004, a 7% improvement compared with $12.2 million at December 31, 2003.

Management continues to expect operating profit from Controls to increase in 2004.

Corporate expenses were $7.2 million in the first quarter 2004 compared with $7.4 million in the first quarter 2003.

Outlook for Second Quarter and Full Year 2004

The Company expects second quarter 2004 earnings per share to be in the range of $0.48 to $0.53. The Company is raising its full year 2004 earnings per share guidance range to $1.90 to $2.05, compared with previous guidance of $1.85 to $2.00, reflecting strengthening market conditions and incremental earnings from the 2004 acquisitions. The Company cautions, however, that new asbestos claims filed in certain jurisdictions and the costs of defending and settling asbestos claims increased significantly in the first quarter of 2004, as set forth in the

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Company’s Form 8-K filed with the earnings release. Historically, the rate of new claims and related costs has varied significantly from quarter to quarter. While one quarter is not indicative of a trend, if this pace continues it could have an adverse effect on the Company’s estimate of its asbestos liability.

Free cash flow (cash flow from operating activities, less dividends and capital expenditures) is expected to be in the range of $90 to $110 million in 2004, down from our prior guidance of $110 to $120 million, reflecting working capital needs to support higher sales levels and increased asbestos payments. The timing of the cash payments associated with asbestos costs is dependent on many factors including the number of claims in active proceedings, terms of settlements and variability in the proportion and timing of insurance reimbursements among multiple insurers. Please see the Company’s Form 8-K filed with this earnings release for a discussion of the Company’s asbestos liability.

Conference Call

Crane Co. has scheduled a conference call to discuss the first quarter’s financial results on Friday, April 23^rd, 2004 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at http://www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company’s website.

Crane Co. is a diversified manufacturer of engineered industrial products. Crane Co. is traded on the New York Stock Exchange (NYSE:CR).

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements present management’s expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and subsequent reports filed with the Securities and Exchange Commission.

(Financial Tables Follow)

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EX-99.2

Exhibit 99.2

CRANE CO.

Income Statement Data

(in thousands, except per share data)

	Three Months Ended March 31,
	2004			2003
Net Sales:
Aerospace & Electronics	$	119,277		$	87,374
Engineered Materials		69,010			62,886
Merchandising Systems		39,450			37,606
Fluid Handling		203,888			173,468
Controls		16,753			15,210
Intersegment Elimination		(72	)		(74	)
Total Net Sales	$	448,306		$	376,470
Operating Profit:
Aerospace & Electronics	$	20,222		$	16,871
Engineered Materials		15,531			12,964
Merchandising Systems		474			(2,118	)
Fluid Handling		8,727			7,426
Controls		889			398
Corporate		(7,165	)		(7,362	)
Total Operating Profit		38,678			28,179
Interest Income		222			189
Interest Expense		(6,541	)		(3,944	)
Miscellaneous - Net		(218	)		(165	)
Income Before Income Taxes		32,141			24,259
Provision for Income Taxes		9,964			7,763
Net Income	$	22,177		$	16,496
Depreciation and Amortization	$	13,798		$	12,364
Per Diluted Share Data:
Net Income	$	0.37		$	0.28
Average Diluted Shares Outstanding		60,418			59,455
Average Basic Shares Outstanding		59,544			59,400

CRANE CO.

Condensed Balance Sheets

(in thousands)

	March 31, 2004		December 31, 2003
ASSETS
Current Assets
Cash and Cash Equivalents	$	39,081	$	142,518
Accounts Receivable		280,353		248,492
Inventories		253,683		235,431
Other Current Assets		35,744		35,335
Total Current Assets		608,861		661,776
Property, Plant and Equipment		300,054		302,638
Other Assets		310,549		311,123
Goodwill		579,113		536,239
Total Assets	$	1,798,577	$	1,811,776
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current Maturities of Long-Term Debt	$	8	$	100,275
Loans Payable		77,561		—
Accounts Payable		133,817		116,885
Accrued Liabilities		170,477		171,438
Income Taxes		34,174		29,976
Total Current Liabilities		416,037		418,574
Long-Term Debt		296,065		295,861
Deferred Income Taxes		58,630		57,738
Postretirement, Pension and Other Liabilities		244,210		253,352
Common Shareholders’ Equity		783,635		786,251
Total Liabilities and Shareholders’ Equity	$	1,798,577	$	1,811,776

CRANE CO.

Condensed Statements of Cash Flows

(in thousands)

	Three Months Ended March 31,
	2004			2003
Operating Activities:
Net income	$	22,177		$	16,496
Income from joint venture		(534	)		(371	)
Depreciation and amortization		13,798			12,364
Cash used for operating working capital		(29,474	)		(4,159	)
Asbestos-related payments		(3,814	)		(421	)
Other		(4,255	)		(1,288	)
Total (used for) provided from operating activities		(2,102	)		22,621
Investing Activities:
Capital expenditures		(5,144	)		(6,484	)
Proceeds from disposition of capital assets		174			344
Payments for acquisitions, net		(50,630	)		—
Proceeds from divestitures		—			1,200
Total used for investing activities		(55,600	)		(4,940	)
Financing Activities:
Dividends paid		(5,953	)		(5,945	)
Settlement of treasury shares acquired on the open market		(23,466	)		(6,116	)
Stock options exercised - net of shares reacquired		6,542			360
(Repayment) issuance of debt, net		(22,743	)		1,032
Total used for financing activities		(45,620	)		(10,669	)
Effect of exchange rate on cash and cash equivalents		(115	)		656
(Decrease) increase in cash and cash equivalents		(103,437	)		7,668
Cash and cash equivalents at beginning of period		142,518			36,589
Cash and cash equivalents at end of period	$	39,081		$	44,257

CRANE CO.

Order Backlog

(in thousands)

	March 31, 2004		December 31, 2003		March 31, 2003
Aerospace & Electronics	$	319,954	$	277,173	$	224,513
Engineered Materials		17,564		11,787		9,828
Merchandising Systems		11,176		10,330		10,543
Fluid Handling		163,955		140,192		138,134
Controls		13,029		12,169		14,736
Total Backlog	$	525,678	$	451,651	$	397,754

CRANE CO.

Non-GAAP Financial Measures

(in thousands)

	Three Months Ended March 31,						Year Ended December 31,
	2004			2003			2004
							(Estimated)
Cash (used for) provided from operating activities	$	(2,102	)	$	22,621		$	146,000		$	164,000
Less: Capital expenditures		(5,144	)		(6,484	)		(32,000	)		(30,000	)
Dividends		(5,953	)		(5,945	)		(24,000	)		(24,000	)
Free cash flow	$	(13,199	)	$	10,192		$	90,000		$	110,000

Free cash flow provides supplemental information to assist management and certain investors in analyzing the

Company’s ability to generate positive cash flow.

Free cash flow is considered a measure of cash generation and should be considered in addition to, but not as a substitute for, other measures reported in accordance with generally accepted accounting principles and may be inconsistent with similar measures presented by other companies.