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Crane at Gabelli & Company, Inc. Pump, Valve & Motor Symposium - Final.

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JIM FOUNG, ANALYST, GABELLI & CO.: We're going to hear next from Crane Co. Crane Co. is a manufacturer of highly engineered industrial products serving niche markets in fluid handling, aerospace, automatic merchandising, and building products. The fluid handling group makes pumps, valves for the chemical, pharmaceutical and oil/gas industry. The Company's Aerospace and Electronics groups make aircraft braking [troughs], [peer] pumps, and power conversion systems. Its merchandising systems segment manufactures vending machines, coin and bill payment systems, and the engineered materials group at Crane produces fiberglass reinforced panels for the transportation and commercial market.

By way of background, Crane has about 60 million shares at $19 a share, a $1.2 billion market value. The company has about $180 million of net debt given at $1.4 billion capitalization. It's my pleasure to introduce Max Mitchell, president of the fluid handling group at Crane Co., and with him is Dick Koch, director of investor relations, who will speak about the prospects at Crane. Max?

RICHARD KOCH, DIRECTOR, IR, CRANE: Good morning, Jim. Thank you very much for the introduction. During the course of today's presentation, we will be making a number of forward looking statements and I invite you to look at our disclosure. Crane Co., for those of you who don't know it, is a diversified manufacturer of highly engineered industrial products. We focuses our businesses on niche markets, normally $1 billion to $1.5 billion in sales. Our businesses typically have high returns and excess cash flow.

Dating back to our founder in 1855, RT Crane, he committed to conduct all his business dealings with integrity and honesty, and that tradition continues. We've been transitioning Crane from a more integrated operating company, from a more diverse company really for the purpose of growing economic value added, and our acquisitions are made to strengthen our existing businesses.

The track record over the last six years has been solid, with sales growth of 9% per year, operating profit growth at 8% per year. Last year, '07 versus '08 sales were flat, operating profits were down 9.4%. Jim just reviewed the business segments for you. It's important for you to understand as we look at Crane's performance in 2008 that our engineered materials business, which serves end markets such as recreational vehicles and transportation had a difficult year from an operating profit and sales point of view, as well as our vending business.

You can see this clearly on the next slide where the first two quarters of the year were record operating profits for Crane in total. Again, in the second half of the year the engineered materials business and the vending business saw softness in sales. Headcount was reduced accordingly.

As we look at the 2008 financials on a non-GAAP basis, we reported $2.93 per share in 2008 versus $3.19 in 2007. As pointed out, in both years we had a number of non-GAAP items and I invite you to look at those on slide number eight. With respect to cost reductions in 2008, and again with the slowing economy particularly in the second half of the year, we reduced headcount in our engineered materials business by 34%. We took 16% of the people out of our North American vending business. In the fourth quarter, we reduced our aerospace headcount by 12% and we recently announced a $40.7 million pretax restructuring charge to reposition the businesses and reduce the footprint of the businesses, and lower the cost case going forward.

In 2009, we expect to reduce our engineering spending in our aerospace group by $25 million. You'll see the impact of that primarily in the second half of the year. There will be a $15 million pretax additional charges associated with the restructuring and integration of The Krombach...

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