(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant is a large accelerated filer, an accelerated filer, or a non –accelerated ~~filer.~~filer, or a smaller reporting company. See ~~definition~~definitions of ~~“accelerated filer and large~~“large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Large accelerated filer~~ x ~~Accelerated filer~~ ¨ ~~Non-accelerated filer~~ ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the issuer’s classes of common stock as of ~~October 31, 2007~~April 30, 2008


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2007			2006			2007			2006			2008			2007
Net sales	$	664,093		$	567,704		$	1,953,208		$	1,675,237		$	678,868		$	628,217

Operating costs and expenses:
Cost of sales		445,603			378,054			1,321,560			1,125,978			452,531			423,683
Asbestos provision		390,150			—			390,150			—
Selling, general and administrative		140,957			118,487			413,919			354,790			150,988			136,135

Operating (loss) profit		(312,617	)		71,163			(172,421	)		194,469
Operating profit														75,349			68,399

Other income (expense)
Other income (expense):
Interest income		1,535			552			3,837			2,163			2,284			1,313
Interest expense		(6,845	)		(5,244	)		(20,614	)		(16,268	)		(6,505	)		(6,868	)
Miscellaneous - net		849			1,461			3,593			7,143			330			1,813

		(4,461	)		(3,231	)		(13,184	)		(6,962	)		(3,891	)		(3,742	)

(Loss) Income before income taxes		(317,078	)		67,932			(185,605	)		187,507
(Benefit) Provision for income taxes		(120,128	)		21,889			(78,036	)		59,602
Income before income taxes														71,458			64,657
Provision for income taxes														23,080			21,012

Net (loss) income	$	(196,950	)	$	46,043		$	(107,569	)	$	127,905
Net income													$	48,378		$	43,645

Basic net (loss) income per share:	$	(3.29	)	$	0.75		$	(1.79	)	$	2.10
Basic net income per share:													$	0.81		$	0.72

Diluted net (loss) income per share:	$	(3.29	)	$	0.74		$	(1.79	)	$	2.06
Diluted net income per share:													$	0.79		$	0.71

Average basic shares outstanding		59,884			61,110			60,008			60,941			60,040			60,209
Average diluted shares outstanding		59,884			62,226			60,008			62,192			60,955			61,207
Dividends per share	$	0.18		$	0.15		$	0.48		$	0.40		$	0.18		$	0.15


	September 30, 2007		December 31, 2006		March 31, 2008		December 31, 2007
Assets

Current assets
Current assets:
Cash and cash equivalents	$	162,248	$	138,607	$	294,728	$	283,370

Accounts receivable, net		390,315		330,146		373,792		345,176
Current insurance receivable - asbestos		32,000		52,500		33,600		33,600
Inventories, net:
Finished goods		114,820		109,856		112,608		109,337
Finished parts and subassemblies		39,943		39,644		40,734		39,108
Work in process		62,642		53,707		53,335		51,923
Raw materials		125,674		110,052		137,886		127,351

		343,079		313,259

Inventories, net						344,563		327,719
Other current assets		61,296		45,897		57,735		47,757

Total current assets		988,938		880,409		1,104,418		1,037,622

Property, plant and equipment:
Cost		811,664		776,787		764,922		749,968
Less: accumulated depreciation		516,144		487,232		472,893		460,285

		295,520		289,555

Property, plant and equipment, net						292,029		289,683
Long-term insurance receivable - asbestos		319,249		170,400		293,940		306,557

Long-term deferred tax assets		299,704		171,164		199,373		220,370

Other assets		121,845		91,476		124,584		128,360

Intangible assets		113,464		122,744

Intangible assets, net						124,202		128,150
Goodwill		776,577		704,736		769,106		766,550

Total assets	$	2,915,297	$	2,430,484	$	2,907,652	$	2,877,292


	September 30, 2007			December 31, 2006			March 31, 2008			December 31, 2007
Liabilities and shareholders’ equity

Current liabilities:
Notes payable and current maturities of long-term debt	$	25,032		$	9,505		$	9,613		$	548
Accounts payable		193,934			161,270			197,936			177,978
Current asbestos liability		80,000			70,000			84,000			84,000
Accrued liabilities		215,762			196,723			221,450			230,295
U.S. and foreign taxes on income		13,104			24,428			2,291			731

Total current liabilities		527,832			461,926			515,290			493,552

Long-term debt		398,256			391,760			398,345			398,301
Accrued pension and postretirement benefits		65,724			59,996			54,095			52,233
Deferred tax liability		93,235			89,595
Long-term deferred tax liability								32,593			31,880
Long-term asbestos liability		975,000			459,567			928,098			942,776
Other liabilities		41,109			41,004			60,271			65,353

Total liabilities		2,101,156			1,503,848			1,473,402			1,490,543

Minority interest		7,987			8,033			8,469			8,394

Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred shares, par value $.01; 5,000,000 shares authorized		—			—			—			—
Common stock, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued		72,426			72,426			72,426			72,426
Capital surplus		143,909			134,798			150,042			148,513
Retained earnings		809,527			946,077			876,075			845,864
Accumulated other comprehensive income		121,760			73,175			174,762			154,077
Treasury stock		(341,468	)		(307,873	)		(362,814	)		(336,077	)

Total shareholders’ equity		806,154			918,603			910,491			884,803

Total liabilities and shareholders’ equity	$	2,915,297		$	2,430,484		$	2,907,652		$	2,877,292


Common stock issued		72,426,139			72,426,139			72,426,139			72,426,139
Less: Common stock held in treasury		(12,463,132	)		(11,953,521	)		(12,815,141	)		(12,264,788	)

Common stock outstanding		59,963,007			60,472,618			59,610,998			60,161,351


	Nine Months Ended September 30,						Three Months Ended March 31,
	2007			2006			2008			2007
Operating activities:
Net (loss) income	$	(107,569	)	$	127,906
Net income							$	48,378		$	43,645
Income from joint venture		(3,798	)		(4,525	)		—			(1,017	)
Asbestos provision, net		390,150			—
Loss (gain) on divestiture		975			(8,931	)
Depreciation and amortization		44,740			39,056			14,983			15,576
Stock-based compensation expense		11,173			11,288			3,615			4,304
Deferred income taxes		(140,243	)		4,954			6,097			(9,819	)
Cash used for working capital		(39,532	)		(35,617	)		(29,834	)		(25,648	)
Receipts (Payments) for asbestos-related fees and costs, net of insurance recoveries		7,311			(29,957	)
(Payments) receipts for asbestos-related fees and costs, net of insurance recoveries								(2,061	)		21,180
Other		(16,889	)		(1,258	)		2,951			(11,332	)

Total provided by operating activities		146,318			102,916			44,129			36,889

Investing activities:
Capital expenditures		(33,412	)		(22,312	)		(9,080	)		(6,963	)
Proceeds from disposition of capital assets		11,610			3,317			676			11,032
Proceeds from divestitures		2,005			26,088
Payment for acquisitions, net of cash acquired		(65,166	)		(234,734	)		(85	)		(5	)
Proceeds from divestiture								506			—

Total used for investing activities		(84,963	)		(227,641	)
Total (used for) provided by investing activities								(7,983	)		4,064

Financing activities:
Equity:
Dividends paid		(28,828	)		(24,465	)		(10,795	)		(9,050	)
Reacquisition of shares on the open market		(50,001	)		(37,499	)		(40,000	)		(40,001	)
Stock options exercised - net of shares reacquired		10,102			20,606			3,556			(387	)
Excess tax benefit from stock-based compensation		4,081			7,575			107			690
Debt:
Issuance of long-term debt		—			71,700
Repayments of long-term debt		(300	)		(410	)		—			(67	)
Net increase in short-term debt		15,492			55			9,037			1,800

Total (used for) provided by financing activities		(49,454	)		37,562
Total used for financing activities								(38,095	)		(47,015	)

Effect of exchange rates on cash and cash equivalents		11,740			5,848			13,307			1,376

Increase (decrease) in cash and cash equivalents		23,641			(81,315	)		11,358			(4,686	)
Cash and cash equivalents at beginning of period		138,607			180,392			283,370			138,607

Cash and cash equivalents at end of period	$	162,248		$	99,077		$	294,728		$	133,921

Detail of cash used for working capital
Detail of cash used for working capital:
Accounts receivable	$	(41,253	)	$	(35,528	)	$	(24,382	)	$	(27,080	)
Inventories		(13,020	)		(16,174	)		(15,171	)		(14,003	)
Other current assets		(110	)		1,329			(592	)		508
Accounts payable		22,724			1,530			19,427			10,531
Accrued liabilities		9,682			8,716			(10,365	)		(2,437	)
U.S. and foreign taxes on income		(17,555	)		4,510			1,249			6,833

Total	$	(39,532	)	$	(35,617	)	$	(29,834	)	$	(25,648	)

Supplemental disclosure of cash flow information:
Interest paid	$	20,049		$	17,333		$	5,918		$	6,330
Income taxes paid		56,576			22,292		$	15,268		$	20,848

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These interim consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007.

In ~~July~~September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The requirements of FIN 48 were applicable to the Company effective January 1, 2007. See Note 11, “Income Taxes”, for further discussion of the impacts of FIN 48.

~~In September 2006, the FASB~~ issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). ~~SFAS 157~~This statement defines fair value, ~~provides~~establishes a framework for measuring fair value under generally accepted accounting principles and ~~requires additional~~expands disclosure about fair value measurements. In ~~accordance with~~February 2008, the FASB issued Staff Positions No. SFAS 157-1 and No. SFAS 157-2 which delayed the effective date of SFAS No. 157 for one year for certain non-financial assets and non-financial liabilities and removed certain leasing transactions from its scope. The Company adopted SFAS 157 ~~the definition of fair value retains the exchange price notion,~~effective January 1, 2008 for financial assets and ~~exchange price is defined as the price in an orderly transaction, between market participants, to sell an asset or transfer~~financial liabilities measured on a liability. If there is a principal market for the asset or liability, the fair value measurement should reflect that price, whether that price is directly observable or otherwise used in a valuation technique. Depending on the asset or liability being valued, the inputs used to determine fair value can range from objective inputs such as prices based on market data independent from the entity, to subjective inputs such as the entity’s own assumptions about the estimates that market participants would use. The Statement applies to other accounting pronouncements that require or permit fair value measurements and will be effective for fiscal years beginning after November 15, 2007.recurring basis (see Note 13, “Fair Value Measurements”). The Company is currently evaluating the provisions of SFAS ~~157~~157-1 and SFAS 157-2 to determine the potential impact, if any, ~~the adoption~~these staff positions will have on the Company’s financial ~~statements. Although~~statements when they are applicable ~~it is not expected to have a material impact on~~beginning in the ~~financial statements.~~first quarter of 2009.

In ~~February~~December 2007, the FASB issued Statement of Financial Accounting Standards No. ~~159, “The Fair Value Option~~141(R), “Business Combinations”

(“SFAS 141(R)”). SFAS No. 141(R) establishes principles and requirements for ~~Financial Assets~~how an acquirer recognizes and ~~Financial Liabilities – Including an amendment~~measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree and recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. SFAS No. 141(R) also sets forth the disclosures required to be made in the financial statements to evaluate the nature and financial effects of ~~FASB Statement~~the business combination. SFAS No. 115,” (“SFAS 159”). This Standard permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. SFAS 159141(R) is effective for fiscal years beginning after ~~November~~December 15, ~~2007.~~2008. The effects of the adoption of this standard in 2009 will be prospective.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards that require that the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income; and changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. SFAS No. 160 also requires that any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure requirements to identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The Company ~~is currently evaluating~~has not yet determined the ~~provisions of SFAS 159 to determine the potential impact,~~anticipated effect, if any, of the adoption ~~will have on the Company’s financial statements. Although applicable, it is not expected to have a material impact on the financial statements.~~of this standard in 2009.

The Company’s basic ~~net (loss) income~~earnings per share calculations are based on the weighted average number of common shares outstanding during the period. Diluted net income per share gives effect to all dilutive potential common shares outstanding during the period.

Certain options granted under the Company’s Stock Incentive Plan and the Non-Employee Director Stock Compensation Plan were not included in the computation of diluted earnings per share in the three-month ~~and nine-month~~ periods ended ~~September 30, 2006,~~March 31, 2008 and 2007 because they would not have had a dilutive effect ~~(0.9 million average options for the third quarter of 2006, and 0.8~~(1.4 million average options for the first ~~nine months~~quarter of ~~2006). Due to~~2008 and 1.3 million average options for the ~~net losses in the three month and nine month periods ended September 30, 2007, the effect~~first quarter of ~~stock options is not used in the calculation of average shares outstanding for those periods, because the effect would be anti-dilutive.~~2007).

Total comprehensive ~~(loss)~~ income for the three months ended March 31, 2008 and ~~nine-month periods ended September 30,~~ 2007 ~~and 2006~~ is as follows:

The changes in goodwill and intangible assets during the nine month period ended September 30, 2007 primarily relate to the recording of preliminary purchase price allocations of the acquisitions of the composite panel business of Owens Corning, as well as the Mobile Rugged Business (“MRB”) of Kontron America, Inc. (see Note 7). The final purchase price allocations are expected to be completed during the first half of 2008.


*(in thousands)*	Nine Months Ended September 30, 2007			Year Ended December 31, 2006			Three Months Ended March 31, 2008		Year Ended December 31, 2007
Balance at beginning of period	$	704,736		$	568,355		$	766,550	$	704,736
Additions		55,649			130,965			190		46,406
Divestitures		(634	)		(5,370	)		—		(634	)
Translation and other adjustments		16,826			10,786
Translation								2,366		16,042

Balance at end of period	$	776,577		$	704,736		$	769,106	$	766,550


*(in thousands)*	Nine Months Ended September 30, 2007			Year Ended December 31, 2006			Three Months Ended March 31, 2008			Year Ended December 31, 2007
Balance at beginning of period, net	$	122,744		$	60,735		$	128,150		$	122,744
Additions		5,222			76,191			—			19,409
Translation								453			3,886
Amortization expense		(12,879	)		(13,886	)		(4,401	)		(17,889	)
Translation and other adjustments		(1,623	)		(296	)

Balance at end of period, net	$	113,464		$	122,744		$	124,202		$	128,150


	September 30, 2007				December 31, 2006				March 31, 2008				December 31, 2007
*(in thousands)*	Gross Asset		Accumulated Amortization		Gross Asset		Accumulated Amortization		Gross Asset		Accumulated Amortization		Gross Asset		Accumulated Amortization
Intellectual property rights	$	87,195	$	42,540	$	88,004	$	40,530	$	93,451	$	45,020	$	92,286	$	43,720
Customer relationships and backlog		79,362		19,092		79,204		14,362		85,204		24,971		85,204		17,448
Drawings		10,825		9,516		10,825		9,199		10,825		9,797		10,825		9,681
Other		15,322		8,092		11,662		2,860		22,343		7,833		23,784		13,100

Total	$	192,704	$	79,240	$	189,695	$	66,951	$	211,823	$	87,621	$	212,099	$	83,949

Amortization expense for these intangible assets is currently estimated to be approximately ~~$14.0 million in 2008, $12.9~~$13.6 million in 2009, ~~$12.0~~$12.5 million in 2010, $11.7 million in 2011, $9.4 million in 2012 and $8.6 million in ~~2011 and $6.7 million in 2012.~~2013. Included within ~~Intangible Assets~~intangible assets is $18.9 million of intangibles with indefinite useful lives, consisting of trade names which are not being amortized in accordance with the guidance of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.

In August 2007, the Company acquired the MRB of Kontron America, Inc., which produces computers, electronics and flat panel displays for harsh environment applications, for approximately $27 million in cash. The final purchase price allocation is expected to be completed in the first half of 2008. Based on preliminary calculations, approximately 80% of the purchase price will be

allocated to goodwill and intangible assets. MRB had sales of approximately $25 million in 2006 and employed approximately 35 people in its manufacturing operation in Poway, California and its engineering group in Fremont, California. This acquisition is being integrated into the Company’s Controls segment.

In September 2007, the Company acquired the composite panel business of Owens Corning, which produces, among other products, high gloss fiberglass reinforced plastic panels used in the manufacture of recreational vehicles. The purchase price was $38 million in cash. The final purchase price allocation is expected to be completed in the first half of 2008. Based on preliminary calculations, approximately 60% of the purchase price will be allocated to goodwill and intangible assets. The acquired business had sales of $40 million in 2006 and employed approximately 150 people at its composite panels manufacturing operation in Goshen, Indiana and its technical center in Elkhart, Indiana. This acquisition is being integrated into the Company’s Engineered Materials segment.

~~The pro forma effect of these acquisitions was not material to the results of three and nine months ended September 30, 2007.~~

As of ~~September 30, 2007,~~March 31, 2008, the Company was a defendant 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:

Of the ~~81,251~~81,103 pending claims as of ~~September 30, 2007,~~March 31, 2008, approximately 25,000 claims were pending in New York, approximately 24,000 claims were pending in Mississippi, approximately 9,000 claims were pending in Texas and approximately ~~3,600~~3,500 claims were pending in Ohio, all jurisdictions in which legislation or judicial orders restrict the types of claims that can proceed to trial on the merits. ~~The balance of the claims are pending in a number of jurisdictions in which settlement and defense costs are affected by a number of factors as described below.~~

Since the termination of the comprehensive master settlement agreement (“MSA”) on January 24, 2005, the Company has been resolving claims filed against it in the tort system. The Company has not re-engaged in discussions with representatives of current or future asbestos claimants with respect to such a comprehensive settlement. While the Company believes that federal legislation to establish a trust fund to compensate asbestos claimants is the most appropriate solution to the asbestos litigation problem, there is substantial uncertainty regarding whether this will occur and, if so, when and on what terms. The Company remains committed to exploring all feasible alternatives available to resolve its asbestos liability in a manner consistent with the best interests of the Company’s shareholders.

Substantially all of the claims the Company resolves are concluded through settlements. The Company tried the Joseph Norris asbestos claim (the “Norris Claim”) to verdict in California, however, and received an adverse jury verdict on September 15, 2006. On October 10, 2006, the court entered judgment on this verdict against the Company in the amount of $2.15 million, together with interest thereon at the rate of 10% per annum until paid. The Company ~~believes~~does not believe that the verdict was ~~not~~ supported by the evidence. ~~In addition, the Company believes that procedural irregularities prevented an appropriate determination of the Company’s alleged responsibility for plaintiffs’ injuries.~~ The ~~Company’s post-trial motions were denied by order dated December 15, 2006. On January 3, 2007, the~~ Company appealed the ~~judgment;~~judgment, and on March 11, 2008, the California Court of Appeal, Second District, delivered its opinion affirming the judgment. The Company has filed a petition for review by the California Supreme Court.

During the fourth quarter of 2007 and the first quarter of 2008, the Company tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court. However, on March 14, 2008, the Company received an adverse verdict in the James Baccus claim in Philadelphia, Pennsylvania, with compensatory damages of $2.45 million and additional damages of $11.9 million. The Company has filed a post-trial motion asserting numerous errors in the trial proceedings, and no judgment has been entered on the trial verdict. The Company intends to pursue all available rights to appeal ~~is pending.~~the verdict.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) for the Company in the ~~nine-month periods~~three-month period ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ totaled ~~$64.7~~$22.5 million and ~~$49.5~~$21.1 million, respectively. In contrast to the recognition of settlement and defense costs that reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several

months or ~~more.~~more, and may show some fluctuation from quarter to quarter. Cash payments of settlement amounts are not made until all releases and other required documentation are received by the ~~Company.~~Company, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements. The Company’s total pre-tax cash receipts/payments for settlement and defense costs, including payments from insurers, in the ~~nine-month periods~~three-month period ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ totaled a ~~$7.3~~$2.1 million net payment and $21.2 million net receipt ~~in 2007~~ (reflecting the January 2007 receipt of $31.5 million in previously escrowed funds from Equitas Limited (“Equitas”) in January 2007 and the receipt of $10.0 million for a full policy buyout from Employers Reinsurance Company (“ERC”) in April 2007) and a $30.0 million net payment in 2006,Equitas), respectively. Detailed below are the comparable amounts for the periods indicated.

The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported.

The Company has retained the firm of Hamilton, Rabinovitz & Associates, Inc. (“HR&A”), a nationally recognized expert in the field, to assist management in estimating the Company’s asbestos liability in the tort system. HR&A reviews information provided by the Company concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the

time lag from filing to disposition of the claim. The methodology used by HR&A to project future asbestos costs is based largely on the Company’s experience during the two full preceding calendar years (and additional quarterly periods to the estimate date) for claims filed, settled and dismissed. The Company’s experience is then compared to the results of previously conducted epidemiological studies estimating the number of individuals likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, HR&A estimates the number of future claims that would be filed against the Company, as well as the related settlement or indemnity costs that would be incurred to resolve those claims. This methodology has been accepted by numerous courts. After discussions with the Company, HR&A augments its liability estimate for the costs of defending asbestos claims in the tort system using a forecast from the Company which is based upon discussions with its defense counsel. Based on this information, HR&A compiles an estimate of the Company’s asbestos liability for pending and future claims, based on claim experience over the past two to three years and covering claims expected to be filed through the indicated period. Although the methodology used by HR&A will also show claims and costs for subsequent periods (up to and including the endpoint of the asbestos studies referred to above), management believes that the level of uncertainty regarding the various factors used in estimating future asbestos costs 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 for years beyond the indicated estimate.

In the Company’s view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year, the jurisdictions where such claims are filed and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected over the past five to ten years by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which are estimated to hold $25 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of the Company’s asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, the Company’s management monitors these trend factors over time and periodically assesses whether an alternative forecast period is appropriate.

~~Updating the~~ Liability Estimate.With the assistance of HR&A, effective as of September 30, 2007, the Company updated and extended its estimate of the asbestos liability, including the costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against the Company through 2017. The Company’s previous estimate was for asbestos claims filed through 2011. As a result of this updated estimate, the Company recorded an additional liability of $586 million as of September 30, 2007. The Company’s decision to take this action at such date was based on several factors. First, the number of asbestos claims being filed against the Company has moderated substantially over the past several years, and in the Company’s opinion, the outlook for asbestos claims expected to be filed and resolved in the forecast period is reasonably stable. Second, these claim trends are particularly true for mesothelioma claims, which ~~although constituting~~constitute only 6%5% of the Company’s total pending asbestos claims. Over the past five years, mesothelioma claims account for approximately ~~85%~~89% of the Company’s aggregate settlement and defense ~~costs over the past five years.~~costs. Third, federal legislation that would significantly change the nature of asbestos litigation failed to pass in 2006, and in the Company’s opinion, the prospects for such legislation at the federal level are remote. Fourth, there have been significant actions taken by certain state legislatures and courts over the past several years that have reduced the number and types of claims that can proceed to trial, which has been a significant factor in stabilizing the asbestos claim activity. Fifth, the Company has now entered into coverage-in-place agreements with a majority of its excess insurers, which enables the Company to project a more stable relationship between settlement and defense costs paid by the Company and reimbursements from its insurers. Taking all of these factors into account, the Company believes that it can reasonably estimate the asbestos liability for pending claims and future claims to be filed through 2017. While it is probable that the Company will incur additional charges for asbestos liabilities and defense costs in excess of the amounts currently provided, the Company does not believe that any such amount can be reasonably estimated beyond 2017. Accordingly, no accrual has been recorded for any costs which may be incurred for claims made subsequent to 2017.

Management has made its best estimate of the costs through 2017 based on the analysis by HR&A completed in October 2007. A liability of $1,055 million ~~has been~~was recorded as of September 30, 2007 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2017, of which approximately 68% is attributable to settlement and defense costs for future claims projected to be filed through 2017. The liability is reduced when cash payments are made in respect of settled claims and defense costs. The liability was $1,012 million as of March 31, 2008. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for ~~many~~a number of years past 2017, due to the significant proportion of future claims included in the estimated asbestos ~~liability.~~liability and the lag time between the date a claim is filed and when it is resolved.

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, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would ~~any~~ substantial adverse ~~verdict~~verdicts at trial. A legislative solution or a revised structured settlement transaction could also change the estimated liability.

Insurance Coverage and ~~Receivables~~Receivables.. Prior to 2005, a significant portion of the Company’s settlement and defense costs were paid by its primary insurers. With the exhaustion of that primary coverage, the Company began negotiations with its excess insurers to reimburse the Company for a portion of its settlement and defense costs as incurred. To date, the Company has entered into agreements providing for such reimbursements, known as “coverage-in-place”, with ~~eight~~nine of its excess insurer ~~groups. With~~groups, and on March 3, 2008, the Company reached agreement with certain London Market Insurance Companies, North River Insurance Company and TIG Insurance Company, confirming the aggregate amount of available coverage under certain London policies and setting forth a schedule for future reimbursement payments to the Company based on aggregate indemnity and defense payments made. In addition, with three of its excess insurer groups, the Company entered into policy buyout agreements, settling all asbestos and other coverage obligations for an agreed sum, totaling $46.8 million in aggregate. The Company is in discussions with or expects to enter into additional coverage-in-place agreements with other of its excess insurers whose policies are expected to respond to the aggregate costs included in the updated liability estimate. Under such coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for the Company’s present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurer’s obligations. Reimbursements from such insurers for past and ongoing settlement and defense costs allocable to their policies have been made as coverage-in-place and other agreements are reached with such insurers. All of these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures.

The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance payments, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by 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. In addition, the timing and amount of reimbursements will vary because the Company’s insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, the Company retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate liability estimate described above and assuming the continued viability of all solvent insurance carriers. After considering the foregoing factors and consulting with legal counsel and such insurance consultants, the Company

determined its probable insurance reimbursement rate for the aggregate liability recorded as of September 30, 2007 to be 33%. An asset of $351 million ~~has been~~was recorded as of September 30, 2007 representing the probable insurance reimbursement for such claims. The asset is reduced as reimbursements and other payments from insurers are received. The asset was $328 million as of March 31, 2008.

Uncertainties. Many uncertainties exist surrounding asbestos litigation, and the Company will continue to evaluate its estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in the Company incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly 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 may take many years, the effect on results of operations and financial position in any given period from a revision to these estimates could be material.

For environmental matters, the Company records a liability for estimated remediation costs when it is probable that the Company will be responsible for such costs and they can be reasonably estimated. Generally, third party specialists assist in the estimation of remediation costs. The environmental remediation liability at ~~September 30,~~December 31, 2007 is ~~primarily~~substantially all for the former manufacturing site in Goodyear, Arizona (the “Site”) discussed below.

The Site was operated by UniDynamics/Phoenix, Inc. (“UPI”), which became an indirect subsidiary of the Company in 1985 when the Company acquired UPI’s parent company, UniDynamics Corporation. UPI manufactured explosive and pyrotechnic compounds, including components for critical military programs, for the U.S. government at the Site from 1962 to 1993, under contracts with the Department of Defense and other government agencies and certain of their prime contractors. No manufacturing operations have been conducted at the Site since 1994. The Site was placed on the National Priorities List in 1983, and is now part of the Phoenix-Goodyear Airport North Superfund site. In 1990, the U.S. Environmental Protection Agency (“EPA”) issued administrative orders requiring UPI to design and carry out certain remedial actions, which UPI has done. Groundwater extraction and treatment systems have been in operation at the Site since 1994. A soil vapor extraction system was in operation from 1994 to 1998, was restarted in 2004, and is currently in operation. On July 26, 2006, the Company entered into a consent decree with the EPA with respect to the Site providing for, among other things, a work plan for further investigation and remediation activities at the ~~Site.~~Site and certain financial assurances. The Company recorded a liability in 2004 for estimated costs through 2014 after reaching substantial agreement on the scope of work with the EPA. During the fourth quarter 2007, the Company and its technical advisors determined that changing groundwater flow rates and contaminant plume direction at the Site required additional extraction systems as well as modifications and upgrades of the existing systems. In consultation with its technical advisors, the Company prepared a forecast of the expenditures required for these new and upgraded systems as well as the costs of operation over the forecast period through 2014. Taking these additional costs into consideration, the Company’s estimated liability for the costs of such activities through 2014 was ~~$15.4~~$41.5 million as of ~~September 30, 2007,~~December 31, 2007. The liability was $39.1 million as of March 31, 2008, which is included in accrued liabilities and other liabilities in the Company’s consolidated balance sheet.

On July 31, 2006, the Company entered into a consent decree with the U.S. Department of Justice (“DOJ”) on behalf of the Department of Defense and the Department of Energy pursuant to which, among other things, the U.S. Government reimburses the Company for 21 percent of qualifying costs of investigation and remediation activities at the Site. The Company has a receivable of $7.0 million as of March 31, 2008 representing the amount of expected reimbursements during the forecast period.

The EPA and the DOJ have alleged that one of the Company’s subsidiaries (Crane Composites, Inc.) is in violation of certain Clean Air Act regulations and a Clean Air Act operating permit at a manufacturing facility located in Channahon, Illinois. The allegations originated from a neighbor’s complaint in late 2003 about an odor emanating from the facility. The Company has cooperated with EPA’s investigation, which now includes representatives of the Illinois state environmental agencies, and it is in the late stage of discussions with the EPA, the state authorities and the DOJ in an effort to resolve the dispute regarding emission, as well as their claim for a civil penalty relative to the alleged violations. The DOJ has demanded a civil penalty in the amount of $1.2 million. While the Company believes that it has not violated its Clean Air Act operating permit or the regulations in question, it recognizes that the cost and risk associated with a protracted litigation with the U.S. Government could be avoided through a reasonable settlement. The Company intends to continue discussions with the state authorities, the DOJ and the EPA in an effort to find a mutually acceptable resolution.

The Company engaged in discussions with attorneys from the Civil Division of the DOJ for over a year regarding allegations that certain valves sold by the Company’s Crane Valves North America unit (“CVNA”) to private customers that ultimately were delivered to U.S. military agencies did not conform to contractual specifications relating to the place of manufacture and the origin of component parts. The DOJ’s allegations originated with a~~qui tam~~complaint filed under seal by a former CVNA employee. The DOJ ultimately intervened in that case, and on March 31, 2007, filed a complaint against the Company in the United States District Court for the Southern District of Texas seeking unspecified damages for violations of the False Claims Act, and other common law claims. The complaint alleges that CVNA failed

to notify the correct U.S. military agency when its manufacturing location for Mil-Spec valves listed on the Qualified Products List was moved from Long Beach, California to Conroe, Texas in 2003. As a result, the complaint alleges that the valves manufactured in Texas were not properly listed on the Qualified Products List as required by the contract specifications.

The Company received a letter from the Department of the Navy on February 14, 2007, conveying the Navy’s concerns about the Qualified Products List allegations raised by the DOJ. The Department of the Navy advised the Company that, if true, these allegations could potentially result in the Company and its subsidiaries and affiliates being suspended and/or debarred from doing business with the U.S. Government.

The Company cooperated with the Government’s investigation of these matters and negotiated a settlement agreement with the DOJ providing for, among other things, the payment of $7.5 million to the United States and $125,000 to pay the legal fees of the former employee who filed the~~qui tam~~ complaint. In addition, the Company negotiated an administrative agreement with the Department of the Navy for a term of three years pursuant to which the Company will implement certain changes to its compliance programs and report to the Navy on a quarterly basis. These agreements were executed and became effective on July 27, 2007. The Company acknowledged the failure to notify the Navy and update the Qualified Products List but denies that this omission violated the False Claims Act. The failure to notify the Navy was unintentional and there was no misconduct by Company personnel. The Company determined to settle this matter to avoid the risks of costly and protracted legal proceedings.

The Company ishas been defending two separate lawsuits brought by customers alleging failure of the Company’s fiberglass-reinforced plastic material in recreational vehicle sidewalls manufactured by such customers. The first lawsuit went to trial in January 2008, resulting in an award of $3.2 million in compensatory damages on two out of seven claims. The jury found in the Company’s favor on the remaining five claims, rejecting, among others, the plaintiff’s claim for punitive damages. The parties are awaiting a ruling from the trial judge on one equitable claim and an affirmative defense, which were not presented to the jury. The Company expects the court to issue its ruling and final judgment shortly.

The other lawsuit is nearing completion of fact and expert discovery and a trial is expected to take place in late 2008 or early 2009. The aggregate damages sought in ~~these two lawsuits~~this lawsuit are approximately ~~$13~~$9.5 million in direct costs allegedly incurred by the plaintiffs, as well as other consequential losses allegedly suffered. The ~~parties in both suits are nearing completion of fact and expert discovery, and trials are expected in the first and second quarters of 2008. The~~ Company continues to believe that it has valid defenses to the claims raised in ~~these lawsuits.~~this lawsuit.

The Company has given notice of these lawsuits to its insurance carriers and will seek coverage for any liability in accordance with the applicable policies.

The Company is also defending a series of five separate lawsuits, which have now been consolidated, revolving around a fire that occurred in May 2003 at a chicken processing plant located near Atlanta, Georgia that destroyed the plant. The aggregate damages demanded by the plaintiff are in excess of $50 million. These lawsuits contend that certain fiberglass-reinforced plastic material manufactured by the Company that was installed inside the plant was unsafe in that it acted as an accelerant, causing the fire to spread rapidly, resulting in the total loss of the plant and property. The suits are in the early stages of pre-trial discovery and the Company believes that it has valid defenses to the underlying claims raised in these lawsuits. The Company has given notice of these lawsuits to its insurance carriers, and will seek coverage for any resulting losses. Based on a review of its coverage, however, the Company has determined that it is facing a potential $25 million gap in insurance coverage, for the layer of insurance which would have provided protection for losses above $25 million but below $50 million. The Company has initiated certain actions aimed at closing the gap in insurance coverage. If the plaintiffs in these lawsuits were to prevail at trial and be awarded the full extent of their claimed damages, and the gap in coverage was not closed, the resulting liability could have a material adverse effect on the Company’s results of operations and cash flows in the periods affected.

A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters. While the outcome of litigation cannot be predicted with certainty, and some of these other lawsuits, claims or proceedings may be determined adversely to the Company, the Company does not believe that the disposition of any such other pending matters is likely to have a material adverse effect on its financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company’s results of operations and cash flows for that period.


	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
	2007			2006			2007			2006			2007			2006			2007			2006			2008			2007			2008			2007
*(In thousands)*	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
*(in thousands)*																									Pension Benefits						Other Postretirement Benefits
Service cost	$	4,199		$	4,050		$	39		$	41		$	12,596		$	12,151		$	116		$	123		$	4,240		$	4,228		$	38		$	40
Interest cost		8,428			7,706			254			284			25,283			23,117			761			852			8,512			8,397			253			268
Expected return on plan assets		(11,084	)		(9,871	)		—			—			(33,252	)		(29,611	)		—			—			(11,170	)		(10,408	)		—			—
Amortization of prior service cost		126			147			(21	)		(40	)		378			440			(63	)		(120	)		129			177			(21	)		(21	)
Amortization of net loss (gain)		146			262			(33	)		(21	)		438			786			(98	)		(63	)		151			295			(32	)		(76	)

Net periodic cost	$	1,815		$	2,294		$	239		$	264		$	5,443		$	6,883		$	716		$	792		$	1,862		$	2,689		$	238		$	211

During the first ~~nine~~three months of ~~2007,~~2008, the Company contributed ~~$3.8~~$1.5 million to its defined benefit plans and ~~$1.2~~$0.2 million to its other postretirement benefit plans. The Company expects, based on current actuarial calculations, to contribute approximately ~~$5.0~~$11.1 million to its domestic and foreign defined benefit plans and $2.4 million to its other postretirement benefit plans in 2008. The Company contributed $5.2 million to its defined benefit plans and $2.0 million to its other postretirement benefit plans in 2007. ~~The Company contributed $8.0 million to its defined benefit plans and $2.2 million to its other postretirement benefit plans in 2006.~~ However, cash contributions for the remainder of ~~2007~~2008 and subsequent years will depend on a number of factors, including the impact of the Pension Protection Act signed into law in 2006, changes in minimum funding requirements, long-term interest rates, the investment performance of plan assets and changes in employee census data affecting the Company’s projected benefit obligations.

~~As discussed~~The Company calculated its income tax provision for the three months ended March 31, 2008 in ~~Note 2, Recent~~accordance with the requirements of Statement of Financial Accounting ~~Pronouncements,~~Standards No. 109, “Accounting for Income Taxes,” Accounting Principles Board Opinion No. 28, “Interim Financial Reporting,” FASB Interpretation No. 18, “Accounting for Income Taxes in Interim Periods” and FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.”

The Company’s effective tax rate of 32.3% for the ~~Company adopted~~three months ended March 31, 2008 is lower than the ~~provisions~~Company’s effective tax rate of ~~FIN 48~~32.5% for the three months ended March 31, 2007 primarily as a result of lower enacted statutory tax rates in 2008 in certain non-U.S. taxing jurisdictions and lower state taxes in 2008. These items were partially offset by the statutory expiration of the U.S. federal research tax credit as of ~~January 1,~~December 31, 2007.

The Company’s effective tax rate for the three months ended March 31, 2008 is lower than the statutory U.S. federal tax rate primarily as a result of earnings in foreign jurisdictions taxed at rates lower than the U.S. statutory rate and the U.S. federal tax benefit on domestic manufacturing activities. These items were partially offset by state taxes, net of the U.S. federal tax benefit and current U.S. taxation of certain foreign-sourced income taxed at rates lower than the U.S. statutory tax rate.

During the three months ended ~~September 30, 2007,~~March 31, 2008, there was ~~no change in the Company’s gross unrecognized tax benefits as a result of tax positions taken during a prior period,~~ an increase of approximately $0.3 million in the Company’s gross unrecognized tax benefits as a result of tax positions taken during the current ~~period, and no change in the Company’s gross unrecognized tax benefits as a result of settlements with taxing authorities.~~period.

During the nine months ended September 30, 2007, there was a decrease of approximately $1.0 million in the Company’s gross unrecognized tax benefits as a result of tax positions taken during a prior period, an increase of approximately $1.3 million in the Company’s gross unrecognized tax benefits as a result of tax positions taken during the current period, and a decrease of approximately $0.4 million in the Company’s gross unrecognized tax benefits as a result of a settlement with a taxing authority.

During the three ~~and nine~~ months ended ~~September 30, 2007,~~March 31, 2008, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate increased by approximately ~~$0.6 million and~~ $0.3 ~~million, respectively.~~million.

The Company recognizes interest related to uncertain tax positions in its income tax expense. During the three ~~and nine~~ months ended ~~September 30, 2007,~~March 31, 2008, the total amount of interest expense related to unrecognized tax benefits recognized in the consolidated statement of operations was approximately $0.1 ~~million and $0.3 million, respectively.~~million. At ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, the total amount of accrued interest expense related to unrecognized tax benefits recorded in the consolidated balance sheet was ~~$0.7~~approximately $0.6 million and $0.5 million, respectively.

The Company regularly assesses the potential outcomes of both ongoing examinations and future examinations for the current and prior years in order to ensure the Company’s provision for income taxes is adequate. The Company believes that adequate accruals have been provided for all open years.

The Company’s income tax returns are subject to examination by the Internal Revenue Service (“IRS”) as well as other state and non-U.S. taxing authorities. In May 2007, the IRS completed its examination of the Company’s 2005 federal income tax return. Therefore, only the Company’s 2006 federal tax return, which it filed in September 2007, has not yet been examined by the IRS.

With few exceptions, the Company is no longer subject to U.S. state and local or non-U.S. income tax examinations by taxing authorities for years before 2003. At this time, the Company is currently under audit by various state and non-U.S. taxing authorities. As of ~~September 30, 2007,~~March 31, 2008, it is reasonably possible that the Company’s unrecognized tax benefits will decrease by approximately ~~$0.8~~$0.3 million during the next twelve months as a result of the closure of the aforementioned ~~audits as well as the expiration of state statutes of limitation on the assessment and collection of income taxes.~~

The Company calculated its income tax provision for the three and nine months ended September 30, 2007 in accordance with the requirements of Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” Accounting Principles Board Opinion No. 28, “Interim Financial Reporting,” FASB Interpretation No. 18, “Accounting for Income Taxes in Interim Periods” and FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.”

The Company’s effective tax rate of 37.9% for the three months ended September 30, 2007, which reflects a tax benefit on a pre-tax loss, is higher than the Company’s effective tax rate of 32.2% for the three months ended September 30, 2006, which reflects a tax provision on pre-tax income. The Company’s effective tax rate for the three months ended September 30, 2007 reflects more tax benefit when compared to the same period in 2006 primarily as a result of:

These items were partially offset by the statutory expiration of the U.S. federal tax benefit on export sales as of December 31, 2006 and incremental taxes from increased dividends from foreign subsidiaries in 2007.

The Company’s effective tax rate of 42.0% for the nine months ended September 30, 2007, which reflects a tax benefit on a pre-tax loss, is higher than the Company’s effective tax rate of 31.8% for the nine months ended September 30, 2006, which reflects a tax provision recorded on pre-tax income. The Company’s effective tax rate for the nine months ended September 30, 2007 when compared to the same period in 2006 reflects more tax benefit primarily as a result of:

~~The asbestos charge recorded during the third quarter 2007 will also result in an estimated incremental tax expense of $3.6 million, or $0.06 per diluted share, in the fourth quarter of 2007.~~

The Company’s effective tax rates for the three and nine months ended September 30, 2007 are higher than the statutory U.S. federal tax rate, which reflects additional tax benefits recorded on the Company’s pre-tax book loss for each period, primarily as a result of:

~~These items were partially offset by state taxes, net of the U.S. federal tax benefit, and the repatriation of foreign earnings taxed at rates lower than the U.S. statutory tax rate.~~audits.

The second quarter 2006 includes a net gain of $4.1 million consisting of $8.3 million from the sales of Resistoflex Aerospace and Westad, offset by $4.2 million from the sale of unused property resulting from prior plant consolidations and certain legal costs associated with previous divestitures.

~~Long-term~~The following table summarizes the Company’s debt ~~net~~as of ~~unamortized original issue discounts, was $398.3 million and $391.8 million at September 30, 2007~~March 31, 2008 and December 31, 2006, respectively, and was comprised primarily of fixed rate borrowings under the $200 million 5.50% notes due 2013 and the $200 million 6.55% notes due 2036. Short-term debt was approximately $25.0 million and $9.5 million at September 30, 2007 and December 31, 2006, respectively, and was primarily comprised of borrowings under a money market credit line. In September 2007, the Company amended and restated its $300 million Credit Agreement which is now due to mature in September 2012, two years and eight months later than the previous term. There were no borrowings outstanding under the Credit Agreement at September 30, 2007.2007:

In the first quarter of 2007, the Company sold its ~~Corporate~~corporate aircraft, generating proceeds of approximately $11 million (classified as cash provided from investing activities), and used these proceeds as the initial payment on an operating lease for a used but newer aircraft replacement (classified as cash used in operating activities).

The Company ~~entered into~~adopted SFAS 157 effective January 1, 2008 for financial assets and liabilities measured on a ~~seven year operating lease~~recurring basis. On February 6, 2008, the FASB deferred the effective date of SFAS 157 for ~~an airplane~~all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the ~~first~~financial statements on a recurring basis. SFAS 157 defines fair value, establishes a framework for measuring fair value and generally accepted accounting principles and expands disclosures about fair value measurements. This standard applies in situations where other accounting pronouncements either permit or require fair value measurements. SFAS 157 does not require any new fair value measurements.

Fair value is defined in SFAS 157 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. SFAS 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

The Company has forward contracts outstanding with related receivables of $1.0 million and payables of $0.9 million as of March 31, 2008 which are reported at fair value using Level 2 inputs.

The carrying value of the Company’s other financial assets and liabilities, including cash, accounts receivable, accounts payable and short-term loans payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding.

The Company adopted Statement of Financial Accounting Standards No. 159, “Fair Value Option of Financial Assets and Financial Liabilities” (“SFAS 159”) effective January 1, 2008. This statement provides companies with an option to report selected financial assets and liabilities at fair value. The Company did not elect the fair value option for any of such eligible financial assets or financial liabilities as of March 31, 2008.

During the fourth quarter of 2007, ~~which includes~~the Company announced and commenced implementation of a ~~$14.1 million residual value guarantee~~restructuring program designed to further enhance operating margins in the Fluid Handling segment. The planned actions include ceasing the manufacture of malleable iron and bronze fittings at the Company’s foundry operating facilities in the United Kingdom and Canada, respectively, and exiting both facilities and transferring production to China (the “Foundry Restructuring”). The Foundry Restructuring is expected to be substantially completed by the ~~Company. This commitment is secured by~~end of 2008. The program primarily includes workforce reduction expenses and facility exit costs, all of which are expected to be cash costs. The Company expects to incur total pre-tax charges, upon program completion, of approximately $14 million. Included in this amount, in December 2007, the ~~leased airplane and~~Company recognized workforce reduction charges of approximately $9 million. Also in December 2007, pursuant to this program, the ~~fair value~~Company sold its foundry facility in the United Kingdom, generating a pre-tax gain of approximately $28 million.

The following table summarizes the ~~residual value guarantee is carried as a $0.5 million liability at September 30, 2007.~~accrual balances related to the Foundry Restructuring:

This Quarterly Report on Form 10-Q contains ~~forward-looking statements as defined by~~information about us, some of which includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. ~~These~~Forward-looking statements ~~present management’s~~are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as “believes,” “contemplates,” “expects,” “may,” “could,” “should,” “would,” or “anticipates,” other similar phrases, or the negatives of these terms.

We have based the forward-looking statements relating to our operations on our current expectations, ~~beliefs, plans~~estimates and ~~objectives regarding~~projections about us and the markets we serve. We caution you that these statements are not guarantees of future ~~financial~~ performance and ~~assumptions or judgments concerning such performance. Any discussions contained in this 10-Q, except to the extent that they contain historical facts, are forward-looking and accordingly~~ involve ~~estimates, assumptions, judgments~~risks and uncertainties. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. There are a number of other 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~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2006~~2007 filed with the Securities and Exchange Commission and are incorporated by reference herein.

Reference herein to “Crane”, “we”, “us”, and, “our” refer to Crane Co. and its subsidiaries unless the context specifically states or implies otherwise. References to “core business” or “core sales” in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition, but exclude currency effects. Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated.

AsWe are a diversified manufacturer of ~~September 30, 2007,~~highly engineered industrial products. Our business consists of five segments: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling and Controls. Our primary markets are aerospace, defense electronics, recreational vehicle, transportation, automated merchandising, chemical, pharmaceutical, oil, gas and power, nuclear, building services and utilities.

Our strategy is to grow the ~~Company extended the time horizon~~earnings of ~~its estimate of asbestos liability from 2011 to 2017, to reflect its outlook regarding trends in its defense~~niche businesses with leading market shares, acquire companies that offer strategic fits with existing businesses, aggressively pursue operational and ~~indemnity costs. The following table shows the Company’s estimate of its asbestos liability, both before~~strategic linkages among our businesses, build a performance culture that stresses continuous improvement and ~~after insurance reimbursements and tax effects, the estimate as of September 30, 2007 of $204 million, prior to extending the timeframe~~a committed management team whose interests are directly aligned with those of the ~~liability estimate; the $250 million effect of the extension;~~shareholders and ~~the total $454 million after insurance and after-tax estimate as of September 30, 2007.~~maintain a focused, efficient corporate structure.

~~Third~~First quarter of ~~2007~~2008 compared with ~~third~~first quarter of ~~2006~~2007

First quarter ~~2007~~2008 sales increased ~~$96.4~~$50.7 million, or ~~17%~~8%, ~~including core~~over the first quarter of 2007. Core business sales for the first quarter contributed approximately 3% growth, or $16.9 million. Acquired businesses (the composite panel business of ~~$49.8 million (9%), sales from acquired businesses (Dixie-Narco~~Owens Corning and ~~Noble)~~the Mobile Rugged business of ~~$30.1 million (5%~~Kontron America, Inc.) ~~and favorable foreign~~contributed 1% growth, or $10.3 million. The impact of currency translation on sales increased reported sales by approximately 4%, or $23.5 million, as the U.S. dollar was weaker against other major currencies in the first quarter of ~~$16.5 million (3%).~~2008 compared to the first quarter of 2007. Net sales related to operations outside the U.S. for the three-month periods were ~~39.0%~~39.2% and ~~37.3%~~36.3% of total net sales for the quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively.

Operating profit margins were 11.1% in the first quarter 2008 compared to 10.9% in the comparable period of 2007. The ~~operating loss for the third quarter was $312.6 million compared with operating profit of $71.2 million in~~increase over the prior year ~~quarter. The operating loss included a $390.2 million provision~~period was largely attributable to ~~update~~improved performance in our Fluid Handling and ~~extend the Company’s estimate of its asbestos liability. This provision extended the Company’s estimated asbestos liability from 2011 to 2017 (See Note 9~~Merchandising Systems businesses, partially offset by weaker performance in our Engineered Materials and Aerospace & Electronics segments.

Other income (expense) in the ~~financial statements under Item 1~~first quarter of 2007 included ~~in this report). Corporate operating expenses were $11.7 compared~~approximately $1.0 million of equity joint venture income related to ~~$4.2 million~~the Industrial Motions Control Holding LLC (“IMC”) joint venture that was sold in the ~~prior year quarter. The increase in Corporate expenses primarily reflects a $4.9 million reimbursement in the prior year~~fourth quarter ~~from the U.S. government for environmental clean-up costs at a former manufacturing site in Arizona, which previously manufactured products for the government. The~~of 2007.

Our effective tax rate ~~in the third quarter of 2007~~ was ~~37.9%, reflecting a tax benefit on a pre-tax loss for the period. This compares to the Company’s effective tax rate~~

~~of 32.2%~~32.3% for the three months ended ~~September 30, 2006 which reflects a tax provision on pre-tax income.~~March 31, 2008 compared to 32.5% for the three months ended March 31, 2007. The ~~Company’s effective~~ tax rate ~~for the third quarter 2007 reflects more~~was lower primarily due to lower enacted statutory tax ~~benefit than the third quarter 2006 primarily as a result of:~~

2008. These items were partially offset by the statutory expiration of the U.S. federal research tax ~~benefit on export sales~~credit as of December 31, ~~2006~~2007.

Order backlog at March 31, 2008 totaled $768.7 million, 6% higher than the backlog of $726.8 million at March 31, 2007 and ~~incremental taxes from increased dividends from foreign subsidiaries in~~7% higher than $719.6 million at December 31, 2007. ~~The third quarter 2007 net loss was $197.0 million or $3.29 per diluted share, as compared with net income of $46.0 million, or $0.74 per diluted share in the same 2006 period.~~

All comparisons below refer to the ~~third~~first quarter ~~2007~~2008 versus the ~~third~~first quarter ~~2006,~~2007, unless otherwise specified.


	Third Quarter						Change					First Quarter						Change
*(dollars in millions)*	2007			2006														Change
*(in millions)*												2008			2007			Change
Sales	$	159.0		$	139.5		$	19.5		14.0	%	$	158.5		$	148.4		Change
Operating Profit	$	23.1		$	25.0		$	(1.9	)	-7.8	%	$	16.0		$	21.0		$	(5.0	)	(23.8	%)
Profit Margin		14.5	%		17.9	%							10.1	%		14.2	%

The ~~third~~first quarter ~~2007~~2008 sales increase of ~~$19.5~~$10.1 million reflected a sales increase of ~~$17.8~~$11.1 million in the Aerospace Group and ~~an increase~~a decrease of ~~$1.7~~$1.0 million in the Electronics Group. ~~Segment~~The segment’s operating profit decreased $5.0 million, or 23.8%, in the first quarter of 2008 when compared to the period in the prior year. The decline in operating profit was driven by substantially higher engineering expense in the Aerospace Group, which was $24 million in the first quarter of 2008, compared to $14 million in the first quarter of 2007. This increase in engineering expense is related to the development of new products, primarily for the Boeing 787 and Airbus A400M programs. We expect a higher level of engineering expense through 2008 resulting, in part, from the delay in the delivery of the Boeing 787 aircraft and corresponding software and hardware testing and modifications, as well as design changes related to the interface of subsystems with other suppliers. Tighter expense controls and potential claim reimbursements are expected to partially offset the unfavorable impact of the continued development expenses on this program.

Aerospace Group sales of $101.5 million increased $11.1 million, or 12%, from $90.4 million in the prior year period. This increase is attributable to continued strong demand in the aerospace industry. Operating profit declined by ~~$1.9~~$5.0 million asin the first quarter of 2008, compared to the first quarter of 2007 which was due to the aforementioned $10.0 million increase in engineering expenses, partially offset by higher original equipment manufacturer and aftermarket sales volume. In addition, the first quarter of 2007 included a ~~result of higher aggregate engineering expense of approximately $9.0~~$1.1 million unfavorable impact related to ~~new programs, including~~a pump connector recall.

Electronics Group sales of $57.1 million decreased $1.0 million, or 2%, due primarily to lower sales in our Power Solutions business. Operating profit remained approximately equal to the ~~Boeing 787.~~ first quarter of 2007.

The Aerospace ~~and~~& Electronics segment backlog ~~increased $26~~was $407.4 million ~~or 7%, as of September 30,~~at March 31, 2008, compared with $405.8 million at March 31, 2007 ~~compared to $373~~and $392.8 million ~~as of September 30, 2006.~~at December 31, 2007.


	Third Quarter						Change				First Quarter						Change
*(dollars in millions)*	2007			2006													Change
*(in millions)*											2008			2007			Change
Sales	$	80.7		$	71.6		$	9.1	12.7	%	$	82.8		$	87.7		Change
Operating Profit	$	15.7		$	9.7		$	6.0	61.9	%	$	11.7		$	16.0		$	(4.4	)	(27.3	%)
Profit Margin		19.5	%		13.5	%						14.1	%		18.3	%

~~Third~~First quarter ~~2007~~2008 sales ~~were higher than~~decreased $5.0 million, or 5.7%, reflecting substantially lower volumes when compared to the prior year ~~period as~~period. Core business sales ~~of $11.9~~were down $13.7 million, ~~from Noble Composites, acquired in September 2006, more than offset~~or 16%, related to lower volumes ~~primarily~~to our traditional recreational vehicle and transportation and building products customers, partially offset by $8.7 million of sales related to the ~~Company’s traditional transportation customers. Sales to building products and recreational vehicle customers were modestly lower than~~September 2007 acquisition of the ~~same period in 2006.~~composite panel business of Owens Corning. Operating profit in ~~2007 increased 62% as~~2008 decreased 27.3%, resulting from the ~~benefit~~lower core business sales, higher raw material costs, and costs associated with the integration of the ~~Noble acquisition, lower product support costs in the recreational vehicle market and improved manufacturing efficiencies offset the impact of lower volume in the base business.~~composite panel business acquisition.

The Engineered Materials segment backlog was $15.9 million at March 31, 2008, compared with $17.4 million at March 31, 2007 and $14.8 million at December 31, 2007.


	Third Quarter						Change				First Quarter						Change
*(dollars in millions)*	2007			2006													Change
*(in millions)*											2008			2007			Change
Sales	$	98.5		$	73.4		$	25.1	34.2	%	$	113.5		$	97.4		Change
Operating Profit	$	9.8		$	8.9		$	0.9	10.1	%	$	14.1		$	9.6		$	4.5	46.9	%
Profit Margin		9.9	%		12.1	%						12.5	%		9.9	%

First quarter 2008 sales increased $16.1 million, or 16.5%, including $10.9 million (11.2%) of core sales, representing growth in both the Vending and Payment Solutions product lines, and favorable foreign currency translation of $5.2 million (5.3%). The Vending Solutions sales increase, representing the majority of the increase, was led by the successful introduction of the BevMax III glass front vender. Operating profit for the segment improved by $4.5 million over the first quarter of 2007, or 46.9%, due primarily to the successful leverage gained from the comparable quarter sales increase, as well as the absence of integration expenses and related production inefficiencies associated with the Vending Solutions group’s 2006 acquisitions.

The Merchandising Systems ~~sales increased $25.1~~segment backlog was $42.5 million ~~or 34%, driven primarily by increased sales of $18.9~~at March 31, 2007, compared with $33.2 million ~~from the Dixie-Narco acquisition~~at March 31, 2007 and organic growth in our payment solutions business. The strong results in payment solutions, completion of the Automatic Products acquisition integration and improved European vending operating results more than offset the losses generated$34.1 million at ~~Dixie-Narco.~~December 31, 2007.


	Third Quarter						Change				First Quarter						Change
*(dollars in millions)*	2007			2006													Change
*(in millions)*											2008			2007			Change
Sales	$	290.8		$	252.3		$	38.5	15.3	%	$	288.5		$	263.1		Change
Operating Profit	$	37.5		$	29.2		$	8.3	28.4	%	$	44.8		$	31.1		$	13.6	43.7	%
Profit Margin		12.9	%		11.6	%						15.5	%		11.8	%

~~Third~~First quarter ~~2007~~2008 sales increased ~~$38.5~~$25.5 million, or ~~15%~~9.7%, including ~~$27.2~~$11.7 million ~~or 11%,~~(4%) of core sales and favorable foreign currency translation of ~~$12.4~~$17.2 million (7%), offset by sales from divested businesses of $3.4 million (1%). Segment operating profit increased $13.6 million, or 5%43.7%, ~~partially offset by~~over the 2007 first quarter. The operating profit increase was broad-based across all major business units in the segment, reflecting continued strong global demand in the chemical, pharmaceutical and energy industries, coupled with throughput efficiencies and pricing discipline. We expect that operating margins during the balance of 2008 will be slightly lower ~~sales from a divested business~~due to spending associated with continued growth initiatives, such as costs associated with the previously announced closure of ~~approximately $1.1 million, or 1%. Operating profit increased $8.3 million, or 28%.~~two foundries, expansion plans in China, new product development efforts and increasing our nuclear valve capacity.

~~Margins increased to 12.9%, reflecting effective leverage of the notable sales increase.~~ The Fluid Handling segment backlog was ~~$267~~$268.3 million ~~as of September 30, 2007,~~at March 31, 2008, compared with ~~$204~~$237.1 million ~~as of September 30, 2006,~~at March 31, 2007 and ~~$211~~$242.6 million ~~as of~~at December 31, 2006. This $63 million increase in backlog, or 31%, over September 30, 2006 reflects increased global demand, particularly from the chemical/pharmaceutical and energy industries, and generally higher demand from many commercial applications.2007.

~~The Controls Segment backlog was $42.2 million at September 30, 2007, compared with $23.0 million at December 31, 2006 and $30.4 million at September 30, 2006.~~

~~Year-to-date period ended September 30, 2007 compared to year-to-date period ended September 30, 2006~~

Year-to-date 2007 sales increased $278.0 million, or 17%, including core business growth of $119.7 million (7%), sales from acquired businesses (CashCode, Dixie-Narco, Automatic Products, Telequip and Noble Composites) of $131.7 million (7%) and favorable foreign currency translation of $40.8 million (3%), reduced by lower sales from

~~businesses divested in 2006~~The first quarter 2008 sales increase of ~~$14.2~~$3.9 million ~~(1%). Net~~reflects $4.9 million of sales related to ~~operations outside~~ the ~~United States were 37.5%~~August 2007 acquisition of the Mobile Rugged Business division of Kontron America, Inc. Core segment sales and 37.3% of total net sales for the nine-month periods ended September 30, 2007 and 2006, respectively. Order backlog at September 30, 2007 totaled $753.2 million compared with $676.7 million at December 31, 2006 and $636.9 million at September 30, 2006.

~~Year-to-date operating loss was $172.4 million compared with~~ operating profit ~~of $194.5 million~~were impacted by delays in ~~2006. The operating loss included a $390.2 million provision to update~~customer projects and extend the Company’s estimate of its asbestos liability. Corporate operating expenses were $42.1 compared to $26.5 million in the 2006 year-to-date period. The increase in Corporate operating expenses primarily reflects: (1) a $7.5 million provision recorded in the second quarter of 2007 relating to the previously disclosed civil false claims proceeding by the U.S. Government, and (2) a $4.9 million reimbursement in the prior year quarter from the U.S. Government for environmental clean-up costs at a former manufacturing site in Arizona, which previously manufactured products for the government. For the nine months ended September 30, 2006, net miscellaneous income included $8.3 million of net gain from the sales of Resistoflex Aerospace and Westad, partially offset by $4.2 million in losses from the sale of unused property resulting from prior plant consolidations and certain legalremaining integration costs associated with ~~previous divestitures. The Company’s effective tax rate of 42.0% for~~ the nine months ended September 30, 2007 reflects a tax benefit on a pre-tax loss. The Company’s effective tax rate of 31.8% for the nine months ended September 30, 2006 reflects a tax provision on pre-tax income. The Company’s effective tax rate for the nine months ended September 30, 2007 when compared to the same period in 2006 reflects more tax benefit primarily as a result of:Mobile Rugged Business acquisition.

These items were partially offset by the statutory expiration of the U.S. federal tax benefit on export sales as of December 31, 2006, and incremental taxes from increased dividends from foreign subsidiaries in 2007. The asbestos charge recorded during the third quarter 2007 will also result in an estimated incremental tax expense of $3.6 million, or $0.06 per diluted share, in the fourth quarter of 2007.

~~All comparisons below reference the year-to-date period ended September 30, 2007 versus the year-to-date period ended September 30, 2006 (“prior year”), unless otherwise specified.~~

The year-to-date 2007 sales increase of $47.1 million reflected sales increases of $43.7 million in the Aerospace Group and $3.4 million in the Electronics Group. Segment operating profit declined by $4.9 million as a result of higher aggregate engineering expense of approximately $22 million related to new programs, including the Boeing 787, which more than offset the profits associated with higher sales. Aerospace Group sales of $314.3 million increased $43.7 million, or 16%, from $270.6 million in the prior year period. Core sales growth was $49.1 million (18%) and favorable foreign currency translations of $0.6 million, were partially offset by a $6.0 million (2%)

decline in sales caused by the absence of Resistoflex Aerospace, which was sold in May 2006. Electronics Group sales of $153.3 million increased $3.4 million, or 2%, from $149.8 million in the prior year period. The Aerospace and ElectronicsControls segment backlog ~~increased $26 million, or 7%, as of September 30, 2007, compared to $373 million as of September 30, 2006.~~

The year-to-date 2007 sales increase of $16.3 million, or 6.8%, includes sales of $39.3 million from Noble Composites, acquired in September 2006, which more than offset lower volumes to the Company’s traditional recreational vehicle, transportation and building products customers. Operating profit in 2007 increased as the benefit of the Noble acquisition, lower product support costs in the recreational vehicle market and improved manufacturing efficiencies offset the impact of the lower volumes in the base business. The Engineered Materials Segment backlog was ~~$14.5~~$34.5 million at ~~September 30, 2007, compared with $13.2 million at December~~March 31, ~~2006 and $13.2 million at September 30, 2006.~~

Merchandising Systems sales increased $116.8 million, or 65%, driven primarily sales of $91.1 million from the CashCode, Telequip, Dixie-Narco and Automatic Products acquisitions as well as organic growth in our payment solutions business. Overall operating profit, including the impact of the acquisitions, improved by $14.2 million as a result of higher margins and effective leverage of the strong sales growth in traditional international payment systems markets. The Merchandising Systems Segment backlog was $30.8 million at September 30, 2007,2008, compared with $33.2 million at ~~December~~March 31, ~~2006~~2007 and ~~$18.6 million at September 30, 2006.~~

The year-to-date 2007 sales increase of $90.9 million, or 12.2%, included $68.0 million (9%) of core sales, $31.1 million (4%) from favorable foreign currency translation, partially offset by lower sales from a divested business of approximately $8.2 million (1%). Operating profit increased $17.4 million or 20.6%. Margins increased to 12.2%, reflecting effective leverage of the sales increase. The Fluid Handling Segment backlog was $267.0 million at September 30, 2007, compared with $210.5$35.3 million at December 31, 2006 and $204.2 million at September 30, 2006. This $63 million increase in backlog, or 31%, over September 30, 2006 reflects increased global demand, particularly from the chemical/pharmaceutical and energy industries, and generally higher demand from many commercial applications.

~~The Controls Segment backlog was $42.2 million at September 30, 2007, compared with $23.0 million at December 31, 2006 and $30.4 million at September 30, 2006.~~

Net debt (total debt less cash and cash equivalents) totaled 24.5% of capital (net debt plus shareholders’ equity) at September 30, 2007, compared with 22.2% at December 31, 2006. Net debt is a non-GAAP measure that provides useful information about the Company’s ability to satisfy its debt obligations with currently available funds.2007.

The Company updated and extended its estimate of its asbestos liability and recorded an additional provision of approximately $390 million during the three months ended September 30, 2007. This provision is based on the total liability to cover the estimated cost of asbestos claims currently pending and subsequently asserted through 2017 of $1,055 million, partially offset by anticipated insurance recoveries of $351 million (using an approximate 33% recovery assumption) and existing reserves of approximately $314 million. After anticipated tax benefits of $140 million, the total after-tax charge for the third quarter 2007 was $250 million. Although this increase did not have an immediate impact on the Company’s liquidity, the provision represents the incremental estimate of future cash payments associated with asbestos-related exposures.Operating Activities

Cash provided by operating activities, a key source of our liquidity, was ~~$146.3~~$44.1 million infor the ~~nine months ended September 30, 2007 compared with $102.9~~first quarter of 2008, an increase of $7.2 million, ~~in the nine months ended September 30, 2006, reflecting a net asbestos receipt of $7.3 million in the nine month period ended September 30, 2007,~~or 20%, as compared to ~~$30.0 million of net asbestos payments in~~ the first ~~nine months~~quarter of ~~2006. The net asbestos receipt of $7.3 million in the nine month period ended September 30, 2007 included the following:~~

~~The above settlement receipts were substantially offset by indemnity and defense~~lower tax payments ~~made~~ during the ~~nine months ended September 30, 2007.~~

Incurrent year first quarter; in addition, in the first quarter of 2007, ~~the Company~~we used ~~the~~$11.0 million of proceeds from the sale of its corporate aircraft as the initial payment on an operating lease for a used, but newer aircraft replacement. ~~Capital~~These favorable changes were partially offset by $2.1 million of net asbestos payments in the first quarter of 2008, compared to $21.2 million of net asbestos receipts in the period last year (reflecting the receipt of $31.5 million in previously escrowed funds from Equitas Limited), as well as the impact of increased operating working capital requirements, which used approximately $4.2 million more cash in the first quarter of 2008 compared to the first quarter of 2007.

Cash flows relating to investing activities consist primarily of cash used for acquisitions (there were no acquisitions during the first quarter of 2008 or 2007) and capital expenditures ~~were $33.4~~and cash flows from divestitures of businesses or assets. Cash used in investing activities was $8.0 million in the first ~~nine months~~quarter of ~~2007,~~2008, compared ~~with $22.3~~to approximately $4.1 million of net cash provided by investing activities in the comparable period of 2007. Our investing activities in the first ~~nine months~~quarter of ~~2006. In~~2007 included the sale of our corporate aircraft, which generated $11.0 million of proceeds. Capital expenditures of $9.1 million for the first ~~nine months~~quarter of ~~2007,~~2008 increased approximately $2.1 million from the ~~Company~~first quarter of 2007. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information systems.

Financing cash flows consist primarily of proceeds from the issuance of debt and common stock, and financing uses of cash consist primarily of repayments of indebtedness, repurchases of common stock and payments of ~~$65.2 million for acquisitions, which compares~~dividends to ~~$234.7~~shareholders. Cash used in financing activities was $38.1 million during the first ~~nine months~~quarter of ~~2006; in addition,~~2008, compared to $47.0 million used during the first ~~nine months~~quarter of ~~2006,~~2007. The decrease in cash used in financing activities was primarily due to an increase in short term debt during the ~~Company~~first quarter of 2008 and, to a lesser extent, net proceeds received ~~$26.1 million in proceeds~~ from ~~the divestitures of two businesses.~~employee stock option exercises.

As a result of the acquisitions in the first nine months of 2006, the Company’s debt increased $71.7 million. In the third quarter of 2006, the dividend was increased 20%, and, as a result, the Company paid $28.8 million in dividends to shareholders in the first nine months of 2007, compared with $24.5 million in the first nine months of 2006. In the first nine months of 2007, the Company repurchased 1,247,130 shares of its common stock on the open market at a cost of $50 million, compared to a repurchase of $37.5 million in the first nine months of 2006.

During the third quarter 2007, the Company amended and restated its $300 million Credit Agreement which is now due to mature in September 2012, two years and eight months later than the previous term. At September 30, 2007, there were no loans outstanding under the Credit Agreement. Long-term debt, net of unamortized original issue discounts, was $398.2 million at September 30, 2007 comprised primarily of fixed rate borrowings under the $200 million 5.50% notes due 2013 and $200 million 6.55% notes due 2036. The Company had $25 million of borrowings primarily under a money market credit line outstanding at September 30, 2007.

Information regarding new accounting pronouncements is included in Note 2 to the Condensed Consolidated Financial Statements.

There have been no material changes in the information called for by this item since the disclosure in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007.

Disclosure Controls and Procedures. The Company’s Chief Executive Officer, ~~and~~who is also Acting Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and ~~forms and that the information is accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.~~forms. Based on this evaluation, the Company’s Chief Executive Officer and Acting Chief Financial Officer ~~have~~has concluded that these controls are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting. During the fiscal quarter ended ~~September 30, 2007,~~March 31, 2008, there have been no changes in the Company’s internal control over financial reporting, identified in connection with ~~the~~our evaluation thereof, ~~by the Company’s Chief Executive Officer and Chief Financial Officer described above,~~ that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 9,8, “Commitments and Contingencies”, of this document, and should be considered an integral part of Part II, Item 1, “Legal Proceedings”.

There has been no significant change to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007.

The table above only includes the open-market repurchases of the Company’s common stock ~~during~~in the ~~third~~first quarter of ~~2007.~~2008. The Company also routinely receives shares of its common stock from ~~employees~~option holders as payment for stock option exercises and the resultant withholding taxes due on such ~~exercises, and the withholding taxes due upon the vesting of restricted stock.~~exercises.

The following Directors’ terms of office continue following the Annual Meeting: Ms. Karen E. Dykstra, Mr. Richard S. Forte, Mr. William E. Lipner, Mr. James L. L. Tullis, Mr. Donald G. Cook, Mr. R. S. Evans, Mr. Eric C. Fast, and Mr. Dorsey R. Gardner

The shareholders approved the selection of Deloitte & Touche LLP as independent auditors for the Company for 2008.

The shareholders rejected a shareholder’s proposal concerning the adoption of the MacBride Principles in reference to the Company’s operations in Northern Ireland.

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.


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


Large accelerated filer x		Accelerated filer ¨

Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨


	Three Months Ended September 30,						Nine Months Ended September 30,
*(In thousands)*	2007			2006			2007			2006
Net Sales
Aerospace & Electronics	$	158,999		$	139,487		$	467,563		$	420,480
Engineered Materials		80,719			71,636			256,180			239,931
Merchandising Systems		98,462			73,384			296,389			179,566
Fluid Handling		290,826			252,278			834,983			744,109
Controls		35,087			30,919			98,093			91,151

Total	$	664,093		$	567,704		$	1,953,208		$	1,675,237

Operating (Loss) Profit
Aerospace & Electronics	$	23,090		$	25,041		$	68,481		$	73,414
Engineered Materials		15,742			9,661			49,713			38,551
Merchandising Systems		9,755			8,887			31,298			17,101
Fluid Handling		37,477			29,188			102,014			84,596
Controls		3,129			2,559			8,331			7,353
Corporate, excluding Asbestos Provision		(11,660	)		(4,173	)		(42,108	)		(26,546	)
Asbestos Provision (a)		(390,150	)		—			(390,150	)		—

Total		(312,617	)		71,163			(172,421	)		194,469

Interest income		1,535			552			3,837			2,163
Interest expense		(6,845	)		(5,244	)		(20,614	)		(16,268	)
Miscellaneous - net		849			1,461			3,593			7,143

(Loss) income before income taxes	$	(317,078	)	$	67,932		$	(185,605	)	$	187,507


	September 30, 2007		December 31, 2006
*(in thousands)*
Accrued payroll and employee benefits	$	94,975	$	82,310
Accrued warranty		23,827		20,294
Accrued insurance		14,789		15,713
Advanced payments		12,078		10,721
Accrued sales allowance		10,944		15,197
Other		59,149		52,488

	$	215,762	$	196,723


*(in thousands)*	March 31, 2008		December 31, 2007
Employee related expenses	$	86,937	$	94,044
Warranty		31,211		32,218
Other		103,302		104,033

Total	$	221,450	$	230,295



	As of
*(In thousands)*	September 30, 2007		December 31, 2006
Assets
Aerospace & Electronics	$	473,609	$	468,652
Engineered Materials		310,008		264,282
Merchandising Systems		342,510		338,207
Fluid Handling		901,768		740,390
Controls		129,953		56,213
Corporate (b)		757,449		562,740

Total	$	2,915,297	$	2,430,484


	Three Months Ended September 30,					Nine Months Ended September 30,
*(In thousands, except per share data)*	2007			2006		2007			2006
Net (Loss) Income	$	(196,950	)	$	46,043	$	(107,569	)	$	127,905

Average basic shares outstanding		59,884			61,110		60,008			60,941
Effect of dilutive stock options		—			1,116		—			1,251

Average diluted shares outstanding		59,884			62,226		60,008			62,192

Basic net (loss) income per share	$	(3.29	)	$	0.75	$	(1.79	)	$	2.10
Diluted net (loss) income per share		(3.29	)		0.74		(1.79	)		2.06


	Three Months Ended September 30,				Nine Months Ended September 30,				Year Ended December 31,
	2007		2006		2007		2006		2006
Beginning claims	84,652		88,833		85,941		89,017		89,017
New claims	694		1,555		2,691		3,837		4,853
Settlements	(109	)	(351	)	(909	)	(923	)	(1,043	)
Dismissals	(3,986	)	(723	)	(6,472	)	(2,617	)	(6,886	)

Ending claims *	81,251		89,314		81,251		89,314		85,941


	Three Months Ended March 31,					Year Ended December 31, 2007		Cumulative to Date Through March 31, 2008
*(in millions)*	2008		2007			Year Ended December 31, 2007		Cumulative to Date Through March 31, 2008
Settlement costs incurred (1)	$	12.1	$	11.2		$	41.6	$	136.2
Defense costs incurred (1)		10.4		9.9			45.9		172.8

Total costs incurred	$	22.5	$	21.1		$	87.5	$	309.0
Pre-tax cash payments/(receipts)(2)	$	2.1		($21.2	)	$	10.2	$	138.0


*(in thousands)*	Three Months Ended March 31, 2008		Year Ended December 31, 2007
Long-term debt consists of:
5.50% notes due 2013	$	199,211	$	199,175
6.55% notes due 2036		199,034		199,026
Other		100		100

Total Long-term debt	$	398,345	$	398,301

Short-term debt consists of :
Money Market Credit Line	$	8,900	$	—
Other borrowings		713		548

Total Short-term debt	$	9,613	$	548


*(in thousands)*	December 31, 2007		Expense		Payments			March 31, 2008
Severance	$	6,855	$	19	$	(13	)	$	6,861
Other		1,966		192		(142	)		2,016

Total	$	8,821	$	211	$	(155	)	$	8,877


	Original Liability Through 2011 at September 30, 2007			Impact to Extend Liability to 2017
*($ in millions)*	Original Liability Through 2011 at September 30, 2007			Provision Recorded During the Three Months Ended September 30, 2007			Current Liability Through 2017 at September 30, 2007
Asbestos Liability	$	469		$	586		$	1,055
Insurance Receivable		(155	)		(196	)		(351	)

Net Asbestos Liability		314			390			704
Tax Benefit		(110	)		(140	)		(250	)

After-Tax Asbestos Liability	$	204		$	250		$	454


	Three Months Ended						Change
*(in millions)*	2008			2007			Change
Net sales	$	678.9		$	628.2		$	50.7		8.1	%
Operating profit	$	75.3		$	68.4		$	6.9		10.1	%
Operating margin		11.1	%		10.9	%
Other income (expense):
Interest income	$	2.3		$	1.3		$	1.0		76.9	%
Interest expense		(6.5	)		(6.9	)		0.4		5.8
Miscellaneous - net		0.3			1.8			(1.5	)	(83.3	)

	$	(3.9	)	$	(3.8	)	$	(0.1	)	2.6	%
Provision for income taxes	$	23.1		$	21.0		$	2.1		10.0	%

Net income	$	48.4		$	43.6		$	4.8		11.0	%


	Year-To-Date						Change
*(dollars in millions)*	2007			2006
Sales	$	467.6		$	420.5		$	47.1		11.2	%
Operating Profit	$	68.5		$	73.4		$	(4.9	)	-6.7	%
Profit Margin		14.6	%		17.5	%


	Total number of shares repurchased	Average price paid per share		Total number of shares purchased as part of pubicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
January 1-31, 2008	—		—	—	—
February 1-29, 2008	581,300	$	42.34	—	—
March 1-31, 2008	376,270		40.89	—	—

Total	957,570	$	41.77	—	—


Mr. E. Thayer Bigelow
Votes for		50,785,685
Votes withheld		2,938,737

Mr. Philip R. Lochner, Jr.
Votes for		52,508,924
Votes withheld		1,215,498

Mr. Ronald F. McKenna
Votes for		52,575,385
Votes withheld		1,149,037

Mr. Charles J. Queenan, Jr.
Votes for		48,026,941
Votes withheld		5,697,481


Votes for		5,200,467
Votes against		40,603,298
Abstained		2,988,067
Broker non-votes		4,932,590



Exhibit 10.1		Benefit Equalization Plan, effective February 25, 2008

Exhibit 10.2		EVA Incentive Compensation Plan for Operating Units, effective April 21, 2008

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)

Exhibit 31.2		Certification of Acting Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)

Exhibit 32.1		Certification of Chief Executive Officer pursuant to Rule13a-14(b) or 15d-14(b)

Exhibit 32.2		Certification of Acting Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b)



~~November 5, 2007~~ Date	By	/s/ Eric C. Fast
May 6, 2008		Eric C. Fast
		President and Chief Executive Officer


~~Date~~
~~November 5, 2007~~ Date		By	/s/ ~~J. Robert Vipond~~ Eric C. Fast
May 6, 2008			~~J. Robert Vipond~~
	~~Vice President, Finance and~~ Eric C. Fast Acting Chief Financial Officer


Exhibit No.		Description

Exhibit 10.1		Benefit Equalization Plan, effective February 25, 2008

Exhibit 10.2		EVA Incentive Compensation Plan for Operating Units, effective April 21, 2008

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)

Exhibit 31.2		Certification of Acting Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)

Exhibit 32.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b)

Exhibit 32.2		Certification of Acting Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b)