Document 1gbB4dxdaOEwD3Yv6j9XGXG2q

I "\ I i t i } l Notes to Financial Statements December 31,1965 1. Principles or consolidation The consolidated statements include the accounts of the Company, all of its whoily-owned subsidiaries and the Com pany's 50% share of the assets and liabilities and income and expenses of Sinclair-Koppers Company, a partnership organ ized january 2,1965 by the Company and Sinclair Petrochemi cals. Inc., a subsidiary of Sinclair Oil Corporation. Based upon the latest available financial statements, in some instances as vet unaudited, the Company's equity in the net assets of non-consolidated subsidiaries and 50% owned com panies at December 31,1965 exceeds the carrying value of the Company's investment therein by approximately SI.500.000. The Company's equity in the net income of these Companies for 1965 amounted to S1.802.000 and dividends of $7,142 were received and taken into consolidated income. On March 31.1965 the business and net assets of U. S. Plas tic & Chemical Corporation were acquired in exchange for Company common shares. The transaction has been accounted for as a pooimg of interests and accordingly the results of the acquired business from January 1. 1965 are reflected in the consolidated financial statements. Results for the year 1964 have not been restated for the pooling of interests since the effect is not material. The 51,877,923 excess of the cost of 42,944 treasury common shares issued and 21,470 shares issuable in 1966 over the amounts paid-in for the capital stock of the acquired company has been charged to capital in excess of par value. Under the acquisition agreement up to 64,414 additional shares of the Company's common shares may be issued to the tormer shareholders of U. S. Plastic & Chemical Corporation dependent upon the earnings of the acquired business during the five vears ended December 31,1969. 2. Pension plans The Companies' contribution under their several trusteed pension plans amounted to $3,000,000 in 1965 including 57CO.COO for past service costs and interest thereon. The unfunded past service costs underail plans at December 31. 1964 approximated $8,500,000 which reflected a reduction of $7,700,000 as the result of die recognition in 1964 of appre ciation .n the common stock investments in one of the trust funds. In 1965 at the direction of the Company, the Trustee sold a sufficient number, of common stock investments to realize the $7,700,000. If payments on unfunded past service costs continue at the rate of $700,000 per year as was paid in 1965, the unfunded past service liability of $7,500,000 for all plans as they presently exist will be completely funded in fourteen years. 3. Income taxes The Company provides deferred income taxes for the excess of guidelines depreciation claimed for tax purposes over book depreciation, estimated taxes payable upon eventual transfer of earnings of consolidated foreign subsidiaries to the parent company, and deferred compensation. In the balance sheet the provisions for the first two items are included in deferred taxes and the provision for the latter item is netted against the related liability account. 4. Notes payable to banks Under the Bank Credit Agreement the Company has agreed not to pay cash dividends or make other distributions on common stock except from consolidated income after December 31. 1962, plus $7,500,000 and to maintain consolidated net current assets of at least $50,000,000. At December 31, 1965, consolidated net current assets amounted to $92,817,750. Of 585,130,527 consolidated earnings retained in the business at December 31, 1965, 567,256,652 was not available for cash dividends on common stock under the dividend restriction. Interest on the notes is at the "prime rate" in effect at the beginning of each fiscal quarter and at December 31,1965 was 4%%. Under the Agreement the notes outstanding on November 1, 1966 can be converted into term notes, 50% of which will be payable in nine semi-annual installments commencing May 1, 1967 and the balance on November 1,1971. 5. Inventories Inventories aggregating $4,549,592 are stated at cost on a last-in, first-out basis which is less than current replacement cost. All other inventories are stated at the lower of average cost or market 6. Stock option plan During 1965 under the Company's stock option plan for officers and key employees, options on 1,000 shares were granted, options on 2,700 shares were terminated, and 21,750 shares were issued from treasury stock on exercise of options at prices ranging from $34 to $61 per share. At December 31, 1965, options covering 47,050 shares were outstanding and 39,420 shares were available for future grants at 100% of market value at date of grant Options granted prior to January 1, 1965 were at 95% of market value at dates of grant and the 1965 option was at 100% of market on date of grant Options granted prior to January 1, 1965 are exercisable over a period of seven years from dates of grant and the option granted in 1965 is exercis able over a five year period from date of grant The $103718 excess of cost of treasury stock over the proceeds resulting from exercise of options during the year was charged to capital in excess of parvalue. 7. Commitments and contingencies The 1966 rentals on properties operated by the Com panies under long-term leases will amount to approximately $1,700,000. In addition, the Companies are required to pay taxes, insurance, repairs .and maintenance and alterations under certain of die leases/ The unexpended balance of open fixed asset expenditure authorizations at December 31,1965 amounted to $31,047,066. The Company has .guaranteed $5725,000 indebtedness of 50% owned companies and other corporations. The Company is defendant in a civil action in which the plaintiffs allege breach of a management assistance contract and are seeking damages in a substantial amount The Com pany and its legal advisors believe the suit to be without merit 1 1 ! j j I | j j Consolidated Balance Sheet December 31,1965 and 1964 (See accompanying notes.) Liabilities Current liabilities: Federal income tax.............................................. Other accrued taxes............................................ Accounts payable and accruals other than taxes. Advance payments received on contracts.......... Term debt due within one year........................... Total current liabilities........................ i 965 S 2.137.403 3.386.00" 37.917.667 3 084,158 872.213 4".397 453 Term debt due after one year: Notes payable to banks due November 1,1966 (Note 4). Other................................................................................ 1 Deferred compensation (Note 3)........................................ .'C.------ -i 2.( Deferred income taxes (Note3).............................. '......... Total liabilities..............................................'1............ 30 000.000 4 251.686 34.251 636 1.367.956 1 7 02",163 90 044.253 1964 $ 4,087,573 3,257,372 28,488,014 3,358,056 481,401 39,672,416 27,000,000 1,051,758 28,051,758 1,278,338 5,205,447 74,207,959 Stockholders' Equity;, Cumulative Preferred Stock, $100 paryalue: .. .- ~i- . > --2. .j Authorized 300,000 shares; is'sued150,000 shares, 4% Series^'.' j 15.000 000 15,000,000 Common Stock, $10 p^r value:; '" Capital in exc^jb^Earvalue (Notes 1 and 6);..... Earnings retainesdlnjthebusiness (Note4)...................-`--`A- ! i 1 Less Common Stock held in treasury: 21,470 shares issuable in 1966 as part of consideration for dom-.l pany acquired .in 1965 (Note 1}.............1... .Tl'<3* -j Other shares, at cost (42798 shares at Decemberjil,1965) .^. J Common stockholders'-equity....... Total preferred and common stockholders' eqiiity. .7^22,] 23.175.940 47 511.233 85.130.527 155.617.700 2.498.956 153.318.744 168.318.744 S258.363.C02 23,175,940 49,492,874 78,174,173 150,842,987 . ; U;080,969 * 146,762,018 . 161.762,018 $235,969,977 " ' *.... .. * * - _ . - *' "n '-`-k'/iiv* j - -1"4s:4 FOLD OUT FOR Financial Statements Koppers Company, Inc. and Consolidated Subsidiaries Five Year Financial Highlights A// s in thousand, except per-share information and number of stockholdersI 1965 1964 1963 1962 1961 Revenue from sales and other income.... Income before income taxes................... Income taxes........................................ Net income......................................... Earnings per share of common stock outstanding at year end...................... Dividends declared and paid, per share ' of common stock............................... Total of all taxes.................................... Taxes per share of common stock............ Number of shares of common stock outstanding at vear end...................... Number of stockholders at year end......... Earnings retained in the business............ Gross addition to fixed assets and investments ...................................... Net book value of land, buildings, equipment and timberlands................ Term debt due after one year................. Wages, salaries and pension expense....... Materials, suDDlies and services.............. Working c lpital at year end..................... 3ook value per share of common stock at year end......................................... S3-3 80S jin.ju l 57.339 512.052 55.03 52.40 " - *+i ir _->t* 55.21 2.275 15 6G6 55.057 529 11 -3 584.3<'4 534 232 5"; 02 0 5233 4 33 ^ v 2 o*o 4 $336,871 $18,452 $8,502 $9,950 $4.21 $2.40 $14,639 $6.59 2,222 16,143 $4,002 $14,969 $87,466 $28,052 $89,324 $209;696 $81,541 $66.05 $295,158 $14,154 $6,872 $7,281 $305,696 $13,823 $5,998 $7,825 $274,446 $12,952 $6,231 $6,721 $3.01 $3.21 $2.67 $2.00 $12,685 $5.72 $2.00 $11,557 $5.14 $2.00 $11,666 $5.08 2,219 15,778 $2,219 2,248 16,267 $2,682 2,296 16,394 $1,526 $17,980 $13,125 $21,268 $87,545 $22,738 $83,290$177,865 $71,449 $87,923 $29,665 $82,626 $190,234 $78,332. $92,405 $31,031 $83,301 $159,102 $73,775 $64.44 $63.19 $61.52 Koppers Company/ lncv and Consolidated Subsidiaries Consolidatea Balancs Sh)66t December 3~, 1965 and T964 (See accompanying notes.) Assets Current assets: Cash ................................................................................................ Accounts receivable less allowance of $446,639 for doubtful ac- . counts in 1965 .......................................................................... 1965 S 7.993.5:2 77.425.673 Inventories (Note 5): Product inventories including work in process.................... ... Raw materials and supplies.............................. :................... Prepaid insurance and taxes.......................... ............................. Total current assets................ ....................................... 1 1 43.342.010 9 422.95" 1.530.991 140.215.203 Investments at cost less reserve: Investments in non-consolidated subsidiaries and 50% owned' comDanies (Note 1)............................................ ............ 1.1.. Other investments (Current value at December 3T, 1965-- $11,249,COO) .............................................................................. ! 1 Notes and accounts receivable due after one year............................ ... : . j Fixed assets, at cost: .. Buildings and equipment . 7.'............................ ......... ............. Less accumulated depreciation'........................................ d * .! ` '- tTferiT;''." Standing timberand timberiands, less accumulated depletion.. . ** *i Land........ v.\V.................................................... ........ ...j Intangible assets, less amortization.................................... 'i ; ' ' '- " -- - /V i ; Deferred charges................................................................................ ................. : 9.641.613 7.895.524 13.8^5 661 31.382.798 220.337.444 143.173.412 77,159,032 1.471.576 5,673.049 2.180.365 86.484.522 230.479 1S64 $ 8,643,806 59,866,131 40,833,951 9,669,333 2,200,166 121,213,387 11,550,098 6,226,281 7,987,997 25,764,376 232,514,630 152,833,036 79,681,594 2,010,529 5,773,733 1,141,257 88,607,113 385,101 > } V ; j 'V 4 i j ' : .`V i 4 S253.363.002 $235,969,977 ... . 7 ; / a * ** :,,x Financial Statements-- Consolidated Statement of income & Earnings Retained in the Business Years endec December 31,1965 and 1964 (See accompanying notes.) 1965 1964 Net sales........................................................................................ 53 S C09.3"2 S334,817,069 Operating expenses (Note 2): Cost of sales.......................................................................... Depreciation and depletion................................................ Taxes, other than income taxes............................................ Selling, research, general and administrative expenses including special research charge in 1965 .................... Operating profit 295 ""'a. 153 10 4,36 809 6 "35 42" 40 32-' 085 353 310 4-4 IT 699 3n3 261,287,111 11,918,007 6,137,700 37,733,032 317,075,850.; 17,741,219r Other income: Dividends (Note 1), interest, etc................................................ Profit on sales of capital assets, principally timber properties. Miscellaneous, net.................................................................... Interest expense................ ...................... . Income before provision for income taxes. 5 6 1 ;-;40 040 2 7*~ Vr, 20 jq1.106 75" :9 3Q0 45" Provision for income taxes: . X Federal (Note 3)............ f- :\*<z...................... .1. State and foreign.......... ...................................... 3.... I.... - Net income for the year. .. vv. ;v. :>.. * ;v. b 568.3~6 ""0.554 7.338.930 12.05 i 527 Earnings retained in Earnings retained in (Note 1).......... at the beginning or period ; .. . ess of acquired company at January 1,1965 Cash dividends paid: ` On preferred stock, $4.00 per share.... On common stock, $2.40 per share... Earnings retained in the business at end of period (Note 4) '* i '.**'J'*: *'.r - **:*. 78.174 i_3 899.630 91.05.330 600.000 5.394 803 5.994.303 S 85 i30.52" Shares of common stock outstanding at year end. Net earnings per share of common stock............ 2 3'4 79/, S3 03 1,281,165 647,712 125,043 2,053,920 19,795,139 1,343,370 18,451,769 7,675,124 826,627 8501,751 9,950,013 74,171,847 -- 84,121,865 600,000 5.347.692 5.947.692 $ 78,174,173 2,222,032 $421 -v Domesnc and Foreign Arfiiiated Organizations" DOMESTIC S .'. r.:'r _ ! , - ->..% it',?**'- " ~r\)~. i, v-yv., s-.-.'-'j C -- ra-. ` ' 'C a '-\OCCeW C.r'l'-. A-'hr.ir.cil. P-r- a v j-'-Nocoe'? Co--ran'. C 5-nun P:e<`c-~` i. 5 ' (. A Chemica. C. -onrat J C R.'chmjn. ,'4n: _ .---a ,, cec - he-- C a:.- C-rac.->: ~r ! O C-mne"' FOREIGN A-anc-na S 4 -Sarce c-a. Spa." D ;.-a."C ~co f-'.-cn \ a. -- ra-- ; E-s; e-a de p'a?::c.r; v-.nce- -U ra- 3". -.... fCO >;. l r--`- o.................... --: --g-ain-e- tie vuce-a ce C-Me~a a ' v.aceras cei Norte. i. 4. Guatemala Gtv Guatemala \e...... . <-o>e. Ctr'e-a- V.'jnj-r- jv Petfccjimicas A.-gen: ra5 hoppe-- S 4 3ueoos Aire; Arce-ima -'-aoc ;co Klastujn. P-es-fent ae1' .`a v Ccr.'t'ucooo S'gco Copper? S A Santiago. Chile 4-.;-e- Dor^-o iarrain. Ce-e-a.'.Yfanape- - -;->"-a.-.a e M.m-aae-: inca;" : - ? 4 'uo Pau.o. 5-a;- > ; i--.Pr, Directc p-"Mu;er:e j- - "... - -j. jr -me-e-i oi a-- ce-f **' --' -*1 Report or Certified Public Accountants ARTHUR ';\_NU N COM.-ANV ;=r- : =; ' '--a- - i Ire Board or Director; and Stockholder; Coopers Compar.v Inc. We have examined the accompanying consoli dated balance sheet of Kcppers Company. Inc. and consolidated subsidiaries at December 31. 1963 and tne related consolidated statement or income and earnings retained in the business for the vear then ended Our examination was mace m accordance with generally acceoted auditing standards, and ac cordingly included such tests or the accounting rec ords and such other auditing procedures as we con-icered necessary in the circumstances. in our opinion the statements mentioned above present fairiv the consolidated financial position or Kopcers Company. Inc. and consolidated subsidiaries a: December 31. 1965 ar.c the consolidated resu'ts of "eir operations tor the vear then ended \o con-wmitv with generai!v accepted acccunti-c on": riles applied on a ba;is consistent w'th T.at o: me r-eceding vear ARTHUR TOUNG A COMPANY P f.sburgh. Pennsvivar.ia uruarv 21. 1966 Transfer Agents v* r. ra Bu'V w -j" Pi^ovr'-h, pj 15230 Cotrspam A,, -rv \ V U;015 -- p" v T'arc ' V. '.*..`*,roo ~carsN ! 6'or'- Stock Registrars j s.i: -.!. S.m- ? o. Bav 'An. P t*in--gn ?a "'523'? Wi'iir. Cua-ant. T'u;t C --r.a-'. New York .ay 3rc vu.. New v.-'x n V l- ell ; rt.-e-'j. I y\c _ * sauf'' -.'.'j- t* - ' * r Dividend Disbursing Agent Me.lon National 6ar.\ and Trur: Cornea--, v.eilon Square. p t:;hurgh Pa 13230 Companv Vice Presidents LKR'i b CL V-WlNGo v -.-'a. a - ::-;sn i 'r"-'.:- V-S-:--.'-?' "... /* 2 ~-j JC'LGLAi GR'iMES. ,'R. LAG.racer Product; D\ .- y- OHN D IONES L.'OC/Jted Ooerat-or; j L : : NON ;R. 'j;e Cr tr. T C. REELING. !R. L 'actor :r. Cr. j.-rre. - fr jor, a". Orerj:. or > .OH\ E, SPEAR? r-oj.' Deoarrment.i! Vice P.-efl ELGE'.E n "ER. ia " a Cera-- ZO'.-LO '.:a'-E;';;LR ' : ' a- C cr ItR- - r -..j. -- j- ; Zcnr.rzct. ?- 3 v .. .. A - \ v. :-'c ref ra a--.: Cam tract.cn 3,.. F - a my 7-j--cara T'an-cor-at/on Ceot. MAX'C HWISCH - : ' :_a:- _ a >r: I A. HAR7IELL :-a:;:ee-_a 3--: CorPouciion Or `OHS H. h VC5ER 7a- a--;: Cremrca. O.-. L-O.r V 3 ' VCKSC-N *arc Cremrca: Dr.'iron A E. IONES, Manager ' .'CVv-rer; Oerar.'.rrert NICHOLAS RAY '..`e:a. P-ccccj Di\iiion C.'.''CON ,rar arc Cuc---.-.:`i O--. ..o- 3 v vast;'. fr? ree'.-ra a. Ca.r.crsc:. '- O -.. 3 VUL C. v-cCONNAUCHE': 'ar j.-.3 Creciica. 0 .... E. J. v.cGcHEE Sees: P.-r.cccu Or. rsior CARL H. POTTEN'CER 0.-recioor Researcn 1. D. RICE Ere.-ref a Construct.cn 0:v FRED \V. RYS cnstme-rg * Cc.r;;,-cc:;r.r O.V FRANK 8. VARGA r.:ernj::or.ai Op'ira'Jcr.s 3. OTTO V/HEELEY. Maracer 'tar'\e!:ns Department R. G. WILSON' f.r":reer:.-3 i Cc.r-rruc: a.- O.i : zees-. seccettec m. j-'j:- r Decerrof -ji S-mf " --aho '"-3 -j' f `--1 is c\r'.,wi-ve *'e a-._. . ' --.'coe'S. D.' -s - - -7 f- "he Gotam. ~?s r addition f - -ite -esocnsibi e* . --fa.' v.maser j--.-s: ooera:-~.-a \ -- `C me Crr-ioam. ; 'a- --> r mjj a on --e - ar.c C'-rv': v.:-- - -- ----- 7j' ?-o-: D . .- mi- . .. --... ...ecteo a.-, Executive \ .ce Preside.-' o' ~e .-a - -_r yer re a so unce-rcov - - -- " Geof.'i Manager the then ?!i=' cs .e.:*.- ." Cura: rg mz-az-.m,-" r -:~ar cr. a - a-- . "oorar: setter o' i I i I i j : :l: execa::-.-; ajsjnied new Dositiors or reijDORSibritv cum; 1965: ir:-!. R a. C'"pALE5 lomea KcDoe"; A.ce A'rs-der:. Executive Depar:- --,-;rt '* exte-.'ive experte-ce m -.a-ase--e'':. r-arxetirs ar.c cc.mmu- ra; r.; -:s 'esconjibi i'.ies u::' ex--r, OVA' a :;-raC rarze or corpo-: a."d re:a:ionsn;ps. .' ..\ ;> a as E'-acar.'.e Lice Pres-der.t 1 Vij'-v e: >.'i'...'a:ed. a eac ne ... ... ---- 1 a;.on> re:-..-a acir .ra war :re Ccr-can.. a.ul: 3 aCXSON was named a . e cert r :.re Tar ar.c Chemia' 0,v..- c''. ~e will continue to ser.e .. -.ijraae' of Ocerauons ot the Oiv:. r a ; t:c- -mh he has heid . : --e'" ca. i.ce'ati.rrs ........ ra.-' EE ars ALFRED E IOnES was aooointeo . e President ar.d .'.tana^er of Procure ment fer the Ccmpar.v. He had been -Assistant .Manager since 1960. Mr. jones has been associated with r.ear.v every phase of Kocpers purchasing act.-.-ties smee r.e joir.ee the Co"parn. in 19-H LACK D. RICE was assigned to :-e rewiv-estabiished position 01 Cere'a. Sales \taraaer ot the E.ngineennu j- : Construction Division He previous . was Manager or P'ocurement tor ---> Comoanv and hj; been cio-elv as-ciateo .vit.n the Purchasing aspects ,r s.ooners erg iKO'rrs ar.c l On-trucr.n r.usmess ror a r.umoer or vear-' -- ras been with 'he Comoanv "'A') ar.c a i< e Presicon* -.'-i el--' 23 ' I . "V ,> Rickard K. Mei'.on R.cha'c R Me Ion retired iron tne Score O "ec:cr5 cur n.g 1965 conc.uc.na pear- 35 .ea'S it Participation in the c.rechon n reper; arrairs. His persona. ir.voiveTtent and va vied counsel have contributed ----- eas-ran.-. to the C tmpanv s deve-oo- =.jr;rg f,:s parted Geneva. Meiion. I'~a.r--an >: tne ,3oarc or :~e Me-'on Nut n-a. 3a-,< a.nc Trust Comoanv, has a trcrav.r. "dm a runne- >' ous.ness - . .... j--e' -.i --`ou-'e --e --oer nr h s d.rect rescct-sib..: es a",c to a .e v ;-u--.ier ~en the ooccrtun.r. : cem'-ate me-r am'ities > van'O' no; o". 'OaCr'i! 35 C\ : lrui.'-v C "` . ance s:\5nd --w r.vnt I">r.at C STANLE'i N BROWN former Vice President i\opner< Comoam. Inc FLETCHER L. 3>ROW President Ropoe-s Comm:)'., ire FRED C. FOY Chairman ot tne Scare Koopers Comoanv. Inc. CURTIS E. (ONES \ .ce President. Mellon Natrona/ SanR and Trust Company : NE-L.NO :R. rtu'- ANDREW v. \th:eson T \le'!or' and Sort ROSERT H. WcCLINTIC Chairman o: the Board Cordon Lubricat'.ns Comoanv ROBERTS. OELMAN Chairman or tne Board \at:onai Cash Resists.Comoam. NATHAN W. PEARSON Vice Pres:der.t and Governor. T Mellon and ions O. P. THOMAS President Sinclair On' Corpora:on ARTHUR B. VanBUSWRK . .ce President and C-y.ernor. T \leiion and Sons ' 3 Andrew '.V Math-e-cn ... a were e;ec:ed to K< pers Board of Directors \n 19n5, ' a---. :e~t or Smcair 7---.--.tt m --n tne Board-n .-_a-. - i-i;. a-remoer c'--e -- ' .......... tne S'-nc j *- ANDREW W. MATHiESON. of T Mellon and Sons, was .na-ned to the Board in June. Mr. Mathieson was previously with the \\ estmgnouse E-ectnc Corporation. It is w.th deep rea-et mat report the ceatn .n Decent,--- of Wader P Arnold. D -ect." ar.d Executive N .ce P'es.cent or tKe Con-.oanv. Mr. Arnold s ca reer ciosew parace'ed the de velopment and g-owth or -~e present soppers Comnanw a~d n;s unexoected death preceded bv onr. a few hours the piann-. j J lr- ? Arnold presentation of his -tO-iear hoppers Service Emblem. Mr mold s eariv ser.-ce with hoppers included a numoer or p.-sitiors of mcreas.ng responsibilitv m the tnen V. .--c ?-eservmg Division, he was named n:e President m IvM anc Cene'al Manager or the Division the :o..ow:na vear Mr. Arnold was appointed Executive Nice President ot tne Comoanv in 1953. and was electee to the Board m !9*>0 - :r the oast three ve3rs he had served on the Corporate 7-;v.;h P'a.onma Crouo I r~\ -O j \ V 'J \J " Tnese. then, are tn.e mator grout es mat we a:e i.urrentlv using in the con duct or hoopers business. "Recognizing that each company has ; < own indi'.iclua! problems and opportunities. we ieei that the philosophy outI ned in :r;s Report is appropriate tor hoppers at this stage :n our corporate development. 'Thi> operating philosophy i.- not a rigid thing, though, and we will not hesitate to alter or adapt it in response to changing conditions. "However, tor the present, we are convinced or tne basic soundness oi our icurrent philosophy and the Comoarv progress o-'.er the oast several years has ntorced this corn ction. ' U e e\pect honners penormar.ce tnnyjgn the -emamder oi this decade and n the ih~C > to provide tang-bie e\ oer.ce in support oi our present optimism." M-_'VggTJi 21 sW e cu."er:.\ nave large engineering ana constructor oro.ects _rce' a', in the Philippines. -\ustra.ia. Spain, and Chile Seven accitionai projects are under consideration in various other countries around the globe. We base seven manufacturing racilities located out side the L.-fec States, and two engineering and construc tor. ami,ate?. These are jointlv owned with local interests m tne host countries, and thev generallv utilize Koppers exoeoence and know-how. Three or the manufacturing affiliates are chemical and plastics operations, three are wood-treating plants and one is a cement manufacturing unit. We plan further expansion of our overseas manufacturing capabilities. The export sale of products manufactured in our plants in the United States has increased nearly 40 per cent since 1960. Exported products include chemicals, plastics, rein forced plastics, treated wood, tar-based chemicals and coatings, and couplings and container machinery. l 20 HYSTRAS reinforced plastic pipe is delivered to a job sice in the Middle fast. The pipe is being used as well casings in a huge land reclamation project. "a**- r :v.`. koppe-s p'r<::;_: :::v<r be '.-ev-ed r, ;be /. 2/:; n; .\<;r:d i.umpei : jn. resource*. and markets. '.n me .'.ft decatte we rave become mcreasmgiv m. :.\ed :n world .ma--.ets. Tins trend wiii continue, af v.e - ..ccefft^. derive me needs ot overseas iv.ar-.ets and determine wmch --ese needs can be met b'. a Koppers rrc-rfuct o' ttrocess We '--card oar . .erseas befiness as a definite area ot -.Lire growth, and one that will become progressively more important in naturevears.- Some of our most noteworthy overseas operations thus tar have been in the design and construction of integrated stee! plants and of specific steel plant units. The large integrated steel plant at Sregii. Turxev dis eased a: seme iercth in our h'c-i -\nnuai Reoort1 was completed eariv in :m65 and was to--.ail-, dedicated m Wav. Production is increasing stead:!*-. and we are targeted to ormg me piant uo to cacactv over me .next two veers. 3-->ow. ie.'f Suie\C-*-vre<. a; - em--tneo Desuf. \i -ten v.-ice elected Prime Minuter ot 7urke\-sr.a Free C -a- ~tandinn 71 C*?/7It?r. pJrJ.O'pJtt? *n C J/lfJ/is? j Of ij***.;* it the dedication ot the r.t-\v E-eei: .re01 p/jrc I 3e!ow ktoiten iron i- r.in^re" : into a va.-t.-ne rac.-.'e r"u being retmed n Ere"11\ BOr .-leeir'akir.i; moo. "= ~c~ie construction he'd. ' .,,-c t.oa: vsniie the par.e;- .`-ere ;a: s'ac: ".'.m "e i'ancoo:*; or ciua!it\ and cost, the resicemia, market .as .-'jit not reads to accept th:s abrupt departure trom conventional home-building methoc'5. Theretore. :n 1962 we turned our atter"on to reneeratec storage construction, where the high insulating value and ease cr erection or the Koppers panels helped them er ov; cd'C stor."..re; ease i.t. cect s -itne-s -'L;LD.\C ?4\El5 v.o'e 'ecentiv koopers SLIL!2:\C PANELS were intro duced ."to tne market tor structures and rooms where complete control or the environment-temperature. humid ity contamination--is important. The use Of these Clean woms m aerospace work and in practicalh every segment ot industry is expanding rapidly. This huge coid storage warehouse shown below in van.mg stages ot construction; was built in s.ight'v oser tnree months using Koppers SL.TLDISC PANELS in the wall construction ana USIT nearos and columns m the rrimmg s.stem The 3 3 million cubic dot laci.Ttv. operated by the March Cod Storase Corporation oi Indianapolis, will maintain temoeratures irom --33 F to --:03f Our -~.r'.\ ra planning is based r,ea\ iiv on fulfilling expressed or implied requirements of customer>. unci on unique product and process ad vantages or proprietary know-how we can bring to bear on meeting present and future needs....." For a great number of years Koppers has been known 'or its technical capabilities, and for products that are dependable, efficient and of high quality. With the acceler ating changes m technology over the past generation, and w::h the increase in competition for customer attention, it has oecome apparent that more than just superior products a.nc sen, ices are needed to compete effectsveiv m today's ~.a're:olace. It is aiso vitally important to have a keen awareness of the market and its needs, and the wavs these -eecs a'e to be served. Accordingly, we have worked to -tab ;h a weii orzapized. aggressive aooroach to de'.eloo and serve the markets in which we operate. We have accelerated our approach toward complete market planning, using research techniques not only to study the present and future importance of products within each market, but also to recognize and evaluate the social and economic changes that are taking place among con sumers and the national economy. Organizational changes have been put into effect to take promising developmental projects more rapidly through to a fully commercial stage. A marketing program directed primarily to architects and engineers has been under wav since 1960. The program consists of group presentations to architects and engineers meetings are heid each year m 10 key cities throughout the nation/ backed up by heavy advertising support in I Above) "Design Ideas" ior,-rns provide >irst-hand iniormaticn to architects and engineers on the capabilities of Koppers broad range oi buiidinc products , tefu These presentation -t? 2 series oi advertising inserts in leading arcmtect-'S arc ene -eer.ng publications, ar.d direct mailings to me >anr.e e I s.:.; ^ncr'^nit I >re "he -.-ro r:e .ear ,n '-'"jS .\*:n 'j.es 99 ce*': apo*.e * l Two firms that were mer~ec into \ nepers back n me o* T.6 ci '~e keepers cruar.;z?.'..cn wnicn has its or>s:r. sack sn the "920 5. is our abiliS to make nighiv enmr.ee'ed and precision machined metai produos. w-SO Hooper Co moan', and C-t-orge Inc-made us a maior factor in the -ast-growing held o: container machinery,. This Hooper-5wi:r unit produce? ma chines to make corrugated beard and poxes. to pc': the boxes, and to told. slot, and giue them. Our sales ct con tainer machinery have developed strongly in recent `.ear? Our design Know-how and abrhtv tor precision roach ri ng or metai have given us a position ot leadership m me design and manufacture or power transmission coup m.tts These coupimgs are used :n steei plants, paper mills, power pianis. ships, in aerospace test and ground suooort -acu ities. and in anv area or indust.-v where it is necessatv to transmit power from one rotating shart to another Our couoiing1 business has experienced suostantiai a'owth in trte pas: tew vears and we are now increasing our production cacacitv. A new coupling plant is being bu;.': I I a tew miles outside of Baltimore and will be the 'a-sest ij coupling manutacturmg faciiitv m the world. It wi!: be iii completed late in 1966. i Another maior metai product itne--piston a.nd sea.me i --nas--is a good example ot a successful adjustment to cnansmg market conditions. While continuing to sen.e our raoitional industrial and aircrart markets for piston rings we have capitalized on the growing need tor small c am- eter piston rings for diesel engines, a.nd have estab!:sh-d a I major position in that market. And our sealing rings. used i ..n power svstems with difficult sealing problems, have -ound a growing use :n :et aircraft engines since 1963 Above; /Coppers container machinery produces corrugated car tons /or manv izrunar products. c-e.o'.v r :-*> ;** v.'zrc'? arsest rouonns? p'art J'e 'evie'.vrU te b H Cj*nm;n2> e*t . Geneva; Manacer jv le^r'a. '/aracer v?:M P#ocucts G1 .jn in summarv. our metal products sales volume--w:- cb r.ciitces additional products such as precipitators -ans arc sound control equipment--rose to a record level o' -ear:-. $32 million m 1965. This compares to 331 ' rr:\.o.o n : -60 and 522.9 trillion in 1953. NwCper; t? cre<ent'v ;er.nj 3- ~-r *~e 35 ir.c'jvrv arc n$jrrer cassifica* ,on e?tah-..?hed u\ the L 5 Deoar:* r.-z zocds into mis nan\ markets. -? r;uest:cn me v. :$dom crcac'erma ojr man <v ac- tn*o totals rev and ur.:e:a:ec area?. We co :ee< that present decree cr diversification ? ad\ antaceo*-? since ` nm. ides a cecree of insuiaticr. aaa:~?t the erect? o* a _ c er "ecnroiOC'ca: change cr ra**,on -r arv coe nme m a?; rran^ormeo lamtex trom e*sen:.a.\ *i miiitarv supo'ier to an operation serving promising com mercial market? We now see further rapid growth :'* HNSTR^N pipe, which combines a high strensth-io-wemhr ratio, ease of nandkng, and a strong resistance to corrosion. -1-vSv. -. tr n me ,e ac Banner Year For New Construction Order? Mdior enasneenr.s i.nc ccrs:*o::.*:n <--n;rac:s *ece".ec :jr r: :r.tf-.eif nc:ucec SJitC Oxygen fj-uce SOf F!^i< A 3-vessei o'tvgs" -:ee--skins ;nCo oe designed and but.t tor c~e> i Laughfm Steei Corporation at Aiiquicpa. Pennsylva nia. Additional contracts ter new SOf iac,iities were awarded to koppers ov C'amte Citv Steel and bv a European steel producer Continuous Casting Four contracts ior new continuous casting machines were received from Kevsior.e Steei & Wire Company Peoria. III.'. Lactede Steel Company 'Si. Louisi; Caiumet Steei Division of Borg-Warner Corooradon Chi cago); and from a steei firm in Europe. Blast Furnaces Every continuous casting machine designed and built bv Koopers to date is m lulltime commercial operation. These units are successfully casting over ICO different grades ot steel. <oppers ouiit the first three-strand machines m Sor.h Amer'ca ior Lake Ontario steel Company Lid. i LASCOi at Whitby, Onrjrio aoove' ine two LASCO mec-i-es cast more than 4.CC0 heats iover 2CCCC0 tons or steel Curing 7965. A contract ior a new European blast :urnace was received. Additional contracts icr refin ing biast turnaces were received from Pitts burgh Steel Company. Granite C:tv Steei Company, and Youngstown Sheet & Tube ;. conception ot the 3-vessei basic owgen 'tee.ma.s.rg sr.co to oe built tor S Laushim Steel Corporation at Ahouioca ?a Coke Plants A contract ior a new coke piant was recsiv ed I I Horn Dominion Foundries and Steel, Limned I (Hamilton, Ontario). Two coke oven rebuild ing contracts were awarded to Kcocers bv Aian Wood Steel Company Conshohocken. Pennsylvania). I General Construction Contracts were received ior a L'.S. Navv communications station in Australia: missile test stands in Mississippi; and a sewage treatment plant in New iersev. Chemical Plants A new polyethylene plant is being designed i I and buiit at Port Arthur. Texas, ior Sir.ciair- I I Koppers Company. J "We are satisfied that each ni our major areas of activity has signifi cant potential tor future growth. Growth is \ital it we are to challenge and stimulate the able executives upon whom we depend for future success-- Mar.-, people think of corporate growth in term; m. =atisfv:nz gams :n sales and earnings. We feel that an ecual- lv impomanr reason :or growth emphasis is the advantage a growing organization has in attracting and keeping too ther: cecpie. Growth means additional responsibility. Uniess we car. challerge our better people by giving them such responsi ble:'. . T.e more aggressive of them will tend to move awav o meet s.tuattor.s where their full potential is testec In `.i ,,- v; .'.-r " ro '^rv v.:;h the peooie v.r.o d.'e rgk going to move ar.vwnere--who are not, in fact, looking for added 'espcr.s.o:' tv or its concomitant opportunities. <v. tr.e p a>t two vears we have reviewed al! our oper ation.- ha.e sat.stted ourselves that each or our existing z'i :-r..ces and each of the markets tnev serve cl; aa.oc ~-e''e~.'po'er.tial rorgrowth. V.e have been successful in positioning the bulk o: o-r :a.es -r crowing markets. The opposite chart shows that bout 71 oer cent of our 1965 manufacturing sales moved makers that are expected to grow at an average annual -u'e " mer than tn.a: o: 'he naticnai economy. e e- use. 1-1 supers manufacturing sales to continue to -'.nano, at an average annual rate better than the national economy s growth. The increase in our manufacturing sales has helped to 'educe the proportion of our operations that tends to be 'omewnar cyclical. The proportion of such operations is not maior in terms of our overall Company, and is expected to continue to become smaller in future years. oi Forest Proci'jct; 7 ~e ceve opmen: or markets tor hoppers ;orest products illustrates how the Company has grown within the frame work of a traditional area of operation. We ;n!l perform essential!,- the same function: upgrading the already fine .haractensf.es o: natural wood to make it more durable, tv re versatile, and therefore a more useful product. 8y in- pucina a number c: new wavs of doing this, however. we have added 528.T miiiion to our rorest products sales -i.nce t ;6i.' and have nea'lv doubled cur 7935 volume. Creosote has been, and remains, our most effective and me-proven preservative tor wood. There are. however, a -umber of 'equirements for treated tirr.oer. particularly in -~e cors"uc:;on held, that cannot be most successfully --e- bv ceosote-treated wood. SLLk OF KOPPERS MANUFACTURING SALES MOVING INTO GROWING MARKETS . x ^ 2'. . i_.N .Gr -'O ..,5 s'Mi, act-,, r.nc sales ' T CWmvaC ;nOi_S'RlcS ARCHITECTURAL CONSTRUCTION j Sv-utures Hull's o*ants. etc . 1 PaaCs. sewers. ere. [ I CHEMICAL a RLB3ER 5 30 2 v.sLL'CN PLASTICS II S l transportation | ' m LL'CN .RON 4 STEEL r:i`T!c5 ELECTRIC 4 TELEPHONE :Of nOPPESS total 1965 MANUFACTURING SALES jv, ica/> aiasg^sa LUMBER | $ $o milL-on *s i TEXTILES Isa* M.LLICn agriculture s 2: m.lliOn a mining UTILITIES SEWER i WATER ;s 2.7 -.IILL'CN -~Ffl I I iS 2 MILL,ON 1 MISCELLANEOUS -5 * 6 .MILLION' I '0TAL MANUFACTURING SALES i >ZT 9 m.L.IOn LEGEND MAa.vE"; CROWING AT a RATE :4f*ER THAN V.ER*CE GROWTH EXPECTED S0R s*T C`-H EEDnCm'- C'.SR n\' *) tEARS 4 5-j ANNLALL'.' ^^R' i wvC''InC AT X RATS 5 LOWER *'ld :"4S W = --iGc EXACTED ?CR naT'Gnm. ECOn.v> C'.ER NEXT ') YEARS 5V 10V. isv* . r : ..........att'a. -re- reread a-:.: --j zr.t.y.r.z ......---r: a.no Teate.: . i n ."j ' at: --ate'-a - xopperv Comparv s .now m a strong competitive ros-tinn .n >acn nt it; ruior rmocuct tines. W.; j-e less vulnerable *-> '.ve.ioai changes man we were 10 or e`.e.n 5 `.ears ago. and are aoil orenared to meet the recuireme.nts ot the markets we serve and the demands ot the grow me national economv We are pleased with the overall growth potential or each or our important product iines. The outlook tor the future is good. We believe we will be able to report another earn in notn sales and earnings in 1966. The Companv s progress wiil be sustained bv more than S-t5 million in new capital investments planned tor 19b6. This s a 50 per cent higher investment levei than in anv preceding vear in our histon. We are making heavv new investments m thermoplastics through the Smciair-k'occers partnership. We are expanding our caoacitv to produce couDlmgs and oiston rings: ""creasing our wood treating caoacitv. particular;', tor the reiaciv elv new clean CELLON process, expanding several or our chemicai lines and our reinforced plastics capacity; and are studying several new overseas investments. civi; r\r Leaccrh:'':: me; Crov kvipcers nas been and :s being operated within a tramework it certain basic pohev decisions ~hese decisions concern '..vti -".atters as emorjsis on Isacersnip. growth, Giversmca- n marketing ooe.otation. and international business. P.viicv decisions are. or course, aiwavs subiec: to change. _>; a- products, technology and marxets wiil change. 3ut .vithm this tramework ot change, the Company is guided and moved tor.varc r.-. an underlying set of principles and poiiC;es hat mav be characterized as an operating philosophy. ' v-uen the paiar.ee of tms Annual Report is concerned w:tr hoppers operating philosophy. it is on -he bas-'s or the thinking outlined in these pages fra: we expect hoopers to reahze its tu!i potential as if moves -nto me last th.rd ot this ce.ntun. We hope this information -v.Ii help vou to a more complete understanding of our Conpa.ov and .ts goals Fur t.ne isoard or electors. Continuing eicar-ion- or CfUO.V wood-lrejtir? racii'tiej new Montgomery A a unit show> a: too meet evoanu.og marve;.I'or CclFOv vv-oii -Setov Over 5'...CO Cfl-Ov-t.-eated seats were g-eci :n ;.ne -w itidrjrr -- Ja - ;a F-ed C. Fov. C.ha..--i.m F Svrom p-e--.te''t