Document 23OwqzRMGBRRB6k9djq47G35

univ. of A' mm u-oFi. DUPS 2950 - APR*12195f - BUSINESS Urn, 'JVJVUiAL J\fPORT FOR F B E TEAR E N JO E Z> MECEMJ3ER TMIRTT-FIRST 1940 m u.5 J= zi ix t*mm 1 if CRANE CO. 836 SOUTH MICHIGAN AVENUE Annual Report FOR THE YEAR ENDED DECEMBER THIRTY-FIRST 1940 CR AN E CO. 836 SOUTH MICHIGAN AVENUE Chicago CRANE CO. DIRECTORS John B. Berryman, Chairman Arthur O. Choate Sydney G. McAllister J. I-I. Collier P. R. Mork A. F. Gartz, Jr. Charles B. Nolte F. R. Lillie William R. Odell Mark W. Lowell E. A. Russell Charles B. Nolte. J. H. Collier.............. C. R. Crane, II......... P. R. Mork............... D. G. Park............... J. L. Holloway. .. . Walter Evensen. . . F. H. Kaiser.............. I. A. COTEIRIN............. W. H. Winslow, Jr. L. E. Baker................. C. W. Dittmar......... OFFICERS .................. President ........ Vice President ........ Vice President ........ Vice President ........ Vice President .................. Secretary ................ Treasurer ........... Comptroller . Assistant Secretary . Assistant Secretary Assistant Treasurer Assistant Treasurer STOCK TRANSFER AGENTS J. P. Morgan & Co. Incorporated Wali and Broad Streets New York City W. E. Peterson, Transfer Clerk Crane Co., 836 South Michigan Ave., Chicago, Illinois REGISTRARS OF STOCK The Chase National Bank of the City of New York Pine and Nassau Streets New York City Continental Illinois National Bank and Trust Company of Chicago 231 South LaSalle Street Chicago, Illinois 2 ANNUAL REPORT To the Shareholders of Crane Co.: This Annual Report covering the operations of your company for the year 1940 is presented by the management with the approval of the Board of Directors. FINANCIAL REVIEW Statements of Profit and Loss and Surplus for the year, and a Balance Sheet as of December 31, 1940, for the company and its United States sub sidiaries consolidated, together with statements reflecting the results of opera tions and the net assets of the subsidiary companies located in foreign countries other than France, and a certificate of Arthur Young & Co., independent public accountants, are shown on pages 8 to 13. In view of the European conflict and regulations imposed on transactions in the currencies of the belligerent countries, the results of operations and the financial condition of subsidiary companies located in foreign countries have v been excluded from the consolidated statements except that the investments in . such companies are carried in the Balance Sheet at the lower of cost-'or* Book value and the Profit and Loss Statement has been prepared in a manner to illustrate what the Consolidated Income would have been for the year if the Net Income of the subsidiary companies in Canada and England had been included in the consolidation in the manner customary in previous years. The amounts quoted throughout the narrative of this report are for the most part, and in all instances except where otherwise specified, on a basis of consolidating only the figures of the United States companies. CONSOLIDATED PROFIT AND LOSS AND SURPLUS: The Consolidated Profit and Loss and Surplus Statements of Crane Co. and its United States subsidiaries only are given for the year 1940, together with a Profit and Loss Statement for the year 1939 prepared upon the same basis of consolidation. The Profit and Loss Statement shows a net income for the year 1940 of $5,134,849.95 equal to earnings of $1.77 per share on the 2,348,628 shares of Common Stock after allowance for the dividend requirements of the 192,803 shares of 5% Cumulative Convertible Preferred Stock. This net income includes dividends received from foreign subsidiaries in the amount of $374,345.04, and is comparable to a net income on the same basis for the year 1939 of $4,444,194.38, including dividends received from foreign subsidiaries in the amount of $900,000.00. The net income from operations in the United States for the year 1940, exclusive of dividends received from foreign subsidiaries and after provision for dividends on the Preferred Stock, amounted to $1.61 per Common Share compared with $1.09 for the year 1939. The Consolidated Surplus of Crane Co. and its United States subsidiaries at December 31, 1940 amounted to $10,788,943.80, of which $1,514,886.08 is allocated as Capital Surplus, leaving $9,274,057.72 as Earned Surplus. This compares with a total Surplus of $9,038,971.06 on the same basis of consolida tion at December 31, 1939, of which $7,502,118.28 represented Earned Surplus. 3 Depreciation: ' & * The amount charged to operations in the United States for depreciation for 4 1940 was $1,870,901.19 compared with $1,805,747.71 for 1939. The charge-off % for depreciation of machinery and equipment is established on a basis of the ; estimated life of the individual item; these items are reviewed annually and y the estimated remaining life revised where deemed necessary. The provision* for depreciation on buildings and structures is computed at rates established from the experience of this and other companies for the various types of con struction. This has been the general depreciation policy of your company during recent years. i Taxation: During the year 1940 the company paid or accrued in combined direct taxes of all kinds in the United States a total of $3,753,330.95, compared with $2,905,745.92 for the year 1939. These taxes for 1940 were equivalent to $1.59 per Common Share compared with the net income of $1.61 per Common Share. No provision has been made for Excess Profits Tax in the United States on the Earnings for the year 1940 as it appears that no such tax will be assess able. However, this tax may readily be a material amount for 1941. The serious effect of the increasing tax burden may be better realized when it is appreciated that the total direct taxes paid or accrued by the Canadian and English subsidiaries for the year 1940 amounted to $1,765,688.70 equiva lent to two and one fifth times their combined net income of $801,716.68,compared with taxes of $683,989.74 equivalent to two thirds of their combined net income of $1,036,822.56 in the year 1939. Dividends: A total of $2,842,917.40 was paid in dividends during the year, consisting of the regular quarterly dividends of $1.25 per share on the 5% Cumulative Preferred shares amounting to $964,015.00, and a dividend of 80< per share amounting to $1,878,902.40 paid on the Common shares on December 23, 1940. i CONSOLIDATED BALANCE SHEET: financial Condition: Current assets of Crane Co. and its United States subsidiaries amounted to $50,170,326.62 at December 31, 1940 and current liabilities amounted to $9,395,537.97, reflecting a net working capital of $40,774,788.65, of which $6,224,891.13 was in cash. This net working capital shows an increase of $1,629,874.78 from the comparable position at December 31, 1939. The ratio of current assets to current liabilities was 5.34 to 1 on December 31, 1940. Your company ow'es no overdue accounts or obligations and has no bank indebtedness. Inventories: Inventories of Crane Co. and its United States subsidiaries valued at cost or market, whichever was lower, amounted to $30,839,438.29 at December 31, 1940, an increase of $7,102,059.00 over the comparable amount at December 31, 1939. 4 The increase in inventories during the year reflects principally increases in quantities, though there were some increases in values arising from in creases in material prices and the normal adjustment of wage rates. The increasing demands of customers, due particularly to the requirements of the National Defense activity, necessitated greater quantities of finished product and product in process of manufacture; and a greater supply of raw materials was necessary to properly support the higher operating level. Open commitments for raw materials, made in the ordinary course of business, amounted to approximately $1,635,000 at the end of the year. Prices thereon were as a whole somewhat below current market quotations. Investment in Foreign Subsidiaries: The foreign subsidiaries of the company are all wholly owned and are located in Canada, England and France. The investment in the foreign subsidiary companies in Canada and England is carried in the Balance Sheet at cost, namely $12,000,000. The investmont in the subsidiary company located in Paris, France is carried in the Balance Sheet at its book value as computed at December 31, 1939 upon a basis of conversion of net current assets and other assets into U. S. dollars at the then current vrate of 44.54 francs to the dollar and conversion of fixed assets, less accrued depreciation, at U. S. dollar cost at date of acquisition. `"'"r '*" ' ' By excluding the subsidiary companies located in Canada and England from the consolidation and carrying the investment in them in the Balance Sheet at cost the parent company's equity of $2,815,808.48 in their surplus, when computed at official rates of exchange, has been eliminated from con solidated surplus. Also, by carrying the subsidiary company located in France in the Balance Sheet at its equity value at December 31, 1939 the net operating losses of that company to that date and the depreciation in the French franc in relation to the U. S. dollar as it applied to the net assets of the company other than plant and equipment at December 31, 1939 have been absorbed in the Consolidated Surplus shown in the Balance Sheet. These amounts totalled $2,372,877.12, of which $623,538.85 was in respect to depreciation in the French franc. Otherwise no reserve for possible loss on the investments in subsidiaries in foreign countries has been created or set aside from Surplus, it being considered at this time impossible to appraise the worth of the companies at all accurately. The net assets of the companies in Canada and England at December 31, 1940 and the results of their operations for the year ended that date are given on Page 12 of this report. Information is not obtainable in sufficiently reliable and complete form to permit the preparation of current financial statements for the French Company during the year 1940. According to cur rent reports, none of the foreign properties have suffered practically any damage from war activities. The companies in Canada and England are operat ing at high production levels and it is understood that the plant of the com pany in France is operating on a modest scale. Refinancing: During October 1940 the company issued $10,500,000 principal amount of Ten Year 2*4% Sinking Fund Debentures due October 1, 1950, and called for redemption the then outstanding $10,950,000 par amount of Fifteen-Year 3}4% Sinking Fund Debentures due June 1, 1951. 5 PT The 2/4% Debentures were sold at a premium of 1/2% over par which premium offset the underwriting commission of the same amount. The issue carries a minimum annual sinking fund requirement of $500,0U0 par amount of debentures which would result in a residual balance due October 1, 1950 of $6,000,000, whereas the Sl/2% Debentures carried a minimum annual sinking fund requirement of $350,000 which would have resulted in a residual balance due June 1, 1951 of $7,450,000. Computed on a cash basis the carrying cost of the new issue over its term is approximately $1,000,000 less than the carrying cost of the 3/2(,o Debentures over their remaining term, after absorbing as a part of the carrying costs of the new issue all the costs of issuance, including the redemption premium paid on the old issue. The terms of the indenture covering the new Ten Year 2%% Sinking Fund Debentures are in a number of instances less restrictive and more favor able to the company than those of the indenture covering the 3y2% Debentures that were retired. SALES: OPERATING REVIEW The sales of your company and its United States subsidiaries for the year 1940 amounted to $88,477,080.97, being 17.12 percent above the sales of 1939. The dollar sales volume showed an increase for each month of the year compared with that of the previous year. However, the major increases oc curred during the latter months which were affected to a greater extent by the National Defense Program both directly, and indirectly through increased business activity in general. MANUFACTURING : Your company and its United States subsidiaries are operating Eve manu facturing plants; its Canadian subsidiaries four manufacturing plants; and its English subsidiary one manufacturing plant. Improvements and replacements of machinery and equipment have been made in all plants wherever they appeared to be economically sound. Expen ditures for these purposes in the United States amounted to $2,159,010.75 during 1940. Through additional mechanization and higher machine speeds both efficiency and capacity have been increased. All of the plants are being maintained to meet the diversified requirements economically. RESEARCH: An increasing amount of the time and facilities of the Division of Research and Engineering has been required for engineering, testing and development in connection with a substantial increase in the demand for product incorporating special features created largely through the National Defense Program. A number of new lines of steel and brass valves were developed during the year and a number of the company's existing lines of valves were redesigned and improved. Progress also was made on the program for revising product and processes to reduce costs without reducing quality. The most outstanding development of the year in the plumbing goods line was our introduction of high-fired special clay bathtubs, sinks and laundry trays under the trade name "DURACLAY". These products, while only slightly higher in cost and weight than enameled iron, are superior to it and also to the earlier costly and exces sively heavy porcelain products. 6 I EMPLOYEE RELATIONS: i Satisfactory relations between employees and the management continued * during 1940. A harmonious relationship is invaluable to the employees and * the company as a whole, and the welfare of the employees will continue to i receive utmost consideration. LITIGATION: % In United States versus Central Supply Association, et ah, No. 16750 in the United States District Court for the Northern District of Ohio at Cleve fit land, 102 defendants, including the company, its president and its manager of plumbing and heating sales, are charged in an indictment under Section 1 of the Sherman Anti-Trust Act, returned March 29, 1940, with conspiring in restraint of trade in their sale of plumbing supplies. Crane Co. has followed its own individual sales policy and methods since it began to sell plumbing supplies years ago. There is nothing about its sales policy that is or has been secretive or the result of any agreement with others. Accordingly, on May 15, 1940 a joint and several demurrer to this indictment was filed on behalf of the company and its executives on the grounds of uncertainty, duplicity and failure to state facts sufficient to constitute an offense under the Sherman Anti-Trust Act. No decision has been rendered as yet on the demurrer. OUTLOOK ' The majority of the manufacturing departments of the company are now operating near capacity levels. Present indications are that the volume of business for, at least, the first six months of 1941 will be substantially greater than for the same period of last year. However, it is impracticable to attempt to forecast profits or losses, especially since increasing taxes and other uncon trollable costs have become such an unpredictable and important factor. CONCLUSION A comprehensive view of your company and its products both in use and in process of manufacture is presented in the pictorial section following the formal financial statements. Through the latter section it is also possible to visualize more fully Crane's part in the National Defense Program and to better appreciate the importance of its products not only in the construction and maintenance of battleships and munitions plants, but also in the thousands of other industrial plants and construction projects which must function before the purely munitions plants can operate successfully. The Management and Directors welcome this opportunity of expressing their deep appreciation of the loyalty and cooperation of the employees, share holders and customers of the company during the past year. John B. Berryman, Chairman. March 3, 1941. Charles B. Nolte, President. 7 CE > 'An 1H-. AND SljtfSHU vRI' O. > ;?F u M1T } f - CUNSOIIDATED HU ':or the Years Ended Decern' -,ND LOSS *1 A ' !v-ir and IVce'- Dec. 31, Np' Sa;--> C'"-general -aeign .'diar< 'otal .... in ,Ang Se x-ns<> '"it hef Si-". "DOd Provision :c- ivpvn-i-. ion............... . . D'D'N-'. Net ope: :.ring prcA:t ... - . - $_J_ P: " Other income, exe! j.-nvc' of mvidei- v,:d from foreign subsidiaries-- Cash discounts on purchases .......................................... $ 691,272.84 Interest received ........................................................ 37,643.88 Miscellaneous other income .......................................... 90,226.31 $ 819,143.03 Deductions-- $ 8,358,487.41 . Cash discount on sales............................ .........................$ 1,208,917.20 Interest paid ................................................. 389,276.54 Amortization of debt discount andexpense................ 52,271.90 Loss on sale or disposition offixed assets.................. 364,779.77 Miscellaneous deductions ............................................... 11,655.61 Minority stockholders' interest in net income of subsidiaries .................. 53,733.68 $ 2,080,634.70 Net profit (exclusive of dividends received from foreign subsidiaries) before federal income taxes..$ 6,277,852.71 Provision for federal income taxes (no provision for excess profits taxes appears necessary)........................ 1,517,347.80 Consolidated net profit of Crane Co. and subsidiaries in the U. S., exclusive of dividends received from foreign sub sidiaries ...........................................................$ 4,760,504.91 Net Profit of Canadian and English Subsidiaries : Canadian subsidiaries (after deducting taxes on in come; $918,918--1940; $162,742--1939) ............... English subsidiary (after deducting taxes on in come; $689,418--1940; $390,652--1939) .............. 406,994.55 394,722.13 Consolidated Net Profit of Crane Co. and U. S., Canadian and English Subsidiaries .............................$ 5,562,221.59 *Deduct: Excess of consolidated net income of Canadian and English subsidiaries over divi dends x-eceived therefrom ........................................... 427,371.64 Consolidated Net Profit of Crane Co. and Sub sidiaries in the United States, Including Divi dends Received From Foreign Subsidiaries ............$ 5,134,849.95 .8"\ '!/. r>dM7jB3ID $ 589,737.44 33,586.14 78,160.76 $ 701,484.34 $ 6,049,315.72 $ 1,029,738.27 399,621.57 57,047.84 106,941.90 22,606.66 67,973.22 $ 1,683,929.46 $ 4,365,386.26 ____ 821,191.88 $ 3,544,194.38 611,743.96 425,078.60 $ 4,581,016.94 136,822.56 $ 4,444,194.38 See note to "Investments and Operations in Canada and England" 8 CRANE CO. (An Illinois Omnmon) A -v D SUBSIDIARIES IN TFF I, N : TED STAFFS CONSOLIDATED SURPLUS STATEMENT r- the Year Ended O ce nb -: 1940 Capii... surplus !vial : ..................... $ 7,5(UJ 18 28 $1,536,852.78 $ 9,038,971.06 for liic ended December 5,134,849.95 5,134,849.95 Discount on funded debt of subsidiary purchased for retirement ........... 1,912.47 1,912.47 Sundry reserve, no longer required 54,686.52 54,686.52 $12,693,567.22 $1,536,852.78 $14,230,420.00 Deduct: Premium on Fifteen-Year 3^2% Sink ing Fund Debentures retired................. Unamortized debt discount and expense applicable to funded debt retired.. . . Excess of cost of stocks of subsidiaries (consolidated) at dates of acquisition over book value thereof ..................... Net advances during the year to French subsidiary not consolidated..................... Appropriation to statutory reserve for compensation insurance.......................... Cash dividends paid-- On 5% cumulative preferred shares, $5 per share................ ......................... On common shares, $.80 per share. . 109,500.00 $ 415,108.10 1,984.00 50,000.00 964,015.00 ,878,902.40 $ 109,500.00 415,108.10 21,966.70 21,966.70 1,984.00 50,000.00 964,015.00 1,878,902.40 $ 3,419,509.50 $ 21,966.70 $ 3,441,476.20 Surplus, December 31, 1940 $ 9,274,057.72 $1,534,886.08 $10,788,943.80 9 -JO1.: 1' R A rn CCUSQUDA^vry bavaKv F Qt rvxr v : c ^ . -: SUAU- - '2' -.ssjcat' D F BI 7' ' Cash A< 1 Su :lc% . ";-'val'...- S 6.22AS9- -;G haC. 'A .A '6?Ae Le:,,. c^:; - -Vi. cou6..ul w !d '.\c:-;S r*a,; 'V:!.: !: ' Immilurn ' - . p.pat. </3ic;p ana em : - ~alue" ' t! iov,!.:r <v ' . o; .a'.set-- Raw aerial anr supph ' . . Work m process . . . . ............ Finished goods ............................... Due from foreign subsidiaries not consolidated .......................................... Total current assets ................. , 'li.: . >2.5c 30,839,438.29 132,340.72 $ 50,170,326.62 Investments : Investments in foreign subsidiaries not consolidated-- Canadian subsidiary (parent com pany of other Canadian sub sidiaries and English sub sidiary), at cost........................... $12,000,000.00 French subsidiary, at book value of its net assets at December 31, 1939 ........................................ 1,233,675.24 Other security investments, at cost or nominal value (less reserve, $135,167.76) .............. ......................... Other investments, at cost (less re serve, $5,456.12) ................................. $13,233,675.24 36,556.25 190,533.55 Fixed Assets, at Cost: Land, land improvements and leases.. $ 7,846,619.94 Buildings .....................................................$33,960,818.90 Less: Reserve for depreciation .... 12,578,678.65 21,382,140.25 Machinery and equipment.................... $34,920,741.34 Less: Reserve for depreciation .... 18,840,625.58 16,080,115.76 Deferred Charges: Unamortized expense on ten year debentures ............................................. Miscellaneous prepaid expenses and other deferred charges ..................... $ 62,061.99 190,553.25 13,460,765.04 45,308,875.95 252,615.24 $109,192,582.85 10 CRANE CO ;An Illinois Corrcracior ' AID SUBSIDIARIES IN THE -n STAT - S " Al-o- UTITATEP falance sheet--x-cembe* 31- 14 40 l * a Bi l.\TIES. CAPITAL STOCK ANT SURPLt -A' ' <! ABILIT" ,,. T -'.ts pcvaT: -uv: -j.ee:. ~d pay rolls. - . . ............ T a.no o-derc income taxes..................... a ; . Incere?'1 on : ng c debt................ ............. Sink11 Arad due "Vagust 20, 1941 ............ - -'53,846.6'. :'82,628.8; 59,062.50 }00,000.00 cta: . * * *{ L L;r :\^S................. 5 9,395.537.97 < !3e 2' - >khr- rune Debenii. s cue ; 1 . : " :mcO sinking fund pav;r-ents o; ; 2n >>? each year to 194'T- r"' ; ;ssued ana ..^standing.......................... $H/,500,000.00 Sinking fund payment due August 20, 941 shown as current liability above............ 500,000.00 $10,000,000.00 Funded debt of subsidiary company (less $25,000 payment deposited with trustee) ................................. 39,363.00 10,039,363.00 Minority Interest in Subsidiary Companies: Preferred stockholders (par value)................................... $ Common stockholders (par value $668,800, plus equity in surplus $20,741.68) ...................................... 46,600.00 689,541.68 736,141.68 Miscellaneous Reserves and Deferred Credits... 236,596.40 Capital Stock: Cumulative convertible preferred shares, par value $100, callable at $105 Authorized--200,000 shares Issued --192,803 shares designated as 5% cumulative convertible preferred shares............$19,280,300.00 Common shares, par value $25 Authorized--3,000,000 shares (385,606 shares are reserved for conversion of cumulative convertible preferred shares) Issued --2,348,628 shares ................................... 58,715,700.00 Surplus: Capital .......................................................................................$ 1,514,886.08 Earned ......................................................................................... 9,274,057.72 77,996,000.00 10,788,943.80 11 \ $109,192,582.85 INVESTMENTS AND OPERATIONS IN CANADA AND ENGLAND The investment in the Canadian subsidiary, Crane, Limited (Canada), is car ried in the balance sheet at U. S. dollar cost, $12,000,000. The net assets of this company and its subsidiaries, segregated as between Canada and England, are summarized below: : Canada England Total Fixed assets less accrued deprecia tion, at U. S. dollar cost at date of acquisition.............................. $ 5',358,626.12 2,107,480.36 Net current assets at official rates 7,466,106.48 of exchange (See note below). . 5,455,199.75 1,810,271.85 Other assets at official rates of ex 7,265,471.60 change ......................................... 55,926.16 28,304.24 84,230.40 $10,869,752.03 3,946,056.45 14,815,808.48 The results of operations of the subsidiaries operating in Canada and Eng land for the year ended December 31, 1940 (converted at official rates of ex change except that the provision for depreciation on fixed assets has been com puted on U. S. dollar cost) are shown below: Canada England Gross sales, less returns and allowances............... $11,632,043.18 Cost of sales, including selling, administrative and general expenses but before provision for de preciation ............................................................... 9,999,318.37 $ 1,632,724.81 Provision for depreciation....................................... 295,113.10 Net operating profit ............................... $ 1,337,611.71 Other deductions, less other income...................... 11,699.16 Net income before income and excess profits taxes ........................................................................ $ 1,325,912.55 Provision for income taxes........... ............................ $ Provision for excess profits taxes (See note be low) .......................................................................... 451,824.98 467,093.02 $ 918,918.00 'Net income (See note below)...................................$ 406,994.55 5,476,749.24 4,134,374.40 1,342,374.84 149,587.07 1,192,787.77 108,647.72 1,084,140.05 380.357.92 309,060.00 689.417.92 394,722.13 Note : During the year 1940, Crane, Limited (Canada) received from its English subsidiary a dividend of $453,288.49 Canadian dollars (equivalent to $398. 898.70 U. S. dollars) which, being an inter-company dividend, is not reflected m the operating results of the Canadian companies. No provision has been made for Canadian excess profits tax ($368,197.83 U. S. dollars) on this dividend, as the company understands that there is under consideration an amendment to the Canadian tax laws which will eliminate the liability for such tax. During the year 1940 Crane Co. received dividends of $374,345.04 (U. S. dollars) from Crane, Limited (Canada) which have been reflected in the con solidated income account of Crane Co. and subsidiaries in the United States. 12 Arthur Young & Company Accountants and Auditors 1 North La Salle Street CHICAGO To the Shareholders of Crane Co.: We have examined the consolidated balance sheet of Crane Co. (an Illinois Corporation) and subsidiary companies in the United States as at December 31, 1940, and the consolidated profit and loss and surplus statements for the year then ended, have reviewed the system of internal control and the accounting procedures of the companies and, without making a detailed audit of the trans actions, have examined or tested accounting records of the companies and other supporting evidence, by methods and to the extent we deemed appropriate. Our examination included tests of accounts receivable by direct cor respondence with debtors and tests of the inventories at locations selected by us, by count and by observation of the taking of the physical inventories. All foreign subsidiaries are located in Canada, England and France. These subsidiaries (wholly owned) were formerly consolidated in the annual reports but have been excluded from the accompanying consolidated financial state ments. The investment in the Canadian subsidiary (parent company of other Canadian subsidiaries and English subsidiary) is stated in the balance sheet at U. S. dollar cost. Separate statements are submitted showing the net assets and operating results of the Canadian and English subsidiaries. The invest ment in the French subsidiary (located in Paris) is stated in the balance sheet at the book value of its net assets (in U. S. dollars) at December 31, 1939. Since that date, reliable figures have not been available. The assets and opera tions of the French subsidiary are not significant in relation to the whole. Owing to exchange restrictions and to other possible influences of the war in Europe, we approve of the exclusion of the foreign subsidiaries from the consolidated financial statements. In our opinion, the accompanying consolidated balance sheet and related consolidated profit and loss and surplus statements present fairly the position of Crane Co. and its subsidiaries in the United States at December 31, 1940, and the results of their operations for the year ended that date, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. The principles of consolidation have been changed as explained in the preceding paragraph. Arthur Young & Co. Certified Public Accountants. Chicago, Illinois, February 28, 1941. 13 CRANE CO.'S FINANCIAL STATEMENTS OPERATIONS 1940 EARNINGS OR LOSSES OF THE ENTIRE CRANE ORGANIZATION BEFORE TAXES. SHOWING PART THEREOF PAID FOR TAXES AS THE SHADED AREA " MILLIONS OF DOLLARS IS,---------------------------- MILLIONS OF OOUA0 IS ZT r ILLUSTRATED AND SIMPLIFIED FORM BALANCE SHEET This is the ASSET section of the balance sheet and shows what we have. Cash, to pay for materials, wages, taxes, etc. $ 6,225,000 Due us from customers who bought our goods $ 13,106,000 Raw materials, supplies, finished and partly finished goods on hand $ 30,839,000 Land, buildings, machinery and equipment used to manufacture and distribute our goods, and investments in our foreign companies $ 58,770,000 Bills, etc., paid in advance $ 253,000 Total $109,193,000 This is the LIABILITY section of the balance sheet and shows the amounts owed and the stockholders' investment. To those whom we owed for materials, wages, taxes, services and the like $ 9,396,000 To those who loaned us their money $ 10,039,000 The stockholders' investment including earnings left in the business THOUSANDS Total NUMBER OF STOCKHOLDERS $ 89,758,000 $109,193,000 BEHIND THE FIG rJ1ODAY, when American industry * being geared up to meet one of most abnormal demands ever made upoa it, the basic importance of your company; as a manufacturer of products essential to virtually every subdivision of industry; may be realized even more clearly than' in the past. ' Similarly, present circumstances on-; phasize the economic value of an efficient,.: organization with scores of years of ao^ IAL TO THE NATIONAL DEFENSE PROGRAM IA7HEREVER you turn in industry ' " or building construction you find a maze of pipe lines performing essen tial services. Crane's 38,000 different kinds and sizes of valves and fittings is the world's largest and most com plete array of products for equipping these lines. Obviously vast quantities of Crane products are required in the present emergency program--for the Navy and merchant marine, for the piping in plants making aircraft, ammuni tion, chemicals, textiles, and food, for the oil industry and the railroads, for power plants of all types and sizes; for buildings of all kinds, from air plane hangars and administration buildings to cantonments and housing projects for industrial labor. From battleship to bungalow--Crane serves American industry and construction. Stepped-up production programs give heed to workers' health and comfort. In this aviation plant, Crane industrial plumbing fixtures assure adequate and safe sanitation for 24 hours a day. In chemical processing plants, Crane - Equipment meets the severe piping re quirements for handling highly corrosive and vola tile fluids. Night is turned into day with the aid of Crane valves and fit tings installed in this midwest ern light and power plant. A picture commonly tound in industrial plants: Even valve in the piping system says "Cram*." Army and Navy barracks, which are being rushed to completion to house America's defense forces, require large quantities of plumbing and heating equip ment to help keep trainees phys ically fit. Typical Crane installa tions in such barracks are pictured here. MANUFACTURE AND DISTRIBUTION OF CRANE PRODUCTS HPHE more you study the Crane manufacturing and distributing organization, the greater becomes your respect for a company that can pro duce so many things of such essential character, and deliver them wherever and whenever they are needed by: so many people. , Think of the physical units in Countless machining operations prepare the thousands of indi vidual parts for assembly into Crane valves. Drilling bolt holes xn the end flanges of an iron gate valve body. View of a Crane pipe fabricat ing shop where modern equip ment permits the shaping and welding of the most complex assemblies. One of the departments in the design engineering division where special problems are solved. A welding operation on a special assembly in one of the fabricating shops. Like Crane valves. Crane fittings are checked at every stage of production. Here at final inspec tion where each fitting is closely examined, the scrap pile gets the benefit of any doubt. Pouring liquid iron into molds to form die base of Crane porce lain enameled cast-iron. Sandblasting a Crane sink casting to prepare its sur face for enameling. Here the first coat of enamel is applied to the sink casting. The v next step takes it to the bak ing ovens. Finishing clay castings prepara tory to drying and firing them into china closets. Huge grinding wheels smooth and finish the rims of Crane china fixtures. Applying color to Crane china plumbing fixtures with spray guns. Drilling connecting bolt boles in boiler sections. Facing and tapping radiator sections for assembly. typical views in Crane dies, showing the large ume in which valves, fitgs and other products flow t to customers. Locations of BRANCHES IN U. S. AND CANADA Aberdeen . . . .South Dakota Albany.....................New York Albuquerque . .New Mexico Asheville . . .North Carolina Atlanta.........................Georgia Aurora ........................... Illinois Baltimore ............... Maryland Beaumont ...................... Texas Billings...................... Montana Binghamton............New York Birmingham ............. Alabama Boise ................................Idaho Boston ............. Massachusetts Bridgeport......... Connecticut Buffalo.................... New York Calgary.............. .Alberta Camden......... .. .New Jersey Canton ........... Ohio Casper...................... Wyoming Charleston . . .West Virginia Charlotte ...North Carolina Chattanooga . .. .Tennessee Chicago .........................Illinois Cincinnati.........................Ohio Cleveland .........................Ohio Columbus .........................Ohio Corpus Christi ............. Texas Dallas ............................. Texas Davenport ...................... Iowa Denver...................... Colorado Detroit .................... Michigan Duluth.................... Minnesota East Chicago............Indiana Edmonton ..................Alberta El Paso ........................... Texas Eugene .........................Oregon Evanston .......................Illinois Evansville.................... Indiana Fargo.............. North Dakota Flint .........................Michigan Ft. Lauderdale..........Florida Ft. Smith..................Arkansas Fort William ..... .Ontario Grand Island ....Nebraska Grand Junction .. .Colorado Grand Rapids .... Michigan Great Falls ............Montana Greensboro. .North Carolina Greenville.. .South Carolina Halifax..............Nova Scotia Hamilton ....................Ontario Harlingen ...................... Texas Hartford ............Connecticut Hempstead............New York Hollywood .............California Houston .........................Texas Indianapolis................Indiana Jackson .................... Michigan Jackson ..................Mississippi Jacksonville................. Florida Kansas City ............Missouri Kingston .................... Ontario Knoxville ............... Tennessee Lexington ............... Kentucky Lima ............................. .Ohio Little Rock ............Arkansas London ...................... Ontario Long Beach...........California Los Angeles .... .California Macon .........................Georgia Madison ..................Wisconsin Mankato ............... Minnesota Mason. City .................... Iowa Memphis ............... 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Oregon Providence . . .Rhode Island Pueblo ...................... Colorado. Quebec ........................ Quebec?' Reading ..... .Pennsylvania ; Regina ............. Saskatchewan Reno............................. Nevada Richmond ..................Virginia Rochester......................... NewYork Rockford ...................... Illinois Sacramento ..........California St. John's .. .Newfoundland St. Louis ........Missouri St. Paul ..................Minnesota Salt Lake City............... Utah. San Antonio................. Texas San Bernardino . - California San Diego ............ California > San Francisco ...California Santa Ana............ California Santa Barbara .. .California-; Saskatoon ... .Saskatchewan ;; Savannah.................... Georgia'* Scottsbluff............... Nebraska* Seattle ..................Washington' Shreveport ............Louisiana \ Sioux City ......................Iowa ? Sioux Falls . .. South Dakota ' South Bend............... Indiana Spokane............... Washington Springfield.................... Illinois Springfield .. . Massachusetts Syracuse . ............... New York Tacoma ............... Washington Tampa ........................ Florida Terre Haute ............Indiana-] Toledo ............................. Ohio Toronto ..................... Ontario Trenton .............. New Jersey Tucson .........................Arizona Tulsa ...................... Oklahoma ; Utica ...................... New York Vancouver.British Columbia Victoria. . .British Columbia Washington................... D. C. Waukegan ....................Illinois West Palm Beach.. .Florida White Plains . .. .New York Wichita .........................Kansas Winnipeg ............... Manitoba: Worcester . .. Massachusetts r 32 UNIV. OF AEARAMA APR 12 1951 BUSINESS UonrtHY