Document 3JpraXMdvG0djRBdZv9b5pe4D
*
I
PLEAXINHTIBIFITFS
1 BEA-73
1967
Annual Report
' CIAL ^STATEMENTS
--4 4,* L'
Kovioers Comoany. Inc. and Consolidated Subsidiaries J. X *
Five-Tear Financial Highlights
`All inures :n thousands, except per snare information ana numoer >r .;:ocxnotdersi
: 1965
1964
1963
1962
Revenue from saies and other income
-
3373,308
3336.371
3293433
3303.696
Income before income raxes and interest charges.............................
Interest charees................................
Income taxes....................................
Net income......................................
*Earnings per share of common stock outstanding at year end................
-- 35.55" if. ' i
320.497 $1,106 57,339 512,052
319,795 $1,343 $8,502 $9,950
315,392 $1,239 56,372 $7,281
$2.51., ... $240 . $1.50
315,062 $1,239 55,998 $7,825 i $iio
`Dividends declared and Daid. pershare of common stock...........................
Total of all taxes..............................
Taxes per share of common stock...
Number of shares of common stock outstanding at year end.............. .
Number of stockholders at year end..
SI--'1 Si 5. "55
*. > ~
$1.20
$1.20
$1.00
$1.00
$14,124-r\ JI4-.639 ^-$12,685
$11,557
w- * ..
52-86
$2.57
-v*- . * " 4,550-):^~ \,:.4,444
Fc%&rr
.15,6dfe~ :i6,i43 V4;-
4,438 . .
.
15,778
- . -4,496
4 .ySj:?'-: 16,267
Earnings retained in the business^... , S-.2'v'
Gross addition ta.fece&assets and investments .. jjS&pSSilsa-v.. \...' $46.ol'o
Net book value <ggj|^f>uading3,
equipment an^ptferiands...........
-'K&.
-
Term debt due after one year...........
SI lr.^ i36". '<><>
Wages, salaries and pension expense. Si l-.ji"
Materials, supplies and services........ S2"o. '.' f
.. Working capital at year end............. S106.; i:
Book value per share ofcommon stock at year end.......................................
355.'f
.*Rtssdls prior to sg66hat bun restated to refect the twogarone stock split in ManS+lpGSsfjf^rijg
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Consolidated Balance Sheet Decerr.oer ::. :qoo and 1965 (See accompanying notes.)
Assets
sK-
,V`rfa$
Current assets: Cash Accounts receivable less allowance of 5449,071 for doubtful -.- . ...: -.vi^j accounts in 1966................-------
Inventories, at lower of cost or market: Product inventories including work in process
Raw materials and supplies-----
:I1 Prepaid' insurance and taxes , i:.............
Total current assets"
.i,,!V-" -Investments at cost less reserved-4^*' -
!* Investments in non-^pn^it^atefTsutsidiaries
companies (Note
Other investments .(Chi
December 31,1966TT-J ;?ir. Notes and accounts it.
it-
vfcv. Fixed assets, at
If. }>
- /- .Buildings*:
"'-'Dess ai
1965
5 7,993,572
.7?. rM
77,425,673 - -ai-~
43,842,o1 '^9,422,^'$1,530,991-' ^40^15,203^-
, J " >"f
'it" T
t'L[ ,t' . .N --
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-
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Standing di
?>C i * = ^;iwangiblea5a.
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vl'^TiJ^ptes to Consolidated Financial Statements December 31,1966
psira\plts of consolidation
ituemena include the accounts of the Com* ` my|Sird:itl domestic subtidiariei and wholly-owned foreign
`iddJAdsa.aadthe Company's 50% share of the assets and liajjfijrjatffip>7"> and cxpmsn at Sinclair-Koppers Company, a Eta!!5fcii?Sinecl by the Company and Sinclair Petrochemicals,
jyMtrtgdUry of Sinclair Oil Corporation. it*wt available finanunat statements, in some
--***adited; the Company's equity in the net assets ' subsidiaries and 50% owned companies at
^exceeds the carrying value of the Company's c by approximately $1,850,000. The Company's Ibl^acoom at these-Companies focio/oS amounted
' rhf'$15,756 were xeceivcd and taken
solidated stockholders' equity. Of $88,745,648 consolidated earou&V:?
ings retained in the business at December 31, 1966,- $10,799^44^^^?"
was available for cash dividends on rwmrwoi im i - usider'the}?er'-
dividend restriction.. Also at December 3r,"ig66r'tfietO
could incur additional indebtedness of $8,350,000. Ihta*xtoo.ij
notes payable to banksis at the i*primerate* in eSeek'dicthed
of the notes and atDccember.3ti .1966 wasu6%r^ -:
The notes payabfeTto^bsmks ard represented
which areautosnatjejijhyyfiriM'Ble iimtg
time they caisiK aoOTkrte^&d^dtnota^hKw^bbV''
in tes.eqtetif
' "*
jrejhsifccompiaiet were acqmredin exchange for '""" tshartafaitd were accounted for at pooling of"
wtawied m riw hamwi at January
:cmmsdpe|g an&sSjYG
' g5iit53M '*d
in excess of par
?TB
~9^7$8^repreaenting'tbe excess of the-. ~:'..-^3axtaf
iwacdtharq at>d the cost hftreasury shares -^^^anS;)
tjffipiial eCtbc-'acquaedTcompanies. Capital'v,^,^
39<iw''iW redbced. by. $63,590 representing 3i^l^fe^t^gosSderation for a,
" jme^jSaan^j^aa.a pooling of^fg
r .*' .tt* *15
"tv
"trusteed.
fmi
Vtb*;?}
other.
tCOJDC'
-total'
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Consolidated, Balance Sheet December 3:. tgoo and 1965 (See accompanying notes.)
.. i '. '*>' '" '* * `fy*-^- ** . '"** -
Liabilities
Current liabilities:
Federal income tax.
Other accrued taxes Accounts payable and accrualsother than taxes.
_ <k*>
Advance payments receivedon contracts..
\ -. Term debt due within oneyear...............
Total current liabilities;^..................
Term debt due after one year:`V^:Notes payable to banks (No6r 4) - -
5.
Other.
v&&3; Deferredi compensation'j Deferred income taxes!
Total]
S3,
i 66
5137,405;j^8<C6ot: wy
Iii.OOo.i.ii ii)
2.'V)i).-i i
'T.-Vio.-m tj. ! yl ilj
Stockholders' Eqi
Cumulative Authorized^
Common i
. -4*674,6
:-,issued:
*- *" .*
_
: Capatalin >
Zhrnmgs
...
" -.TxsscoxnmdTBstbdf]
; .. faiHirinivrtnrthnlae V:
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rstoclfhrfd
Egg^ V-
v^lssV?'-L?-33
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II1(11IIIII
,3-3.0G0
.*j5.351 ->s. i.648
Il-t.559
I ~2.2! 3306.'''22.050
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-
Consolidated Statement of Income and Earnings Retained in the Business
Years ended Decernoer ji. i960 and 1965 (See accompanvir.a notes.)
Net sales.............................................................................................. Operating expenses (Note 2):
Cost of saies................................................................................. Depreciation and depletion.......................................................... Taxes, other than income taxes.................................................... Selling, research, general and administrative expenses................
Operating profit................................ Other incomer
Dividends (Note 1), interest, etc. Profit on sales of capital assets...
1 0o
1965
$371,009,872
'295,709,153 10,486,809
- , 6,785,427s
Interest expense..;..................................................................... Income before provision for income taxes......................................
Provision for income taxes: Federal (Note 3)........... vi;;. i'-i'ii: '. . ............................ State and foreign......... -------------------------- ------- -............ -`-'IS.
Net income for the year..
Earnings rctained.fi Earnings retairn
companies
Cash dividends On preferred On common in 1965*. .
L.l inning of period';... .VijS
' share fit l966 and $1.20 per share
.-rtlrf"!
Special charge, net of applicable income taxes (Note 6)..... . . . .^
Earnings retained in the business at the end of period........ ..
^___
Shares of common stock outstanding atyear end................................... Earnings per share of common stock...:. ;V........................................... -
Adjusted for two-far-one split of common stock on March 29, 1966
21
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\ " or-'i-'.'T.c ana -r.or *: f.
aid "`oris. Mr. V.inBinKirx .* a masor rssr:r-
n ana ::nanc:a< ;:rc:es snc .".as
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.sn--: ov r.:s sersonai *mv:e::on mat ".o'tsj r.ut i**rv* on tr.c Bnarr. alter reae**.r.-r :r.;: aee ot "o.
JOSEPH 3ECKER
I: <s *.vun ce-p rezr*: mat -vc reoort
*r.eaeatn:n Feoruarv, ' '*'>*>. >!'joseon
3eacer. director ot :ne Comoanv ana
.voria-r'`r.ownea iuc:.onr.v m coal
anc roKine tecnnoioev. Mr. 3ecser
naa b'*-n associates
rCoDpers for
-o .-**ar3. ssr.es .ts -r:?:nat:cn. ana
-"m --.-.rr.t '.*"ars r>*:cr* mat a;;?. Dr.
H**:nr:cn Hooper*. H:s ;ar-rr nar-
i:>iec m.e grower, anc srvetoomenr
: m.e evoroauc: m^m.? .r.custrv r.
\nvtr:ca. '.or muen a Aimer. nr .vas
.mmse:: responsible. In :rm rariv
s.o'i r.e aevpjooea :r.r -viccr/ :ssc
:okc oven :nat >t:u nears r. name--
:ne Koopers-Becser r.en. He was
ran:*a m.anv coxe aven patents
ma r-c^sv^a numerous nor.crs anu
..varcs for -as verx :n :nac r.eic.
Mr. 3f*cser was *.;ce presicer.c ana
enemi munaz^r m" me nnzm.eerrrdi
me Construe::an Dr/jsion m.iu ms
--mr-ment .n .05:. Hr .vas r.amec
*o r.ne Board in :o=n .r.c :**rve-j is
jD*c:ai :onsu:anc :o me Hm.oanv
11'trr ms retirement.
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tzii
7.. ' 'KES
.'Var:.-'.:
D, ;* /v .Vmhol.va K.A-: /-'a
i)t>v\LO Ma:,\r r: <
?. V. Martin
Pvfi C. M:Co.vv^r.i::r;-
r :r inn
D* -
Carl H. ?ott.s*cer Dtr'c:nr : R'sszrrr.
J. D. R:cs
egi7i??rn? :ni Cins:nc:izn Z:::.: "
T. D. T \L3Enec:< 2tiema:i.'.r.z: ^c^'ztior.s
Fra.sk 3. \'\rc,.\ intirnatintn
?\CL X \ Y'fA \ 7nrtst P'uucis 0::-:s:cn
Frank Z. -X Srrinm-.q ir.a >'ijutr\ic::on Oinsim
3. Om `-Vheelsv '.linae'T Marxe:\ni Qtvnnmrr.t
Kippers Company. Lnc.
Board of Directors
,m:z 3r \nd
'i'-lc, X 3rown
Fletcher L. 3\r.'M P-'r.aer.t K-topers Company. Inc.
Fred C. Fov Chairman 'f :r,c Boara K'cpers Company. Inc.
Douglas Grymes Executive Ice placer: cC.-opers Company, i.nc.
Curtis E. Jones ''cc President
Meiion Mauanai 3ar.k :na Ernst Comcary
T. C. Keeli.nc. Jr. `ice P'esident Keepers Company. Inc.
Andrew \V. Mathieso.n `.`ice President and Governor r. Melton and Sons
Robert H. McClintic Chairman of the Board Cordon'Lubricating Company
Robert a. Oelman Chairman of the Board .Vationai Cash Register Company
Nathan W. Pearson tec President and Governor ~. Meiion and Sons
Dr. H. Guyford Steves P'esiaent Carnegie institute of T-.chnology
i O. P. Thomas ! President I Y.nciaiT Oil Corporation
' AV:e Directors
Dr. H. Guvfora Stever. president of Camecte Institute of Technology. was elected to Koppers
3oara of Directors in January, i960. Dr. Stever nas had a distinguished career as an educator, scientist, government otficiai and advisor to industrv. He is a guided missile and space research expert, having served as chief scientist of the U.5. Air Force and as cnairman of the research advisory committee on i missile and spacecraft aerodynamics of the National
I! Aeronautics and Space Administration. 3eiore coming
1 to Carnegie Tech in 1065, he was head of the departments of mechanical eneineering and at navai arenitecture and marine engineering at Massachusetts Institute of Technoiogy. Mr. Douglas Grvmes was eiectea to the 3oard in March. Additional information on Mr. Grymes
: appears on page 3 of the Report.
DOUGLAS GRYMES vance brand
CURTIS E. JONES STANLEY N. BROWN
T. C. KEELING, JR.
FLETCHER L. BYROSt
DR. H. CUYFORD STEVER
ANDREW W. MATHEESON O. P. THOMAS
ROBERT H. McCLINTTC
Basic oxvger. :v.rr.ace 3CF -tee mum:: a > me T newer ot*ocesces. \\V -^timme i*.n1 Amer*.ci'r. ;teei * ::r.oames 'aill icd "** :v.::Iiop. *.Dr.> *: :r;it-ocev:.v.::v.:. meter.: BOF caoacttv :.r. me r.ex: _' vear; at a :m: .: "tore than 3: biiiicr.. We expect Kcpcem to pet a bzaoie -.tar-* of mis business. Koppers is t:te world's leading aesicr.er a:tc builder of BOF punts. In :96b aione. ;:te eigr.t'r. and ninth BOF insinuations aesigr.ed bv ::te Companv were completed ar.c put into operation.. One of t.tese two piants ranks among the largest in tr.e incustrv ana is ex pected to produce over a.c million tons of ingots anr.uaiiv. In total. Koppers has designed about one-tr.tra of a.i the BOF capacifv in the United States. We currentiv .uve three additional BOF plants under construction. These will prcc.uce more than b million ingot tons of -tee: each year.
C ,ntinuous Casting Every major steel producer is giving concentrated
attention today to the continuous casting of steei. Our projection is that the industry wiil 'ouiia ;oo million an nual tons of suer, capacity over the next ao years. This wiil create at ieast 51 billion in potentiai new design and construction business.
Koppers has made and is making major contribu tions to the technology of continuous casting. To date, the Company has built and helped to start up casting machines at sever, piar.ts. Design or construction work on six more facilities involving a totai of 44 casting strands is currently under way. We received contracts for two casting piants in tobo.
Breakthrough in Coke Oven Technology
Koppers is now ottering the American steei industry a r.ewiv designed coke oven that will produce 3o per cent more coke in a diver, time than the iarstest exisiir.tr aver.4
The ovens are part at'our c-nunuine crur -::-. :
researcr. ar.a development wore-: ;c rect:c-`
---
Our researcr. becar. with macnenancn: m.uce-.- .
-mail-scale ovens. 3v m.id-iodb. operations -r-
wav at a fuii-scaie demonstration natter'.' r.vr - -
built at our Kearny. New jersev. piar.t. Tins m.sta.U:..-.
'.tas more than fuiriiied expectations nv nrcducir.a r.ur-'
coke per oven, per day man ar.v nrmr existing w.-r.
installation.
Witn this new oven teennoiogy. w e exoec: to retain
tr.e position of leadership in the cc.-ce over, .business mat
Koppers has had in the past.
Future coke oven business couia be verv -unstar.r.ai.
Thirty per cent of the American steel inaustrv's preset'.:
coking capacity was buiit before 1942. We estimate mat
the industry will invest 31.5 billion in new cokir.u ra
pacity over the next two decades to meet its ironmaxmc
requirements.
Construction Overseas
Our position in the design and construction ot over seas steei piant facilities is a strong one. On the basis of Koppers experience with the most advanced steelmakir. technology in the U.S. and abroad, we foresee continue opportunities for prontabie construction work outside tr.e United States.
One significant project now under fuil-scaie con struction is for Empresa Xacional Siderurgica. S.A. ENSIDESA). Spain's largest steei producer. Koppers de signed and is helping to build a new blast furnace, a mil lion ton-per-year basic oxygen furnace piant and an : ostrand continuous casting facility at Aviles for E.\'S IDESA.
During the year. Koppers was retained by the gov ernment of the Republic of South Korea to form and lead an international consortium and to prepare a plan, including financing, for the first phase of an integrated ;:ee! plant with an ultimate caoacity of one million mr.-.
O. on
Our ;aies of forest prcduc:; nave mors than ccun.ec ::-.e past five vears. rising from S40 million in : no: : 536 rr.iiiion in :o66. A further increase is expected .r. : go~. This growth rate has been about twice that :-f t.te iumber and wood products industry as a whole curing the same period.
This dramatic increase was brought about by me high growth rate of our new processes and new products, with particular emphasis on expanded saies for commer cial and industrial construction. Steadily increasing sa.es of creosote-treated wood to our traditional markets ar.o a resurgence in investment by the raiiroad industry have aiso played a substantial roie in the growth of forest products saies.
We have spent S~ million over the past two years to buiia new pressure-creating-plants and to modernize ar.d expand existing facilities. Mechanized material handling equipment has been installed to reduce operating costs, to speed up delivery, and to improve service to our cus tomers. Much of this capital spending has been for fa cilities and processes used to manufacture new products that are experiencing rapid growth.
New installations at two of our piants have been built to pressure-impregnate wood by our cellos treat ing process, which leaves the wood virtually unchanged from its natural state while providing long-lasting pro tection from decay ana termites. We have aiso doubied our capacitv at an existing facility. Our cellos business has been doubiing approximately every eighteen months. To assist in developing the market still further, two com panies have been licensed to use the cellos treating process.
This treatment has opened up new uses tor wood, and it has recaptured a number of oia uses where wood had been repiaced by other materials. Cellos treated wood is being used in stadium seating, roof decking, boat marinas, framing for swimming poois. the highway held, outdoor furniture and utility poies.
With a national emphasis on land "beautification." the use of pre-wired. cellon treated utiiity poles, elec tric transmission structures and street lighting standards should continue to expand. All are avaiiabie in coiors to biend with the surroundings.
We have mcr-asea our xpacuv to produce noncom fire-pro tectec wccc by per ter.t ir. the oast two vears. Xon-ccm saies ac-our.t for about hail of ail the fire-retardant wood usee in the U. S.
In 40 states, insurance companies now accept the use ot non-com wood in r.igh-nse aoartments and office "Hidings witr.out insurance penalty. Four major codes re -`gr.ized nationally as "model" building codes, as well as .ie local codes in most major cities, accept non-com as a tull alternate to other non-combustibie materials.
Since entering the field in :c6-a. Koppers saies cf giue-iaminated wood beams and arches have increased by 30 per cent. Where the architect wants beauty, long free spans, dramatic effect, corrosion resistance, strengtn and flexibility of design, he has turned more and more to laminated timber construction.
With the recent completion of a new cellon treat ing installation at Morrisville. X. C.. we have for the first time combined at one location the capability to pressure-treat and laminate such products as beams, arches. lighting standards and electric transmission struc tures. The major markets for these products are the utility industry, chemical-fertilizer storage and processing facil ities. and commercial and institutional structures.
The use of .YO.Y-COM wood in race track stables and riding academies is growing rapidly. Here it has been used in a new 50-stail stable at Maryland's Laurel track in the roof, doors and stail kickboards.
*? sr* ^ro<zy,
.i:i oC minion mvesimon: oro^zr:
~:-r :oniinned ^ou::h
Koppers metai procuc:s sales nave r.ear:v acumen iince : geo. Another saies gain is expected in :c6_.
To meet the demands of the growing markets in this segment of our business, expansions and improvements totaiing over S3 million have been carried out at our metalworking facilities over the past two years. We have invested in machinery and equipment :o reduce costs, to increase capacity and to maintain high quaiitv standards. In me tnree lines that account for two-thirds of the Com pany's metal product saies -- power transmission cou plings. piston and sealing rings and container machinery -- we have built or are building new or greativ expanded production facilities.
These are the major developments in our metai products business:
.Tern Coupling Plant
Ground was broken near Baltimore tor the world's largest flexible coupling plant. When this piant is in full operation early in 1967. it will increase our capacity to produce couplings by 50 per cent.
Couplings are used to transmit power from one ro tating shaft to another, and to compensate for shaft mis alignment. Koppers is a world leader in the manufacture of couplings, with particular strength in those used in machinery and equipment operating at high speeds and under demanding conditions.
majority interest in L'Inaustr.aie S.p.A.. a leading Ital ian producer of medium- and large-diameter piston rings used in diesel engines. This new affiliation will enable us to participate in the growing European market for smalldiameter diesel engine rings.
Greater Container Machinery Cabacitv
We have undertaken a 50 per cent expansion of our capacity to produce container-making machinery. This expansion was started late in 1966 ana is expected to be completed in the second naif of 1967.
In this field, the Company is a leading producer of corrugating and box-making machinery. This product tine includes machines to convert kraft paper to corru gated board and machines to fold, glue, slot and print .the corrugated board to form corrugated boxes. We are introducing major innovations and improvements in our corrugating and printing equipment. An annual growth rate of about 6 per cent is foreseen for this machinery, a growth that we believe will be world-wide and rela tively non-cyclical.
Expanded Piston Ring Facilities
We are adding 30 per cent to our capacity to pro duce piston and seating rings. The new facilities will also be in operation early in 1967.
Koppers piston and seating ring business has been growing since 1961 at the rate of :g per cent per year. Saies of our small-diameter rings, which we developed for use in high-speed diesel engines, have increased 37 per cent annually in that time, and we have become a prominent supplier in this market. Other rapidly grow ing ring markets include sealing rings for jet aircraft en-" gines and rings for compressors and hydraulic cylinders.
A base for the saie and manufacture of Koppers industrial piston rings in the European Common Market countries was established in tcsoo with me ourchase or a
v. //.`Ccjvt'U
r.cnasda c~c:c?:cus ; i.1 D 01 V ^
- ..JUL .,.cj
1
Keepers has im'ested So million curias tccj-tcco in pipelines, industrial maintenance, sewage and water
new ana expanded chemicai and car processing facilities.
works, and marine and swimming pcoi applications. A
A major portion of this amount is being expended
number of protective coatings introduced in 1066 re
to strengthen and broaden the chemicai end of our tar ceived excellent reception.
and chemicai operations. Sales of Koppers chemicals
have increased 6o per cent in the past five years. Since
these are essential chemicais used in many of the faster
growing processes of American industry,, their growth is
expected to continue at a high rate.
These are the major developments in our growing
tar and chemical business:
We began an expansion of existing phthaiic annv-
aride facilities that by mid-rod? will increase our capac
ity by 40 per cent, from 50 million pounds a year to _o
million pounds. Additionally, pians were announced for
a new too million pound-per-year phthaiic plant, with
completion targeted for late :q68 or eariy : pda. This
basic chemicai is used primarily in aikvd resins for paints,
in plasticizers, and in poiyester resins.
.\Vw West Coast Facilities
During 1900. we added a resin piant in Richmond. California, that has provided Koppers with a regional operation for serving customers in growing West Coast markets. This has increased the Company's capacity to produce poiyester and various paint resins. The prime Western market for polyesters is the growing reinforced plastics industry. The paint manufacturing held is the important market for the other resins.
We further increased our ability to serve the Western market with the construction of a new tar processing piant at Portland. Oregon. The plant's major products will include electrode binder pitch for the Northwest aluminum industry and creosote for the wood-treating industry. Koppers is a leading supplier to the U. S. and Canadian aluminum industry, a market that has been growing about 10 per cent annually. The aluminum in dustry uses one pound of binder pitch in producing seven pounds of aluminum.
Koppers growth in corrosion prevention products cieariv establishes the Company as a leader in this held. We have broadened and improved the Company's line of bituminous and chemicai-based. coiored ccatinss for
Expansion of Koppers phthaiic anhydridefacilities will help fill the growing demand, for this industrial chemical.
:o
. he stcrv a .voppe
s operation?
oi contmued grow::
. 01 long -unge
realization . . . y. new products ar.c :ac:u
ties finding new markets.
/' r - ;;' ^
cmciair-Aoppers
In the ear:--- mcr.ths of :96". .ainciair-K-oppers wli complete wo major pr.ases ot an expansion program uegun in Januarv. :96s. when the partnership :n mermcpiastics with Sinclair Petrochemicals. Inc. was formed.
An ethylene piant at Houston. Texas. will come :r. stream with an annual capacity 01 500 miiiion pour.cs. ar.c -.viil make the partnership tuiiy competitive with respect to the raw material suppiy for its polyetr.viene operations.
At nearby Port Arthur, completion of a .new r.ighdensitv poivethviene unit, and expansion of existing lowdensity poiyethvier.e facilities, wiil bring our tctai poly ethylene capacity at that site to more than coo miiiion pounds annuaily. compared to do miiiion pounds at me beginning of 1905. The national growth rate for highdensity poiyethvier.e has been about co per cent per year and the demand for this material could accelerate dra matically :: new developments such as the r.cn-returnabie. poiyetnvier.e milk bottle illustrated or. opposite page; succeed as well .nationally as in test markets.
In other areas of me expansion program: A new piant whicn can produce ;oo miiiion pounds of polystyrene per year was added late in 1 odd at SinciairKoppers styrene-based ccmpiex at Kobuta. Pa. This gives us an improved cost position for conventional poly styrene piastic. In the second quarter or red", oyute expandable cciystyrer.e capacitv will be increased by i-. per cent with the start-up of new production facilities. This uccition follows cioseiy an eariier 50 per cent expansion com pleted in 1965. Use of this foam piastic -- for packaging of breakabie articles, in produce containers, in hoc ar.c raid drink cups and :r. insulation applications -- is grow
ing faster than twice the growth rate of the piastics :n__isiry as a w'noie.
Scyrene-butadier.e iatex facilities at Kobuta are :v.rrentiv being exoanced and about one-third more capac itv wiil be available during the first quarter of :96'. The
rowmg me ui o:r.c.air-.-s.coper" ate:: .r. .'cruet oac.t-
make emvibenzer.e ar.c -rtvrer.e monomer. raw materia..vr.ich support me Kccuta poivstvrer.e cuerztior.s.
To increase its rr.arxe: per.etraticr.. Vmciair-Roccer--s moving into tr.e production ar.c sa.e cf end orocucts. d.ucn er.d-nse items as poivethviene dim. occties ar.c oor.ainer closures and foam piastic pacxagir.g acccur.teu :cr :a per cer.c of Sinclair-Koppers sa.es m :cdd.
Xtopers International plastic: Intettmzn::
The Companv's growing overseas mastics ousir.ess now includes four affiliates: two :r. Brazil, one in Argen tina and a 1905 investment in Spain.
This latest investment invoivec tr.e ourcr.ase of a one-half interest in Arranona. S.A.. a zoivstvrer.e firm aeadquarrered at Barcelona. Spam. The outicox for our investment in Arranona is encouraging, esoeciailv since the Spanish markets for polystyrene are expected to grow 15 to ao per cent annually based on steadiiv increasing demand for end uses such as refrigerator comconencs. television sets, other appliances and packaging.
Reinforced Plastics
In 1966 we further broadened our market develop ment approach to reinforced piastics by me addition of two California facilities.
The technology of fiberglass reinforced piastics is barely beyond its infancy, but it has already produced a whole new family of materials being used in hundreds of products. Reinforced plastic products have a very high strength-to-weignt ratio. They have exceptional resist ance to corrosion, moisture and impact, wiil not conduct electricity, and can readiiv be moicec and fabricated.
Our emphasis has been in me newer areas of rein forced piastics technoiogy, ana on proprietary preducts for fast growing markets. Koppers has a basic position in the olastic resins usee in this business.
Unciair-Hoopers is smonq :ht leaders :r.e jyr.r:s :o date to develop
\ie mantel jot non-r'rurnaoie ooivet/iviene muk :ctt.es. In :ne
.nte*ratea piant shown at the
:oitles :Tzvscea ?v :noiant
~ ::d:n% machines its filled with miik nr.d ihicved :o customer:.
re cuticc-t :cr suture zrcwt.n tr.ese mar.u-
ng earnings is rccc. .
r.tinuing :v.:-
.ccx. r growth ir. prccuc: s a;^s. i a xe acvantaoe
;e occcrtunities :'cr
arcwm
.ngner earnings. copper; investee acout 070 m:;.-cn
in new piants and equipment between Jar.uar"
:co^. and December rt. :o66.
Our continuing investment program is directly related to our stated operating philosophy: "we will become seriousiy involved oniy with those markets and products where we now have a leadership- po sition in terms 01 market position, raw material csts. process emciencv. product quaiity and technica. and marketing know-how. or where we have the inherent potential to achieve such leadershiD."
z.xec:i:i
. noma; t. j:c:ira:i. : .j:; ippair.ten '.:t .rts-aer.t. renera: jcur.se: ur.c mar.suer ;; :r.e .a'-'.' cecar:mer.t. He 'aas aiso eiectec -ecretarv :r.e I crr.car.v. Mr. Cochran. a member Hoppers .eso. ;taff for ter. ears, bad beer, jour.se: ar.ti assistant -ecre:ar". He rocreeds Johr. M. Crirr.mr.r.s. manager jf :r.e .aw cepor:mer.c since :coi. who resismea :o enter unvote .aw prac tice.
Robert G. Wilson 'A'as elected vice cresicer.t ar.ti genera: manager oi tr.e Engineering ar.c Construction Division, following tr.e retirement of Her.rv A. Der.r.v who haa directed the Division's activities since : to:. .Mr. W iison has beer, with tr.e Division tor over := year; ar.c. prior to his present assignment, servea as assistant genera: manager. Jack D. Rice, a vice president oi tr.e Division, was named assistant general manager and will continue to have the prime responsibility for the Division's mar keting activities. John A. Hagan, vice president, was ap pointed manager oi operations for the Division. During the past five years. Mr. Hagan served as president of Hoppers of Turkey. Inc. with responsibility for construc tion of the new steel plant at Eregli. Turkey, and assist ance in the management of the completed facility.
T. D. Taubeneck was appointed vice president and assistant general manager of International Operations. A member of Hoppers law department since 1961. Mr. Taubeneck is a graduate of the Woodrow Wilson School of Public a d International Affairs at Princeton Univer sity and the Harvard Law School. He has been cioseiv associated with our overseas operations for several years.
In the Forest Products Division. 3. G. Bartley. Jr. was named vice president and marketing manager and Paul Wayman was appointed vice president and operat ing manager. Mr. Bartley was previously Division saies manager and Mr. Wavman had been an assistant vice president and assistant to the general manager.
William 3. Jackson was named general manager of the Tar and Chemical Division. A vice president in that Division, he previously was manager of operations. T. H. Bartholomew was appointed a vice president of that Di vision and continues as manager of procurement. B. Otto Wmeeiey was assigned the responsibility for ail Tar and Chemical Division marketing activities, in addition to his dudes as vice president and manager of the Com pany'; marketing department.
THOMAS C. COCHRAN, JR.
T. D. TAUBENECK -aX4
PAUL WAYMAN
7. H. 3ARTHOLOMEW
ROBERT C. WILSON JOHN A. HAGAN a. G. BARTLEY, JR. WILLIAM B JACKSON 3. OTTO WHESLSY
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Tre Compar.v'- nacxiog or. emrer : mm ^ ;s
turnings m. : -,c" are erpectec to snow aooreciar.e
'.-1 million. digr.tiv below m.e recrrr :ac.;.oo :: am :
improvement over : 966. w-.tn saies at or aoove the : rnrl
million at the end of :a65.
.evei m spite of signs mat me aenerai econorr.v mart V
The manuiact'jr.r.s portion 01 our backlog ''as wed
slowin'.! down.
.rove the year-eariier ievei. rer.ectir.s the strong rate
r.ew orders for choppers products that prevaiieo throuar-
i ;ut the year. i The backlog that relates to construction was lower
at tne end of 1966 than at the besinning of the year.
Chairman of :he Board
President
sorrow on a revoiv.nc: basis until Marc:'. : .66. A; time. any :ur.c; ncrrowec under the aareemer.t 'a ill :e:one a term '.car. cuvabie :r. semiannual in-takne:::; curing the following nve years. The C'ompa::'.' ..as :he option of substituting longer-term debt tor the bank loans.
Investment Credit
Koppers investment credit, which was equal to 29 cents per share in 1965. amounted to 27 cents per share in i960. It should be about twice that much in :got. re heating completion ot severai major plant units in the current year.
Other Financial Matters
Totai shares 01 Koppers common stock outstanding as ot the end of 1966'amoumed to 4.074.61-2. rejecting the two-i'or-one split or the common stock on March 29. :c6o. During the year :: 4.928 shares previously purchased by the Company and held in the treasury were used in two acquisitions.
Common stock owners received totai dividend pavtr.er.ts ot 56.3 million 31.40 per share: during roco. compared to 25.4 million iSt.20 per share; during 1965. Dividends totaling $600,000. equai to 34.00 a share, were paid to preferred stockholders.
Cash How from operations during the year -- con sisting of net income, depreciation, depletion and re ferred federal income tax -- totaled 524.8 million, equai to S5.17 per share. This compares with cash how. at 3-25 million, or 25.36 per share, in 1965.
Inventories on December 3:. rood. amounted :c 361.2 miilion. compared to 253.3 miiiion at the end tt the orecedir.s vear. Receivables at vear end : 966 tctaiec
responsibility. for the day-:o-dav operations jf all Koppers divisions ar.d departments.
Mr. Grymes has been vice president and ger.eni manacer of the Company's Forest Products Division since : 958. and a director of the Company -since March of redo. He will continue to have general -upervision of the Forest Products Division.
Mr. Grvmes has been with the Division :cr aver l'j vears in a number of saies and management posi tions. Since he was named general manager of Forest Products, the Division's saies have doubled and the mentions have been broadened from a wood pre serving business to the production of a diverse line of forest products.
292.6 miilion. compared to $77.4 miilion on December -1. :c.6~.
Labor PMauons
During rood the Company negotiated mutuaiiv agreeable work contracts at 28 plants with just five wcrx stoppages. In 70 per cent of these settlements we obtained agreements of two years or mere duration. The hve strikes totaied ox days, ar.d ranged in length from : to a" favs. In most cases, we were abie to continue operations ac these plants.
.coppers sales continued to improve tr. tone. exceedng ;400 miilion for the first time. Sales v.Ciurr.e tctu:eti lap'1 tr.-.iiion. up from S37: million in : 765.
The Companvh tr.ar.uiacturir.r units set a sa.es rec:rd of S306.0 million. : - oer tent ancve ; -mri =. Earnings from tnese manufacturing tperaticns also rose -ucstanuaiiy m 1966.
Net income for the year was S:380.000 compared to Si a.052.000 in 1965. After payment of preferred divi dends. 1966 earnings were equivalent to 82.3: per snare of common stock outstanding, compared to Sa. 3: in : 963.
This 52.31 figure was alter deducting losses equiva lent to 47 cents per common share incurred during the -ear in our engineering and construction business.
Construction Problems.
The improved manufacturing earnings achieved in : 966 were more than onset by the loss situation that oc curred in our usuaiiy profitable construction business. This was the first loss year in construction since forma tion of the present Company in 1944. and resulted largeiv from the nationwide shortage at skilled construction labor. In order to fulfill contract commitments, it became necessary to greatiy extend the length of the average work week and all too often to employ iess-skiiled work ers. Inevitably, this meant that many more hours were required to compiete a given contract than we ever pre viously experienced.
The greatest impact came from contracts that were negotiated in : 964. but an which held labor require ments peaked in 1906. Steps have been taken during the past year designed to protect us against the adverse effects of a recurrence of this labor problem. Conse quently, we expect our construction operations in :on to contribute again to overall Company earnings.
P.eccrd Level of Capital Investment:
In 1966 the Company invested $46.7 miilion in new mar.t construction and exoansion. in the modernization
of existing facilities and in new acquisitions and invest ments. This brings our two-year investment totai to $75.3 miilion. twice the Company's average annuai in vestment rate of Si7 million in the five-year period :coo through 5964.
With a number of large expansions nearly :ompieted. capital investments in 1967 will be less than in 966. but are expected to approach S30 miilion. The bulk of this investment will be used to compiete projects started in 1965 and i960.
Increased Interest Charges
Much higher interest expenses have resulted from the borrowings required to finance this sizable capital investment program. Interest charges were S3.3 million in :q66. an increase from 1965 of 3a.2 miilion. The effect of this heavy interest expense on our earnings was mag nified in 1966. since the major investments that brought about this greater interest burden were not yet contrib uting to Company earnings.
Company Debt
The Company's term debt on December 31. :q6o. totaiea 563 miilion 128 per cent of totai capitalization: and consisted primarily of 3io miilion in promissory notes piaced privately in August. 1066. and 5f ` million
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