Document MJYg24MpY38aebyDvOmZ15d4a

EXHIBIT Crane Serves Vi '<*<? 'iS!" V ' ' - <*> r' 'i ' f <*J? i S' 5 tl i M.su,-r-i * ;l < 4 ' ; it ^ ' V3^ J|J(U t ,/{ Y s <* <4 :< 5 `ijh tn'/i United States Operations til ''\sWSStiSF' Contents Annual Meeting International Operations * V s'^ < .-vjau i;? * ne Co. Annual Report 1971 ncial Highlights me before income taxes ................................. me taxes............................................................... me before extraordinary credit..................... aordinary credit............................................... income............................................................... h dividends.......................................................... working capital............................................... assets ............................................................... aon shareholders' equity................................ aon shares outstanding at year end .... s at year end: . gt income to sales............................................... 0mmon shareholders' income to average equity rent ratio.......................................................... *mmon share : ome before extraordinary credit .... traordinary credit.......................................... it income.......................................................... `predation.......................................................... h flow from operations................................ h dividends..................................................... non shareholders' equity.......................... ted for 2% stock dividend in December, 1971. dng conversion of subordinated debentures, net income aunon share would amount to $3.41 ($2.48 in 1970). 1971 $791,508,000 13,458,000 3,169,000 10,289,000 873,000 11,162,000 4,189,000 173,409,000 589,202,000 154,810,000 2,581,755 1970 $680,207,000 2,841,000 (5,414,000) 8,255,000 -- 8,255,000 4,165,000 180,352,000 597,207,000 149,619,000 2,577,868 1.4% 7.3% 2.5 1.2% 5.5% 2.6 $ 3.91 .33 4.24+ 10.31 14.55 1.60 59.96 $ 3.09* -- 3.09* 8.53* 11.62* 1.60 56.90* Crane operations in 1971 showed an im $1,193,000 par value of Crane debenture*- ' provement over the prior year with CF&I Steel 250,000 shares of Southern Pacific were gold; Corporation and Huttig Sash & Door Com pany contributing the principal increase. How ever, these gains were partially offset by and 135,052 North Jersey National Bank`d - ishares were exchanged for appraisal proceed*. '' The net result of these investment change* had'-'' operating problems at other plants, particularly no material effect on income. `-.'`jkjisjj the new automated enamelware foundry at Capital expenditures in 1971 totaled ^ Chattanooga, Tennessee. $50,789,000, compared with $52,395,000 ill I Consolidated net sales for 1971 were 1970, and charges for depreciation increased to $791,508,000, compared with $680,207,000 for $26,837,000 from $22,459,000 in 1970. Mod- ! 1970, an increase of 16.4 per cent. Huttig Sash ernization of facilities, particularly at CF&I ' t & Door financial results, shown on the equity Steel, continued in 1971, and a new battery q|.n I method for 1970, were included for the full coke ovens is scheduled for operation in lWte&i year 1971 and accounted for $70,530,000, or Over the last few years a major portion 63.4 per cent of this increase. Consolidated net Crane facilities have been modernized. income for 1971 was $10,289,000, or $3.91 per The Board of Directors has approved'IfJij share, excluding an extraordinary gain of $.33 two-for-one common stock split and an per share, compared with $8,255,000, or $3.09 crease in authorized common shares ffdii per share, for 1970. 10,000,000 to 20,000,000 to be voted u Income before income taxes in 1971 was the Annual Meeting on April 25,1972. $13,458,000, compared with $2,841,000 in On behalf of the Board of Director*] 1970, and income taxes were $3,169,000, com wish to thank our shareholders, empl pared with a tax credit of $5,414,000 last year, customers and suppliers for their su] or a net change in tax provision of $8,583,000. Your Company views 1972 as an oppo: The significant change in income taxes was to continue the improvement which caused by the higher operating income and last year. Respectfully sufemij limitation on use of investment credits. Cash flow (net income plus depreciation) in 1971 was $38,000,000, or $14.55 per share, compared with $30,714,000, or $11.62 per share, for 1970. During 1971, the regular $.40 quarterly dividend was paid and in December d.c: Pr a 2 per cent stock dividend was paid as in the previous three years. All per share statistics k. have been adjusted to reflect this stock dividend. During 1971, the remaining 40,568 Alcan Aluminium shares were exchanged for March 1, 1972 2 lancial Review Insolidatiori The consolidated financial statements for |th years include all subsidiaries except SSttig Sash & Door Company in 1970, which carried as an investment and equity in , earnings was reported. In early 1971, the [vestment in Huttig was increased from 55 cent to 87 per cent, which upon consolida- contributed $70,530,000 of net sales and Dll,000 of net income, compared to equity 11970 net income of $525,000. The deferred Jit from the CF&I Steel Corporation acjfsition continues to be amortized at an an1 rate of $2,633,000. In 1970, this deferred [it was also reduced by the CF&I Steel ex jinary loss resulting from a plant closing was increased by gains on purchase of {exchange for subordinated debentures, for : reduction of $1,363,000. Subsidiaries operating outside the United i and Canada had net sales of $69,407,000 71, compared with $66,163,000 in 1970. ng 1971, their net income contribution ited to $680,000, as compared to operiata break-even level in 1970. These sub files represented 16.2 per cent of share s' equity in 1971 and 16.3 per cent in . International accounts have been trans fat appropriate rates at December 31,1971 jut resulting unrealized exchange gain of DO has been deferred as a reserve against {foreign currency devaluations, aority interest for all subsidiaries against earnings was $1,418,000 in nd $1,486,000 in 1970. 'Improvement he modernization program for Crane production facilities continued during the year. In 1971, start-up costs of new plants, prin cipally at Chattanooga, and phase-out costs of retired facilities were $2,381,000, com pared with $3,449,000 in 1970. These costs were charged against earnings as miscellan eous expense. CF&I Steel has committed to spend approximately $50,000,000 on plant improvement over the next two years begin ning January 1, 1972. Long-term Financing The net reduction in long-term debt dur ing 1971 amounted to $12,124,000. This in cluded a $5,000,000 prepayment in early 1972 of the 5% per cent bonds by CF&I Steel in connection with an amendment to their first mortgage indenture, and additional long-term debt amounted to $7,625,000, including $5,125,000 of Huttig Sash & Door which was not previously consolidated. The principal amounts of long-term debt repayments for the next five years are $12,624,000 in 1972, $11,248,000 in 1973, $8,703,000 in 1974, $8,685,000 in 1975, and $9,574,000 in 1976. At December 31,1971, Crane and its sub sidiaries were committed for annual rentals for operating locations under leases expiring through 2002 in the amount of $6,507,000, compared with $5,273,000 in 1970. Pensions Pension costs charged against operations for the various retirement plans maintained by the Company and its subsidiaries were $13,944,000 for 1971, compared with $11,325,000 for 1970. Current service and interest costs for all plans are funded annually. $5 -- Net Income per Share 151 08 152.421 36.90 130.1C; 119 80 $15 -- Cash Flow per Share net income plus depreciation 1455 ' $60-- Shareholders'Equily per Share 56 90 i 55.22 s 1 52.29 I 49.80 | 50 47.74 [ 44.85 | 40.88 | 40 -- 39.33 0 37.171 '64 '65 '66 '67 '68 '69 70 7 62 '63 '64 65 '66 '67 '68 '69 70 71 62 '63 64 '65 '66 '67 '68 '69 '70 71 62 '63 '64 '65 *66 '67 '68 `69 70 71 3 In addition, prior service costs of CF&I Steel are provided over a 20 to 30-year period. At December 31,1971, CF&I Steel vested benefits exceeded the total of pension assets and bal ance sheet accrual by $65,000,000 ($54,000,000 at December 31,1970). Income Taxes The provision for income taxes in 1971 amounted to $3,169,000 (including $1,209,000 for foreign income taxes), compared with a credit of $5,414,000 in 1970. Deferred taxes charged in 1971 were approximately equal to the total federal income tax provision; whereas in 1970 a deferred tax benefit of $1,520,000 together with the federal tax credit resulted in an income tax refund of $6,850,000. The customary relationship between the tax provision and pretax income for both years is different, principally due to non-taxable income and permanent tax savings such as percentage depletion, tax-deductible original issue dis count on the debentures issued in the CF&I acquisition, domestic dividend deductions, and the deferred credit amortization. In addition, investment tax credits in 1970 of $2,876,000 were used to reduce the provision on the flow through method. Investment credits of $1,882,000, none of which were applied in 1971, are available to reduce future taxes. Extraordinary Credit The extraordinary credit of $873,000 rep resents income of a subsidiary as determined by the values realized through the sale of its operating assets in early 1971. Stock Options Under the stock option plan adopted in 1970, 50,000 additional shares of common stock were reserved for issuance to key em ployees. A summary of option under all plans is as follows: Number Outstanding -g_Shares January 1, 1971 Options granted Options cancelled Options exercised 54,623 12,000 (U,168) (510) 2% Stock dividend JO&n Outstanding December 31, 1971 53,016 Pric JPer.Shg $i7.7y iSijn 36.50 37.2S2: $17.44-!34.41 In 1970, options for 13,400 shares granted and options for 5,506 shares wer* m> ercised. At December 31, 1971, options far '1 27,671 shares were exercisable, and shares were available for grant. : Litigation ' The litigation which Crane commotOMl against American Standard, Inc., and Blyth*- Co., Inc., in 1968 arising out of the mergts of Westinghouse Air Brake Company intoT* ican Standard, all as previously repor you, remains pending. Crane has asl court to award it damages, but it is imj at the present time to determine the exti any recovery. In the suit brought by, Standard against Crane for so-called "i profits," both sides have asked the COafj||!| summary judgment, and your maria, A continues to believe that Crane will lilt prevail. In prior annual reports, we have i you of the civil antitrust litigation inijj against the Company and other pill manufacturers, and the court has _ to approve settlements in the majority^ cases. We are advised by our counseljl amount of any such settlements or. with respect to these suits will not: affect the financial position of the, Report of Independent Accountants To the Shareholders of Crane Co.: We have examined the consolidated balance sheet of Crane Co. and subsidiaries as of December 31, 1971 and 1970, and the related consolidated statements of income, earned surplus, capital surplus and changes in financial position for the years then ended. Our examinations were made in accordance with generally ac cepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We did not examine the financial statements of CF&I Steel Corporation, a consolidated subsidiary, which statements were examined by other inde pendent certified public accountants whose reports thereon for 1971 and 1970 have been furnished to us. Total assets and net sales of CF&I Steel Corporation constitute approximately 49% and 34%, respectively, of the related consolidated totals for both years. Our opinion expressed herein, insofar as it is related to the 4 amounts included for the foregoing subsidiary, is butd| upon the reports of the other independent certified X accInouonutarnotsp.inion, based upon our examinations and At/ mentioned reports of other independent certified public! ants, the accompanying balance sheet and statements,,?! earned surplus, capital surplus and changes in finandilj present fairly the consolidated financial position of and subsidiaries at December 31, 1971 and 1970, solidated results of their operations, changes in equity and changes in financial position for the yeaT3; in conformity with generally accepted accounting M plied on a consistent basis. New York, N. Y. January 25, 1972 1971 $791,507,548 1970 $680,206,546 680,475,599 80,376,161 760,851,760 30,655,788 (17,582,502) 1,370,447 1,807,378 (2,793,248) (17,197,925) 13,457,863 3,168,956 584,892,028 75,275,787 660,167,815 20,038,731 (16,900,581) 726,761 2,358,772 (3,382,874) (17,197,922) 2,840,809 (5,413,929) 10,288,907 872,870 $ 11,161,777 8,254,738 -- $ 8,254,738 $4.24 3.41 $3.09 2.48 ce at Beginning of Year............................................... "come............................................................................... 1971 $ 79,402,937 11,161,777 ends: .. erred shares -- $3.75 per share..................................... ron shares: Cash--$1.60 per share.................................................... _Stock--2% per share, market value of 50,739 shares (50,547 in 1970).......................................... ..... . . Is of Cost Over Par Value of Reacquired Shares--Net: p Preferred (1,192 in 1970) and 47,700 common reacjpuired, less 510 issued under stock options (21,200 and |p506, respectively, in 1970).......................................... at End of Year.......................................................... 90,564,714 110,430 4,078,333 . 1,834,215 621,136 6,644,114 $ 83,920,600 1970 $ 76,867,991 8,254,738 85,122,729 114,476 4,050,100 1,381,450 173,766 5,719,792 $ 79,402,937 RE Co. and subsidiaries See comments on pages 2 through 4. I 5 Consolidated Balance Sheet at December 31 ASSETS Current Assets: Cash......................................................................................... Short-term investments......................................................... Accounts receivable, less allowances of $1,727,394 ($1,862,114 in 1970)......................................................... Inventories, less LIFO reserves of $32,134,035 ($32,540,704 in 1970), at lower of cost or market: Finished goods............................................................... Work in process............................................... Raw materials and supplies.......................................... Prepaid expenses.................................................................... Total current assets.................................................... 1971 $ 20,071,799 28,046,259 102,154,214 72,403,292 42,787,333 18,961,376 134,152,001 5,049,498 289,473,771 Investments and Other Assets: . Investments at cost: Southern Pacific Company, 750,000 shares of common stock (1,000,000 in 1970).......................................... Alcan Aluminium Limited, 40,568 shares of common stock.............................................................................. North Jersey National Bank, 135,052 shares of common stock.............................................................................. Outlying lands.................................................................... Miscellaneous.................................................................... Investment (equity method) in Huttig Sash & Door Company.............................................................................. Other assets......................................................................... 31,839,976 1,258,021 2,818,611 35,916,608 4,188,291 40,104,899 Property, Plant and Equipment at Cost: Land.................................................... Buildings and improvements . . . Machinery and equipment . . . . Less accumulated depreciation . . . 15,988,250 129,982,753 424,874,907 ' 570,845,910 311,223,076 259,622,834 $589,201,504 4W CRANE CO. and subsidiaries (LITIES AND SHAREHOLDERS' EQUITY .ent Liabilities: Current maturities of long-term debt................................ _ is payable.......................................................................... Accounts payable..................................................................... ccrued payrolls, taxes and other liabilities..................... .S. and foreign taxes on income.......................................... Total current liabilities............................................... "-Term Debt (see details on page 9)................................ rating and Other Reserves............................................... rity Interest in Subsidiaries............................................... red Credit from Acquisition.......................................... ^holders' Equity: eference stock of Glenfield & Kennedy Holdings Limited, 5V2%.................................................................................... aulative preferred shares, 3%%, par value $100 (re deemable at the option of the Company and subject to Sinking fund requirements): Authorized--68,536 shares (72,996 in 1970); outstanding--29,129 shares (29,834 in 1970) after deducting 39,407 shares in treasury (43,162 1970)............................................................................... [ preferred shares, par value $5: , uthorized--600,000 shares.......................................... ion shareholders' equity: Common shares, par value $25: Authorized--10,000,000 f shares; outstanding--2,581,755 shares (2,577,868 in 1970) after deducting 266,588 shares in treasury (218,888 in 1970).......................................................... Capital surplus..................... '............................................ led surplus--$12,641,089 in 1971 ($13,936,001 in 1970) is not restricted under the terms of the 6^2% (Sinking fund debentures............................................... Total common shareholders' equity..................... Total shareholders' equity.......................................... 1971 1970 $ 12,624,464 9,882,251 45,711,694 45,709,916 2,136,543 116,064,868 261,916,872 17,520,110 23,526,802 9,849,889 $ 5,379,011 16,539,800 47,134,781 43,497,637 2,150,796 114,702,025 274,041,143 18,281,214 23,910,559 11,270,361 2,600,000 2,400,000 2,912,900 2,983,400 64,543,875 6,345,588 64,446,700 5,768,864 83,920,600 154,810,063 160,322,963 $589,201,504 79,402,937 149,618,501 155,001,901 $597,207,203 See comments on pages 2 through 4. Consolidated Statement of Capital Surplus for Years Ended December 31 Balance at Beginning of Year............................................... Excess of market value over par value of common shares issued as 2% stock dividends.......................................... Excess of subordinated debentures converted over par value of 338 common shares issued............................... Balance at End of Year......................................................... 6,345,588 Consolidated Statement of Changes in Financial Position for Years Ended December 31 Source of Funds: Operations: Income before extraordinary credit............................... Depreciation.................................................................... Other, net......................................................................... Extraordinary credit......................................................... Long-term debt of Huttig Sash & Door Company . . . Long-term debt issued of CF&I Steel Corporation . . . Reduction in investments.................................................... Disposals of property, plant and equipment..................... Application of Funds: Additions to property, plant and equipment..................... Acquisition of Huttig Sash & Door Company non-current assets .............................................................................. Reduction in long-term debt............................................... Reacquisition of shares less options exercised and stock issued for converted debentures.................................... Cash dividend......................................................................... CF&I extraordinary item absorbed by reserves .... Other, net.............................................................................. Net Source (Application) of Funds .......................................... Increase (decrease) in components of working capital: Current assets: Cash and short-term investments............................... Accounts receivable.................................... ..... Inventories......................................................................... Prepaid expenses............................................................... Current liabilities: Current maturities of long-term debt.......................... Loans payable.................................................................... Accounts payable.............................................................. Accrued payrolls, taxes and other liabilities .... U. S. and foreign taxes on income............................... Increase (decrease) in working capital............................... 1971 $10,288,907 26,837,153 674,205 37,800,265 872,870 5.125.000 2.500.000 24,818,481 5,617,078 76,733,694 50,788,861 4,646,740 19,749,271 1,651,952 4,188,763 2,651,577 83,677,164 $ (6,943,470) . 6,377,965 (9,225,485) (2,662,615) (70,492) (5,580,627) 17,549) 13,087) .2,279 4,253) 1,362,843 i (6,943,470) 1070' U7,i $5,76 29,1 70,0 52; $(1 See comments on pa| CRANE CO. and subsidiaries 1% Ills of Long-Term Debt at December 31 Ifee Co.; |y2o/0 Sinking fund debentures due 1992, $2,000,000 due annually beginning in 1973, after deducting $2,463,000 in treasury in 1971............................................................... fe % Bank term loans due 1974, $4,000,000 due annually ` (7% and 7V4 % in 1970)..................................................... Miscellaneous......................................................................... Subordinated debentures: 7% Sinking fund debentures due 1993, up to $1,000,000 due annually beginning in 1974, after deducting $1,806,000 in treasury in 1971..................................... 7% Debentures due 1994 ............................................... 5% Convertible debentures due 1993, convertible at $50 per share (375,592 common shares reserved in 1971), after deducting $1,410,000 in treasury in 1971 . . . 5% Convertible debentures due 1994, convertible at $57.50 per share (640,911 common shares reserved in 1971), after deducting $15,068,000 in treasury in 1971 [ Steel Corporation: t % First mortgage and collateral trust bonds, sinking fund |series due 1979, minimum of $2,000,000 due annually i% First mortgage and collateral trust bonds, sinking ad series due 1990, $3,000,000 due annually beginning 1975 ............................................................................... |% Convertible sinking fund debentures due 1977 (con vertible into CF&I common shares at $31 per share), |l,000,000 due annually, after deducting $4,495,000 in reasury in 1971............................................................... ! Sash & Door Company: |% Notes payable to banks due 1976, up to $625,000 |ue semi-annually............................................................... i Subsidiaries: ' pte Canada Limited 53A % sinking fund debentures (col lateralized by a general claim on property and assets), due ?85, $440,000 due annually, after deducting $344,000 treasury in 1971.......................................................... f*e Ltd. (England): V2% Bank term loan due 1973 (8% in 1970) . . . fi% Bank term loan due 1977 (7% % in 1970) . . . aeld & Kennedy Holdings Limited 5% % unsecured R stock due 1982 ............................................... '. . cUaneous . . ............................................................... 1971 $ 37,537,000 7,000,000 1,095,312 45,632,312 18,398,400 52,077,200 18,779,600 .36,852,400 126,107,600 171,739,912 10,965,000 50,000,000 4,025,900 64,990,900 3,875,000 7.920.000 2,841,712 4.680.000 3,929,564 1,939,784 21,311,060 $261,916,872 1970 $ 38,645,000 11,000,000 2,454,374 52,099,374 20,204,400 52,077,200 18,858,600 38,239,900 129,380,100 181,479,474 17.965.000 47.500.000 5,628,700 71,093,700 8,008,320 3,132,403 4,320,000 3,628,490 2,378,756 21,467,969 $274,041,143 9 Ten Year Consolidated Financial Summary (in thousands of dollars) Net Sales Net Income Depreciation Common Shareholders' Equity Total Per Shared Net Income Per Shared Cash Dividends Per Shared 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 $333,767 337,366 357,823 370,084 405,907 403,361 409,549 550,707 680,207 791,508 $ 1,176* 5,447 5,530 7,991 11,251 10,228 10,998* 11,602* 8,255 11,162* $ 8,383 7,607 8,316 7,847 8,124 8,632 9,146 14,354 22,459 26,837 $124,105 $37.17 121,834 39.33 122,087 40.88 121,256 44.85 128,255 47.73 133,831 49.80 140,514 52.29 146,094 55.22 149,619 ' 56.90 154,810 59.96 $ .25 1.66 1.75 2.84 4.12 3.75 4.03 4.30 3.09 4.24 $ .78 .78 .78 .90 1.25 1.51 1.51 1.54 1.57 .1.60 *After extraordinary charge of $2,018,000 in 1962 and extraordinary credits of $2,503,000 in 1968, $2,109,000 in 1969 and $873,000 in 1971. dAll per share amounts have been adjusted to reflect stock dividends. Cash dividends have been paid at an annual rate of $1.60 since December, 1965. m Analysis of Net Sales and Operating Profit (in thousands of dollars) 1967 Amount % Crane U.S.A........................ $240,189 60 CF&I Steel Corporation* . . -- -- Huttig Sash & Door Company -- -- Hydro-Aire Division . . . 19,075 5 Crane Canada Limited . . 82,262 20 International Operations . . 61,835 15 Total Net Sales . . . $403,361 100 1968 Amount % $251,286 61 ---- ---- 18,610 5 84,720 21 54,933 13 $409,549 100 1969 Amount % $263,941 48 120,918 22 ---- 16,758 3 88,079 16 61,011 11 $550,707 100 1970 Amount % $270,703 40 242,300 35 ---- 14,740 2 86,301 13 66,163 10 ; $680,207 100 197 Amount $279,5|| 261,719 70M 12,| 98'3f! 69,m $791,5(1 Crane U.S.A........................ CF&I Steel Corporation* . . Huttig Sash & Door Company Hydro-Aire Division . . . Crane Canada Limited . . International Operations $ 7,973 -- -- 4,037 3,659 7,456 23,125 34 -- -- 17 16 33 100 Corporate....................... (3,960) Total Operating Profit . $ 19,165 "From July 1,1969 $ 6,737 -- -- 3,684 4,623 4,553 19,597 34 -- -- 19 24 23 100 (4,339) $ 15,258 $ 5,153 7,585 -- 2,446 3,574 4,120 22,878 22 33 -- 11 16 18 100 (4,198) $ 18,680 $ 3,308 13,696 -- 1,855 2,161 4,156 25,176 13 54 -- 7 9 17 100 (5,137) $ 20,039 $ 4^ 17,$h 4,522 lAtm 3Mm 3/9l| 35,|M (4J1I $ sojrn Pages 11 through 20 describe the organization, products and services of these units. 10 Crane-U.S.A. [Crane-U.S.A. is made up of the Engineered rjucts, the Valves and Fittings, and the 1umbing and Heating Divisions and Crane apply Company. It manufactures and 5tributes all domestic products except those t the Hydro-Aire Division. These include Jves, pumps, meters, controls, fittings, iter treatment and conditioning equipment [ plumbing and heating equipment sold oughout industrial, building and struction markets. Overall, 1971 operations of Crane-U.S.A. ved improved sales and profits despite genlly depressed conditions in some primary justrial markets. Gains came from the upi in building and construction. During 1971, $5,966,000 was invested in dial expansion, including major projects at Chattanooga, Tennessee, and Ferguson, ucky, plumbing plants and a new pump tldry in Salem, Ohio. The outlook for Crane-U.S.A. is encourng. Housing starts are forecast to exceed. ] year's all-time high, and non-residential Struction is expected to show a significant ease. Reinstatement of the investment |t should favorably affect capital spending aghout industry. Increasing emphasis Dilution control, by municipalities and in f, also points to new sales opportunities. jeered Products Division rane has an international reputation for feign and manufacture of sophisticated fluid control and treatment products, supplying a wide range of pumps, meters, control valves, and water and waste treatment equipment used in industrial processing, power generation, and municipal water and waste systems. Sales of the Engineered Products Division showed a slight improvement in 1971. Good growth projections for the process and nuclear power industries as well as for pollution control --all major markets--should enhance its per formance for several years. Environmental Systems Formed in early 1970 to coordinate and expand Crane activities in the fight against water, air and thermal pollution, the Environ mental Systems operation, which includes Cochrane products, showed increased profit ability in 1971. New contracts were up from 1970, largely due to increased activity in the electrical generating, pulp and paper, and pol lution control markets. Cochrane's leadership in the field of highpurity condensate treatment for the electric generating industry led to increased sales of its Ammonex system, an exclusive and practical technique to ammoniate resins in condensate polishing systems. There is also growing ac ceptance of Cochrane's newest development for nuclear generating stations. This system assures the nuclear plant operator of pure con densate while reducing by 60 per cent the radioactive waste produced. Orders for waste treatment products were ahead of 1970. Microstraining gained wider acceptance for advanced treatment of both municipal and industrial waste. To meet the l. Deming pumps handle the entire potable water supply for the new Disney World in Florida. In this southern textile mill, several Chempump units pump a variety of caustics, cleaning and toxic bleaching solutions in applications where leakage cannot be tolerated. 3. One of the two ozonators to be installed in a Michigan municipal sewage treatment plant to control odors is prepared for shipment. I lift. m 11 1. Crane 900-pound cast steel gate vaives installed at a new refinery in the Pacific Northwest. 2. A 36-inch pressure-seal bonnet gate valve, to be installed by an electric utility, on test in the Chicago plant. 3. Hundreds of Crane valves are installed throughout Chicago's McCormick Place, one of the country's largest exhibition halls. All public facilities there are equipped with Crane plumbing fixtures. increasing demand, a fabricated microstrainer design was developed for manufacture at the King of Prussia, Pennsylvania, plant. Ozonation equipment, used to control air pollution and for water and waste treatment, has a considerable potential whether used alone or in combination with microstrainers. While innumerable industries currently have problems adversely affecting ecology, specific remedies have been held in abeyance pending the establishment of requirements and standards by the Federal Government and individual states. Once these have been de fined, there should be greater activity in the pollution control areas Crane-U.S.A. serves. Pumps and Meters While 1971 Chempump sales were down from the previous year, current increasing ac tivity in the chemical and nuclear power indus tries indicates opportunities for improvement. Because leaks in conventional pumps can be dangerous, the dependable canned motor Chempump has found good reception in the chemical industry. This hermetically sealed unit also has applications in the nuclear power industry, where leakage cannot be tolerated. In 1971, Chempump received the ASME "N" stamp for nuclear applications. The Chempump operation was broadened during the year. Manufacture of the Crane Teledyne, a motorized valve operator, was moved from Chicago to Warrington, Pennsyl vania, where a plant addition was completed to house the line. Manufacture of Flomatics in dustrial control valves was also moved to Warrington from Folsom, California, to bring the manufacturing and sales efforts close fa major markets in the East and Midwest. *** tear During 1971, internal cost improvement programs enabled Deming to meet sales yflgume and earnings projections. Deming sales increased although the general capital ?>] goods market was somewhat depressed. Foe '^1 1972, growth is expected in the process, utility ** and municipal markets, especially for sewatt and solids handling pumps, and for nuclear power installations. , Significant expansion took place last ytg' with the completion of a nuclear pump a*ijf sembly line and test laboratory at Salem,Ohfftig New foundry facilities, completed there fj in 1972, will supply pump castings for Salem and Rogers, Arkansas, plants at a I unit cost and with better quality control. Water meter sales rose in 1971, duel to the fact that virtually every major city] approved the Crane water meter. Conti growth is expected as housing starts inc Valves and Fittings Division All types of fluids for industrial and mercial markets are controlled, channe otherwise governed by the broad ra Crane standard and engineered valves > tings. This division's sales increased sli over the 1970 level despite severe comf and restrictions on capital expenditure The increase in sales is attributaW marily to the availability of product||| year-old distribution center at Carol Illinois. This fully automated cental stocks a broad range of standard, fasl||_ valves, makes shipments to all partt.J 1 12 Iry possible within 48 hours. With imed customer service, the distribution cen' o enables Crane to increase manufacturfefficiency by utilizing automated facilities e Chicago, Chattanooga, and Washington, , plants. .During 1971, Crane became the first pro - in the United States authorized to use ticlear "N" symbol of the American Soof Mechanical Engineers for both valves welding fittings. The electric utility market is showing ining activity in both nuclear and fossil fuel Recent developments in the petroleum try indicate an upturn in construction, "ing refineries to produce lead-free e. With its expanded line of ball and butter- 'ves, newly introduced universal trim teel valves, and the launching of a new AWWA valves, the Valves and Fittings on is in a position to improve its per-ce in 1972. ing and Heating Division vane plumbing and heating product sales a marked improvement in 1971, di . reflecting record housing starts and a construction during the year. Prospects trend to continue through 1972 are especially in view of declining interest d the greater availability of mortgage 'for residential construction, us coincides with the completion of extensive three-year program to exd modernize major plumbing plants, , ading which cost over $25 million. The new Nevada, Missouri, pottery, com pleted late in 1970, reached full production last year. It has shown excellent progress and profitability. A sizable expansion at the Fer guson, Kentucky, plant came on stream at the end of the year and will double ceramic capac ity there early in 1972. The Nevada and Fer guson plants are key factors in meeting the in creased demands predicted for the 1970's. The fully automated Chattanooga enamelware facility, the only one of its kind in this country, has been slower in starting up than anticipated. Achievement of full production of enameled cast iron plumbingware there is a major goal of the division this year. A new gold finish for plumbing fittings, named Perma Gold, was introduced to the trade and won immediate acceptance. For in creased bathroom safety, a new slip-resistant tub bottom design was brought out in 1971. The program to redesign and modernize the hydronic heating line culminated with the introduction of three new boiler products last year and another in January, 1972. The new boilers are engineered to fill all residential and light commercial and industrial heat ing requirements. With these redesigned products, greater market penetration is ex pected in 1972. Crane Supply Company Crane Supply Company, the distribution division of Crane-U.S.A., supplies plumbing and heating equipment, valves, pumps and re lated products of other manufacturers to hous ing, construction, water systems and industrial markets through 64 branches in 36 states. 4. In the automated foundry of the new Chattanooga plant the cupola in the background, which can melt over 32 tons of iron per hour, delivers molten metal to the induction furnace (foreground) as the first step in casting plumbingware. 5. At an automatic enameling station in Chattanooga, dusters spread an even coat of frit over red-hot tub surfaces prior to baking the final finish. 6. Crane plumbing is used throughout the new Lyndon Baines Johnson Library in Austin, Texas. 1. South mills water treatment system cleans and recirculates 24,000,000 gallons of water daily to the rod and bar mills. 2. Modernization of the seamless tube mill approximately doubled the capacity of this facility for high-strength oil country casing and tubing. 3. Ore sample is fed into the ball-rod grinding mill in preparation for testing in the new ore preparation research lab. - 4. Unit train cars being loaded with coal from storage silos at the Allen Mine. CF&I Steel Corporation CF&I Steel Corporation marked its 100th anniversary on January 11,1972. The major supplier to the Rocky Mountain area, CF&I ranks twelfth in the industry in steel shipments. It manufactures and distributes a variety of steel products used in the construction, petroleum, mining, metalworking, transportation, and farming and ranching markets. CF&I sales volume increased in 1971 despite continued depressed economic condi tions in the steel industry. The threat of a work stoppage connected with wage negotiations caused some hedge buying during the first half of the year and lower shipment rates during the second half as customers worked off high inventories. Sales were adversely affected by strikes in the copper and coal mining indus tries, but benefited from the West Coast dock strike which reduced foreign imports in that section of the country. Expenditures under CF&I's capital im provement program totaled $34,994,000 last year. The Company plans to spend an addi tional $50,000,000 in 1972 and 1973. Much of this will be for air pollution abatement and pollution control equipment. Construction CF&I sales to the construction industry were up in 1971, reflecting a general strength ening of this market. Forecasts of continued growth in housing and non-housing construc tion should improve business there this vtu Equipment for the production of treated dozer and scraper blades was insU,!Iej during 1971. The facility allows penetratJjj* into a new market for cutting edges used' 0Q heavy construction earth moving equipment. The new 11-inch bar mill, which wn brought on stream at the end of 1970, went into full production during the year. The new facility produces a wide variety of bar* shapes with improved physical prop+rtfrf rolled to extremely close tolerances. Thl* ha* permitted extension of marketing effort* Into manufacturing areas not available previously,. Petroleum Sales and market conditions were btlUg in 1971 despite a continued low level oft activity. Steady growth in the numbefjll tive drilling rigs during the last six mont|gf improved the outlook for 1972 and expected to equal or exceed 1971 level*. Ag During the year, expanded and ized heat treating facilities for processing strength casing and tubing were insia! _ Pueblo. This new equipment enables CFAT.t# produce better and more uniform producttH improves its ability to serve the oil awdb drilling market. Mining : Sales of mining supply products l level during the year despite the adve of the copper and coal mining strikes. New hollow core rock bolts forr derground construction were introdl limiting of Federal funds delayed ma Reclamation and Corps of Engineers projand slowed initial sales. CF&I's range of t-treated grinding rod sizes was increased. An ore preparation research laboratory completed during 1971. Designed to test omer ores under laboratory controlled con~ns, this facility provides a unique service to 'industry. It will assist CF&I in selecting opi grinding media to match customer needs. alworking Controlled cooled rods, introduced late in gained in market share during the year sales in 1972 are expected to increase again. - metallurgical structure results in savings nufacturing costs to customers. sportation Sales of railroad products exceeded the Jous year and are expected to remain -g in 1972. ' Hi-Cant tie plates, a CF&I patented prod|irst introduced in 1969, continued to gain tance. This innovation for improved per- ace and safety of the high rail of curved :has been installed on 16 major rail lines. jCF&I rail continued to be used at the U.S. "talent of Transportation High Speed d Transportation Center near Pueblo. Center will test and evaluate new forms -speed mass transportation. During the the last rail was placed on the Bay Area ^Transit System in San Francisco. CF&I !ed all rails for this project. g and Ranching hipments of products to the agricultural market were equal to the prior year, although limited availability of fence post strip reduced sales of posts. Additional capacity from the new 11-inch bar mill will permit a resumption of aggressive sales of this product. Facilities A major project completed was a unit train system from the Allen Mine near Trinidad to the Pueblo plant for year-round delivery of coking coal. Rapid loading and unloading of new 24,000-ton-capacity storage silos are ac complished by automated electronic facilities. Water quality control at Pueblo was im proved with the completion of the south mills water recirculating and reuse system. This sys tem collects and treats cooling water from the bar, seamless and rod mills and recirculates water to the rod and bar mills. Projects underway in 1971, to be com pleted and in 'operation in 1972, include new coke ovens equipped with the latest pollution control devices and operating controls. Also under construction is a waste water treatment system to eliminate pollution at the coke plant. Water will be recirculated for reuse. Modernization of the 14-inch mill will provide a continuous rolling and finishing fa cility capable of operating at the maximum rolling rate of the mill. The new finishing fa cility will permit continuous process from billet to final product with no intermediate handling. Construction of a new electric furnace shop is scheduled to get underway in 1972. It will replace an existing open hearth shop with a modem steel-producing facility. Completion is set for 1973. 67 5. In this new heat-treating facility, dozer and scraper blades are heated, then quenched with water to provide the hardness needed for highway and construction work. 6. CF&I rails, tie plates and spikes are used on the test track for the Linear Induction Motor prototype vehicle, which reaches speeds up to 250 miles per hour. 7. New coke ovens being constructed at Pueblo were designed with the most advanced technology to control smoke emissions during operation. Huttig Sash & Door Company Huttig Sash & Door Company, established in 1885, is headquartered in St. Louis, Missouri. It manufactures and distributes millwork and other building products in the southeastern, midwestern and southwestern states. The major portion of Huttig's business is in single-family residential and apartment units. & 1. White pine logs are cut with a band saw at the Missoula saw mill. 2, Wood moldings are stored vertically to maintain stability and reduce possible damage to the finish. 3. Huttig serves retail lumber dealers and contractors through its 26 branch warehouses. Huttig Sash & Door enjoyed record sales and earnings in 1971. Its business had eased in late 1969 as demand for and prices of build ing products fell off. Beginning in November, 1970, however, there was an upsurge in de mand which carried through the 1971 building season. Lower interest rates and the availa bility of mortgage funds from both savings and loan associations and governmental sources helped in this area. The current outlook for continuing im provement in both sales and earnings is encouraging. Huttig serves a growing market in south eastern, midwestern and southwestern states from 26 branch locations, selling to both retail lumber dealers and contractors. It also has a 2 manufacturing operation producing lumber and wood window stock at Montana. Accelerated growth and cons in southern states, coupled with a long ing season in these areas, has been factor in Huttig's increased sales. During the year, a new East Co house facility to serve the growing i between Baltimore, Maryland, and News, Virginia, was constructed at Fr burg, Virginia. A similar facility is p!' construction in 1972 in the Rocky North Carolina, area to serve Carolinas. Huttig plans to expand into 0 ing market areas as opportunity themselves. 3 I jydro-Aire Division fydro-Aire designs and manufactures |rake control systems, fuel and |ydraulic pumps, controls and other ccessories and systems used by the erospace industry. Considering the depressed level of busis in the aerospace industry during 1971, yidro-Aire's performance was satisfactory according to expectations. While the Divi- does not depend heavily on governt business, reaction to business conditions ughout the air transport field meant re ed production schedules and deferred dejry dates. . Hydro-Aire fared better in both sales and fits than many of its competitors last year. (was primarily due to the commercial air- skid-control systems in its product line. e development of Hydro-Aire's newest , atic braking systems for aircraft was feed in 1971. These brake control sysjwhich improved the short-field operation aircraft, were ordered for both the 8 737 and the Boeing 747. Improved stop ping performance is important to market pene tration as the smallest field for which an aircraft is certified determines the number of airfields that can be serviced by an airline. This new concept in brake control is gaining accept ance throughout the airline industry and brings a new dimension to the Hytrol product line. During 1971, Hydro-Aire achieved a sig nificant milestone which may provide strong impetus to its future. A new product line for the Division--the main engine fuel pump for Pratt & Whitney's jet engine to be used in the F-14B and F-15 fighter aircraft-- achieved technological breakthroughs which will assure continuation of the engineering phase during 1972. Assuming normal progress for this engine and its aircraft, this fuel pump could provide significant production orders in the years ahead. 1. Components of the anti skid Hytrol Mark III and Selected Deceleration system installed on the Boeing 737. 2. Hydro-Aire turbo engine fuel pumps include an augmentor pump (left) and a main engine pump. 3. A complete set of HydroAire equipment for the Boeing 747 includes components for the Selected Deceleration automatic braking system and 14 fuel boost and transfer pumps. 3 I 17 Crane Canada Limited Crane Canada Limited manufactures and distributes plumbing fixtures, valves, pumps, heating and water conditioning equipment for residential, commercial and institutional building and for industrial applications. 1. Place de Radio-Canada, Montreal headquarters for the French networks of the Canadian Broadcasting Corp., is equipped exclusively with Crane plumbing fixtures. 2. This automatic Cochrane hot lime zeolite system, including deaeration, supplies treated water for the boiler plant of an Alberta refinery. 3. Crane Canada supplied the bulk of the valves for Ontario Hydro's Pickering Generating Station, one of the world's largest nuclear generating plants. Throughout 1971, the Canadian economy continued to suffer from a general slowdown. This was due to anti-inflationary programs in force since 1969. The home building industry was a notable exception. Housing starts, pressured by back logged demand and reacting to the ready avail ability of mortgage money and easing of mort gage rates, rose considerably. Crane Canada Limited benefited from an improved demand for plumbing and heating products as a result. Sales of plumbing fixtures and fittings ran ahead of 1970. Working closely with Crane-U.S.A., a new line of plumbing brass was created specifically for the low-cost hous ing market of 1972, and three new lavatories were introduced during the year. All have been well received by the trade and are expected to make a substantial contribution to sales. Capital spending by manufacturing in dustries remained below the 1970 level, with l2 3 nternational Operations "lilted Kingdom--valves, fittings, heating equipment, pumps, meters, and water conditioning equipment 5 Netherlands--valves, fittings and _ heating equipment ranee--valves and pumps pain--valves and pumps CSt Germany--valves ustralia--valves and pumps %xico--valves and pumps Last year operations outside the United lies and Canada showed only a modest gain Jales, but profits were significantly higher, 'y because of improved operating efficien- \ France, The Netherlands and Spain in cular showed increased profitability. Kingdom Strikes, growing unemployment and con g inflation in Great Britain were reflected e results of Crane Ltd., which, although expectations, showed an improvement the previous year. In 1971, Crane Ltd. revised its organiza tional structure into operating divisions to par allel the United States and Canada. Each is a profit center responsible for its own product development, manufacturing and sales. Formation of the Environmental Systems operation to handle the sale of Cochrane prod ucts and the microstrainer and ozonation busi ness of Glenfield & Kennedy resulted in greater market penetration, with orders nearly double forecast. The year also produced record orders for microstraining and ozonation equipment, two of which are for major ozonation plants. Among markets hardest hit by the busi ness recession were construction, engineering and general industry--the primary markets served by the Valves, Heating and Fittings Division. Demand was down from the pre vious year. One notable exception was com mercial boilers, which had sales well above 1970 levels, due to the introduction of new gas-fired equipment. Both steel and butterfly valve lines per formed well, and the sale of marine valves rose considerably with an increase in ship building. Glenfield & Kennedy, responding to the needs of the water supply industry, devel oped and introduced the Apex air valve, a product that was well received. The Netherlands Despite a slowing of the economy in the second half of 1971, sales of all Crane Neder land N.V. product lines showed increases. Sales were primarily in the domestic area, fol lowed by Common Market customers. Start-up of a new, automatic molding line in August gave increased production and 1. Crane Australia supplied the iron, bronze and steel valves used in this refinery complex. 2. Four microstrainers at this sewage treatment plant in Worcestershire, England, can handle 12 million gallons of effluent daily. 3. A 72-inch submerged discharge regulating valve for an irrigation project in South Africa is tested at the Kilmarnock, Scotland, works. 1&2. Central heating and hot water for London's Limebank Building are supplied by five Crane Europa boilers installed on the 27th floor. 3. Cast iron sections for gas-fired domestic boilers are machined on automatic equipment in the plant at Deventer, The Netherlands. greater operating efficiency. While some prod ucts are scheduled for redesign in 1972, the major effort will be to further improve oper ating efficiency. France Crane S.A. showed substantial improve ment. Faced with a general slowdown of activ ity throughout France, considerable effort was devoted to the export market with good results. Substantial valve orders came from power sta tions, refineries and other large projects. This trend may be expected to continue in 1972. Continuation of a standardization and cost reduction program, including the installa tion of new automatic machinery, will enable Crane S.A. to improve its competitive position. Spain A continued high level of activity in the Spanish shipbuilding industry proved to be a strong factor in the 1971 performance of Crane-FISA, S.A. Prospects are favorable for major orders again this year. Domestic market expansion plans have been slowed because of government action to stop inflation, complicated by European Common Market developments and the Span ish National Development Plan. But perform ance should improve during 1972, based on the reduction of the cost of money and promotion of new investment in plants and equipment. Use of nodular cast iron has helped CraneFISA to obtain important valve orders--and additional orders are expected in 1972. Circu lating pump sales increased slightly as the housing and construction markets expanded. A new type of circulator, to be launched year, is now being tested. West Germany Though sales were down, profi Crane G.m.b.H. showed a small improv over 1970. Revaluation of the mark efforts of the German government to* inflation slowed capital expenditures. The chemical industry was most se affected, but this loss was partially off' increased activity in the petroleum industries. Large quantities of steel valves were supplied to petrochemical ins. tions and substantial gains were made forged steel valve market. Australia Although showing good results, tralian business recession had an effect' operations of Crane Australia Pty. last year. Reduced capital expenditur tion and increasing unemployment expected to continue in 1972. : In the longer term, however, prosj the Australian economy are good. The sive mineral resources still to be devel that continent offer a number of market tunities for Crane products. Mexico ^ Despite a modest rise in pump 8. profits from increased penetration of^ ing and construction markets last* overall performance of Crane-D^ Mexico S.A. was below 1970 beca. v > < -* S ('^{J i-*<rts>*4-s^ft}%a*fc4|t'S ,<#f^tS^m `f( V ~^V -lISffc***** Stock Transfer Agents. ' V . v1' ` 1 '- ' * ' -i N ;< ? f * "MlT'VV* Equal Employment Opportunity Policy Registrars of Stock I* .,,i, V // , v v*> nyi^ *'*>'*( ^OHW' - ` -^fh- - ys4*< -<V?isHaHrt:' rtSt Jm-J ^5t'*!9r"* * ' ''"Bond Trustees ai i3rf*SlS r ty**w !. > >*" '*v> '-, v,"-a-vV* ;wwSks* hi .*.*.'{ 'vMsItftjJsijiLS .jl uH&5?nK ';. . - M>v i-- . ,:'}.. . ' -; : K> - !>aki' nwm&itmHmfrtimi Jaimonajo Emnane. Executive Offices ................. 1