Document Qk4npoKn8g7oYNYykyYpEgzG5

JOHNS-MANVILLE CORPORATION 1965 Annual Report MTC 002245 FINANCIAL HIGHLIGHTS OF THE YEAR Net Sales Net Earnings Net Earnings per Share Dividends Dividends per Share 1965 $480,180,000 $ 34,134,000 $4.03 $ 17,375,000 $2.05 Cash Flow Cash Flow per Share Working Capital Stockholders' Equity $ 54,093,000 $6.39 $126,937,000 $324,495,000 Depreciation and Depletion Research and Development Capital Expenditures Income Taxes Other Tax Provisions Total Taxes Total Taxes per Share $ 19,959,000 $ 7,417,000 $ 21,231,000 $ 29,370,000 $ 10,748,000 $ 40,118,000 $4.74 Stockholders Number of Employees 27,700 20,900 1964 $458,879,000 $ 32,065,000 $3.77 $ 17,018,000 $2.00 $ 50,739,000 $5.96 $114,420,000 $307,796,000 $ 18,674,000 $ 7,627,000 $ 20,105,000 $ 26,200,000 $ 9,652,000 $ 35,852,000 $4.21 30,000 20,400 CONTENTS President's Letter............................. ............ Mining .............................................. ............ Production ........................................ ............ Marketing.......................................... ............ Research and Engineering .............. ............ 1 2 4 6 8 Administration ...................... ........................ 10 Directors and Officers........... ........................ 11 Divisions .............................. ........................ 12 Operating Facilities ............. ........................ 14 Ten-Year Review................. ............... ........ 15 Financial Statements ........... ........................ 16 ANNUAL MEETING--The 1966 Annual Meeting of Stockholders will be held in Boston, Massachusetts on Thursday, March 17. All stockholders are cordially invited to attend. Proxies for this meeting and a reservation card are included with this mailing. All stockholders who cannot attend in person are reminded of the importance of returning their proxies. FRONT COVER--Four photographs representative of the company's principal operating areas--Mining, Production, Marketing, and Research & Engineering. MTC 002246 PRESIDENT'S LETTER February 14, 1966 To Johns-Manville Stockholders: 1965 was a year of progress for Johns-Manville. Market momentum in a healthy business economy produced record sales and earnings, despite strikes at eight of our plants. Mining operations reached the highest levels ever and further strengthened our already important position among asbestos, diatomite and perlite producers. Eleven of twelve divisions increased sales. Only Building Products, most affected by the strikes, failed to surpass 1964. Cash flow--net earnings plus provision for depreciation and depletion--was the greatest yet experienced. For the fourth consecutive year, this important indicator bettered the previous year's mark. These 1965 achievements, coupled with anticipated future growth, encouraged the Board of Directors to raise the dividend in the last quarter to an annual rate of $2.20 per share. The high level of construction activity throughout the Free World had a favorable impact on our business. Construction, in Johns-Manville terms, covers a broad spectrum. It embraces refineries, schools, ships, plants, hospitals, residences--both private homes and apartment houses--shopping centers, water and sewer systems, power lines, oil and gas pipe lines, motels, farm buildings, TV studios and highways. Tooling up to meet this broadening construction market, your company built three plants during the year. One at Hayward, California, is now producing floor tile. Another, at Green Cove Springs, Florida, makes both asbestos-cement and plastic pipe. Overseas, a plant in Ghent, Belgium is now ship ping asbestos-cement building materials. Supporting these new operations were capital investments in J-M mining operations. Our asbestos, diatomite and perlite mines were expanded and modernized to help meet current needs and anticipated demand for these important raw materials. To accelerate our participation in markets outside the construction business, two other important projects were completed: a friction materials plant at Laurinburg, North Carolina; and at Wissembourg, France, a second European perlite processing plant. We hope this report gives you a good perspective of Johns-Manville and helps you evaluate the successful operations of 1965. The Board joins me in extending appreciation for your support of our efforts. Together with the cooperation received from employees, customers and suppliers, it helped make 1965 a good year. C. B. Burnett President MTC 002247 1 MINING Asbestos fiber, diatomite, perlite and prod ucts made from these raw materials accounted for approximately 55% of 1965 sales. The efficient and economical mining of these three minerals is basic to the successful per formance of the company. Asbestos Asbestos fiber, Johns-Manville's most im portant raw material, is mined at Asbestos, Quebec, Canada; Coalinga, California; and Baie Verte, Newfoundland, Canada. It is a basic component of products used in construc tion, fire protection and insulation. Customers for J-M asbestos fiber, around the world, bought in record volume last year. Additions and improvements were made in each of the company's three asbestos mining and milling operations. At the wholly-owned Jeffrey Mine at Asbes tos, a $4,000,000 investment was authorized, increasing capacity of fiber production 30,000 tons and improving the quality of output. Spe cialized high-speed equipment for removal of overburden and waste rock at lower cost was part of this expenditure. At the Coalinga mine, completing its fourth year of operation, milling capacity was in creased 15,000 tons annually. Coalinga yields a high quality white fiber par ticularly suited for manufacturing asphalt and vinyl asbestos flooring. Johns-Manville owns an 80 percent interest in this excellent California ore body, with Kern County Land Company also a part owner. Advocate Mine, at Baie Verte, completing its second year of operation, exceeded 1964 pro duction. Fiber quality was improved and added equipment increased the yield. J-M owns 31 percent of the Advocate Mine. Field work and physical testing on the Reeves property, located in Northern Ontario, has been completed. Decision on the development of the ore body will be made early in 1966. Diatomite Diatomite, presently mined by Johns-Man ville at Lompoc, California and Santa Catarina, Jalisco, Mexico, is a fossil mineral which the company markets under the name Celite. It is used for filtering and clarifying liquids ranging from water to molten plastics. It is also used as a filler in paints, plastics, papers and polishes, serving to reduce sheen or to give whiteness. During the year, with world-wide use of Celite continuing to grow, productive capacity of the wholly-owned Lompoc mine and mill was expanded 20,000 tons. At Santa Catarina, the mining and milling operation went into full scale commercial pro duction to serve the expanding market for diat omite in Mexico. J-M holds a 40 percent inter est in the Santa Catarina operation with the balance held by Mexican nationals. Perlite Perlite mining and milling capacity at No Agua, New Mexico was increased 20,000 tons to keep pace with growing demand. Perlite is a volcanic raw material that has the unique property of expanding like popcorn when heated. The expanded mineral has mil lions of air cells, is incombustible, and therefore ideal for insulation and other fire retardant building materials. Light in weight, perlite is particularly suited as an aggregate for plaster and concrete. 2 MTC 002248 High speed equipment removes overburden at the rate of 35 tons a minute during stripping operations at the Jeffrey Mine, Asbestos, Quebec. Quality control testing of synthetic silicates pro duced at Lompoc, California. Panoramic view of asbestos mine and mill, Baie Verte, Newfoundland. MTC 002249 3 PRODUCTION Plant construction, expansion and modern ization keynoted Johns-Manville production activities in 1965. Five new plants were in operation by year end, bringing the company total to fifty-three. Forty-three are located in the United States; three in Canada, and seven overseas. New U.S. Operations A new floor tile plant is operating at Hay ward, California, to meet growing demand in the western states for asphalt and vinyl asbestos flooring products. Market studies of the southeast U. S. pointed up a steadily increasing interest in J-M pipe products in that area. So, a new pipe plant is now located at Green Cove Springs, Florida. The new plant produces asbestos-cement and polyvinyl-chloride (PVC) plastic pipe for use in municipal water and sewage lines, irrigation and industrial plant piping systems, as well as in new homes. Laurinburg, North Carolina, is the home of a new J-M friction materials plant, producing Cobra brake shoes for the railroad industry. New Overseas Plants Asbestos-cement building board is being made at a new plant in Ghent, Belgium. At Wis sembourg, France, another new J-M factory is producing and shipping perlite filter aids to the sugar, beverage, food and chemical processing industries of Europe. The Wissembourg plant is the second perlite operation the company has established over seas. The first such facility is located in Hull, England. Modernization and Expansion Besides building new plants, J-M increased capacity and reduced costs by modernizing or expanding at a number of locations. At Denison, Texas, new equipment is pro ducing Temp-Tite pipe, a recently developed J-M product that has a polyurethane plastic core, sandwiched between two sections of Transite asbestos-cement pipe. At Manville, New Jersey, equipment was in stalled to make the newly developed Bel-Air fire resistant shingles. Facilities were also added to hot-form titanium for components the company furnishes for America's defense and aerospace programs. Manufacturing facilities for fiber glass were expanded at Richmond, Indiana; Defiance and Waterville, Ohio; Parkersburg, West Virginia; and Penbryn, New Jersey. Asphalt roofing products are now being pro duced in greater volume at the Savannah, Georgia plant, as a result of an expansion com pleted during 1965. Licensing Agreements Johns-Manville continued in 1965 to in crease its role in important world markets through licensing, technical assistance agree ments and minority investments. At year end, J-M developed products were being manufactured overseas by 64 companies, operating 86 plants in 28 countries. Of particular interest to overseas manufac turers has been an extrusion process which J-M developed for making asbestos-cement building products. Already, companies in the United Kingdom, Belgium, Denmark and Mexico have signed licensing and technical assistance agree ments for this promising production technique. 4 MTC 002250 Manufacturing operations at recently completed friction materials plant, Laurinburg, North Carolina. Ground level view of the company's new floor tile plant at Hayward, California. J-M developed extrusion process is used by Mexican manufacturer to make asbestos-cement products. MTC 002251 5 MARKETING Johns-Manville markets more than 100 ma jor product lines. They range from disc brake pads for automobiles to built-up roofing for buildings; from pressure-sensitive tapes to fiber glass reinforced plastic panels; from pipe that carries water deep underground to sophisticated insulations that protect U.S. astronauts a hun dred miles above the earth. Because J-M sells these products to a wide variety of major industries--construction, steel, chemical, petroleum, transportation, appliances, electrical, sewage and utilities--the company's sales performance is closely related to the progress, growth and strength of the whole general business economy. Thus the high national level of capital spend ing in 1965 helped the sales of J-M industrial products--industrial insulations, perlite, diatomite and friction materials, as well as construc tion materials--asbestos-cement pipe, building panels, roofing, ceiling and floor tile and in sulated hot and cold air ducts. The slight dip in U.S. housing starts affected the sale of J-M building products, partially off setting the gains in industrial and commercial construction. Due to its wide product and market diversification, however, Johns-Manville today derives only 15% of its sales from the new home market. Customer Services Expanded To improve delivery to J-M's 70,000 cus tomers, a new product distribution center was established at Columbus, Ohio and warehouse facilities were relocated at Jacksonville; Mt. Vernon, New York; Tulsa; Miami; Minneapolis; and St. John, New Brunswick, Canada. An important part of the company's market ing program is the intensive product training that is conducted for the sales employees of J-M customers. In 1965, more than 15,400 such people par ticipated in sales training sessions in major mar ket areas throughout the U.S. Styling and Design The sale of J-M building products, in parti cular, hinges in large measure on good product styling and design. To insure continued progress in this area, the company established a Design Center at Mountainside, New Jersey. Here, de sign and styling specialists work to upgrade the appearance and utility of well-established J-M lines as well as the newer building materials de veloped at the company's Research Center at nearby Manville. Advertising and Sales Promotion Advertising and sales promotion activities were intensified during the year, in support of the company's more than 20,000 distributors, dealers, applicators and approved contractors. More than 200 specialized business publica tions carried advertisements designed to tell readers more about what J-M products can do for them. A worldwide advertising campaign--telling the story of Johns-Manville progressiveness, its development of unusual new products, its asso ciation with progressive projects like space ex ploration-appeared in Newsweek, Newsweek International, Time International, U.S. News & World Report and Business Week. Progress continued during the year on a pro gram for measuring advertising effectiveness on a market-by-market basis. Computer analysis of various combinations of promotional effort will help formulate future advertising campaigns designed to produce maximum return on the dollar invested. 6 MTC 002252 Advertisement highlighting J-M contributions in On-site application of the recently introduced Bel-Air fire resistant roofing that aerospace as featured in leading publications. provides texture and appearance of natural wood shake shingles. Building Products exhibit at the 1965 national con- Sales promotional programs include eye-catching point-of-purchase displays in support vention of the American Institute of Architects. of the national network of J-M dealers. MTC 002253 7 RESEARCH AND ENGINEERING At Manville, New Jersey the company oper ates the largest research and engineering facil ity in the world devoted to building materials, insulations and industrial products. Here, J-M scientists concern themselves with the control of heat, cold, sound and motion--with fight ing the destructiveness of fire, weather and wear. In 1965, Johns-Manville invested over $11 million in research, development, and engi neering. A substantial part of this was di rected to developing new applications for plas tics, products for use in water treatment, and high temperature insulations for the nation's aerospace program. In addition, a number of promising new products were brought from the development stage to commercial production. Plastics Efforts continued in 1965 to use plastics to broaden and improve J-M product lines. To consolidate development efforts in plastic foam materials, a new operating department was organized under the Industrial Insulations Division. Plastic foam products currently in clude polystyrene, polyurethane and polyvinyl chloride for low temperature insulating appli cations and as insulating core materials for building panels. Water Treatment Johns-Manville products have long been of service in the purification and transportation of water. J-M pipe carries potable and industrial process water as well as sewage, safely and eco nomically. Diatomite-based filtration products are currently in use in industrial, waste, second ary recovery, swimming pool and municipal water treatment systems. In view of the growing national concern over the problem of water conservation, J-M re search people are currently working with inde pendent laboratories and government authori ties to develop new uses for diatomite in purifying salt water and removing iron, hydro gen sulfide, starches, bacteria and detergents from public water systems. Aerospace High-temperature insulations developed by Johns-Manville continued to play a key part in the nation's aerospace effort. Min-K and Thermoflex insulations pro tected U.S. astronauts in the Gemini orbital space flights. Several J-M products, including Min-K and Micro-Quartz insulations, will shield the occupants of the forthcoming Apollo space vehicles that are scheduled to send men on a round trip to the moon. Dyna-Flex, J-M trademark for a newly-de veloped insulating material capable of with standing temperatures of 2,700 degrees F., is currently undergoing evaluation for future aero space projects. New Products J-M products that progressed from the re search and development stage to commercial production in 1965 included: Bel-Air -- fire resistant premium roofing material for residential, commercial and institutional buildings. This new material has the texture and appearance of natural wood shake shingles. Acousti-Clad -- incombustible, metal-en closed ceiling tiles for industrial, institu tional and commercial use. Micro-Aire Duct Board--aluminum-faced fiber glass board for fast fabrication of complete duct systems, for heating and air conditioning applications. 8 MTC 002254 Pilot plant operator inspects new plastic foam prod- Laboratory conductivity test is applied to newly developed aluminum-faced fiber uct at the J-M Research and Engineering Center. glass product for duct systems. Research technician operates arc furnace used in the development of sophisticated insulating materials for aerospace applications. MTC 002255 9 ADMINISTRATION The future strength and growth of JohnsManville, in an increasingly competitive and complex society, requires that the 20,900 J-M people continually improve their skills, compe tence and knowledge. In 1965, some 500 employees participated in supervisory and middle management train ing, 190 of them completing courses in admin istrative leadership or product management. More than 5,000 J-M people were involved in plant training programs and 533 employees took advantage of the company's tuition aid plan to further their individual education at secondary schools and colleges. Health, Safety and Service In 1965, Johns-Manville further improved its programs for employee health, safety and industrial hygiene. From base laboratories located at Asbestos, Quebec; Manville, New Jersey; Waukegan, Illinois and Lompoc, California, professional hygienists periodically visit each J-M plant and mine to determine that air cleanliness, light, heat and noise levels assure pleasant and efficient working conditions. Johns-Manville continues to be an industrial leader in employee safety. As a result of a com prehensive accident prevention program, the company's safety record during 1965 stands well ahead of the National Safety Council's allindustry average. During the year, 288 employees completed 25 years of company service, enlarging the ranks of the J-M Quarter Century Club to a total of 3,744 members. Some 2,100 men and women received retire ment income in 1965 from the Johns-Manville Retirement Fund. Labor Relations The company currently has fifty-three labor agreements with twenty-one international unions. During 1965, thirty-one contracts, of two or three years duration, were negotiated. Union attempts at multi-plant bargaining and internal union problems resulted in costly strikes at Waukegan, Natchez, Long Beach, Toronto, Defiance and Hayward. These unfortunate work stoppages had a sub stantial effect on both the employees involved and the company. Cost to employees--about $4,100,000 in lost wages. Cost to the com pany--1,400,000 lost man hours of work. Organization Changes Effective January 1,1965, Francis E. Dutch- er, Vice President of Johns-Manville Corpora tion, was appointed to the newly created posi tion of Vice President for Building Materials Divisions. In this operating position, Mr. Dutcher is responsible for the overall admini stration of the J-M Building Products, Flooring and Melamite Divisions. Murray F. MacDonald, Vice President of Johns-Manville Sales Corporation, succeeded Mr. Dutcher as General Manager of the Build ing Products Division. Legal Matters A civil antitrust action instituted by the Gov ernment in 1962 against the Corporation and a related private antitrust action brought against the Corporation in 1964 are still pending. Counsel is of the opinion that the Corpora tion has a valid defense to these two actions. Each involves the charges of antitrust viola tions, made by the Government in a criminal prosecution which ended in 1964 in a judgment of acquittal. MTC 002256 Johns-Manville Directors in session. Left to right, George P. MacNichol, Jr., Francis H. May, Jr., Leslie M. Cassidy, Joseph A. Grazier, Adrain R. Fisher, President Clinton B. Burnett, Secretary Herbert Morton Ball, Thomas E. Sunderland, Roger Hackney, William C. Stolk, Edgar G. Burton and Henry C. Alexander. BOARD OF DIRECTORS Henry C. Alexander...................... Chairman of the Executive Committee, Morgan Guaranty Trust Company of New York Clinton B. Burnett...................................... President, Johns-Manville Corporation Edgar G. Burton........................................ Chairman, Simpsons Limited (Toronto) Leslie M. Cassidy..........................................................Director various corporations Adrain R. Fisher...................................... Director, American Radiator & Standard Sanitary Corporation Joseph A. Grazier.......Chairman and President, American Radiator & Standard Sanitary Corporation Roger Hackney.................................. Vice President, Johns-Manville Corporation George P. MacNichol, Jr............Director, Member of the Executive Committee, Libbey-Owens-Ford Glass Company Francis H. May, Jr..............................Vice President, Johns-Manville Corporation William C. Stolk.................................................. Director, American Can Company Thomas E. Sunderland.......................................... Chairman, United Fruit Company OFFICERS Clinton B. Burnett....................................................................................... President Charles W, Hite............................................ Vice President for Industrial Relations Roger Hackney...................Vice President for Mining and International Divisions Robert F. Orth.......................Vice President for Marketing and for Pipe Division Don L. Hinmon............................................ Vice President for Industrial Divisions Francis E. Dutcher........................ Vice President for Building Materials Divisions Francis H. May, Jr........................................................... Vice President for Finance Arthur C. Smith.......Vice President for Research, Development and Engineering Herbert Morton Ball.............................................. Secretary and General Attorney James M. Shackelford...................................................................................Treasurer Irving J. Pedly............................................................................................. AssistantSecretary Mrs. Consuelo C. Bean..............................................................................AssistantSecretary Richard M. Davis........................................................................................AssistantTreasurer Robert A. Goldthwaite................................................................................AssistantTreasurer MTC 002257 11 OPERATING DIVISIONS Operation and administration of the company's fifty-three plants, six mines and worldwide net work of sales offices is organized into twelve sepa rate operating divisions. Each division is responsible for production, sales and earnings within the scope of its assigned area. Corporate departments coordinate operating divisions' efforts in the areas of finance, research, development and engineering, marketing, legal, administrative services, advertising and public relations and industrial relations. ASBESTOS FIBRE CANADIAN PRODUCTS Alfred G. Sinclair, General Manager The Canadian Products Division with headquar ters at Toronto, Ontario is responsible for the man ufacture and sale of Johns-Manville product lines throughout the Canadian market. The division op erates plants at Asbestos, Quebec; North Bay and Toronto, Ontario. CELITE Karl V. Lindell, General Manager The Asbestos Fibre Division is engaged in the worldwide exploration, mining and milling of as bestos fiber. It is responsible for operating asbestos mines and mills located at Asbestos, Quebec; Coalinga, California; and Baie Verte, Newfoundland. Headquarters for division activities is located at Asbestos, Quebec. BUILDING PRODUCTS Perry A. Martinson, General Manager The Celite Division is a major producer of diatomite for industrial applications as filter media and inert filler, and a supplier of perlite and syn thetic silicates. Operating facilities include a diatomite mine and mill at Lompoc, California; a perlite deposit and mill at No Agua, New Mexico, and a processing plant at Joliet, Illinois. DUTCH BRAND Murray F. MacDonald, General Manager The Building Products Division is a major national producer and supplier of a variety of wood, fiber glass, perlite, asbestos, and plastic based building materials for residential, commercial, institutional and industrial construction. The division operates a total of sixteen manufacturing facilities and a network of sales offices serving major markets throughout the United States. James R. Allen, Operations Manager The Dutch Brand Division produces and markets a wide variety of pressure-sensitive plastic, rubber, cloth and paper tapes for electrical, industrial and MTC 002258 residential applications--and asbestos papers and board for the electrical and electronic industries. The division also produces and markets adhesives, cork and sponge rubber products for industrial use as sealing and gasketing. The division's production facilities are located at Chicago, Illinois and Tilton, New Hampshire. FIBER GLASS William L. VanDerbeek, General Manager The Fiber Glass Division is responsible for the production of J-M fiber glass insulations marketed by the Building Products and Industrial Insula tions divisions. The division also manufactures and sells textile fiber glass and reinforcement mate rials. Principal manufacturing operations are lo cated at Cleburne, Texas; Corona, California; Defiance, Ohio; Parkersburg, West Virginia; Penbryn, New Jersey and Waterville, Ohio. The divi sion maintains headquarters at Toledo, Ohio. FLOORING MELAMITE Wallace R. Tyrie, Operations Manager The Melamite Division produces high-pressure plastic decorative laminates for application as counter tops, wall paneling and as surfacing ma terial by furniture manufacturers. The division's production facilities and headquarters are located at Lawrence, Massachusetts. John B. Jobe, General Manager The Industrial Insulations Division is a major sup plier of industrial and commercial insulating mate rials. Principal product lines include pipe and block insulations; insulating fire brick; refractory cements; appliance, railroad, marine and automo bile insulations; and specialty insulations for aero space, atomic energy and cryogenic applications. A. Kenneth Higbee, General Manager The Flooring Division produces and sells the com pany's broad line of vinyl asbestos and asphalt asbestos floor tile products for residential, com mercial and industrial flooring applications. The division operates plants at Chillicothe, Ohio; Manville, New Jersey; Marrero, Louisiana; and Wau kegan, Illinois. A fifth manufacturing plant was placed in operation in 1965 at Hayward, California to meet growing demand in western markets. Dudley T. Colton, General Manager The International Division is responsible for the production and marketing of J-M product lines MTC 002259 outside the United States and Canada. The division currently operates seven overseas manufacturing facilities located at Hull, England; St. Marcellin, Wissembourg and Bellegarde, France; Mol and Ghent, Belgium; and at Milan, Italy. PACKING AND FRICTION MATERIALS Edward H. Wells, General Manager The Packings and Friction Materials Division manufactures and markets an extensive line of packings, gaskets, asbestos textiles; automotive and industrial brake linings, brake blocks and clutch facings. The division's production operations are located at Manville, New Jersey; Marshville, North Carolina; North Brunswick, New Jersey; Wauke gan, Illinois; and Laurinburg, North Carolina. PIPE Robert F. Orth, General Manager The Pipe Division produces and markets asbestoscement pipe for home, farm and turf irrigation, public works, water and sewer systems, industrial and process applications. The division is also an important supplier of plastic pipe for water service and gas connections, irrigation systems, conduit, processing and oil lines. Operating facilities are located at Green Cove Springs, Florida; Denison, Texas; Manville, New Jersey; Marrero, Louisiana; Stockton, California; Long Beach, California; Waukegan, Illinois; and Franklin, Pennsylvania. OPERATING FACILITIES Plants Alexandria, Indiana Long Beach, California Asbestos, Quebec Los Angeles, California Avery, Ohio Madison, Illinois Bellegarde, France Manville, New Jersey Billerica, Massachusetts Marrero, Louisiana Chicago, Illinois Marshville, Chillicothe, Ohio North Carolina Cleburne, Texas Milan, Italy Cleveland, Ohio Mol, Belgium Corona, California Nashua, Defiance, Ohio New Hampshire Carpenter Road Natchez, Mississippi Defiance, Ohio New Orleans, Louisiana Columbus Avenue North Bay, Ontario Defiance, Ohio North Brunswick, Perry Street New Jersey Denison, Texas Parkersburg, Fort Worth, Texas West Virginia Franklin, Pennsylvania Penbryn, New Jersey Ghent, Belgium Pittsburg, California Green Cove Springs, Richmond, Indiana Florida Rockdale, Illinois Houston, Texas St. Marcellin, France Hayward, California Savannah, Georgia Hull, England Stockton, California Jarratt, Virginia Tilton, New Hampshire Joliet, Illinois Toronto, Ontario Laurinburg, Waterville, Ohio North Carolina Waukegan, Illinois Lawrence, Wissembourg, France Massachusetts Zelienople, Lompoc, California Pennsylvania Mines Asbestos, Quebec tBaie Verte, Newfoundland Coalinga, California Lompoc, California No Agua, New Mexico fSanta Catarina, Mexico Research and Engineering Center Near Manville, New Jersey Fiber Class Research and Technical Center Waterville, Ohio Majority Owned tMinority Interest--Operated and Managed by Canadian Johns-Manville (Minority Interest MTC 002260 TEN-YEAR REVIEW OF OPERATIONS (All dollar figures except those per share are in millions) 1965 1964 1963 1962 1961 I960 1959 1958 1957 1956 Sales $480.2 458.9 414.9 Earnings Before Income Taxes $63.5 58.3 52.6 Income Taxes $29.4 26.2 24.9 392.3 43.8 19.9 377.8 43.0 19.1 365.2 49.9 23.4 377.6 331.7 55.7 42.2 24.1 18.8 308.3 31.2 13.4 310.4 46.2 21.2 Net Earnings $34.1 32.1 27.7 23.9 23.9 26.5 31.6 23.4 17.8 25.0 Earnings per Share*t $4.03 3.77 3.25 2.81 2.81 3.12 3.74 2.83 2.48 3.79 % of Earnings to Sales 7.1 7.0 6.7 6.1 6.3 7.3 8.4 7.0 5.7 8.0 Dividends $17.4 17.0 17.0 17.0 17.0 17.0 16.7 14.3 14.3 15.0 Dividends per Share* $2.05 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.25 Investment $324.5 % of Earnings to Invest ment at Start of Year 11.1 307.8 10.8 297.3 9.6 Capital Expenditures $21.2 20.1 15.8 Investments in Other Companies $3.5 6.3 5.8 Depreciation & Depletion $20.0 18.7 19.2 Research Development & Engineering Expense $11.0 11.8 9.7 287.2 8.4 11.4 6.6 19.6 11.3 283.6 8.7 20.0 1.8 16.9 11.4 275.7 10.0. 20.0 2.9 16.8 10.1 265.4 245.5 12.4 11.1 16.2 12.0 .9 .9 16.8 15.8 8.5 7.7 210.2 8.6 45.3 .4 14.5 8.5 206.2 15.0 24.9 1.2 13.6 7.5 Book Value per Share* $38.29 36.32 34.89 33.71 33.30 32.47 31.32 29.63 29.35 28.84 Shares Outstanding at End of Year* 8,475,233 8,474,778 8,510,248 8,519,900 8,517,613 8,490,038 8,474,214 8,283,192 7,163,006 7,148,723 Stockholders 27,700 30,000 31,000 30,500 29,400 29,600 30,100 23,800 20,000 19,200 Employees 20,900 20,400 20,000 20,200 21,200 21,000 22,000 21,800 21,700 21,300 Wages, Salaries & Employee Benefits $184.8 175.7 159.2 151.9 150.3 146.3 145.9 135.7 130.9 127.5 *Adjusted lot 7956 stodc split. fOn average shares outstanding. MTC 002261 15 FINANCIAL STATEMENTS Johns-Manville Corporatio INVESTMENT Working Capital Cash (including time deposits of $7,500,000 in 1965) Marketable securities at cost (approximately market) Accounts and notes receivable Inventories at the lower of cost (principally last-in, firstout) or market Total current assets Less, Current liabilities: United States and Canadian income taxes Other taxes Wages and compensation Accounts payable and other accrued liabilities Total current liabilities Working capital Marketable Securities set aside for plant additions Properties and Plants, at cost Less, Accumulated depreciation and depletion Investments (principally outside U.S.) and other assets, at cost or less Investments in unconsolidated subsidiaries Investments in other companies Prepaid expenses and deferred charges Other assets Total Less: Notes payable, 2.7 per cent, principal payable $250,000 annually to July 15,1966, balance payable July 15,1967 Reserves for self-insurance and product guarantees Investment Represented By: Common stock, $5 par, 25,000,000 shares authorized, 8,582,500 issued. (Note 1) Earnings reinvested Less: Cost of treasury stock, 1965--107,267 shares; 1964--107,722 shares December 31 1965 1964 $ 17,958,000 37.483.000 92.750.000 58,570,000 206,761,000 23,505,000 8,274,000 17.415.000 30.630.000 79,824,000 126,937,000 20,000,000 363,049,000 219,743,000 143,306,000 $ 16,453,000 35.279.000 79.710.000 57,685,000 189,127,000 27,861,000 6,588,000 16.139.000 24.119.000 74,707,000 114,420,000 20,000,000 347,225,000 203,864,000 143,361,000 7,494,000 22,096,000 4.329.000 5.996.000 39,915,000 330,158,000 5,709,000 20,682,000 3.420.000 6.320.000 36,131,000 313,912,000 1.250.000 4.413.000 5,663,000 $324,495,000 1.500.000 4.616.000 6,116,000 $307,796,000 $119,484,000 211,038,000 330,522,000 6,027,000 $324,495,000 $119,526,000 194,279,000 313,805,000 6,009,000 $307,796,000 ACCOUNTANTS' REPORT To the Stockholders and Directors of Johns-Manville Corporation: We have examined the statement of invest ment of Johns-Manville Corporation and its consolidated subsidiary companies as of December 31, 1965 and the related statement of earnings and earnings reinvested for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other au diting procedures,'as we considered necessary in the circumstances. We previously examined and reported upon the financial statements of Johns-Manville Corporation and its consolidated subsidiary companies for the year 1964. We MTC 002262 and Consolidated Subsidiary Companies EARNINGS AND EARNINGS REINVESTED Net sales Costs and expenses (Note 2): Cost of sales Selling, general and administrative expenses Total Income from operations Other income, net Earnings before income taxes Federal, Canadian and state income taxes (Note 3) Net earnings for the year.................... Earnings reinvested at beginning of year Cash dividends, 1965, $2.05 per share; 1964, $2.00 per share Earnings reinvested at end of year 1965 $480,180,000 346,173,000 75,720,000 421,893,000 58,287,000 5,217,000 63.504.000 29.370.000 34,134,000 194,279,000 228,413,000 17,375,000 $211,038,000 1964 $458,879,000 331,542,000 74,327,000 405,869,000 53,010,000 5,255,000 58.265.000 26.200.000 32,065,000 179,232,000 211,297,000 17,018,000 $194,279,000 Notes 1. At December 31, 1965, 311,658 shares were reserved for issuance under the employees' stock purchase and deferred compensation plans. The Company presently intends to pur chase in the open market or otherwise all shares of common stock necessary to meet its obligations under these plans. At December 31, 1965, an additional 128,075 shares were reserved for issuance in con nection with options granted but unexer cised under the incentive stock option plan. At January 1, 1965, options outstanding for 136,225 shares at prices ranging from $41.875 to $57.00 per share were unexercised. Dur ing 1965 no options were granted; options on 6,350 shares were exercised at prices ranging from $41,875 to $53.00 per share, and options on 1,800 shares expired. No further options may be granted under the plan. 2. Depreciation and depletion charged to oper ations amounted to $19,959,000 in 1965, $18,674,000 in 1964. 3. The Company has reflected the investment credit as a reduction of Federal income tax ex pense. The reductions amounted to $1,055,000 or 12< per share in 1965 and $1,781,000 or 21< per share in 1964, of which $880,000 was applicable to prior years. did not examine the financial statements of the Canadian subsidiaries, which statements were examined by Sharp, Milne & Co., Canadian chartered accountants, whose reports thereon have been furnished to us. Our opinion ex pressed herein, insofar as it relates to the amounts included for Canadian subsidiaries, is based upon such reports. In our opinion, the aforementioned financial statements present fairly the financial position of Johns-Manville Corporation and its consoli dated subsidiary companies at December 31, 1965 and 1964 and the results of their opera tions for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. Lybrand, Ross Bros. & Montgomery New York, January 26, 1966 17 MTC 002263 Johns-Manville 22 East 40th Street . New York. N. Y. 10016 TRANSFER AGENT-MORGAN GUARANTY TRUST COMPANY OF NEW YORK REGISTRAR-THE CHASE MANHATTAN BANK, NEW YORK GENERAL COUNSEL-DAVIS POLK WARDWELL SUNDERLAND & KIENDL, NEW YORK AUDITORS-LYBRAND, ROSS BROS. & MONTGOMERY, NEW YORK SHARP, MILNE & CO., MONTREAL m LITHO IN U.S.A. MTC 002264 0 3 17 a 0 I 0 I / | JOHNS-MANVILLE CORPORATION 1965 AnnuaI Report MTC 002265 0 0 I 7 :> 0 111 7 2 FINANCIAL HIGHLIGHTS OF THE YEAR Net Sales Net Earnings Net Earnings per Share Dividends Dividends per Share 1965 $480,180,000 $ 34,134,000 $4.03 $ 17,375,000 $2.05 Cash Flow Cash Flow per Share Working Capital Stockholders' Equity $ 54,093,000 $6.39 $126,937,000 $324,495,000 Depreciation and Depletion Research andDevelopment Capital Expenditures Tngmm Tiitw Other Tax Provisions Total Taxes Total Taxes per Share $ 19,959,000 $ 7,417,000 $ 21,231,000 $ 29,370,000 $ 10,748,000 $ 40,118,000 $4.74 Stockholders Number ofEmployees 27,700 20,900 1964 $458,879,000 $ 32,065,000 $3.77 $ 17,018,000 $2.00 $ 50,739,000 $5.96 $114,420,000 $307,796,000 $ 18,674,000 $ 7,627,000 $ 20,105,000 $ 26.200,000 $ 9,652,000 $ 35,852,000 $4.21 30,000 20,400 CONTENTS President's Letter.................... ........... ............. Mining...... ............................................ ............. Production ............................... .............. Marketing.............................................. ............. Research and Engineering............... ............. 1 2 4 6 8 Administration..............................................:... 10 Directors and Officers...................................... 11 Divisions ............. .......... ................................... 12 Operating Facilities..... ........................... :....... 14 Ten-Year Review............................................... 15 Financial Statements ... ................................... 16 ANNUAL MEETING--The 1966 Annual Meeting of Stockbolden will be held in Boston, Massachusetts on Thursday, March 17. All stockholders are cordially invited to attend. Proxies for this meeting and a . reservation card are included with this mailing. All stockholders who cannot attend in person are reminded of the importance of returning their proxies. FRONT COVER--Four photographs representative of the company's principal operating areas--Mining, Production, Marketing, and Research & Engineering. MTC 002266 : view of asbestos mine and mill. Baa New automatic bag collectors installed at Lompoc, California increase diatomite wfoundland. processing capacity. 3 MTC 002267 0 0 1/ O 0 j 0 | / 5 PRODUCTION Plant construction, expansion and modern ization keynoted Johns-Manvilie production activities in 1965. Five new plants were in operation by year end, bringing the company total to fifty-three. Forty-three are located in the United States; three in Canada, and seven overseas. New U.S. Operations A new floor tile plant is operating at Hay ward, California, to meet growing demand in the western states for asphalt and vinyl asbestos flooring products. Market studies of the southeast U.S. pointed up a steadily increasing interest in J-M pipe products in that area. So, a new pipe plant is now located at Green Cove Springs, Florida. The new plant produces asbestos-cement and polyvinyl-chloride (PVC) plastic pipe for use in municipal water and sewage lines, irrigation and industrial plant piping systems, as well as in new homes. Laurinburg, North Carolina, is the home of a new J-M friction materials plant, producing Cobra brake shoes for the railroad industry. New Overseas Plants Asbestos-cement building board is being made dt a new plant in Ghent, Belgium. At Wissembourg, France, another new J-M factory is producing and shipping perlite filter aids to the sugar, beverage, food and chemical processing industries of Europe. The Wissembourg plant is the second perlite operation the company has established over seas. The first such facility is located in Hull, England. Modernization and Expansion Besides building new plants, J-M increased capacity and reduced costs by modernizing or expanding at a number of locations. At Denison, Texas, new equipment is pro ducing Temp-Tite pipe, a recently developed J-M product that has a polyurethane plastic core, sandwiched between two sections of Transited asbestos-cement pipe. At Manville, New Jersey, equipment was in stalled to make the newly developed Bel-Air fire resistant shingles. Facilities were also added to hot-form titanium for components the company furnishes for America's defense and aerospace programs. Manufacturing facilities for fiber glass were expanded at Richmond, Indiana; Defiance and WatervUle, Ohio; Parkersburg, West Virginia; and Penbryn, New Jersey. Asphalt roofing products are now being pro duced in greater volume at the Savannah, Georgia plant, as a result of an expansion com pleted during 1965. Licensing Agreements . Jobns-ManviUe continued in 1965 to in crease its role in important world markets through licensing, technical assistance agree-' menu and minority investments. At year end, J-M developed products were being manufactured overseas by 64 companies, operating 86 plants in 28 countries. Of particular interest to overseas manufac turers has been an extrusion process which J-M developed for making asbestos-cement building products. Already, companies in the United Kingdom, Belgium, Denmark and Mexico have signed licensing and technical assistance agree ments for this promising production technique. 4 MTC 002268 Manufacturing operations at recently completed friction materials plant, Laurinburg, North Carolina. Recently introduced Temp-Tlte pipe is stacked prior to shipment from production operation at Denison, Texas. Ground level view of die company's t plant at Hayward. California. floor tile J-M developed extrusion process is used by Mexican Aircraft insulating shrouds for the F-l 11 tactical fighter receive inspection check manufacturer to make asbestos-cement products. at Manville, New Jersey plant. S MTC 002269 uu I 7i0 \ 0 \ 77 MARKETING Johns-ManvDIe markets more than 100 ma jor product lines. Urey range from disc brake pads for automobiles to built-up roofing for buildings; bom pressure-sensitive tapes to fiber glass reinforced plastic panels; bom pipe that carries water deep underground to sophisticated insulations that protea U.S. astronauts a hun dred miles above the earth. Because J-M sells these products to a wide variety of major industries-construction, steel, chemical, petroleum, transportation, appliances, electrical, sewage and utilities--the company's sales performance is closely related to die progress, growth and strength of the whole general business economy. Thus the high national level of capital spend ing in 1965 helped the sales of J-M industrial products--industrial insulations, perlite, diatomite and friction materials, as well as construc tion materials--asbestos-cement pipe, building panels,. roofing, ceiling and floor tile and in sulated hot and cold air ducts. The slight dip in U.S. housing starts affected the sale of J-M building products, partially off setting the gains in industrial and commercial construction. Due to its wide prodna and market diversification,however,Johns-ManvOle today derives only 15% of its sales from the new home market. Customer Services Expanded To improve delivery to J-M's 70,000 cus tomers, a new product distribution center was established at Columbus, Ohio and warehouse facilities were relocated at Jacksonville; Mt. Vernon, New York; Tulsa; Miami; Minneapolis; . and St John, New Brunswick, Canada. An important part of the company's market ing program is the intensive product training that is conducted for the sales employees of J-M customers. In 1965, more than 15,400 such people par ticipated in sates training sessions in major mar ket areas throughout the U.S. Styling and Design The sate of J-M building products, in parti cular, hinges in large measure on good prodna styling and design. To insure continued progress in this area, the company established a Design Center at Mountainside, New Jersey. Here, de sign and styling specialists work to upgrade the appearance and utility of well-established J-M lines as well as the newer building materials de veloped at the company's Research Center at nearby Manville. Advertising and Sales Promotion Advertising and sates promotion activities were intensified during the year, in support of die company's more than 20,000 distributors, dealers, applicators and approved contractors. More than 200 specialized business publica tions carried advertisements designed to tell readers more about what J-M products can do for them. A worldwide advertising campaign--telling the story of Johns-Manville progressiveness, its development of unusual new products, its asso ciation with progressive projects like space ex ploration-appeared in Newsweek, Newsweek International, Time International, US. News &. World Report and Business Week. Progress continued during the year on a pro gram for. measuring advertising effectiveness on a market-by-market basis. Computer analysis of various combinations of promotional effort will help formulate future advertising campaigns designed to produce maximum return on the dollar invested. MTC 002270 enisement highlighting J-M contributions in On-site application of the recently introduced Bel-Air fire resistant roofing that space as featured in leading,publications. provides texture and appearance of natural woodshake shingles. 'uilding Products exhibit at the 1965 national con- Sales promotional programs include eye-catching point-of-purchase displays in support ention of the American Institute of Architects. of the national network of J-M dealers. 7 MTC 002271 o ! 7 0 I 0 | 7 9 RESEARCH AND ENGINEERING At Manville, New Jersey the company oper ates the largest research and engineering facil ity in the world devoted to building materials, insulations and industrial products. Here, J-M scientists concern themselves with the control of heat, cold, sound and motion--with fight ing the destructiveness of fire, weather andwear. In 1965, Johns-ManviUe invested over Sll million in research, development, and engi neering. A substantial part of this was di rected to developing new applications for plas hes, products for use in water treatment, and high temperature insulations for the nation's aerospace program. In addition, a number of promising new products were brought from the development stage to commercial production. Plastics Efforts continued in 1965 to use plastics to broaden and improve J-M product lines. To consolidate development efforts in plastic foam materials, a new operating department was organized under the Industrial Insulations Division. Plastic foam products currently in dude polystyrene, polyurethane and polyvinyl chloride for low temperature insulating appli cations and as insulating core materials for building panels. Water Treatment Johns-ManviUe products have long been of service in the purification and transportation of water. J-M pipe carries potable and industrial process water as well as sewage, safely and eco nomically. Diatomite-based filtration products are currently in use in industrial, waste, second ary recovery, swimming pool and municipal water treatment systems. . In view of the growing national concern over the problem of water conservation, J-M re search people an currently working with inde pendent laboratories and government authori ties to develop new uses, for diatomite in purifying salt water and removing iron, hydro gen starches, bacteria and detergents from public water systems. Aerospace High-temperature insulations developed by Johns-Manville continued to play a key part in the nation's aerospace effort. Min-K* and Thermofiex* insulations pro tected U.S. astronauts in the Gemini orbital space flights. Several J-M products, including. Min-K and Micro-Quartz!' insulations, will shield the occupants of the forthcoming Apollo space vehicles that are scheduled to send men on a round trip to the moon. Dyna-Flex, J-M trademark for a newly-de veloped insulating material capable of with standing temperatures of 2,700 degrees F,, is currently undergoing evaluation for future aero space projects. New Products J-M products that progressed from die re search and development stage to commercial production in 1965 included: Bel-Air--fire resistant premium roofing material for residential, commercial and institutional buildings. This new material has the texture and appearance of natural wood shake shingles. Acousti-Clad -- incombustible, metal-en closed ceiling tiles far industrial, institu tional and commercial use.. Micro-Aire Duet Board--aluminum-faced fiber glass board for fast fabrication of complete duct systems, for heating and air conditioning applications. 8 MTC 002272 : plant operator Inspects HHMWM new plastic foam prod- at the J-M Research and Engineering Center. Laboratory conductivity test is applied to newly developed aluminum-faced fiber glass product for ductsystems. furnace used in the development of sophisticated insulating materials for aerospace applications. Research technician operates arc 9 MTC 002273 0 i) ! / a o j 0 I 3 | ADMINISTRATION The future strength sad growth of JohnsManviUe, in an increasingly competitive and complex society, requires that the 20,900 J-M people continually improve their skills, compe tence and knowledge. In 1965, some 500 employees participated in supervisory and middle management train ing, 190 of them completing courses in admin istrative leadership or product management. More than 5,000 J-M people were involved in plant training programs and 533 employees took advantage of the company's tuition aid plan to further their individual education at secondary schools and colleges. Health, Safety and Service In 1965, Johns-Manville further improved its programs for employee health, safety and jpAmriiil hygiene. From base laboratories located at Asbestos, Quebec; Manville, New Jersey; Waukegan, Illinois and Lompoc, California, professional hygienists periodically visit each J-M plant and mine tO mine that air light, heat and noise levels assure pleasant and efficient working conditions. Johns-ManviOe continues to be an industrial leader in employee safety. As a result of a com prehensive accident.prevention program, the company's safety record during 1965 stands well ahead of the National Safety Council's allmdustry average. During the year, 288 employees completed 25 years of company service, enlarging the ranks of the J-M Quarter Century Club to a total of 3,744 members. Some 2,100 men and women received retire ment income in 1965 from the Johns-Manville Retirement Fund. tabor Relations The company currently has fifty-three labor agreements with twenty-one International unions. During 1965, thirty-one contracts, of two or three years duration, were negotiated. Union attempts at mnhi-plant bargaining and internal union problems resulted in costly strikes at Waukegan, Natchez, Long Beach, Toronto, Defiance and Hayward. These unfortunate work stoppages had a sub stantial effect on both the employees involved and the company. Cost to employees about $4,100,000 in lost wages. Cast to the com pany--1,400,000 lost man hoots of work. Organization Changes Effective January 1,1965, Francis E. Dumb er, Vice President of Johns-Manville Corpora tion, was appointed to the newly created posi tion of Vice President for Building Materials Divisions. In this operating position, Mr. Dutches is responsible for the overall admini stration of the J-M Building Products, Flooring and Melamite Divisions. Murray F. MacDonald, Vice President of Johns-ManviUe Sales Corporation, succeeded Mr. Dutcher as General Manager of the Build ing Products Division. Legal Matters A civil antitrust action instituted by the Gov ernment in 1962 against the Corporation and a related private antitrust action brought against tile Corporation in 1964 are still pending. Counsel is of die opinion that the Corpora tion has a valid defense to these two actions. Each involves the charges of antitrust viola tions, made by die Government in a criminal prosecution which ended in 1964 in a judgment of acquittal. MTC 002274 lohns-ManviUe Directors In session. Left to tight, George P. SdacNickol, Jr* Fronds H. May, Jr,, Leslie M. Cassidy, Joseph A. Grazier, Adrain R. Fisher, President Clinton B. Burnett, Secretary Herbert Morton Ball, Thomas E. Sunderland, Roger Hackney, William C.Stolk,EdgarG.Burtonand Henry C. Alexander. BOARD OF DIRECTORS Henry CL Alexander_____________ Chairman of the Executive Committee, Morgan Guaranty Trust Company of New York Clinton B. Bnmett. ................. President, Johns-Manville Corporation Edgar G. Burton________________________Chairman, Simpsons Limited (Toronto) Leslie M. Cassidy________________ ___________ ______ Director various corporations Adrain R. Either ............... Tthmtor, American Radiator & Standard Sanitary Corporation Joseph A. Grazier____ Chairman end President, American Radiator &. Standard Sanitary Corporation Roger Hackney.______ __________ __ Vice President, Johns-Manville Corporation George P. MacNichol, Jr_______ Director, Member of the Executive Committee, Libbey-Owens-Ford Glass Company Francis H. May, Jr_______________ ~.Vice President, Johns-Manville Corporation William C. Stolk._____ __Director, American Can Company Thomas E. SunderlandChairman, United Fruit Company OFFICERS Clinton B. Burnett.................. ,................................................._____________ President Charles W. Hite.____ ___ President for Industrial Relations Roger Hackney-----------------Vice President for Mining and international Divisions Robert F. Orth_____________ Vice President for Marketing and for Pipe Division Don L. Hinmon___________ ____ __________ Vice President for Industrial Divisions Frauds E. Dutcher.Vice President 'for Budding Materials Divisions Frauds H. May, Jr~~~~.~~.....~..~...--..~........--~....--.Vice President for Finance Arthur G Smith.___ Vice President for Research, Development and Engineering Herbert Morton BaiL...__________________ _____ Secretary and General Attorney James M. Shackelford_____ --_______ ....Treasurer Irving J. Pedly__________ __ Assistant Secretary Mrs. Consuelo C Bean... --Assistant Secretary Richard M. Davis----------- --Assistant Treasurer Robert A. Goldthwaite..-- --Assistant Treasurer 11 WTC 002275 OPERATING DIVISIONS Operation and administration of the companyt fifty-three plants, six mines and worldwide net work of sales offices is organized into twelve sepa rate operating divisions. - Each division is responsible for production,sales 'and earnings within the scope of its assigned area. Corporate departments coordinate operating divisionf efforts in the areas of finance, research, development and engineering, marketing, legal, administrative services, advertising and public relations and Industrial relations. ASBESTOS FIBRE CANADIAN PRODUCTS Alfred G. Sinclair, General Manager The Canadian Products Divirion with headquar ters at Toronto, Ontario is responsible tor the man ufacture and sale of Johns-Manville product lines throughout the Canadian market. The division op erates plants at Asbestos, Quebec; North Bay and Toronto, Ontario. CHUTE Karl V. Lindell, General Manager The Asbestos Fibre Division is engaged in the worldwide exploration, mining and milling of as bestos fiber. It is responsible for operating asbestos mines and mills located at Asbestos, Quebec; Coa lings, California; and Baie Verte, Newfoundland. Headquarters tor division activities is located at Asbestos, Quebec. BUILDING PRODUCTS Perry A. Martinson, General Manager The Celite Division is a major producer of diatomite tor industrial applications as filter media and inert filler, and a supplier of perlite and syn thetic silicates. Operating facilities indude a dlatomite mine and mill at Lompoc, California; a perlite deposit and mill at No Ague. New Mexico, and a processing plant at Joliet. Illinois. DUTCH BRAND Murray F. MacDonald, SmmlMaaqfr The Building Products Division is a major national .producer and supplier of a variety of wood, fiber glass, perlite, asbestos, and plastic based building materials for residential, commercial, institutional and industrial construction. The division operates a total of sixteen manufacturing facilities and a network of sales offices serving major markets throughout the United States. James R. Allen, Operations Manager The Dutch Brand Division produces and markets a wide variety of pressure-sensitive plastic, rubber, doth and paper tapes for electrical, industrial and MTC 002276 U J i / j 0 1 l) 1 3 A l residential applications--and asbestos papers and board for the electrical and electronic industries. The division also produces and markets adhesives, cork and sponge rubber products for industrial use as sealing and gasketing. The division's production fneititw* are located at Chicago, Illinois and Tilton, New Hampshire. FIBER CLASS William L. VanDerbeek, General Manager The Fiber Glass Division is responsible for the production of J-M fiber glass insulations marketed by the Building Products and Industrial Insula tions divisions. The division also manufactures and sells textile fiber glass and reinforcement mate rials. Principal manufacturing operations are lo cated at Cleburne, Texas; Corona, California; Defiance. Ohio; Parkersburg, West Virginia; Peabryn, New Jersey and Waterville, Ohm. The divi sion maintains headquarters at Toledo, Ohio. MELAMITE Wallace R. Tyrit, Ogeradata Managtr The Melamhe Divirion produces high-pressure plastic decorative laminates for application u counter tops, wall paneling and as surfacing ma terial by furniture manufacturers. The division's production facilities and headquarters are located at Lawrence, Massachusetts. INDUSTRIAL INSULATIONS John B. Jobe, GeneralManager The Industrial Insulations Division is a major sup plier of industrial and commercial insulating mate rials. Principal product lines indude pipe and block insulations; insulating fire brick; refractory cements; appliance, railroad, marine and automo bile insulations; and specialty insulations for aero space, atomic energy and cryogenic applications. The Flooring Division produces and sells the com pany's broad line of vinyl asbestos and asphalt asbestos floor tile products for residential, com mercial and industrial flooring applications. The division operates plants at Chillicothe, Ohio; ManvtHe, New Jersey; Marrero, Louisiana; and Wau kegan. Illinois. A fifth manufacturing plant was placed in operation in 1965 at Hayward, California to meet growing demand in western markets. Dudley 71 Colton, General Manager The International Division is responsible for the production and marketing of J-M product lines 13 MTC 002277 0 1 7 i0 j I a s* outside the United States and Canada.The division currently operates seven overseas manufacturing facilities located at Hull, England; St. Marcellin, Wisscabourg and Bellegarde, France; Mol and Ghent. Belgium; and at Milan, Italy. PAOQNG AND FRICTION MATERIALS Edward H. 1Veils. General Uenaftr The Packings and Friction Materials Division manufactures and markets an extensive line of packings, gaskets, asbestos textiles; automotive and industrial brake linings, brake blocks and clutch facings. The division's production operations are located at Manville, New Jersey; Matshville, North Carolina; North Brunswick, New Jersey; Wauke gan, Illinois; and Laurinburg, North Carolina. OPERATING FACILITIES Plants Alexandria, Indiana Long Beach, California Asbestos, Quebec Los Angeles, California Avery, Ohio Bellegarde, France Madison, Illinois Manville, New Jersey BiUerica. Massachusetts Marrero, Louisiana Chicago, Marshville, ChiQicothe, Ohio Worth Carolina Cleburne, Texas Milan, Italy Cleveland, Ohio Mol, Belgium Corona, California Nashua, Defiance, Ohio New Hampshire Carpenter Road Natchez, Mississippi Defiance, Ohio New Orleans, Louisiana Columbus Avenue North Bay, Ontario Defiance, Ohio North Brunswick, Perry Street New Jersey Denison, Texas Fort Worth, Texas Parkersburg, West Virginia Franklin, Pennsylvania Penbtyn, New Jersey Ghent, Belgium Pittsburg, California Green Cove Springs, Richmond. Indiana Florida Rockdale, Illinois Houston, Texas St. Marcellin, France Hayward, California Savannah, Georgia Hull, England Stockton, California Janatt, Virginia Tilton, New Hampshire Joliet. Illinois Toronto, Ontario Laurinburg, Waterville, Ohio Worth Carolina Waukegan, Illinois Lawrence, Wbsembourg, France Zelienople, Lompoc, California Pennsylvania Robert F. Orth, Gtnrmi Mumtrr The Pipe Division produces and markets asbestoscement pipe for home, farm and turf irrigation, public works, water and sewer systems, industrial and process applications. The division b also an important supplier of plastic pipe for water service and gas connections, irrigation' systems, conduit, processing and oil lines. Operating facilities are located at Green Cove Springs, Florida; Denison, Texas; Manville, New Jersey; Marrero, Louisiana; Stockton. California; Long Beach, California; Waukegan, Illinois; and Franklin, Pennsylvania. Asbestos, Quebec tBaie Vene, Newfoundland rnliii|| Califnmia Lompoc, California No Agua, New Mexico gSanta Catarina, Mexico leseareh and Engineering Center . Near Manville, New Jersey fiber Clast Research and Technical Center Waterville, Ohio Minority Owned tMinority Interest-Operated and Mansard by Canadian Johns-Manville tMinority Interest MTC 002278 ooi / 0 10 13 6 TEN-YEAR REVIEW OF OPERATIONS IAtl deUer mrrt rttm ftr thmt m* te mtUitxu) IMS 1M4 IMS ' 1902 1M1 1980 1959 1958 1957 1950 Sales S48&2 Earnings Before Income Tun s633 Income Taxes S29.4 4JU 4143 SU $24 263. 243 3923 <34 193 3774 434 193 3453 `3774 3317 493 557 412 214 24.1 184 3083 313 114 3104 402 213 Net Earnings mi 32.1 277 233 233 205 314 2X4 174 254 Earnings per Share** $443 177 373 241 241 112 374 183 148 379 Viof EaminptoSales 7.1 7j0 07 Ol 03 7J 8.4 74 17 . 84 mutmt o-iv--n-o_i $17.4 174 174 174 174 174 167 143 M3 110 Dividends per Sham* S2jQS 240 240 240 240 240 240 240 240 125 Inmtmtm sms '/ of Eiminp to Invest ment at Sort 0/ Year TI.1 Capital Expenditure* sru Investments In Other Companies su 3073 2973 me 94 201 154 63 54 2873 2Ui 04 87 114 204 04 14 2757 104. 204 19 2814 114 102 3 2453 11.1 124 3 2102 84 413 A 2002 154 243 13 Depreciation It Depletion $200 107 193 194 183 104 184 118 143 134 Besearch Development 0 Engineering Expense St14 TVS 97 TI3 TM lOI 83 77 83 73 took Value perShare* SM3 3032 3449 3371 3330 3147 3132 2943 2935 2844 Shame Outstanding .at End o< Year* 8475333 0474778 8410248 8319300 8317413 8.490038 8474314 8381192 7,163400 7.148723 Stockholders 27700 31400 303QD 29,400 29400 30100 23400 Qflfl 19300 liwptoywi 20900 20400 20200 21300 21400 22400 21400 21700 21300 Wages. Salaries & Employee Benefits $1844 17S7 1S93 1S13 `Adfusud tor 19S6 stock split tOn average sharer outstanding. 1503 1403 1419 13S7 1303 1273 15 m MTC 002279 00 I 7 i0 I 0 | H 7 FINANCIAL STATEMENTS Johns-Manville Corporation INVESTMENT Workino Capital f*ah (including time deposits of $7,500,000 in 1965) ytarirgtnhif securities at cost (approximately market) Accounts and notes receivable Inventories at the lower of cost (principally last-in, first out) or market Total current assets Less, Current liabilities: United States and Canadian income taxes . Other taxes Wages and compensation Accounts payable and other accrued liabilities Total current liabilities Working capital Marketable Securities set aside for plant additions Properties and Plants, at cost Less, Acenniulated depreciation and depletion Investments (principally outride US.) and other assets, at cost or less Investments in unconsolidated subsidiaries Investments in other companies Prepaid expenses and deferred charges Other assets Total Less: Notes payable, 2.7 per cent, principal payable $250,000 annuallytoJuly 15,1966, balancepayableJuly 15,1967 Reserves for self-insurance and product guarantees Investment Represented By: Common stock, S5 par, 25,000,000 shares authorized, 8482400 issued. (Note 1). Earning* reinvested Less: Cost of treasury stock, 1965--107,267 shares; 1964-107,722 shares December 31 1965 $ 17,958,000 37.483.000 92.750.000 58.570.000 206.761.000 1964 $ 16.453,000 35479.000 79.710.000 57.685.000 189,127,000 23.505.000 . 8,274,000 17.415.000 30.630.000 79.824,000 126,937.000 2O.OOO.0OO 363.049.000 219.743.000 143,306,000 27.861.000 6488,000 16.139.000 24.119.000 74,707,000 114.420.000 20.000,000 347425.000 203.864.000 143.361,000 7.494.000 22,096,000 4.329.000 5.996.000 39.915.000 330,158.000 5.709.000 20,682,000 3.420.000 6.320.000 36,131,000 313,912,000 1.250.000 4.413.000 5.663.000 S324.495.000 1400,000 4,616.000 6,116.000 S307.796.000 $119,484,000 211.038.000 330422,000 6.027,000 $324,495,000 $119426,000 194.279.000 313,805,000 6.009,000 S307.796.000 ACCOUNTANTS' REPORT To the Stockholders and Directors of Johns-Manville Corporation: We have examined the statement of invest ment of Johns-Manville Corporation and hs consolidated subsidiary companies as of December 31, 1965 and the related statement of earnings and earnings reinvested for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other au diting procedures as we considered necessary in the circumstances. We previously nramincd and reported upon the financial statements of Johns-Manville Corporation and its consolidated subsidiary companies for the year 1964. We MTC 002280 0 0 i / . ; } | u | g g I Consolidated Subsidiary Companies EARNINGS AND EARNINGS REINVESTED Net sales Costs and expenses (Note 2): Cost of sales - Total Income from operations Other income, net Earnings before income taxes F-fUp.1 rattaitian anit ttatm ingnmi- fare* (Note 3) Net earnings for the year Parninga reinvested at beginning of year Cash dividends, 1965, $2.05 per share; 1964, $2.00 per share Earnings reinvested at end of year 1965 $480,180,000 346,173,000 75.720,000 421.893,000 58,287,000 5.217,000 63,504,000 29,370,000 34,134,000 194.279.000 228.413,000 17.375,000 $211,038,000 1964 $458,879,000 331,542,000 74.327,000 405.869.000 53,010,000 5.255,000 58,265,000 26,200,000 32,065,000 179.232,000 211,297,000 i7,018.000 $194,279,000 Notes 1. At December 31, 1965, 311,658 shares were reserved for issuance under the employees' stock purchase and deferred compensation plans. The Company presently intends to pur* chase in the open market or otherwise all shares of common stock necessary to meet Its under At December 31,1965, an additional 128,075 shares were reserved for issnance in con nection with options granted but unexer cised under the incentive stock option plan. At January 1, 1965, options outstanding for 136,225 shares at prices ranging from S41.875 to $57.00 per share were unexercised. Dur ing 1965 no options were granted; options on 6,350 shares were exercised at prices ranging from $41,875 to S53.00 per share, and options on 1,800 shares expired. No further options may be granted under the {dan. 2. Depredation and depletion charged to oper ations amounted to $19,959,000 in 1965, $18,674,000 in 1964. 3, The Company has reflected the investment credit as a reduction of Federal income tax ex pense. The reductions amounted to $1,055,000 or 12c per share in 1965 and $1,781,000 or 21C per share in 1964, of which $880,000 was applicable to prior years. did not examine the financial statements of the rn.Hian subsidiaries, which statements were examined by Sharp, Milne & Co., Canadian chartered accountants, whose reports thereon have been furnished to us. Our opinion ex pressed herein, insofar' as it relates to the amounts included for Canadian subsidiaries, is based upon such reports. In our opinion, the aforementioned financial statements present fairly the financial position of Johns-ManviQe Corporation and its consoli dated subsidiary companies at December 31, 1965 and 1964 and the results of their opera tions for the yean then ended, in conformity with generally accepted accounting prindpies applied on a consistent basis. Lybjund, Ross Bros. & Montgomery Saw York, January 26,1966 17 MTC 002281 00 i /i0 i U I 69 Johns-Manville 22 East 40th Strast Naw York. N. Y. 10016 TRANSFER AOENT-MORGAN GUARANTY TRUST COMPANY OF NEW YORK RXUSTRAR--THE CHASE MANHATTAN BANK. NEW YORK GENERAL COUNSEL-DAVIS POLK WAROWELL SUNDERLAND 4 KIENDL. NEW YORK AUDITORS--LYBRAND. ROSS BROS. A MONTGOMERY. NEW YORK SHARP. MILNE A CO- MONTREAL m UTMO IN UAJL MTC 002282