Document b5Vpg6BNkbbax3LrnMB7xZgX1

CRANE CO. Annual Report 1970 Contents I Sftislrtvfell ffWlltWo;.- * riir.tilt.*Kit fl*/Ivv- r rMf.Vilt nlj .*<r:Wiiiii*UMC ''I *iu*jtiiV. >* *-.t*f*'*V Annual Meeting ii K.Vtii C * 'L*V/| aiiniKiS i'.uiii V i vt* t|l'li fft <i C.i-.iKii'tiy 4V- r.ito i'v L)', 5i !* iv -.1 * ' ?t* V'* CRTX0212 ;.`*Ww3 'J**f***r'. JUS'S'fJV'** ,, " -r Crane Co. Annual Report 1970 Financial Highlights Sales.............................................................. .... Income before net extraordinary credit. . . Net extraordinary credit............................... Net income......................................................... Cash dividends ............................................... Net working capital......................................... Total assets.................................................... Common shareholders' equity.......................... Common shares outstanding at year end . . . . . . . . 1970 8,255,000 4,165,000 180,352,000 597,207,000 149,619,000 2,577,868 1969 $550,707,000 9,493,000 2,109,000 11,602,000 4,141,000 194,321,000 577,410,000 146,094,000 2,543,015 Ratios at year end: Net income to sales.................................... Common shareholders' net income to average equity.................................... Current ratio............................................... 2.1% 8.1% 3.1 Per common share: Income before net extraordinary credit. . Net extraordinary credit............................... Net income............................................... Depreciation..................... ..... ... . Cash flow from operations.......................... Cash dividends............................................... Common shareholders' equity..................... . . $ 3.15 8.70 $ 3.58* .81* 4.39* 5.50* 9.89* 1.60 56.32* "Adjusted for 2% stock dividend in December, 1970. +Assuming conversion of subordinated debentures, net income per common share would amount to $2.52 ($3.62 in 1969). CRTX 0213 To our shareholders: Crane results reflect the 1970 eco nomic slowdown in both North Amer ica and abroad. Specifically labor, raw materials and freight costs increased sharply, and competitive policies in the steel business partially prevented Crane from recovering these cost increases. Consolidatednetsales forl970were $680,207,000, up from $550,707,000 for 1969. CF&I Steel Corporation finan cial results are included for the full year 1970 and for only six months of 1969. Net income for 1970 was $8,255,000, or $3.15 per share, compared with $9,493,000, or $3.58 per share, exclud ing a non-recurring gain of $2,109,000, or 81 cents per share, from the sale of real estate not used in the business in 1969. Cash flow (net income plus depreci ation) in 1970 was $30,714,000, or $11.85 per share, compared with $25,957,000, or $9.89 per share in 1969. Crane con tinued its modernization program and in 1970 new capital expenditures totaled $52,395,000, with CF&I Steel incurring the major share. A substantially lower level is anticipated for 1971. During 1970, the Company paid the regular $1.60 cash dividend per share and in December, 1970 paid a 2 per cent stock dividend as in the previous two years. All per share statistics have been adjusted to reflect this stock dividend. At December 31, 1970, Crane common shareholders' equity was $149,619,000, or $58.04 per share, compared with $56.32 at December 31, 1969. Consoli dated net working capital at December 31, 1970 was $180,352,000, compared with $194,321,000 for 1969. At Decem ber 31, 1970, consolidated long-term debt was $274,041,000, compared with $271,411,000 at December 31, 1969. At year end, $129,380,000 of this long term debt was subordinated, including $57,099,000 convertible into common stock. During the year, 251,532 shares of Alcan Aluminium Limited, held as an investment, were exchanged for $7,398,000 principal amount of 5 per 'cent convertible subordinated deben tures due 1994 for a net gain of $996,000. In addition, $2,915,000 prin cipal amount of these convertible sub- uJ ordinated debentures was purchased in the open market for $2,061,000. Gains on these transactions were credited to the balance sheet account-- deferred credit from acquisition. On behalf of the Board of Directors, we wish to thank ail shareholders, em ployees, suppliers and customers for their support. Looking ahead, if the economic climate improves as forecast for 1971, your Company has the finan cial resources, products and people to continue to increase shareholders' equity. Respectfully submitted, D. C. Fabiani President / . hi. February 25,1971 T. M. Evans Chairman CRTX 0214 f `Vi I Financial Review pally a new bar mill at Pueblo, Colorado An additional $8,500,000 expansion a- Consolidation the Chattanooga, Tennessee, plant wa: The consolidated financial state financed by a ten-year equipment lease ments include the operations of CF&I In the same period, several unprof Steel Corporation, an 86 per cent owned itable or marginal plants were closed o; subsidiary, for the full year 1970 and for sold and the Company incurred start-up the second half of 1969. The difference expenses on new facilities. Operation? between the purchase price and CF&I at the Trenton, Mew Jersey, pottery Steel shareholders' equity was recorded Madrid, Spain, valve factory; and Ay- as deferred credit from acquisition in cliffe, England, heating factory were dis the consolidated balance sheet. This de continued, and Crane-Glenfield (S.A. ferred credit is being amortized as a Pty. Ltd., South Africa, was sold, result credit to cost of sales over a seven-year ing in costs of $1,701,000. In addition period from July, 1969, with $2,633,000 start-up costs at Chattanooga, the Caro recorded in 1970 and $1,074,000 in 1969. Stream, Illinois, distribution center anc CF&I Steel contributed $242,300,000 other locations amounted to$l,74S,00C sales and $8,792,000 net income in 1970, These actions,, to improve future earn compared with $120,918,000 sales and ings for Crane, caused the incurrence o: $4,406,000 income before extraordinary costs and losses totaling $3,449,00C credit in 1969. The income contributions which were charged against 1970 earn were after deducting minority interests ings before income taxes as miscella of $1,402,000 in 1970 and $800,000 in neous expense. 1969. ` In 1970, the operations of the The investment in Huttig Sash & Palmer, .Massachusetts, wire rope plan- !9> Door Company, a 55 percent owned sub and other smaller operations of CF&. sidiary, is recorded at cost plus equity in Steel Corporation were sold and the re undistributed earnings since acquisition. sulting loss of $3,725,000, after a relatec The equity in Huttig 1970 income be income tax credit of $3,406,000, was fore taxes was $996,000, compared with charged by Crane to the deferred credit $1,551,000 in 1969, and 1970 income from acquisition and minority interes after taxes was $525,000, compared with in the amounts of $3,213,000 anc $753,000 in 1969. $512,000, respectively. Subsidiaries outside of the United States and Canada contributed net sales of $66,163,000 in 1970, compared with $61,011,000 in 1969. During 1970, they operated at break-even, compared to net income of $657,000 in 1969. These subsidiaries represented 16.3 per cent of shareholders' equity in 1970 and 16.8 per cent in 1969. Long-term Financing Long-term debt at December 31 1970 was S274,041,000, essentially thsame amount as the prior year. This wa achieved although CF&I Steel issuet. $23,750,000 of 7SA per cent first mort gage bonds in May, 1970. Corpora;liquidity and working capita! durir.- 1970 were such that other long-term deb Plant Improvement was reduced by $21,120,000. Schedule-, In 1970, $52,395,000 was invested debt retirements over the next five year in property, plant and equipment, princi are in principal amounts of $5,379,00 CRTX0215 4 1 in 1971, S12,173,000 in 1972, $10,898,000 in 1973, $9,597,000 in 1974 and $9,592,000 in 1975. In March, 1971, CF&I Steel will is sue an additional $2,500,000 of 7V* per cent first mortgage bonds due 1990 to complete the overall funding of $50,000,000 for the capital improve ment program. Under the terms of the indenture, CF&I Steel is required to ex pend approximately $35,000,000 on capital improvement. From inception of the program, $64,000,000 was expended and an additional $27,000,000 has been committed. At December 31, 1970, worldwide commitments for annual rentals under long-term leases expiring through the year 1993 amounted to approximately $4,586,000. Pension Plans Crane Co. and its consolidated sub sidiaries have a variety of pension plans for the more than 28,000 employees worldwide. Crane and certain subsid iaries have followed the practice of funding current service costs and inter est on unfunded past service costs for major plans. CF&I Steel provides for funding of past service costs over a 30-year period. Investment gains, which continue to be substantial, are used under an av eraging method to reduce payments to the trustees on certain plans. Pension costs charged against 1970 operations were $11,325,000, compared with $4,239,000 for 1969. At December 31, 1970, CF&I vested benefits exceeded the total of pension funds and balance sheet accrual by $54,000,000. The sub stantial increase in vested benefits over last year was principally caused by the most recent labor contract and the Palmer plant closing. Income Taxes In 1970 and 1969, as a result of sub stantial differences between reported in come before income taxes and actual taxable income, federal income tax re funds of $6,850,000 and $3,150,000 were recorded in accounts receivable. These differences arose from permanent tax savings which resulted in income tax benefits and temporary tax differences which resulted in a deferred income tax benefitof $1,520,000 (S2,313,00acharge in 1969). Principal 1970 permanent tax savings were investment credits -- $2,876,000 ($1,075,000 in 1969), tax exempt inves tment income--$1,444,000 ($1,790,000 in 1969) and depletion, original issue discount and other-- $2,714,000 ($970,000 in 1969). Stock Options During 1970, the Stock Option Plan adopted in 1965 was terminated and no further options could be granted. At the 1970 Annual Meeting, a new plan was adopted under which 50,000 shares were initially reserved for options. A sum mary of option transactions is as follows: ,, , Number nf ,,. Price Per 5Katp Outstanding January 1,1970 52,570 Options granted 13,400 Options cancelled (6,S90) Options exercised (5,506) 2% stock dividend 1,049 S18.15-S56.62 32.25- 39.25 27.63- 54.90 25.03- 27.63 Outstanding Dec. 31,1970 54,623 S17.79-S55.51 Options for 20,500 shares were granted and for 6,169 shares were ex ercised in 1969. At December 31, 1970, options for 24,612 shares were exercisable and for 46,410 shares could be granted. Litigation The litigation between Crane and American Standard, Inc., and Blyth & Co., Inc., which arose out of the merger of VVestinghouse Air Brake Company into American Standard, as reported in last year's Annual Report, is continuing. Crane has entered a claim for^damages, but it is impossible to determine at this time the extent'of any recovery. Man agement continues to believe that the American Standard suit against Crane for so-called "insiders profits" is with-.-, out substantial merit. . The civil anti-trust litigation insti tuted against the Company, arising un der the Sherman Act, which has been discussed in previous Annual Reports, is still the subject of pending court pro ceedings. Management continues to be advised by counsel that the amount of any payments or settlements made with respect to such suits will not materially affect the financial position and earnings of the Company. Miscellaneous Early in 1971, North Jersey Na tional Bank was merged into Garden State National Bank. Crane opposed the merger on the basis of its large invest ment, and has now surrendered ;:s shares for appraisal rights. CRTX 0216 ir i i V. - Consolidated Statement of Income for Years Ended December 31 Net Sales......................................................... Operating Costs and Expenses including straight-line depreciation of $22,458,887 ($14,354,342 in 1969): Cost of sales.............................................................. Selling, general and administrative.......................... Operating Profit.............................................. Other Income (Deductions): Interest--net.............................................. Gain on disposal of capital assets--net. . . . . Dividend income on investments .... Miscellaneous--net.................................... Income Before Income Taxes.......................... Provision for Income Taxes.......................... Income Before Net Extraordinary Credit--per share: $3.15 in 1970 and $3.58 in 1969 ($2.52 and $3.04 assuming conversion of debentures).......................... Net Extraordinary Credit............................... Net Income....................................................... Net income per common share: On average shares outstanding . . . Assuming conversion of debentures . 1970 $680,206,546 1969 $550,707,177 584,892,028 75,275,787 660,167,815 20,038,731 464,665,938 67,360,814 532,026,752 18,680,425 (16,900,581) 726,761 2,358,772 (3,382,874) (17,197,922) 2,840,809 (5,413,929) (11,947,201) 1,089,863 2,617,755 210,894 (8,028,689) 10,651,736 1,158,267 8,254,738 -- $ 8,254,738 9,493,469 2,108,830 $ 11,602,299 $3.15 2.52 $4.39 - 3.62 I Consolidated Statement of Earned Surplus for Years Ended December 31 Balance at Beginning of Year Net Income..................... Dividends: Preferred shares--$3.75 per share.......................... Common shares: Cash--$1.60 per share......................................... Stock--2% per share, market value of 50,547 shares (50,084 in 1969).................................... Excess of Cost Over Par Value of Reacquired Shares--Net: 1,192 preferred (5,870 in 1969) and 21,200 com mon reacquired, less 5,506 issued under stock options (48,300 and 6,169, respectively, in 1969)................................................................... Balance at End of Year................................................... 1970 $ 76,S67,991 8,254,738 85,122,729 114,476 4,050,100 1,381,450 173,766 5,719,792 $ 79,402,937 1969 $ 72,580,736 11,602,299 84,133,035 122,754 4,0ZS,390 2,172,644 1,001,256 7,315,044 $ 76,867,991 CRANE CO. and subsidiaries See comments on pages 2 through 4 CRTX0217 Consolidated Balance Sheet at December 31 ASSETS Current Assets: Cash............................................................................. Short-term investments.............................................. Accounts receivable, less allowances of $1,862,114 ($1,990,492 in 1969).............................................. Inventories, less LIFO reserves of $32,540,704 ($31,274,298 in 1969), at lower of cost or market: Finished goods................................................... Work in process.............................................. Raw materials and supplies............................... Prepaid expenses.............................................. . Total current assets......................................... 1970 , 1969 S 18,138,288 ' S 17,865,804 23,o01,S05 ! 39,061,024 111,379,699 1 96,110,081 6S. 239,222 51,063,708 17,511,686 136,814,616 5,119,990 295,054,39S 66,675,813 45,717,560 18,932,464 131,325,837. 3,613,S51 257,976,597 Investments and Other Assets: Investments at cost: Southern Pacific Company, 1,000,000 shares of common stock................................................... Alcan Aluminium Limited, 40,568 shares of com mon stock (301,300 in 1969).......................... North Jersey National Bank, 135,052 shares of common stock................................................... Outlying lands........................................................ Miscellaneous........................................................ Investment (equity method) in Huttig Sash & Door Company.............................................................. Other assets.............................................................. 41.779,9S4 1,065,166 4,934,362 1,261,388 ; 3,904,580 52,945,480 7,7S9,609 4,536,117 65,271,206 41,779,984 7,S59,749 4,934,362 1,261,388 4,472,726 60,308,209 7,515,52S 4,774,833 72,598,570 Property, Plant and Equipment at Cost: Land................................................... Buildings and improvements . . . Machinery and equipment .... Less accumulated depreciation. . . CRANE CO. and subsidiaries 14,515,006 107,S93,993 407,S 26,962 530,235,961 293,354,362 236,SS1,599 $597,207,203 14,386,053 108,104,626 380,356,933 503,347,617 , 286,513,152 216,834,465 $577,409.632 CRTX 0218 r LIABILITIES AND SHAREHOLDERS' EQUITY 1970 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............................... Total current liabilities............................... $ 5,379,011 16,539,800 47,134,781 43,497,637 2,150,796 ' 114,702,025 1969 S 2,736,985 7,891,193 42,40S,221 34,536,509 6,0S2,611 93,655,519 Long-Term Debt (see details on page 9).................... Operating and Other Reserves.................................... 274,041,143 13,281,214 271,411,242 20,138,339 Minority Interest in Subsidiaries............................... 23,910,559 26,627,972 Deferred Credit from Acquisition............................... 11,270,361 13,958,955 Shareholders' Equity: Preference stock of Glenfield & Kennedy Holdings Limited, 5 lh!o........................................................ Cumulative preferred shares, 33A%, par value $100 (redeemable at the option of the Company and subject to sinking fund requirements): Author ized--72,996 shares (76,806 in 1969); outstand ing--29,834 shares (31,026 in 1969) after deduct ing 43,162 shares in treasury (45,780 in 1969). . 2,400,000 2,983,400 2.400,000 3,102,600 Serial preferred shares, par value $5: Authorized--600,000 shares............................... -- -- Common shareholders' equity: Common shares, par value $25: Authorized 10,000,000 shares; outstanding -- 2,577,868 shares (2,543,015 in 1969) after deducting 21S,SSS shares in treasury (197,688 in 1969) Capital surplus........................................................ Earned surplus--$13,936,001 in 1970 ($13,874,241 in 1969) is not restricted under the terms of the SV^fo sinking fund debentures.......................... Total common shareholders' equity . . . Total shareholders' equity......................... 64,446,700 5,768,S64 63,575,375 5,651,0S9 79,402,937 76,367,991 149,618,501 ' 146,094,455 155,001,901 151,597,055 $597,207,203 $577,409,632 See comments on pages 2 through 4. CRTX0219 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 3,050 common shares issued . . . Balance at End of Year.............................................. 1970 S 5,651,089 117,775 -- S 5,768,864 1969 $ 4.632,917 920,522 97,650 5 5,651,089 Consolidated Statement of Source and Application of Funds for Years Ended December 31 Source of Funds: Operations: Net income............................................................. Depreciation........................................................ Other, net.............................................................. Long-term debt issued.............................................. Reduction in investments, mainly Alcan shares exchanged .............................................................. Disposals of property, plant and equipment . .. . Increase in minority interest.................................... Application of Funds: Additions to property, plant and equipment . . . Acquisition of CF&I Steel Corporation's net noncurrent assets........................................................ Reduction in long-term debt.................................... Reacquisition of shares less options exercised . . . Cash dividends......................................................... CF&I extraordinary item absorbed by reserves . . Other, net................................................................... Net Source (Application) of Funds............................... 1970 S 8,254,738 22,458,887 ( 1,651,556) 29,062,069 23,750,000 7,362,729 9,888,983 -- 70,063,781 1969 $ 11,602,299 14,354,342 1,092,511 27,049,152 145,751,432 -- 1,979,76424,S63,195 199,643,593 52,395,004 38,326,059 -- 21,120,099 685,316 4,164,576 3,725,180 1,942,311 84,032,486 $(13,968,705) . 68,060,190 12,923,724 2,641,553 4,141,144 -- 1,332,677 127,425,347 $ 72,218,246 See comments on pages 2 through 4. Report of Independent Accountants To the Shareholders of Crane Co.: We have examined the consolidated balance sheet of Crane Co. and subsidiaries as of De cember 31,1970 and 1969, and the related con solidated statements of income, earned surplus, capital surplus and source and application of funds for the years then ended. Our examina tions were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we con sidered 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 in dependent certified public accountants whose New York, N. Y. January 28,1971 reports thereon for 1970 and 1969 have been furnished to us. In our opinion, based upon our examinations and the aforementioned reports of other in dependent certified public accountants, the ac companying balance sheet and statements of income, earned surplus, capital surplus and source and application of funds present fairly the consolidated financial position of Crane Co. and subsidiaries at December 31,1970 and 1969, and the consolidated results of their operations, changes in shareholders' equity and source and application of funds for the years then ended, in conformity with generally accepted account ing principles applied on a consistent basis. CRTX 0220 ir r Details of Long-Term Debt at December 31 Crane Co.: BVz'c Sinking fund debentures due 1992, $2,000, 000 due annually beginnning in 1973 of which $1,355,000 was in treasury in 1970 . . . . 7/f> and 7x-\r' Bank term loans due 1974, $4,000, 000 due annually and 9^c in 1969) . . Miscellaneous......................................................... Subordinated debentures: 7'o Sinking fund debentures due 1993, up to SI,000,000 due annually beginning in 1974 . 7$c Debentures due 1994.................................... 5 9c Convertible debentures due 1993, converti ble at $50 per share (377,172 common shares reserved in 1970) after deducting $1,331,000 debentures in treasury in 1970 ..................... S'ic Convertible debentures due 1994, converti ble at $57.50 per share (665,042 common shares reserved in 1970) after deducting $13,700,000 debentures in treasury in 1970 1970 $ 38,645,000 11,000,000 2,454,374 52,099,374 20,204,400 52,077,200 18,858,600 38,239,900 129,3S0,100 181,479,474 1969 $ 39,627,000 15,000,000 3,313,437 57,940,437 20,204,400 52,077,200 19,020,600 43,552,900 139,355,100 197,795,537 CF&I Steel Corporation: 5'?icf First mortgage and collateral trust bonds, sinking fund series due 1979, minimum of $2,000,000 due annually, of which $2,035,000 was in treasury in 1970 .................................... First mortgage and collateral trust bonds, sinking fund series due 1990, $3,000,000 due annually beginning in 1975. Additional"amount of $2,500,000 to be issued in 1971..................... 4ls4c Convertible sinking fund debentures due 1977 (convertible into CF&I common shares at $31 per share), $1,000,000 due annually, of which $3,S92,500 was in treasury in 1970 . . 17,965,000 47,500,000 5,623,700 71,093,700 20,000,000 23,750,000 7,920,200 51,670,200 Foreign Subsidiaries: Crane Canada Limited 53/i?c sinking fund deben tures (secured by a general claim on property and assets), due 1985, $427,000 due annually. of which $508,300 was in treasury in 1970 . . Crane Ltd. (England): 7?i$c Bank term loan due 1972 (8?i% in 1969) 8% Bank term loan due 1973 (9% in 1969) . . Glenfield & Kennedy Holdings Limited 5ZA% un secured loan stock due 1982............................... Miscellaneous......................................................... 8,003,320 4,320,000 3,132,403 3,628,490 2,378,756 21,467,969 $274,041,143 7,636,S00 : 4,320,000 ; 3,442,550 ! 3,6S3,513 ! 2,862,642 j 21,945,505 , $271,411,242 CRANE CO. and subsidiaries CRTX 0221 Ten Year Consolidated Financial Summary (in thousands of dollars) Common Shareholders' Net Sales Net `Income Depreciation Equity Total Per Share t Net Cash Income Dividends Per Share t Per Share t 1961 1962 1963 1964 196S 1966 1967 1968 1969 1970 $319,556 333,767 337,366 357,823 370,084 405,907 403,361 409,549 550,707 680,207 $ 5,676 1,176* 5,447 5,530 7,991 11,251 10,223 10,998* 11,602* 8,255 $ 8,000 8,383 7,607 8,316 7,847 8,124 8,632 9,146 14,354 22,459 $130,650 124,105 121,834 122,087 121,256 128,255 133,831 140,514 146,094 149,619 $37.11 37.91 40.12 41.70 45.75 48.69 50.80 53.34 56.32 58.04 $1.50 .25 1.69 1.78 2.90 4.20 3.82 4.11 4.39 3.15 $ .so .80 .80 .80 .92 1.28 1.54 1.54 1.57 1.60 After extraordinary charge of $2,018,000 in 1962 and extraordinary credits of S2,503,000 in 1968 and $2,109,000 in 1969. tAH 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. ' Analysis of Net Sales and Operating Profit (in thousands of dollars) Crane-U. S. A.................... CF&I Steel Corporation . Hydro-Aire Division . . Crane Canada Ltd. . . . International Operations . Total Net Sales . 1970 Amount % 1969 Amount Yo Net Sales $270,703 242,300 14,740 86,301 66,163 $680,207 40 35 2 13 10 100 $263,941 120,918 16,758 88,079 61,011 $550,707 48 22* 3 16 11 100 Crane-U. S. A.................... CF&I Steel Corporation . Hvdro-Aire Division . . Crane Canada Ltd. . . . International Operations . Corporate............................ Total Operating Profit 'From July 1, 1969. Operating Profit $ 3,308 13,696 1,855 2,161 4,156 25,176 13 54 7 9 17_ 100 ( 5,137) $ 20,039 $ 5/153 7,585 2,446 3,574 4,120 22,878 22 33* 11 16 18 100 ( 4,198) $ 18,680 Pages 11 through 20 describe the organization, products and services of these units. vft2i Crane-U.S.A., consisting of the Engineered Products, the Valves and Fittings and the Plumbing and Heating Divisions and Crane Supply Company, manufactures and distributes all domestic products except those of the Hydro-Aire Division. Its broad line of valves, pumps, meters,controls,fittings, C water treatment and conditioning equipment, and plumbing and heating equipment is sold throughout all indus trial, building and construction markets. Although Crane-U.S.A. sales showed a slight increase in 1970, profits were down. Operations suffered from cut backs in capital goods spending in some industrial markets and the continued low level of activity in all segments of the building and construction fields. Engineered Products Division An international leader in the design and manufacture of highly engineered fluid control and treatment products. Crane supplies a wide range of pumps, meters, control valves, and water and waste treatment equipment used in in , dustrial processing, power generation, \^,and municipal water and waste treat ment. Sales and profits of this Division ex ceeded 1969 results. Looking ahead. performance is directly tied to indus tries for which good growth projections have been made for 1971 and beyond. Environmental Systems To expand its activities in the fight against pollution, Crane formed a new Environmental Systems Division, which includes the Cochrane operation. It de signed and built the world's largest microstrainer for the Chicago Metro politan Sanitary District. This unit will provide tertiary (advanced) treatment for 15,000,000 gallons of municipal ef fluent per day, the first installation of its kind in a major city. Crane also has exclusive representa tion in this country for Trailigaz and Otto Process ozonation equipment for air pollution control and water and waste treatment. The combination of ozonation and microstraining gives Crane, a system with considerable po tential in this ecology-conscious era. Use of this combination to purify and clarify effluent in municipal waste treat ment was demonstrated experimentally at the Chicago Hanover Park plant. A Michigan sewage treatment plant in stalled ozonation to destroy odors. Industrial water treatment equipment represented Cochrane's highest sales volume again in 1970. Boiler feedwater and condensate polishing demineral izers and deaerators for central stations showed the best performance, reflecting continued demand for increased elec trical generating capacity. While new contracts, particularly those related to industrial expansion. A. Stainless steel framework of the giant microstrainer, ill's feet in diameter and 30 feet long, is examined by officials of Chicago Metropolitan Sanitary District. B. Deming vertical in-line pumps installed at an East Coast oil terminal. C, Leakproof Chempump in a research plant evaluating processes for the removal of phosphorus from *.vas:ewaters. CRTX 0223 fell slightly under last year, a healthy backlog and more efficient operations provided improved performance. Cochrane designed and supplied a system which destroys and removes toxic chromium from the plating process waste effluent of a major steel company plant. The major effort is to achieve completely integrated installations like the boiler makeup and condensate de mineralizers at the Fort St. Vrain nuclear generating station north of Denver, Colorado. Pumps and Meters Chempump sales increased over the pre vious year despite depressed activity in the chemical processing industry. The growing role of Chempump products in the power industry is ex emplified by the installation of 28 sub merged pumps at a nuclear plant in Chicago and four units in a Swiss nuclear installation to provide safe recirculation. An anticipated growth in demand from the chemical industry and expansion of the nuclear market should broaden op portunities for Chempump in 1971. Sales of Deming pumps increased in 1970. Product development has been geared to the growing chemical, power and environmental control industries, where Deming products are gaining wide acceptance. Both chemical process and vertical in line pumps, introduced in 1969, showed substantial sales increases. However, pump sales to municipalities and the building trade declined slightly. Ground was broken for a new Dem ing foundry at Salem, Ohio. It is sched uled for operation late this year. Water meter sales held up well in 1970 in spite of the downturn in resi dential housing. "Aqua-Flow," a new manifold meter for economical meas urement of large quantities of water, was introduced early this year. Control Valves and Off-Shore Systems Flomatics is undergoing restructuring as an industrial control valve manufac turer. During 1970, it developed a nylon extrusion valve for service in textile fiber plants. . Advancing Crane technology for off shore oil drilling and exploration opera tions was demonstrated last year by the functional use of Flomatics solenoid valves and micromatic filtration in a sub-sea depth test of 300 feet. The off shore industries operation also started development of other new products to increase Crane participation in this market. Vatves and Fittings Division Crane offers a wide range of valves and fittings to control, channel, and govern the flow of all types of fluids. Higher sales in 1970 were offset by increased costs, with the result that operations fell below expectations. Research and development produced a number of new and highly market able designs, including a 300-pound cast steel gate valve, the new Tork-Seal ball valve for industrial, chemical and petroleum applications and an expanded butterfly valve line. A new 150-pound cast steel gate valve for the power, petroleum and chemical industries went into full production at the Chattanooga valve plant, where major moderniza tion and expansion were completed in 1970. The 300-pound valve will be in production there this year. - Crane remains a leading mar.ufac- , turer of nuclear valves and fittings for the power industry and naval applica tions. Experience in the'nuclear field puts the Division in a unique position to capitalize on the expanding commer cial nuclear utility market. The Chapman operation marked its centennial during 1970. This plant, which produces some of the largest spe cially engineered valves in the western hemisphere, operated at a good per formance level. A distribution center at Carol Stream. Illinois, was opened in ,1970 to stock regular and fast-moving valve products. Fully automated, it permits shipment to all parts of the United States within a 48-hour period. In addition to improv ing customer service, the distribution center will enable the Company to in crease manufacturing efficiency by more fully utilizing automated facilities a: the Chattanooga, Chicago and Wash ington, Iowa, plants. Crane supplies a broad range of standard and special fittings. Notable among contracts last year was the mil lion-dollar order for large diameter (48- inch) welding fittings for the Alaska pipeline project. CRTX 0224 Plumbing and Heating Division Crane plumbing and heating product sales are directly related to the construc tion industry, where greater than antic ipated sluggishness occurred during 1970. As a direct result, performance was below the 1969 level. The forecast of increased home building activity and (--reater availability of construction and \_,.iortgage money should improve busi ness in 1971 and beyond. The new Nevada, Missouri, ceramic plant went on stream in late 1970 and full production is anticipated before mid-1971. Full production is also sched uled in the second half at the Chatta nooga, Tennessee, enamelware facility, where a large-scale modernization and expansion program is nearing comple tion. The installation includes a fully automated enameling process, a Crane exclusive in the United States, which will produce cast iron plumbingware at greatly reduced costs. In addition, expansion of the Fergu son, Kentucky, plant to be completed late this year will nearly double cer amic capacity there. These new facilities will improve Crane's ability to meet ceramic demands, strained during 1970 by the closing of the antiquated Tren ton, New Jersey, plant. The Petite 7, a highly styled new line of modem hydronic nonferrous base board heating, recorded sales perform ance well ahead of forecast. In early 1971, Crane introduced three new boilers designed for residential, light and heavy commercial hydronic heating applications in a range of sizes for broad and optimum marketability. A pioneer in the modular bathroom, the Crane Unette showed increased ac ceptance during the year. It is being re designed and modified to make it more versatile for commercial, residential and institutional construction. Typical Un ette shipments for multiple installations included units for a low income housing project in Maine, a condominium com plex in Colorado, and a high-rise apart ment building in Missouri specially de signed for the elderly. The Crane Chef compact kitchen has been modified to improve appearance and operation, making it more adapt able to efficiency apartments, dormi tories and institutions, as well as to home improvement and renovation. Distribution was expanded during 1970 by marketing nationwide through in dependent kitchen dealers. Additional outlets are planned this year. Crane Supply Company Crane Supply Company, with 72 branches in 38 states, is the distribution division for plumbing and heating equipment, valves and pumps, as well as related products purchased from other manufacturers to serve housing, building, water systems and industrial markets. Sales in 1970 were equal to the prior year. This operation maintained a good profit position despite the decline in housing and higher operating expenses. A. Crane cast steel gate valve at a natural gas booster station in Oklahoma. 8. This 35-irveh-diameter 600pound cast steel Y-pattern globe valve will be used as a main steam valve at a nuclear power plant in Illinois. C. Console operated automatic equipment fills valve orders at the new Carol Stream distribution center. D. The versatile Unette modular bathroom, quickly and easily installed in many types of buildings, is ideally suited to pre-stressed slab construction. E. A portion of the casting department at the new Nevada, Missouri, pottery. CRTX 0225 CF&I Steel Corporation CF&I Steel Corporation, a major supplier to the Rocky Mountain area, 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, farming and ranching markets. CF&I, in its first full year as a Crane subsidiary, maintained sales volume and performed profitably despite unfavor able economic conditions, increased freight rates and higher labor and mate rial costs. Increased prices on a number of products during the year failed to off set these costs. CF&I eastern mills were adversely affected by strikes in the trucking, tire and automotive industries. At the end of 1970, CF&I closed its Palmer, Massachusetts, plant because of unprofitable operations. The manufac ture of wire rope products will continue as before at Trenton, New Jersey. Construction The slackening of activity in the con struction industry during 1970, plus imports of low-priced foreign steels, affected sales. Sales of rolled products-- merchant bars, shapes and angles, re bars and cutting edges -- all of which are tied directly to construction, were below 1969. The. wire products group, which serves the western construction, home building and agricultural markets, be gan to show improved sales in the last quarter. Principal components of this group are nails, welded wire fabric and prestressed strand. The new 11-inch bar mill at Pueblo began production at the end of 1970. Built at a cost of $41 million, it is one of the most technologically ad vanced facilities of its type in the coun try, and is capable of producing a broad range of bars and shapes in a variety of sizes. Production for the fu|l_1971 year will permit a more aggressive approach to sales opportunities and a share in markets not now obtainable. CF&I launched development of new markets for the sale of controlled cooled rods produced at the Pueblo mill. The Pueblo plant is one of the few in the na tion equipped to furnish rods with the in-line process for thermally controlling the metallurgical structure. These rods offer users substantial savings as cer tain processing can be eliminated at the customer's plant on many end products. During the year, CF&I acquired a re inforcing bar fabricating plant in Salt Lake City. This plant, CF&I Fabricators of Utah, will supplement the activities of CF&I Fabricators Inc., of Denver, to broaden CF&I markets for reinforcing steel. Petroleum Drilling activity in the petroleum in dustry during 1970 was lower than in 1969, but casing and tubing business picked up late in the year because of higher crude oil prices and an expected increase in natural gas activity. Drilling in 1971 is expected to equal if not ex ceed 1970. During the year, the Pueblo mill be gan to stock casing and tubing in CRTX 0226 Anchorage, Alaska, establishing an early foothold in this market. Prudhoe Bay and the North Slope of Alaska are expected to become large oil producing areas. CF&I, with the only seamless tube mill west of the Mississippi, is strategically located to serve this grow ing market. The company has installed special 'a-' equipment to produce casing and tubing with couplings applied under controlled ' torque turn conditions. To meet increasing demands of the petroleum industry for higher quality products, CF&I is expanding the quench and tempering facilities in its tubular production department. Mining Puebio introduced improved grinding balls and grinding rods for the mining industry in 1970. Expanded grinding ball production facilities, which include a new forging and heat treating unit, are now in full operation. An evaluation laboratory to process and test customer ores will be completed during 1971. Msfiii'toovki.'tg Wire and cold rolled product sales were below 1969, due primarily to the de pressed automotive industry. Metal working is a principal market for CF&I, especially for its eastern mills. Primary market areas for wire, wire rope, cold (, rolled strip, welded wire fabric and pre stressed strand are in states east of the Mississippi River. Transportation Sales of railroad products made at the Pueblo plant showed an improve ment over the previous year. The Hi-Cant tieplate, which was in troduced in 1969, has met increasing acceptance by the railroads. This tieplate, which is exclusive in the indus try, is designed to reduce wear and improve service life of the outside rail on a curved track. CF&I is supplying rails for the High Speed Ground Transportation Center being built near Pueblo, Colorado, by the U.S. Department of Transportation. This 45-square-mile complex will be used to test advanced forms of rail transportation. In addition, CF&I has furnished all the rails for the Bay Area Rapid Transit System in San Francisco, which is now nearing completion. Farming and Ranching Sales for Pueblo agricultural products, including baling wire and field fence and posts, showed considerable im provement in the fourth quarter, and growth is expected throughout 1971. Organizational Changes CF&I corporate headquarters moved from Denver to a new building in A. & B. "Snipping IVesnew CF&I open-air facility, more than one mile long. Ea. access for truck or rail snipmeand modern materials handli: equipment help g-.ve custom* better and faster servn C. Two new 200-foot silos at tl Allen Mine (and two Pueblo) will be used to stc: speed loading andunloadir and maintain a continue flow of coking co D. All rails and accessories : the Department Transportation new hi speed testing center are bet produced at Pueb E. Grinding bails undergo htreating extrar,- production faculties a: Pucc CRTX 0227 --> c `S:< ; Pueblo during the year. The Pueblo Di vision Sales offices were also moved to the new headquarters building. Another important organizational change during the year was the estab lishment of the Wire Rope, Roebling, Pueblo and Fabricated Metals Divisions as separate profit centers. With this change, each division is responsible for its own manufacturing, purchasing, en gineering, accounting and sales. Distribution A traditional problem in the steel in dustry has been the distribution of mill products to highly diverse markets. "Shipping West," adjacent to the Pueblo mill, is a new 2.1 million square foot storage and shipping area which has immediate access to rail and high way transportation. Arranged to allow rapid assembly and shipment of cus tomer orders, this area, coupled with improvements in plant facilities, helps CF&I offer customers improved service. facilities All phases of the program for modern ization and improvement of the Pueblo plant, launched in 1968, moved forward on schedule during 1970. A major project at the Allen coal mine was the installation of Iongwall mining equipment. In Iongwall mining, an entire seam of coal is removed from a section of the mine by carving a con tinuous working face, or Iongwall. This method reduces operating costs and in creases the safety of the operation. Among projects that will be com pleted in 1971 are facilities for rapid loading and unloading of coal, which will be transported by unit train system from the Allen mine to the Pueblo plant, expansion of heat treating capac ity in Pueblo's seamless tube mill to meet the increased demand for higher strength tubular products, and the in stallation of additional equipment for the production of an expanded line of cutting edges. In addition, a new battery of coke ovens has been authorized for Pueblo, and a new electric furnace in stallation is also being planned for this location. CF&I is exploring both Company and leased lands to determine the availabil ity of mineable seams of coking coals. Diamond core drilling is being con ducted in the Sunrise District of Wyo ming in a search for additional ore reserves for the Pueblo plant. Other ex ploration of outlying Company lands is seeking additional mineral deposits. A. In the new 11-inch bar mill, the entire hot mill complex between the heating furnace and cooling bed ts controlled from this consolejn^a. pulpit 14 feet above the mil! floor. B. V:ew down the bar mill line shows the roughing stands 3In the foreground. Intermediate and finishing stands are beyond. C. Aerial view of new eightacre bar mill facility. j CRTX 0228 B Hydro-Aire Division Hydro-Aire designs and manufactures brake control systems, fuel and hydraulic pumps, controls and systems and other accessories for the aerospace industry. Hydro-Aire Division is a pioneer and recognized leader in the design of,brake controls. Its products are on all major U. 5. military aircraft and all but one of the American-built commercial jet air craft models presently in use. Last year, the commercial aircraft in dustry, faced with spiraling costs of financing and reduced passenger traffic, cut back its programs, and the govern ment made reductions in military and space expenditures. Because of depend ence on both commercial and govern ment segments of the aerospace in dustry, Hydro-Aire operations were depressed but profitable. Advances were made by Hydro-Aire in 1970 in :he fields of automatic brak ing (where the brakes are controlled by computer) and jet engine fuel controls. Significant contracts have been received for further advancement and applica tion of these technologies. Their impact on operations is not expected to be felt until 1972 and later because of longrange development and subsequent production phases. In cooperation with The Boeing Company, Hydro-Aire developed and demonstrated the first fully automatic braking and skid-control system. This system, already successfully tested, is designed to provide automatic brake release to prevent excessive wheel slip and lockup, while at the same time auto matically controlling the deceleration of the aircraft. Hydro-Aire entered a new product area last year with the development of the main engine fuel pump for a new jet engine. This pump incorporates features which result in considerable weight savings and improved engine performance. The Division also developed a motor and/or engine driven fuel boost pump which will be used on many new air craft* This pump can be serviced in the field without disturbing aircraft plumb ing, thus reducing aircraft downtime. Hydro-Aire has developed an on-line maintenance system for in-flight moni toring of aircraft systems. The basic concept is also directly applicable to ground installations. It provides a unique approach to system monitoring and offers an excellent new product potential for the Seventies. A. Slain fuel pump tor a new engine to power military jet aircraft. B. Cut-away.view shows the rdque cartridge conrrguraiion of a fuel boost pump used in both the Seeing 747 and Douglas DC-10. C. This Hydro-Aire on-line maintenance system equipment is designed to pinpoint problem areas. CRTX 0229 Crane Canada Limited Crane Canada Limited manufactures and distributes plumbing fixtures, valves, pumps, heating equipment and water conditioning equipment for housing, commercial and institutional building and industrial applications. Tight money, coupled with severe labor problems, adversely affected Crane Canada Limited operations in 1970. Work stoppages in housing and build ing construction rose to an unprece dented level, highlighted by a fourmonth construction strike in British Columbia. This had a serious effect on plumbing product sales, and severe price competition worsened the impact. Unpegging of the Canadian dollar slowed capital spending in the pulp and paper industry and affected others en gaged primarily in export. Exceptions were the oil and gas industries where spending remained strong. With labor contracts settled and more mortgage money available, hous ing starts began to increase during the last months of 1970 and are expected to continue strong in 1971. Emphasis will be on multiple family and other low cost housing projects. Improvement hinges on the construction industry's ability to resolve new labor negotia tions without major stoppages. Crane Canada has worked closely with the Canadian government to help plan for housing needs, particularly in moderate income and public housing areas. Last year, it was one of- three major companies selected to pool re search and development talents to in vestigate the design of a totally inte grated, all-Canadian building system for low income housing. Sales of valves, pumps, water treat ment equipment and other industrial products exceeded 1969 despite gener ally depressed capital spending. A redesigned cast steel valve line and activity in the oil and gas industries contributed to this performance. An Environmental Systems Division was formed to combine water and waste treatment experience with knowledge of systems engineering and fluid pumping and control. Research and development activities will be coordinated with those of the Environmental Systems Division in the United States. Crane Supply Division distributes in every major Canadian city and serves building, construction and industrial markets. Results were below the record 1969 levels because of reduced con struction and tight money. Increased activity forecast for this year, especially in the second half, points toward im proved business for the Crane Supply operation in Canada. A. Crane valves, hydrants, pipes and fittings nere used extensively throughout the ttew St. Anne-NacLa .sic pulp and paper null .a \'eiv3run>;ck'. B. Control panel and regeneration system of Cochrane Ammonex condensate polisher installed at the Clover Bar Generating Station, Edmonton. C. Simon Fraser University. Vancouver, selected Crane plumbing fixtures and brass. J CRTX 0230 r International Operations United Kingdom--valves, fittings, . heating equipment, pumps, and water conditioning equipment The Netherlands--valves, fittings and heating equipment France--valves and pumps Spain--valves and pumps West Germany--valves Australia--valves and pumps Mexico--valves and pumps Operations outside the United States and Canada showed a moderate sales gain, but operating profits remained essentially the same because of world wide economic conditions and labor unrest. United Kingdom Crane Ltd. operations in 1970 produced higher sales, but Great Britain's infla tion, a very significant increase in labor costs, a construction slowdown and a credit squeeze all served to depress profits. In the Heating and Supply Division, malleable fittings sales were particularly strong. Crane Ltd. is concentrating on commercial heating products where market conditions are favorable. The Company expects to be a strong factor in this area. Fluid Control Division sales rose in 1970 with the introduction of control valves and a new butterfly valve. Gains were made in sales to the oil, chemical, petrochemical and marine industries, and also in the sale of water meters and pumps. Programs to broaden the product and market bases for both pumps and meters were launched. Following the successful introduction of new vertical in-line and chemical process pumps, sales efforts were extended into areas where market penetration has been limited in the past and considerable potential exists. ' A new'Environmental Systems Divi sion was established for industrial water and waste treatment and the first major contract for a new fertilizer com plex in Hungary was signed. If the labor climate improves and easing of the money supply continues, the outlook for 1971 is expected to be more favorable. The Netherlands Generally favorable economic condi tions, coupled with increased operating efficiency, helped Crane Nederland, N.V. show improved performance for the year. Sales of malleable fittings, natural gas-fired domestic boilers and ball valves all were ahead of 1969. While inflation is expected to con- ( V_- A. & B. Three 43-inch hollow jet steel valves manufactured at Kilmarnock, Scotland, plant were installed by Crane Australia to control the water supply for Sydfiey, which uses up to 637 million gallons per day. C. This 16-inch pump discharge valve at the Algeciras, Spain, power station is one of a variety of valves supplied by Crane S.A. CRTX 0231 nue in 1971, Crane Nederland anticiates improved market conditions. Caacity will be increased with a fully utomated malleable fittings molding ne scheduled for operation by the middle of the year. ranee !rane S.A. orders were up in all primary markets served: oil, gas, chemical, elecical and ship building. Significant inreases in material and labor costs were ffset by improved efficiency in manuicturing and distribution. Automated lachinery was installed for manufac me of new low pressure steel valves. While inflation and a possible slowlown in the economy make projections incertain, industrial expansion in 1971, ogether with improved operating effiriency, is expected to provide favor.ble marketing conditions. pain hipments improved significantly dur\g 1970, due to strength in the shipuilding industry, a major market for rane-FI5A, S.A. valves. A new line of ist steel valves was developed to meet ie needs of thermal power plants lanned by the Spanish government. The domestic market also showed nprovement during 1970, and there as an expansion in export sales. This end is expected to continue in 1971. Zest Germany rane G.m.b.H. serves the chemical. petroleum, gas and power industries of West Germany with valves manufac tured there and by other Crane compa nies. The chemical industry was most responsive in 1970 with a substantial jump in demand over last year. Sales of steel valves rose, but unstable prices, coupled with rising labor and interest costs, reduced profits. The forged steel line will be broad ened in 1971 to gain greater penetration into the domestic market and the Com mon Market. Australia Crane Australia Pty. Limited sales were approximately the same in 1970, but profits showed improvement. Australia last year expanded its ca pacity to produce large diameter valves. With the introduction of several new products, it now manufactures a full line of iron and steel valves in sizes up to 24 inches in diameter and a compet itive line of pumps. With the continuing discovery and development of mineral resources on that continent, the outlook for the Aus tralian economy is expected to remain favorable. Mexico Valve and pump sales for Crane-Deming de Mexico S.A. rose as a result of the improved economic climate and better distribution. Plans for 1971 include the introduction of a new low cost valve and an industrial pump line. CRTX 0232 A. Electrically operated sub merged discharge regulating valve tor the Essex River Authority was built at the Glenfield & Kennedy plant, Kilmarnock. . B. Boilers for domestic heating are inspected at Deventer, The Netherlands, plant. 0 C. This battery of Crane cen trifugal pumps circulates water for the air conditioning and heating system in the Churchill Hotel, London. J Chempump, Crane Chef, Hi-Cant, microstraining, Petite'7, and Unette are Registered Trade Marks. Applications have been filed to register Ammonex and Tork-Seal as Trade Marks. Directors , Ut,r 7^*?-, 115 S'. -i- Officers ItUmhi: !\V "V/ ^ , *. . . whiG&tM&kr iiiln,,.. DA. i-;, */ 'C luiyiut]i '* - *.... i-M! .'inti- ri *>31* Jrmiu * :V*nu!i* ** ?*, .'V* *1 />|{> * inJTj'!^,1' p.'l:fr?y;.< ii- `iff'. * * Stock TransferAgents Vlf*v-ri* ',*>**. 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