Document e4JNwD9QpY4vNM35gyvw4Vge

Crane Co, Annual Report 1970 'Financial Highlights ; j>- -- v * ' ** _ ' ^ ' Sales.-. . . :i-M.4u . . . Income brfo.m net extraordinary credit- . Jxjef eytt'ordimry credit ' '* Net income . . . ' .- .f*. I ' i ~ Cash dividend1' ,,. -- . .Networking capital &$>. ; .:-' iTotal aSSfctS'"' . ''rS3'*-;'?>i' .,.: .: .Common_haxJioideis'.equily. ... ( `inuiton. ihaic3 outstanding at year tin! P .tics at ycat uni.,. _ ... fe' Met income to sales.". sj,=.. . * / Ip Common shareholders''' net income ' to average equity ." * . Current ratio . , . y T'f : (tnnmon .!> ca : ^iticome before net extraordinary credit- Net extr u>,din u y credit......... ,, ,;y 4+i Net*income pppre'u it ion " . * . .. . ,, v. . jCash flow froi'i >urndiou' , 23* C^ i'd_ i-td, i;viiit nd; . . . . .. _ i om iion` mail hridi i>. tqmfy. . . 1970 '>080,207,000 8,255,000 8.255.000 4.165.000 180.352.000 697,207,000' 149.619.000 2,577,868 1909 $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 1.2% 5.5% 2.6 2.1% 8.1% 3.1 $ 3.15 .3.15+ 8.70 11.85 1.60 ' 58.04 $ 3.58* .81* 4.39* 5.50* 9.89* 1.60 56.32* Adjusted for 2% stock dividend in December, 1970. i A.'tuning conversion of subordinated debentures, net income ,, per common share would amount to $2.52 ($3.62 in 1969).  *.<-Via* - ` ;*%#*! |to. our shareholders: _ At December 31, 197ocTr^ "x shareholders' equity was^l^fc Crane results reflect the 1970 eco or $58.04 per shafe,-?df?rriM nomic slowdown in both North Amer $56.32 at December 3i^isj69[ ica and abroad. Specifically labor, raw; dated net working capitaTaCi materials and freight costs increased 31, 1970 was $180,352,'d6or sharply, and competitive policies in the steel business partially prevented Crane with $194,321,000 fo&l '0;: ber 31, 1970^cdxis6fic from recovering these cost increases. debt was $274;Q4oQC Consolidated net sales for 1970were $271,411,000 af-Decer; $680,207,000/ up: from $550,707,000 year end, $129,380jC for 1969. CF&I Steel Corporation finan term debt was suborc cial results are included for the full year $57,099,000 convertible 1970 and-for only six months of 1969. ' stock. , Net income for 1970. was $8,255,000, During the|yea or $3.15 per share, compared with of Alcan Aluminir $9,493,000, or $3.58 per share, exclud an investment/SwerJ ing a non-recurring gain of $2,109,000, $7,398,000'- principa or 81 cents per share, from the sale of 'cent convertible-`-su]E real estate not used in the business in tures due 1994Wor _1969. ` - ' ' $996,000. In additrof Cash flow (net income plus depreci cipal amount oStEes ation) in 1970 was $30,714,000, or $11.85 ordinated - deberitS^ per share, compared with $25,957,000, in the open.., marj< or $9.89 per share in 1969. Crane con Gains' on ' tHesd ^ tinued its modernization program and credited to theJ&laL in 1970 new capital expenditures totaled deferred crediffror ' $52,395,000, with CF&I Steel incurring . .On behalfofjtbl the major share. A substantially lower we wish to tljat level is anticipated for 19Tl//^_ ployees/ suppf During' 1970; the' Company paid their support/*! the regular $1.60 cash dividendper share economic cliniat 'and in December, 1970 paid a 2 per cent for 1971, youir stock dividend as in the previous two dal resourceSxf E years. All per share statistics have "been continue-.ftc adjusted to reflect this stock dividend. equity, 3/. T. M. Evans, Chairman, and D. C. Fabiani, President '^ February 25/ IS Financial Review Consolidation The consolidated financial state ments include the operations of CF&I Steel Corporation, an 86 per cent owned subsidiary, for the full year 1970 and for the second half of 1969. The difference between the purchase price and CF&I Steel shareholders' equity was recorded as deferred credit from acquisition in the consolidated balance sheet. This de ferred credit is being amortized as a credit to cost of sales over a seven-year period from July, 1969, with $2,633,000 recorded in 1970 and $1,074,000 in 1969. CF&I Steel contributed $242,300,000 sales and $8,792,000 net income in 1970, compared with $120,918,000 sales and $4,406,000 income before extraordinary credit in 1969. The income contributions were after deducting minority interests of $1,402,000 in 1970 and $800,000 in 1969. The investment in Huttig Sash & Door Company, a 55 per cent owned sub sidiary, is recorded at cost plus equity in undistributed earnings since acquisition. The equity in Huttig 1970 income be fore taxes was $996,000, compared with $1,551,000 in 1969, and 1970 income after taxes was $525,000, compared with $753,000 in 1969. 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. Plant Improvement In 1970, $52,395,000 was invested in property, plant and equipment, princi pally a new bar mill at Pueblo, Colorado. An additional $8,500,000 expansion at the Chattanooga, Tennessee, plant was financed by a ten-year equipment lease. In the same period, several unprof itable or marginal plants were closed or sold and the Company incurred start-up expenses on new facilities. Operations at the Trenton, New Jersey, pottery; Madrid, Spain,valve factory; and Aycliffe, England, heating factory were dis continued, and Crane-Glenfield (S.A.) Pty. Ltd., South Africa, was sold, result ing in costs of $1,701,000. In addition, start-up costs at Chattanooga, the Carol Stream, Illinois, distribution center and other locations amounted to $1,748,000. These actions, to improve future earn ings for Crane, caused the incurrence of costs and losses totaling $3,449,000 which were charged against 1970 earn ings before income taxes as miscella neous expense. In 1970, the operations of the Palmer, Massachusetts, wire rope plant and other smaller operations of CF&I Steel Corporation were sold and the re sulting loss of $3,725,000, after a related income tax credit of $3,406,000, was charged by Crane to the deferred credit from acquisition and minority interest in the amounts of $3,213,000 and $512,000, respectively. Long-term Financing Long-term debt at December 31, 1970 was $274,041,000, essentially the same amount as the prior year. This was achieved although CF&I Steel issued $23,750,000 of 73/4 per cent first mort gage bonds in May, 1970. Corporate liquidity and working capital during 1970 were such that other long-term debt was reduced by $21,120,000. Scheduled debt retirements over the next five years are in principal amounts of $5,379,000 in 1971, $12,173,000 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 73/4 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 $85,000,000 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 benefit of $1,520,000 ($2,313,000 charge in 1969). Principal 1970 permanent tax savings were investment credits -- $2,876,000 ($1,075,000 in 1969), tax exempt investment 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 which50,000 shares were initially reserved for options. A sum mary of option transactions is as follows: Number of Shares Price Per Share Outstanding January 1, 1970 52,570 Options granted 13,400 Options cancelled (6,890) Options exercised (5,506) 2% stock dividend 1,049 $18.15-$56.62 32.25- 39.25 27.63- 54.90 25.03- 27.63 Outstanding Dec. 31, 1970 54,623 $17.79-$55.51 Options for 20,500 shares granted and for 6,169 shares were tX 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 ft Co., Inc., which arose out of the merger of Westinghouse Air Brake Company into American Standard, as reported Id last year's Annual Report, is continuing. Crane has entered a claim for damages but it is impossible to determine at UtSt ' time the extent of any recovery. Mm* agement continues to believe that thf ! American Standard suit against CrahC(l for so-called "insiders profits" is wife* ! out substantial merit. " al The civil anti-trust litigation in*t3 tuted against the Company, arising US* jL der the Sherman Act, which hat discussed in previous Annual R is still the subject of pending court ceedings. Management continues (0 advised by counsel that the amoun|. any payments or settlements madd respect to such suits will not mat affect the financial position and e of the Company. vliscellaneous Early in 1971, North Jersey ional Bank was merged into hate National Bank. Crane oppos edl&ftl nerger on the basis of its large 1 nent, and has now surrendeitd hares for appraisal rights. 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 $680,206,546 584,892,028 75,275,787 660,167,815 20,038,731 (16,900,581) 726,761 2,358,772 (3,382,874) (17,197,922) 2,840,809 (5,413,929) 8,254,738 --- $ 8,254,738 $3.15 2.52 1969 $550,707,177 464,665,938 67,360,814 532,026,752 18,680,425 (11,947,201) 1,089,863 2,617,755 210,894 (8,028,689) 10,651,736 1,158,267 9,493,469 2,108,830 $ 11,602,299 $4.39 3.62 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 common reacquired, less 5,506 issued under stock options (48,300 and 6,169, respectively, in 1969) . . .......................................................... Balance at End of Year.................................................... 1970 $ 76,867,991 8,254,738 85,122,729 114,476 4,050,100 1,381,450 173,766 5,719,792 $ 79,402,937 1969 $ 72,580,736 11,602,299 84,183,035 122,754 4,018,390 2,172,644 1,001,256 7,315,044 $ 76,867,991 CRANE CO and qiihsidiarioR See comments on pages 2 through 4 - 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 $ 18,138,288 23,601,805 111,379,699 68,239,222 51,063,708 17,511,686 136,814,616 5,119,990 295,054,398 1969 $ 17,865,804 39,061,024 96,110,081 66,675,813 45,717,560 18,932,464 131,325,837 3,613,851 287,976,597 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............................................................... 41,779,984 1,065,166 4,934,362 1,261,388 3,904,580 52,945,480 7,789,609 4,536,117 65,271,206 41,779,984 7,859,749 4,934,362 1,261,388 4,472,726 "60^308,209 7,515,528 4,774,833 72^98^570 Property, Plant and Equipment at Cost: Land............................................................................... Buildings and improvements..................................... Machinery and equipment.......................................... Less accumulated depreciation..................................... CRANE CO. and subsidiaries 14,515,006 107,893,993 407,826,962 530,235,961 293,354,362 236,881,599 $597,207,203 14,386,053 108,104,626 380,856,938 503,347,617 286,513,152 216,834,465 $577,409,632 LIABILITIES AND SHAREHOLDERS' EQUITY 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................................ 1970 $ 5,379,011 16,539,800 47,134,781 43,497,637 2,150,796 114,702,025 1969 $ 2,736,985 7,891,193 42,408,221 34,536,509 6,082,611 93,655,519 Long-Term Debt (see details on page 9)....................... Operating and Other Reserves..................................... Minority Interest in Subsidiaries.................................. Deferred Credit from Acquisition.................................. Shareholders' Equity: Preference stock of Glenfield & Kennedy Holdings Limited, 51/2%.............................................................. Cumulative preferred shares, 3% %, 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) . . Serial preferred shares, par value $5: Authorized--600,000 shares................................ 274,041,143 18,281,214 23,910,559 11,270,361 2,400,000 2,983,400 -- 271,411,242 20,158,889 26,627,972 13,958,955 2,400,000 3,102,600 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 218,888 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 61/2% sinking fund debentures.......................... Total common shareholders' equity . . . Total shareholders' equity........................... 64,446,700 5,768,864 79,402,937 149,618,501 155,001,901 $597,207,203 63,575,375 5,651,089 76,867,991 146,094,455 151,597,055 $577,409,632 See comments on pages 2 through 4. Consolidated Statement of Capital Surplus for Years Ended December 31 Balance at Beginning of Year.......................................... Excess of market value over par value of common shares issued as 2% stock dividends..................... Excess of subordinated debentures converted over par value of 3,050 common shares issued ... Balance at End of Year..................................................... 1970 $ 5,651,089 117,775 -- $ 5,768,864 1969 $ 4,632,917 920,522 97,650 $ 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 non current 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 $ 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 27,049,152 145,751,482 __ 1,979,764 24,863,195 199,643,593 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. Details of Long-Term Debt at December 31 Crane Co.: 6%% Sinking fund debentures due 1992, $2,000, 000 due annually beginnning in 1973 of which $1,355,000 was in treasury in 1970 . . . . 7/o and 7*4% Bank term loans due 1974, $4,000, 000 due annually (S%% and 9% in 1969) . . Miscellaneous........................................................... Subordinated debentures: 7% Sinking fund debentures due 1993, up to $1,000,000 due annually beginning in 1974 . 7% Debentures due 1994..................................... 5% Convertible debentures due 1993, converti ble at $50 per sharfe (377,172 common shares reserved in 1970) after deducting $1,331,000 debentures in treasury in 1970 ..................... 5% 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 CF&I Steel Corporation: 5%% 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 ..................................... 7%% 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...................... 4%% Convertible sinking fund debentures due 1977 (convertible into CF&I common shares at $31 per share), $1,000,000 due annually, of which $3,892,500 was in treasury in 1970 . . Foreign Subsidiaries: Crane Canada Limited 5%% 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%% Bank term loan due 1972 (8%% in 1969) 8% Bank term loan due 1973 (9% in 1969) . . Glenfield & Kennedy Holdings Limited 5%% un secured loan stock due 1982................................ Miscellaneous.......................................................... 1970 $ 38,645,000 11,000,000 2,454,374 52,099,374 20,204,400 52,077,200 18,858,600 38,239,900 129,380,100 181,479,474 17,965,000 47,500,000 5,628,700 71,093,700 8,008,320 4,320,000 3,132,403 3,628,490 2,378,756 21,467,969 $274,041,143 1969 $ 39,627,000 15,000,000 3,313,437 57,940,437 20,204,400 52,077,200 19,020,600 48,552,900 139,855,100 197,795,537 20,000,000 23,750,000 7,920,200 51,670,200 7,636,800 4,320,000 3,442,550 3,683,513 2,862,642 21,945,505 $271,411,242 CRANE CO. and subsidiaries 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 $319,556 $ 5,676 $ 8,000 1962 333,767 1,176* 8,383 1963 337,366 5,447 7,607 1964 357,823 5,530 8,316 1965 370,084 7,991 7,847 1966 405,907 11,251 8,124 1967 403,361 10,228 8,632 1968 409,549 10,998* 9,146 1969 550,707 11,602* 14,354 1970 680,207 8,255 22,459 *After extraordinary charge of $2,018,000 in 1962 and extraordinary credits of $2,503,000 in 1968 and $2,109,000 in 1969. $130,650 $37.11 $1.50 $ .80 124,105 37.91 .25 .80 121,834 40.12 1.69 .80 122,087 41.70 1.78 .80 121,256 45.75 2.90 .92 128,255 48.69 4.20 1.28 133,831 50.80 3.82 1.54 140,514 53.34 4.11 1.54 146,094 56.32 4.39 1.57 149,619 58.04 3.15 1.60 fAll 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) 1970 Amount To 1969 Amount Net Sales To Crane-U. S. A.............................................................. CF&I Steel Corporation........................................ Hydro-Aire Division............................................. Crane Canada Ltd...................................................... International Operations........................................ Total 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 . 48 22' 3 16 11 $550,707 100 Operating Profit Crane-U. S. A......................................... CF&I Steel Corporation.................... Hydro-Aire Division......................... Crane Canada Ltd.................................. International Operations.................... .... .... .... .... .... $ 3,308 13,696 1,855 2,161 4,156 25,176 13 54 7 9 17 100 Corporate............................................. .... ( 5,137) Total Operating Profit . . . .... $ 20,039 $ 5,153 7,585 2,446 3,574 4,120 22,878 22 33* 11 16 18 100 ( 4,198) $ 18,680 *From July 1,1969. Pages 11 through 20 describe the organization, products and services of these units. me-U.S.A. ne-U.S.A., consisting of the leered Products, the Valves and igs and the Plumbing and Heating sions and Crane Supply Company, |ufactures and distributes all |estic products except those of the -Aire Division. Its broad line of S, pumps, meters, controls, fittings, r treatment and conditioning Ijpment, and plumbing and heating ipment is sold throughout all indus^building and construction markets. ugh Crane-U.S.A. sales showed a .increase in 1970, profits were 1 Operations suffered from cutgirt capital goods spending in some rial markets and the continued vel of activity in all segments of flding and construction fields. eered Products Division international leader in the design Manufacture of highly engineered j&ontrol and treatment products, ^supplies a wide range of pumps, |' COntrol valves, and water and l^eatment equipment used in in processing, power generation, fticipal water and waste treat ' an^ Profits of this Division ex1969 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, I2V2 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 wastewaters. 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. , Valves 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 expanxfad butterfly valve line. A new i50-gm4 cast steel gate valve for the powsr* petroleum and chemical industriei,V|nk. into full production at the Chattanpci|-> valve plant, where major moder*1" tion and expansion were complex 1970. The 300-pound valve will, production there this year. Crane remains a leading turer of nuclear valves and fUtingtJ the power industry and naval ajmjGjj tions. Experience in the nuclear Bril' puts the Division in a unique to capitalize on the expanding cial nuclear utility market. The Chapman operation centennial during 1970. which produces some of the l_a dally engineered valves in hemisphere, operated at a formance level. A distribution center at Caro Illinois, was opened in 1970 : regular and fast-moving valve Fully automated, it permits to all parts of the United States^ 48-hour period. In addition to ing customer service, the dis center will enable the Compa crease manufacturing efficiency, fully utilizing automated fa^ the Chattanooga, Chicago ington, Iowa, plants. Crane supplies a broad standard and special fittinc among contracts last year W lion-dollar order for large di inch) welding fittings for pipeline project. ing and Heating Division plumbing and heating product are directly related to the construcindustry, where greater than antic sluggishness occurred during As a direct result, performance Jow the 1969 level. The forecast eased home building activity and availability of construction and ge money should improve busijn 1971 and beyond. ! new Nevada, Missouri, ceramic went on stream in late 1970 and production is anticipated before 71. Full production is also schedi the second half at the Chatta- f Tennessee, enamelware facility, a large-scale modernization and 1ion program is nearing comple te installation includes a fully d enameling process, a Crane ye in the United States, which !|oduce cast iron plumbingware at 'reduced costs. idition, expansion of the Fergu[jKentucky, plant to be. completed year will nearly double cer|pacity there. These new facilities e Crane's ability to meet Pc demands, strained during 1970 gt losing of the antiquated Tren- 1^ Jersey, plant. Jjctite*7, a highly styled new line ^ m hydronic nonferrous base- ating, recorded sales perform` ahead of forecast, ty 1971, Crane introduced three J~ers designed for residential, l d heavy commercial hydronic gp 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. B. This 35-inch 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. 14 A ?v ' Ifcsi 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 thecousi* try, and is capable of producing a range of bars and shapes in a variety of sizes. Production for the full 1971 yug-. * will permit a more aggressive approach to sales opportunities and a shnr* wf] markets not now obtainable. CF&I launched development of i markets for the sale of controlled coofg rods produced at the Pueblo mill. TmTi Pueblo plant is one of the few in the It** J tion equipped to furnish rods with tht^] in-line process for thermally controll the metallurgical structure. These 'I offer users substantial savings as tain processing can be eliminated customer's plant on many end prod|T During the year, CF&I acquired l inforcing bar fabricating plant Lake City. This plant, CF&I, of Utah, will supplement the ac of CF&I Fabricators Inc., of Denv broaden CF&I markets for rfeii steel. Petroleum Drilling activity in the petrolei dustry during 1970 was lower tl 1969, but casing and tubing bt picked up late in the year becat^ higher crude oil prices and an ( increase in natural gas activity, in 1971 is expected to equal if. ceed 1970. During the year, the Pueblo^ gan to stock casing and tut chorage, Alaska, establishing an ly foothold in this market. Prudhoe y and the North Slope of Alaska are pected to become large oil producing eas. CF&I, with the only seamless be mill west of the Mississippi, is ~ategically located to serve this growg market. The company has installed special ipment to produce casing and tubing th couplings applied under controlled que turn conditions. To meet increasing demands of the "oleum industry for higher quality 'ucts, CF&I is expanding the quench tempering facilities in its tubular Juction department. nmg eblo introduced improved grinding s and grinding rods for the mining ustry in 1970. Expanded grinding production facilities, which include new forging and heat treating unit, are in full operation. An evaluation aratory to process and test customer Will be completed during 1971. etalworking ire and cold rolled product sales were w 1969, due primarily to the desSed automotive industry. Metal ing is a principal market for CF&I, crially for its eastern mills. Primary rket areas for wire, wire rope, cold ed 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 tie- plate, 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. "Shipping West" new CF&I open-air facility, is more than one mile long. Easy access for truck or rail shipment and modern materials handling equipment help give customers better and faster service. C. Two new 200-foot silos at the Allen Mine (and two at Pueblo) will be used to store, speed loading and unloading, and maintain a continuous flow of coking coal. D. All rails and accessories for the Department of Transportation new high speed testing center are being produced at Pueblo. E. Grinding balls undergo heat treating in expanded production facilities at Pueblo. 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 longwall mining equipment. In longwall mining, an entire seam of coal is removed from a section of the mine by carving a con tinuous working face, or longwall. 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 mil the entire hot mill complf between the heating furtun and cooling bed is controlli from this console in a pulp 14 feet above the mill floe B. View down the bar mill 111 shows the roughing slut' in the foreground. Intermedia and finishing stands are beyoit C. Aerial view of new eigl acre bar mill fadli1 o-Aire designs and manufactures e control systems, fuel and aulic pumps, controls and systems other accessories the aerospace industry. ~o-Aire Division is a pioneer and ized leader in the design of brake trols. Its products are on all major 5. military aircraft and all but one of American-built commercial jet air- models presently in use. t year, the commercial aircraft in , faced with spiraling costs of "g and reduced passenger traffic, hack its programs, and the governt made reductions in military and expenditures. Because of dependon both commercial and governt segments of the aerospace in- Hydro-Aire operations were essed but profitable, vances were made by Hydro-Aire 970 in the fields of automatic brak(where the brakes are controlled by uter) and jet engine fuel controls, cant contracts have been received further advancement and applicaf these technologies. Their impact 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. Main fuel pump for a new engine to power military jet aircraft. B. Cut-away view shows the unique cartridge configuration of a fuel boost pump used in both the Boeing 747 and Douglas DC-10. C. This Hydro-Aire on-line maintenance system equipment is designed to pinpoint problem areas. 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. B. Control panel and regf system of Cochrane A condensate polisher! at the Clover Bar G# Station, E` C. Simon Fraser Uni Vancouver, selected, plumbing fixtures and tional OpefaiiSr^ Ldom - - v Ivts, i mgs,. r pmei'it j m .1'- if i ^ equrpme nt ' - lands - v-dvr?, fl.rmgsand J, `pm.ent - o yes.and pumps es-and pumps-- - - - any--valves . . -yrv. mves and pumps'---- - lives`and pumps 1 7 *du! i If da I J r,fati . ishowed j moderate sales 'Operating profits remained. ae sj.ui It cm-' o{ /voilJ Sue-, conditions and labor fsC' -- . . a"-',; 'dom perations in 1970 produced , ^but Great Britain's infla'sigmficant increase in labor fraction slowdown and a ze all served 'to depress ..eating and Supply Division, ttings sales were particularly e Ltd. is concentrating on heating products where ditions are favorable. The tgects to be a strong factor fluid ( iml ml I '.vision sales ioce m 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 al=o n the , sate of water, meters and puxnpc. .. . ,; ' Programs to broaden the product and market bases for both pumps and metem were launched.-Following the sueef ,'cful 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 wkste 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- A. & B. Three 18 -im h hollow je{ steel valves manufactured at Kilmarnock, Scotland, plant ' were- ins tailed by Crane Australia to ccmtiol the water.., supplv for Sydney, which uses up to 637 million gallons per d'ayi ~ C. This U inch pump dr-charge-- * valve at the Algecira-, Spain, * ' power s>t jt on one of a variety. of valve upp'ied by Cmru- 3 A. ; :> ; t rm10" tinue in 1971, Crane Nederland antici pates improved market conditions. Ca pacity will be increased withia*. fully automated malleable fittings-' molding line scheduled for operation* JSy the middle of the year. s? V wv France , '- - Crane S.A. orders were up in all primary markets served; oil, gas, cbemical,selec- trical and ship building. Significant in creases in material and labor costs were offset by improved efficiency in-, manu facturing and distribution. Automated machinery was installed for manufac ture of new low pressure steelvaly^s. : While inflation and a possible^yow? down in the economy make projfictions- uncertain, industrial expansioijtjij|;1971, together with improved operating; effi-: ciency, is expected to provideffavor able marketing conditions. - Spain Shipments improved significantly dur ing 1970, due to strength in the ship building industry, a major market for Crane-FISA, S.A. valves. A newline of cast steel valves was developed to meet the needs of thermal power- plants planned by the Spanish government. . The domestic market also showed improvement during 1970,. and? there was an expansion in export sales-t This trend is expected to continue in 1971. West Germany . Crane G.m.b.H. serves the chemical, petroleum; gas and power, in3ustfles^of, -West Germany' with varves'i'^nuracf. tured there and by other "Cran'dcompa-; hies. The chemical industry/v^as most responsive, in -1970 with i suBstanfial. jump in'demand over last yeahiSalesfof steel valves rose, but unstable'prices, coupled with rising labor and#interest 'costs, reduced profits. -V '* - The forged steel line will be broad ened in. 1971 to gain greater penetration into the domestic market and the Com mon Market, , ^' Australict^ - \ . k; Crane Australia Pty. LimitedJsales were but pacitytgproductlarge dSme With tKe^6qductiopQf:rss: product?,; if^now^mahufS^f line of irohahd'steel'valves i to 24 inches in diameter and ^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. *' 1 ;' , ' a * ^0-f, * " - ! , Mexico Valve and pump sales'for Cfane-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. Stock Transfer Agents Registrars of Stock Bond Trustees & Disbursing Agents Equal Employment Opportunity Policy Auditors Executive Offices i "V,