Document gonmzD0KyrJ8JjJE0dKRnmL

CRANE CO./ANNUAL REPORT/1965 CRTX 0097 CRTX 0098 Crane Co. Annual Report 19"" ane line of cast steel gate valves represents a signifihrough in valve design by combining big valve per- ith lightness and compact size for greater efficiency. CGKTEI.TS Financial Highlights ........................................... 2 Letter to Shareholders......................................... 3 Ten-Year Summary............................................. 4 Consolidated Statement of Income................... 5 Consolidated Statement of Earned Surplus.... 5 Consolidated Balance Sheet............................ 6-7 Consolidated Statement of Changes in Net Working Capital..................................... 8 Details of Long-Term Debt................................. 8 Status of Stock Option Plans............................. 9 Report of Certified Public Accountants............ 9 Review of 1965 Operations..................................10 Worldwide Facilities ................................ 16 Officers and Directors............ inside Back Cover CRTX 0099 Financial Highlights 1965 Sales ................................................................................................... $370,084,000 Net Income ......................................................................................... 7,931,000 Cash Dividends . '.............................. '.................................... ........... 2,709,000 Net Working Capital...... .......................................... 105,844,000 Total Assets......................................................................................... 206,929,000 Common Shareholders' Equity........................................................ 119,774,000 Common Shares Outstandingat Year End..................................... 2,081,200 Ratios At Year End: Net Income to Sales.................................................................. Net Income to Average Assets............................................... ; Common Shareholders'Net Income to Average Equity................................................................ . Current Ratio .............................................................................. 2.2% 3.9 % . .. 6.4% 3.6/1 Per Common Share: *" Net Income ................................................................................ $ 3.70 Depreciation............................................................................... 3.77 Cash Flow from Operations...................................................... 7.47 Cash Dividends.......................................................................... 1,1 Common Shareholders' Equity................................................ 57.55 1964 $357,823,000 5.530.000 2.644.000 96,098,000 206.404.000 121.605.000 2,299,440* 1.5% 2.7% 4.3% 3.2/1 $ 2.27* 3.62* 5.89* 1.00* 52.89* Adjusted (or 100% stock distribution in October 196S. W-- CRANE 2 CRTX 0100 To 1 fiC briatv..oic;'-r Crane Co.'s net income in 1965 was $7,991,000, or S3.70 a share, compared with $5,530,000, or $2.27 a share, in 1964. The 1965 total earnings were the highest in eight years, and a record high per share. Net sales in 1965 amounted to $370.1 million, the highest in eight years. This represents an increase of $12.3 million, or 3.4%, over 1964. The gain consisted of $19.8 million, or 5.7%, of increased sales of current product lines reduced by $7.5 million of unprofitable sales of terminated operations. Even with the higher volume of shipments in 1965, the backlog of orders in creased during the year by almost 40%. Cash flow from operations (net income plus depre ciation) in 1965 amounted to $15.8 million, or $7.47 a share compared with $13.8 million, or $5.89 a share in 1964. Common shareholders' net income to average equity rose to 6.4% in 1965--the highest in nine yearsfrom 4.3% in 1964. Common shareholders' equity per share was S57.55 at year end 1965-a record high-an increase of $4.66 per share over 1964. In October 1965, the Board of Directors declared a 100% common stock distribution to provide a broader base for common stock ownership. In November 1965, the quarterly dividend was increased from 25 cents to 40 cents on the new common shares. The major gain in 1965 sales and income occurred within the United States in the industrial productsvalves, pumps, water systems--which account for twothirds of Crane product volume. ' Investment in additional property, plant and equip ment during the year, which amounted to $5,748,000, was generally distributed throughout the entire Company to improve operations. Continuing attention was given during the year toward improving the return on investment. The adminis tration of certain operating groups in the United States was consolidated to gain the benefit of improved direc tion and lower costs. The administration of the Com pany's several Research and Development activities was centralized. Considerable work has been completed toward improvement in content and timeliness of in T. M. Evans, Chairman, and 0. C. Fabiani, President, review company plans and operations in the Executive Offices of Crane Co. in New York. ternal financial data. An important improvement was made in production and inventory control procedures which is hoped will result in improved inventory turn over rates throughout the Company. Early in 1965, the Company's Canadian subsidiary issued $11,000,000 Canadian ($10,175,000 U.S.) sinking fund debentures, which are secured by a general claimon the property and assets of that subsidiary. Late in 1965, the Company prepaid all the 1966 installments due under the U. S. bank loan agreement. Operations in the United States and Canada pro duced 64.8% of consolidated net income and repre sented 89.6% of consolidated equity; comparative percentages for existing operations in 1964 were 66.8% and 89.7%, respectively. In early 1965, the reserve for foreign contingencies was increased $1,000,000, by a charge to earned surplus, for possible future devalua tion losses. No payments to the trustees of the major pension plans were required either this year or last year, because payments made in prior years have accumulated funds in excess of the estimated pension rights vested in pen sioners and employees. Pension costs paid under other arrangements amounted to $640,000, compared with $654,000 in 1964. On behalf of the Board of Directors, we thank em ployees and shareholders alike for another year of loyal support. Respectfully submitted, March 18,1966 D. C. Fabiani, President / . fa. T. M. Evans, Chairman 3 CRTX0101 177 84 155.64 IT" 3 70 55 '57 '53 '59 '50 '61 '62 '63 '64 '65 NET SALES PER SHARE* '56 '57 '58 '59 `60 '61 '62 '63 64 '65 NET INCOME PER SHARE* 57 55 56 '57 '58 '59 '60 `61 '62 '63 '64 '65 CASH FLOW PER SHARE* i (net income plus depreciation) 'in dollars per common share outstanding at end of year. '56 `57 `58 `59 *60 '61 '62 '63 '64 *65 SHAREHOLDERS' EQUITY PER SHARE* TEN-YEAR CONSOLIDATED FINANCIAL SUMMARY 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 Net Sales $394,132,662 378,948.173 336,196,279 310,172.639 285,618.712 319,556,202 333.766,863 337,365,571 357,823,354 370,084,039 income Before income Taxes $22,923,629 17,218,612 3,897,185 13,585,161 7,216,250 9,121,253 6,926,092 10,703,634 10,028,987 13,836,113 Net Income $12,203,059 8,678,272 2,167,345 6,517,746 4.824,463 5,675,770 3,194,032 5,447.378 5,529,829 7,991,351 Net Working Capital $128,122,909 130,175,138 136,163,472 84,626,580 89,560,647 99,371,959 88,226.079 92,081,379 96,098,246 105,843,822 Depreciation $6,109,485 6,213,179 5,915,406 6,369,811 7,457,676 8,000,070 8,383,196 7,606,845 8,316,181 7,846,942 Preferred Shares $12,295,705 11,983,182 11,406,185 10.941,523 10,459,300 10,009,300 9,109,300 8,441,300 8,069,300 6,318,600 Common Shareholders Equity Total Per Share* $171,571,876 $36.16 175,064,998 36.91 174,250,476 36.72 135,003,440 44.53 135,064,791 45.40 130,649,983 47.25 123,623,143 48.09 121,351,442. 50.88 121,604,518 52.89 119,774,345 57.55 Net Income Per Share $2.47 1.73 0.36 2.01 1.49 1.92 1.11 2.15 2.27 3.70 Crane Co. Sjcs^iaries 'Adjusted tor 100*/* Stock Distribution in October 19&S. 4 CRTX0102 --'jr ***--^ sr Consolidated Statement of Income For Years Ended December 31 1965 Net Sales..................................................................................... Operating Costs and Expenses: Cost of sales......................................................................... Selling, general and administrative................................. Operating Profit........................................................................... 353,920,739 Other Income (Deductions): Interest-net......................................................................... ................... Gain on disposal of capital assets-net........................... ................... Miscellaneous .................................................................... ................... Income Before Income Taxes.................................................... ................... ( 2,241,237) 48,440 ( 134,390) ( 2,327,187) 13,836,113 Provision for Income Taxes...................................................... ................... 5,844,762 Net Income...................................................................................................... ' $ 7,991,351 1964 $357,823,354 302,010,037 44,050,568 346,060,605 11,762,749 ( 2,252.617) 468,971 49.884 ( 1,733.762) 10,028,987 4,499.158 $ 5,529.829 Consolidated Statement of Earned Surplus For Years Ended December 31 1965 Balance at Beginning of Year................................................................ ................. Net Income................................................................................. ................ ............... Dividends: . Preferred shares-$3.75 per share..................................... .............. Common shares: Cash--$1.15 per share ($1.00 in 1964)............................. ............... Stock -- par value of 1,035,550 shares issued in October 1965 as 100% stock distribution................. ................. ' Excess of Cost Over Par Value of Reacquired Shares--Net: 17,507 preferred shares (3,720 in 1964).................................................. 101,620 common shares (42,700 in 1964)............................ .................. Addition to Reserve for Foreign Contingencies.............................. Balance at End of Year............................................................................................... $ 92,861,518 7,991,351 100,852,869 290,522 2,418,045 25,888,750 ( 170,261) 3,681,468 33,108,524 $ 67,744,345 1964 $ 91,540.942 5,529.829 97,070,771 310,967 2,333,115 - ( 53,123) 1,618,294 4,209.253 $ 92,861,518 5 CRTX0103 Consolidated Balance Sheet At December 31 1965 1964 ASSETS Current Assets: Cash ........................................................ -........................................... Marketable securities, at cost which approximates market ................................................................ Accounts receivable, less allowance for ' doubtful accounts-$1,294,819 in 1965; $1,091,836 in 1964 ............................................................................ Inventories, at lower of cost or market (after deducting reserves of $20,817,526 in 1965 and $22,426,130 in 1964 to state the principal inventories in the U.S. on a LIFO basis): Raw materials and supplies............................................. Work in process.................................................................. Finished goods .................................................................. . \ ' I Preoa.c expenses...............................................................................' Total Current Assets.................................................. . $ 17,512,868 5,156,241 54,052,952 10,816,708 24,618,710' 33,084,054 68,519,472> 631,831 145,873,364 $ 21,845,858 48,032,956 10,966,538 23,882,248 33,439,965 68,288,751 603,246 138,770,811 Investments and Other Assets at Cost: Investment in foreign affiliate (equity in net assets--$1,768,208 in 1965; $1,766,951 in 1964)........................................................ Investments and other assets............................................................ , ; 1 j` ; Property, Plant and Equipment at Cost: i jLand ..................................................................................................... Buildings and improvements............................................................ j Machinery and equipment................................................................ ' ' Less accumulated depreciation........................................................... 1,497,382 1,156,224 2,653,606 i 5,085,524 55,845,217 l 108,180,276 169,111,017 110,709,054 58,401,963 ! $206,928,933 1,497,382 1,943,453 3,440,835 5,564,948 56,226,104 111,119,931 172,910,983 108,718,407 64,192,576 $206,404,222 Crane Cc. a-.z S_cs`c :'.i: 6 CRTX 0104 1965 ABILITIES AND SHAREHOLDERS' EQUITY rrent Liabilities: . i [ Current maturity of long-term bank loan............................................................. Loans payable by foreign subsidiaries............................................................... Accounts payable...................................................... ,.......................................... Accrued payrolls, taxes and other liabilities.................................................... U.S. and foreign taxes on income....................................................................... Total Current Liabilities............................................................... $4,934,993 15,855,997 12,728,091 6,510,461 40,029,542 ig-Term Debt................................................................................................................ 37,992,850 lority Interest in Foreign Subsidiaries............................. .................... '..................... , 1,331,444 serve for Foreign Contingencies....................................................................................; < areholders' Equity: Capital stock- Cumulative preferred shares, 33/4% par value $100 (redeemable at the option of the Company and subject to sinking fund requirements): Authorized-92,057 shares in 1965 (96,008 in 1964); outstanding-- ` 63,186 shares in 1965 and 80,693 shares in 1964 (after deducting 28,871 shares in treasury in 1965 and 15,315 shares in 1964)............ j 1,482,152 6,318,600 Common shares, par value $25: Authorized-3,500,000 . shares; outstanding-2,081,200 shares in 1965 : and 1,149,720 shares in 1964 (after deducting i 111,620 shares in treasury in 1965)............................................................... 52,030,000 Earned surplus-$25,918,511 in 1965 ($29,442,920 in 1964) 1 is not restricted as to payment of common dividends......................... ; Total Shareholders' Equity.................................................................. : { ! 67,744,345 126,092,945 $206,928,933 1 1- 1964 $ 3,500,000 7,108,458 15,332,432 11,693,902 5,037,773 42,672,565 32,371,097 1,204,590 482,152 "* 8,069,300 28,743,000 92,861,518 129,673,818 $206,404,222 7 CRTX0105 Consolidated Statement of Changes in Net Working Capital For the Years Ended December 31 SOURCE OF NET WORKING CAPITAL Net income...................................................... Depreciation .................................................. Cash flow from operations................... Disposals of property, plant and equipment Long-term debt--net..................................... Consolidation of foreign subsidiary........... Other................................................................. 1965 $ 7,991,351 7,846,942 15,838,293 3,691,258 5,621,753 914,083 $26,065,387 1964 $ 5,529,829 8,316,181 13,846,010 2,137,012 1,084,510 2,100,400 $19,167,932 USE OF NET WORKING CAPITAL Acquisition of new business facilities................... Addition to existing plant and equipment............ Reacquisition of shares (less options exercised) Cash dividends paid................................................ Other........................................................................... Increase in net working capital............................. $ 1,408,533 4,339,054 7,863,657 ' 2,708,567 - 9,745,576 $ 1,376,416 7,964,874 3,004,671 2,644,082 161,022 4,016.867 $26,065,387 $19,167,932 Details of Long-Term Debt At December 31 U.S. bank loan payable $875,000 quarterly through May 1,1971 and $1,750,000 quarterly through May 1,1972 plus interest, currently at 5V4%......................... Canadian subsidiary's sinking fund debentures (secured by a general claim on property and assets), dated May 1,1965, payable $407,000 annually through May 1,1984 and $2,442,000 on May 1,1985, plus interest at 53A%............... English subsidiary's term bank loan-payable February 28,1969, interest currently at 6V2%....................... Miscellaneous ................................................................................... 1965 1964 $22,750,000 $26,250,000 9,768,000 -- 5,040,000 434,850 $37,992,850 j 5,040,000 1,081,097 $32.371.097 8 CRTX0106 Status of Stock Option Plans At December 31,1965 Plan Adopted in 1951* Balance outstanding January 1,1965............................................... ... Options granted ................................................ .................................. Options cancelled................................................................................ ... Options exercised (5,000 shares issued from treasury).................... Balance outstanding December 31,1965......................................... .. Number of shares 64,460 ( 9,600) (15,000) 41,860 Price per share $16.25 to $34.88 26.63 27.00 to 32.75 19.50 to 32.75 16.25 to 34.88 Of the balance outstanding at December 31, 1965, options for 32.060 shares were exercisable. No additional options are to be granted under this plan (compared with options for 180,040 shares at December 31, 1964). Plan Adopted in 1965* Authorization to grant options on 100,000 common shares was approved by shareholders in 1965. Options to purchase 19,000 shares were granted during the year and were outstanding at December 31, 1965 at prices ranging from $29.50 to $35.13 per share. None of these options were exercisable at December 31,1965. , 'Adjusted for 100V Stock Distribution in October 1965. Report of Certified Public Accountants TO THE SHAREHOLDERS OF CRANE CO.: We have examined the accompanying consolidated balance sheet of Crane Co. and subsidiaries at December 31, 1965 and the related consolidated statements of income, earned surplus and changes in net working capital for the year then ended. Our examina tion was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the statements mentioned above present fairly the consolidated financial position of Crane Co. and subsidiaries at December 31, 1965, the consolidated results of their operations and the changes in their net working capital for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. New York, N.Y., February 14,1966 ARTHUR YOUNG & COMPANY 9 CRTX0107 K: v.c. c; li>5 Operatic. . This year took Crane a major step closer to the kind of manufacturing and marketing organization vis ualized in 1959. All programs have been planned to in crease the Company's profitability, not only within the framework of present sales, but through achieving greater market penetration in such growth industries as the water, chemical, petrochemical, oil, gas, electric and aerospace fields. The products and services produced by these in dustries are helping to fill the ever-increasing demands of the domestic and world markets, stimulated by a ris ing economy and population growth. Crane Co. is play ing a vital role in providing the equipment for controlling the flow of liquids, semi-solids and gases used to help these industries keep up with their growing requirements. Growth in v, aier Treatment f-ieid In 1965, industrial and consumer use of water con tinued increasing with the expanding economy, to a point where Federal, state and local governments were forced to take dramatic conservation measures and seek new sources of water. With a background of more than 100 years in the water treatment field, Crane Co.'s Cochrane Division has been playing an important role in what looms as one of the great growth markets of the next decade. While the Division does not design or manufacture complete water desalinization plants, it has been a key supplier of systems and components to three major projects of the U. S. Department of the Interior's Office of Saline Water developed at Roswell, N. M., Wrightsville Beach, N. C. and Webster, S. D. Experience from these research projects, and others on which the Company has been working with OSW, could lead the way to more com mercial desalinization units in the future. Until such time as the cost of water from desalini zation processes is brought down to a more economic level, however, Crane's Cochrane Division will continue to help industry and communities make better and more frequent use of the water they have available. The Cochrane Division's growing work in this area was shown in a substantial increase in shipments and orders received this year over 1964. These orders re flected additional sales to the utility, chemical and pulp and paper industries. Nev Cccrirane Developments Product marketing this year was highlighted in three areas: 1) Water Treatment saies-by very large central station condensate scavenging demineralizer projects, where Cochrane has obtained a large part of available business because of its technological back ground; 2) Deaerator sales--which have increased sharply with heavy demand for naval and marine units, as well as industrial package systems: 3) Prefabrication of complete water treatment and chemical process systems --which is gaining rapid acceptance from customers. Waler treatment system designed and built by Crane Co.'s Cochrane Oivision for a large phosphate products manufacturing plant in Florida. This Cyclone Foam Breaker, a new development from the Cochrane Oivision. saves and purifies more than 250,000 gallons of water per day. 10 CRTX0108 Another area where Cochrane made a pioneering effort that could lead to future growth markets was the development of a new Cyclone Foam 8reaker at the sewage waste water reclaiming plant for the Borough of Lansdale, Pa. This new system enables the Borough to save and purify more than 250,000 gallons of water per day. The water is used for cooling in the town's power plant. Cochrane entered the sugar refining market for the first time with a sale to PepsiCo at Auburn, N. Y. This large installation utilized new techniques in sugar processing, involving ion exchange and carbon adsorp tion, for the clarification and deliming of sugar syrups. Another approach to condensate treatment, known as the Cochrane Filterex system, has resulted in orders for full-scale operating plants. This system provides a more simplified system to remove suspended and dis solved iron in condensate loops. Crane entered the water meter field with this V*" meter, which can be fitted to 90 per cent of presently metered homes in the United States. H/dro-Aire A:*.;.-: ir, Aerospace Increased acceleration of the nation's jet aircraft and aerospace programs helped the Company's HydroAire Division achieve a successful year. One of the major reasons for this success was the continued acceptance of the Hytrol Mark II, an advanced aircraft brake control system that helps make landings safer and smoother. The Mark II system is a second generation system utilizing solid state electronics and advanced hydraulic servo controls. The Mark II is now standard equipment on practi cally all U. S. produced commercial and military jet air craft. Hydro-Aire is now the world's leading manufac turer of this specialized equipment. Since Hytrol was first introduced in 1948, more than 12,000 aircraft of all types have been equipped with the system. Hydro-Aire's role in the space technology and mis sile fields continues to expand. A new family of high performance pump assemblies have been developed for handling liquid coolants in both manned and unmanned space technology vehicles. Current applications include the Saturn, Apollo and Lunar Excursion Module (LEM). One of the Hydro-Aire pumps was used to cool both the fuel cells and the animals in the General Elec tric Company's bio-satellite. The pumps will also be used for cooling electronic equipment and for keeping astro nauts cool in manned space vehicles. New Products For Grow:. As part of Crane's increased emphasis on re search, development and long-range planning, all of these functions have been put in charge of a Corporate Vice President. The department's function is to coordi nate the research and development work of all Crane Co. operations in the U. S. and overseas and assist management in preparing long-range plans for the Com pany's future. Under this program, key people from Crane opera tions in the U. S. and overseas meet regularly with man agement to review and coordinate R&D activities. This saves duplication of research and development effort.* and makes it possible for each Crane operation to take advantage of the best thinking of units in other countries. One highlight of the new product development pro gram has been the full-scale introduction of the new Criterion line of cast steel gate valves, running from three through eight-inch diameters. Field tested for over a year, this new valve is a significant breakthrough by Crane. A 150-pound valve, for example, gives big valve performance in a compact size and is 30 per cent lighter than regular valves. The new Criterion valve will bring Crane customers significant economies in installation and maintenance costs. Criterion valves incorporate many features pres ently found only in the most expensive high-pressure/ temperature valves. The Company anticipates there will be hundreds of applications for these valves, includ ing use in power, chemical, industrial and processing plants, steel and paper mills and in marine service. New industrial Products In the industrial field, the Company's Deming Di vision introduced a new line of horizontal centrifugal pumps for chemical processing, petrochemical and gen eral industrial applications. This group of pumps brings Crane products up to three distinct lines. In addition to the new Deming AVS line (American Voluntary Standards set up by the chemi- ii CRTX 0109 having the same suction and discharge sizes without changing piping or foundation. It is designed for leak proof handling of corrosive, toxic, explosive, radioactive and other problem fluids at line pressures to 300 pounds per square inch and temperatures to 400'F. and pro vides a capacity of 100 gallons per minute against a discharge pressure of 160 feet. Fluid viscosity is gen erally limited to 30 centipoise, although special engi neering will increase this limit to 75 centipoise. Advanced brass cleaning and pickling process at a leading metals producer and fabricator incorporates Oeming pumps to create pres sure for spraying the strip with the cleaning and pickling solutions. cal industry), the Company also markets standard cen trifugal pumps and the Chempump line of canned motor pumps for leakproof handling of sensitive and volatile materials. The new Crane-Deming pumps, made to conform with AVS configurations and proposed American Stand ards Association standards, are available in nine sizes with capacities up to 800 gallons per minute and dis charge pressures to 390 feet. . The newly acquired Chempump Division also brought out the world's first canned motor pump de signed to conform to AVS standards. It was introduced and shown at the 30th Exposition of the Chemical In dustries in New York. Chempump's model GVBS is a leakproof centrif ugal pump that can replace any conventional AVS pump Ccnipr.t' P-.cli?- In another marketing area, the Company intro duced an all new line of compact kitchens at the Na tional Association of Home Builders' Show in Chicago and the Hotel-Motel Exposition in New York. The new Crane Chef compact kitchen features clean, straight edge profiles and a number of unit combinations, styles and colors in kitchens for the apartment dweller, hotels, motels and other commercial and institutional users. New Crane Chef compact kitchen features clean lines and a variety of combinations for residential, commercial and institutional uses. In plumbing, heating and air conditioning, 13 new products were released for marketing; other products were modified to reduce manufacturing cost and stimu late new market acceptance. For example, a new pump was developed for hydronic heating systems for use with Crane and National - U.S. packaged boilers. High pressure, seal-less canned pump by Chempump, Crane's newly acquired Divisipn, is checked out for use in corrosion study of re actor materials at Hanford Atomic Products, Richland, Washington. Bathroom Remodeling Package. To improve the Company's share of the home building field in the U. S., new sources of distribution are being sought, endeavoring on the one hand to take 12 CRTX0110 excess cost out of the selling effort while, at the same time, looking to new outlets for products. Crane is working with its wholesalers to build their sales while helping them to control their costs and in vestment, to the mutual benefit of each. The Company also is working with large mass merchandisers, such as product lines, rather than having a different salesman for each group of products. Modernizing Plant and Equipment Two important programs being carried out in the Company to improve profitability are the modernization of plant and equipment and the building of new plants where it is not feasible to modernize an older plant, or where new production capacity is needed to keep up with a growth market. Examples of this program are: 1) a warehouse modernization program at the New Castle, Pa. plant to speed orders and reduce cost of shipping to customers: 2) re-allocation of part, of the manufacturing space at the Middletown, Pa. facility to provide for more efficient production of small and large residential steel boilers and to expand finished product storage space; 3) the production of the Criterion valve line, which will be manufactured at the Chattanooga, Tennessee Division without any significant addition to plant and equipment. The Chapman Division, Indian Orchard, Mass., started a $1,750,000 program to expand and modernize its steel foundry. The modernization will enable the fa cility to manufacture castings of better quality at lower, cost, in virtually the same amount of space. Crane plumbing products provide quality, convenience and satety in new slip-resstant tubs, lavatory vanity combinations with hid' den soap receptacle, leak-proof faucets and sweat-free tanks. mail order houses and specialty chain stores, to broaden the distribution of Crane products and enhance the sale of complete residential remodeling packages. Manage ment hopes to develop a sales package that will enable the homeowner to purchase the entire project through a. single dealer, thereby eliminating the frustrations of dealing with numerous suppliers and contractors. Another Crane plumbing innovation was introduced in a full line of cast iron bathtubs with full-width, slipresistant bottom surfaces. This Crane safety factor in bathtubs should find new markets in retirement com munities, hotels, hospitals and other institutions. Consolidation in Chicago Consolidation of the major part of U. S. operations in Chicago is progressing smoothly and resulting in greater economies and better marketing for the plumb ing, heating, air conditioning, industrial and engineered products of the new Crane Group. It provides for a program of broadening individual activities by having salesmen handle a number of Crane Tape-Controlled Machine: At the Chicago facility, further installations of highly efficient automatic machine tools continued at an accel erated rate during the year. Most important of these tools is a group of tape-controlled automatic chucking ma chines for the highly accurate machining of iron gate valve bodies. In addition, a series of automatic turret drills was added for machining of cast iron valve bonnets. In the latter part of the year, the Deming Division completed construction of a new equipment test floor. With a tank capacity of 50,000 gallons, the Division is now able to test pumps up to 800 horsepower. Included in the test equipment are four large magnetic flowmeters and an electronic test center for the quick measure ment of pumps of up to 30 horsepower. Other new automatic turret lathes were also put into operation at the Company's Chattanooga Division. These sophisticated tools bring the latest and most mod ern equipment for machining techniques to the Division. The Company is planning a $1.4 million expansion program at the Rogers, Arkansas plant for the manufac turing of Crane's new 7 inch water meters and a new line of Deming hydronic heating circulator pumps. This program will involve the construction of a new 100,000 square foot addition to the present plant. The new plant should be in operation by the middle of 1966. 13 CRTX0111 Single Source for World Market? Crane Co. continued to expand its unique market ing concept of having a single sales and service source to serve world markets through its International Sales Division in New York. This means that a customer can place an inquiry or order with International Sales and be assured that all his problems on price, product, delivery and service will be handled through one coordinated channel. The Division decides which of the Company's multi national manufacturing units, or combination thereof, is best able to fill the customer's requirements. On large projects, the Division may have several Crane plants fill various parts of the order to give the customer the best possible price and service advantages. This system provides prospects with all the bene fits of trading with various countries, yet requires that only one consolidated inquiry be submitted to the New York headquarters of International Sales. Multi-national manufacturing units are also gain ing from this concept, since each is obtaining business which might not be realized if their products were not part of the packaged presentation as made by Inter national to ail prospects. A modern valve machine shop went "on stream," utilizing several of the latest tape-controlled and auto mated machines that perform in one operation functions usually requiring up to seven machining operations. To expand sales to the mining and smelting indus try, a major part of the Canadian economy,, a branch, supply warehouse was opened in Timmins, Ontario to serve booming mining and smelting operations in that area. Later in the year, a mine supply business was acquired in Seven Islands, Quebec, to increase sales and service to the iron ore industry in that area. Among many major projects to which the Cana dian subsidiary will be making a contribution is the Athabaska Tar Sands Development in Northern Alberta. This multi-million dollar program to extract oil from the tar sands will expand Canada's crude oil output when completed. In the extraction and refining processes, the products will flowthrough piping fabricated by the Crane Piping Division at Hamilton, Ontario, and will be con trolled by Crane valves produced at the Montreal plant. Sunnybase baseboard heating units emerge from punching and form ing machines at new Ayclilfe Estate plant of Crane Ltd. in Durham County, England to meet growing demand for new heating equipment. Thesa numerically tape-controlled machines turn out completely machined valve bodies at Crane Canada Limited, Montreal. Canadian Minina Offers Growth Market Crane Canada Limited, in addition to having a good sales year, also entered a period of intensified ac tivity in 1965 to set the stage for future growth. British Operations Satisfactory Despite a slower economic growth and measures taken to adjust the British balance of payments prob lem, Crane Ltd. had satisfactory operations in 1965. Greatly expanded research and development, new sales programs, industrial training and market research will be the basis for planned development of the British subsidiary. The new Research & Development building at Burgess Hill, Sussex, for Crane Ltd. was completed in November. This division is working on a number of new projects that show strong market potential. 14 CRTX0112 As part of the British Government's program of diverting industry to development areas, the Company started production of Cavalier gas-fired boilers at its new 50,000 square foot plant on the Aycliffe Estate in the County of Durham. Production of boilers is now increas ing rapidly and further expansion is anticipated. New North Sea Gas f.larke: . One of the brightest areas for potential growth for Crane Ltd. will come from the discovery of natural gas under the North Sea. Crane cast iron and galvanized cast iron gate valves and bronze gate valves are being used in the fuel and water oil systems and pump rooms of the drill ing rigs operating in many parts of the North Sea. This development may offer substantial demand for Crane products of all types in pumping stations and pipe lines carrying supplies of gas to the mainland. Snan'sh tndus'.'is' Development Hig1- Crane's newest subsidiary in Bilbao, Spain, CraneFISA, S.A., participated in the high level of economic activity in Spain in 1965, This company obtained a foot hold in the Spanish petroleum industry with substantial valve orders from several new refineries. Late in .the year the company successfully introduced a new cast steel gate valve for the growing petroleum market there. As part of the Company's increased marketing of Crane products in Spain, a new combination warehouse and showroom was opened in Barcelona to replace an obsolete facility. With little change in physical facilities and manpower, a substantial increase in production and sales was obtained in 1965. Valves in f.'Frer,;!- Crane S. A. France continued to be a major sup plier of valves to the French Atomic Energy Committee, the French nationalized gas industry and Electricite de France. For the latter company, the French subsidiary provided large-size gate valves for superheated lines at the Le Havre power plant, the first 600 Mw plant put into operation in France. As part of Crane's International program of service in depth, Crane S. A. worked in cooperation with Crane G.m.b.H., Germany, on the Porvoo Refinery Project in Finland and on the Chemical Complex Dow-Unquinesa, Spain Project in cooperation with Crane-FISA, S.A. In December, Crane S. A. opened a new display room for plumbing fixtures, which should help expand sales in the growing French home building market. Large motor-operated Crane gate valves are shipped from Crane S.A.'s Lille, France facility for use in major French utility plants. Australian Plant to Expand From the base of the Australian subsidiary in Syd ney, Crane Australia Pty. Limited, the Company has been expanding its markets into New Zealand, the Philippines and other Southeast Asian countries. To supply this growth market, the plant in Sydney is being expanded to increase its capacity by 705/o. Twelve new sizes of large diameter valves were successfully manufactured and marketed in the Austral ian market during the year. This continues the program of developing local manufacturing of Crane products to participate in this growing economy. Crane sales engineers now operate from all prin cipal cities in every state in Australia. Latest expansion of marketing efforts there was the opening of a new warehouse and sales office in Melbourne. One of the major projects in which the Australian subsidiary is participating is the Queensland Alumina Refinery Project of Kaiser Engineers International. The engineers have chosen Crane valves for this project, one of the largest capital expenditures ever undertaken in Australia. With international markets constantly expanding in both the developed and the emerging nations, and Crane's unique ability to coordinate orders both large and small from a single source, substantial growth is anticipated in this area. ('crane- 15 CRTX0113 Crane Co. Facilities UNITED STATES OPERATING GROUPS Crane Group Chicago, Illinois W. D. Graham, Jr., Executive Vice President Crane Supply Company Chicago, Illinois E. L. Hannon, Jr., Vice President Hydro-Aire Division Burbank, California D. A. Lichty, Vice President FOREIGN SUBSIDIARIES Crane Australia Pty. Limited St. Marys, N.S.W., Australia P. J. Farrell, Managing Director Crane Canada Limited Montreal, Canada R. S. Reade, President Crane Ltd. London, England R. H. Morris, Managing Director Crane S.A. Paris, France R. D. Halpin, General Manager Crane G.m.b.H. Dusseldorf, Germany Klaus Alms, Manager Crane-Deming de Mexico S.A. Monterrey, Mexico H. F. McNiff, Manager Crane-FISA, S.A. Bilbao, Spain L. R. Kowalski, General Manager AFFILIATED COMPANY Crane Nederland N.V. Deventer, Netherlands G. DeHorn, General Manager CRTX0114 16 Printed <n L` S A Directors THOMAS M. EVANS DANTE C. FABIANI JOHN D. GARRISON P. BLAIR LEE MARKW. LOWELL LEWIS P. SEILER A. VARICK STOUT CHARLES W. VEATCH R. ARTHUR WILLIAMS Officers THOMAS M. EVANS Chairman DANTE C. FABIANI President WILLIAM D. GRAHAM, JR. Executive Vice President-Crane Group ROBERT E. CASNER Vice President-Operations-Crane Group WILLIAM C. DACKIS Vice President--Research and DevelopmentCrane Group CHARLES R. EBLE Vice President-Customer Relations EUGENE L. HANNON, JR. Vice President-Crane Supply Company FRANK C. HESS Vice President-European Operations JOHN P. KINNANE Vice President--International Sales DALE A. LICHTY Vice President-Hydro-Aire Division JOHN H. REDMOND Vice President-Research, Development and Planning HORACE R. RIGGS Vice President-Assistant to President JAMES F. O'BRIEN, JR. Controller NORMAN PACUN Secretary and General Counsel ROGER A. SCHL1EDER Treasurer and Chief Financial Officer LESLIE V. CHATER Chairman-Crane Ltd. (Great Britain) ROBERT H. MORRIS Managing Director--Crane Ltd. (Great Britain) RICHARD S. READE President-Crane Canada Limited STOCK TRANSFER AGENTS Morgan Guaranty Trust Company New York. New York 10015 Continental Illinois National Bank and Trust Company of Chicago Chicago, Illinois 60690 REGISTRARS OF STOCK The Chase Manhattan Bank New York, New York 10015 The First National 8ank of Chicago Chicago, Illinois 60690 AUDITORS Arthur Young & Company New York, New York 10006 EXECUTIVE OFFICES Crane Co.. 300 Park Avenue New York. New York 10022 -- Crane Canada Limited 5800 Cote de Liesse Road St. Laurent. Montreal 9, P. Q. Crane Ltd.. 15-16 Red Lion Court Fleet Street, London, E. C. 4, England CRTX0115 CRANE Crane Co., 300 Park Avenue, New York, N. Y. 10022 Valves, Pumps, Fittings, Water Treatment, Piping, Plumbing. Heating, Air Conditioning CRTX0116