Document 0JVQdamjZmJ6LbR8a71NB9gmx

a t io n a- LEAD -tv-` ith Annual Report 1970 ' "a'e^c'ders 2 Developments 4 SuDS'dianes & A`f-. ates 6 = Report 8-16 l & bearings 8 ~ pigments 10 st ngs 12 :ais & plastics 13 materials & services 14 ' products 15 es 16 Report 17-19 1 an: Statements 20-23 Report 24 i Ye. Review of Operations 24 hio^soH*. i c-t-- year 1970 Jl ^aie: 1 Net ' come $915,877,000 38.071,000 -j Pe - share 1.60 Cas- dividends paid 36.261,000 P-' share 1.525 Proc-dy expenditures 58,635.000 It yea end J.Wor- ing capital 1 Lore term debt "jmg'-noiders' equity 241.739,000 180,902,000 408,915,000 1969 $929,785,000 50,675,000 2.12 40,272,000 1.70 39,830,000 186,876,000 94,688,000 ..... 403,975,000 flare solders are cordially invited to attend e seventy-ninth annual meeting of -atic-ai Lead Company, Thursday, April 15, 971 at the Hotel Robert Treat in Newark, lew .ersey at 2:00 p.m. 0000-NLI-000018890 Ml Toe year 1970 was one of ewe- sales and earnings wmcn followed a national pattern for manufacturing industries such as ours. The results reflected a 'ecessive economy, a cost-price squeeze, higher interest charges, and strikes in tne automoDile and transportation industries. Sales amounted to S915,877,000 in 1970. compared with $929,785,000 the year before. Earnings totaled $38,071,000, or $1,60 a share, compared witn $50,675,000, or $2.12 a share in 1969. In view- of lower earnings, our requirements for cash, and the prolonged softness n the economy. ,t was considered to be in the best interests of the company and Us shareholders to reduce the dividend to 25 cents a snare from 42Vi cents in the fourth quarter of 1970. As a result, dividend payments in 1970 amounted to $1.5212 a share, compared with $1.70 a share in 1969. This decision was based on careful and deliberate consideration. The dividend rate we had been paying was taking a disproportionate share of earnings and was reducing the working capital needed to maintain our future profitability. We have undertaken a company wide cost reduction program, and this effort, together with the availability of funds for expansion programs now underway, should set the stage for improved earnings and growth in the years ahead. Your company's financial position was strengthened by the successful offering in January, 1971 of $100 million of debentures due December 15, 1995. The new financing is being used to repay funds borrowed from banks. The bank debt was incurred during 1969 and 1970 to finance capital expenditures, investments, and increases in working capital. Capital expenditures amounted to approximately $40 million in 1969 and $59 million in 1970, We estimate that expenditures for similar purposes in 1971 will amount to approximately $80 million. The thrust of our corporate efforts in 1970 was to lay the groundwork for a greater participation in the metal and chemical m mamets, r wmco we nave org seen cr'e o' :~e eac ng c'cc^cen and to develop new markets m cur amas cf competence 7/ :ac expenditures, development of raw mate-.als. manager-.-' o'ogmand higner Investments m researco and development -a.a a; beedevoted to these objectives. A few highlights of these act-vhes described 'n great?- detail r the report that follows, are: Good progress In construction of our S70- --h on m ag-es-um metal plant at Great Salt Lake, Utah. Tne ciant, w'l;r n , :ec;ec be completed n late 1971. will also be a producer of : - -e arc ultimately of other co-products. Completion of a $4-mill:on mineral synthesis plan* - -ouster Texas, to produce fluid catalysts for crackmg petroleu~ "to high-quality gasoline and synthetic clay mmerals for ct~eapplications. Expansion is continuing overseas with the start of cv-struct.c-* a new plant m West Germany to manufacture gellants expans; of our titanium pigment plant in 8elg:um and the bulci'c of an anticorrosive pigment plant In the same locatior. Late r --e year, we formed a majority-owned subsidiary in Australia tc ds.e'co tne use of metal die castings in that country. Our raw material producing capabilities were impre. sd during the year both a? home and abroad. Hnemte minmg ccem* cos at t' Tellnes, Norway, facility are being expanded at a cost cd 1.1 miller and our ilmenite mine at Tahawus. New York, excects t: cc~d lets its $4.5-million magnetite regrind c.rcuit ;n early 1971. s will increase our output of ilmenite, wr cn is used fc manmaf me titanium pigment and high-quai tv .magnetite, a mater a' .at m steel production. Implementation of our environmental control programs as accelerated during the year Exoeratjres n tms ama. bet' - <~ev, and older facilities, are becoming a sigmf cant ;actc o mst o' doing business. The comcany Is work eg to nrnease the e"e:t vem to On-' S`-Sr&hoiOtu: : <p T 2 0000-NLI-000018891 icers, capita ogrem, been ail in urn :ted to and ston, .. .;6r, mmenta protection efforts and thus fulfill its corporate -e. rnsibiist-es. For example, in 1970, an additional $3 million , . -<e- -or tie punenase of row sulfur fuels to reduce emissions, --e -- , name of tne company--n l in d u s t r ie s , in c .--which you se m: asked to approve at the annual meeting, is indicative not .. - company's present diversity but also of its future and goals As you know, we are today a broadly based 2' l J per cf metal and chemical products operating around the ctstmctwe ML corporate identification symbol will aid . - v n estab',sn""g awareness that n l in d u s t r ie s , in c . name for National Lead, Researcn nas shown that two out _s.ness executives recogn,ze the NL device as the symbol of _ead. Retaining this familiar symbol and associating it . "ew corporate name should help significantly in transferring JCtior o'|-. ansion i: nL tar, the ring at the lion lete a: cn from National Lead to n l in d u s t r ie s , in c , -ew name, while maintaining continuity with the past, rStnctive and more accurately embraces the total our corporate interests, me company is building a new and stronger base. Subject to c factors beyond our control, we are optimistic for the ead. With your support, and with the capable people and es at its command, we believe your company cannot help ze its new potential. /QzzyjL Chairman of the Board new t of veness ; Mam 15,1971 J|. RB. WHeonnrricirh, President OOOO-N'Ll-OOOO 18892 3 Management Changes -' -j Hj",. ',V. i - " v: ^w-t- P . r o -//.a 5 alcrr^ tnp Ecga' J. H3g;;e:te Jo. was e'ectec a . ce pres.dent and was A'C"-r C 3s'g""' was aopc wed ass-start v ce pres:dent. i7 rar:e ms ; -m ,vas measurer a"d das been ass;: a'ec *- t'e :c3-, Ow 37 .ears. V rcer-t R. McLean was acpc.nted treasurer succeeding tv'r. Sanger: He jo'-ed Nat cna1 Lead in 1Q69 and was previously Vcb'i C Coroc'ahon Edw " C. Bur'"e s`er was named cna.-man of the beard of Lace V'-ew 7-us; p-p Savngs Bane, a subsidiary m. Ch:cago. Oc- K-e de- .'.a: name a ores-dert and cn-er executive officer of the cany succeed -g 5u'~e:sren Vr. EWrmeister began his asscc at on ,vW Lake V-ew r, 1914 and became its president In 1948 7' K'e-ae'"as "ad more d'an 30 ^ears of bank management a"d ' "a"c a exser'erce. Expanded Research & Development Reorgan zat on and mcdem-izaticr of the company's reseamn and development activ ties, nidatec n 1959, ac;e:erated dunrg tne year. New technical preg'am; were "shouted, add-hcra technological equipment was acau-red. anc n gnt> qualified scientists were recruited for the cent'3! researc'* tacoratcv and fcr some of the other research facuihes in t"e Un-ted States and overseas. Spending for research and development amounted to approximately SI8 m-'Lon in 1970. Magnesium mseamh was exoanded in support of the new product-on fac ..ty now being built in Salt Lake City. Studies are concentrating on the development of magnesium alloys for new applications of the metal and on the improvement and moder"Lzat`On of magnesium die casting technology. corporate developments product on ocemLors of :~e cats , = : -srpab/ -g p --- rprcnjly CC^DlCtOd f' Our New Ventures grcu.c. v."cse m'ssic" : tc sta- - control -devices used " TV' sets "lectr ca: ass' -mces computers and ccr,rc: systems Progress in Employee Relations T- e de.e ccmanagemsnt ta'ert :crt-r,,eq tc oe mma; zed a: N-s-t .; in 1970 Success on cans and executi.e tm " r.g O'sc.- ; "a.. been established by all major d.visions and subs-d ar es In the ama r,f gpor mlanc-" s 34 ccrtra~`r ;cm' "c ~ ~ ~" employees were neget sted n 1970 Wage a"d cere'* " -essm n general, corresponded w th a'ea satter"s T me css ' s.. = e strikes was less than one per cert o? Ta-r-'t-wt wo'-e-c 2whole, comoany-un-on rglat ens we'e sat s'ac'cw cver = - Add-tional emphasis .s ceirg placed c" r qustr-a! sa'---. '"m . the introduction and mpleme."t3t.c"- of = " ad.a" :ec a"' - oa": Total Aco,dent Control program Every e~ c'c .ee 's ce " z metnocs c-f acc.dent creve"t C" a = a resu : a:: a-"' - -: shows an -morcved t'e"d w 'w -ec-7 pop - c:t" ''eo_e . and severit,. Wh !e st 1 jrsabs'a:::'. ;-ed_f t" - : Implementation o* Na*lena Lead s. A" -- e; ,e p-- 1970 provded botn female S"C "":"C'hy e~o's .ees r , a'. cha1!engir.g opportunities. T"e cempa-y ;m- -:.ea :: act -- *s positive commTments tc regulate-'^ ageoc es am: me Nat : - a Alliance of Businessmen in its adherence *o 'a ' a."d e w. tut e employment prachces. Employment in domestic and fc'e go Nat c'`a. Lead cce- t m; both part'aily and wnol-y owned, totaled acc'c' mate'. 23 -10 at the end of 1970. i 4 0000-NlvI-000018893 ~g :f fining and Exploration 1970. Nat-onal Lead exoanded its 3rd 5 new :over rg five - Dri rg was mm acted 'r Tennessee for zinc in a joint e . m Comir.ro J~er can and an exploration project was sinesse- ; e- .r Buazv .vm h; j . a Braz can cement producer, for ame'nca. act.v bes were concentrated ver- ead. ens Litigat on An act o- "as er "stitufed against tne Company in ""r * ''"'r'.l'rt of |Ha f*1 ' of St, Louis, Missouri, alleging that the os- As St. Louis tcamum p,gment plant polluted the Lead tave ;s: ere. thus aneged.y creating a nuisance. Compensatory az s, totaling in the aggregate SI.750.000, and punitive sc s totaling m the aggregate 57.000,000, for 350 plaintiffs are ;;,,g- me Company ras denied the allegations of the complaint, ises. r;: : s "-avg deen fled, and the suit 'S awaiting disposition. The se of term ny believes it is covered in this action by adequate insurance, he rj-ance carrier has taken the position that any award of ar. - e damages would be outside the coverage of the policies and rough as eserved its right to disclaim liability for compensatory andec cams. es. The carrier has undertaken defense of the action with a oduced ml n ervation of its rights. cd in / in ' m opinion of local counsel for the Company, disposition nee cmim apove-mertioned action will not have a substantial s"e:' mm-' tee eam.ngs c the tr.anciaI condition of the Company. "am 1 and ts Share nolders Tne number cf shareholders was 59,707 at the lem : 1970. an ncrease cf over 17 per cent as compared with re 5 52- hoidem a year earner. The growth in National Lead h'c'i . aem cf record nas been more than 40 per cent in the past (Environmental Control Environmental protection programs are ,m w: easmgiy imoortant aspect of National Lead's operations. ons. i"erf ; nothing simple about environmental control. Because of the D jr-em ' / of our business, we deal with many types of control techmaues. m w ronmental problem requires a specific solution, even advanced commi system a.a ;ac:e must _,sua y ce adactea tc the ;nd'vZuo! c:a.nt ' epc'ements and ,m : continue to ad.an.ee Expenditures `cm cot1' ecwrc"~en!a control equipment and t~e cent ru;rg ccerat rg costs 3'e add111or,a. ccerat ng expenses `mat a , "ave an effect cm sm-mam' earnmgs. However you- ocmpsry s oommllrg em ss ers -at or > C,t'Zen W6 /, !Sr" tC Sr$Jr6 3 "'30"' rcr',^6,r't Dur r.g 1970. the comcany -.s*.a!!c-d a number cf envrorr-s" contmi devees meud'^g. eye ores and fatmu dust ames'om: general and specia'-cu'pcse scruCbe'S: ana odor and smcee control .noineratC'S. in addhion tc ccntmi eaumment me imcsr has modified some proauenon crocesses to reduce em ss.crs tc a minimum. Near'y a: cm bac'i'hes -ave converteo to ce .m'L' f U0)S Th13 n c m C 3 n v '~'3~ 3150 . r St3 !sd A35t6-vS,3t6f' r6C'<C 'Cg ct -ts cDerat.cns. Nc.se cc-t-oi stjenes ore jr,cerA3? a: location: `Oise-acate^ Tne dcufcie absemt cr am I c tus-m.t uf-.cp..n 0ct h:~ Tne project experienced ~a:0' oonsmuct.cr ceiay s as a em : cf jurisdicbcna1 :afcor c scutes and -mate'd ce'very a- tc by the nahcrai teammtam s:r kg 'n.s acc-:t'cbu:.ng _m t ce the f.rst cf its kind in 'me United States and v h rec_se e~ ss cm to me lowest level known tc mecem tec noCiOgy. in 1970, the company spent approximately 310 mw cm capital and operating costs for new environmental ccr.trpi pmi and expenditures tor 1971 are expected to be above tn s e.ei f 0000-NLI-000018894 5 Metals 4 Bearings METil D :vi $ ic-N -1 n* v, cadm:urr, ,:ead and zmc metals; fabricated lead products New v'r-s. N.v. a l u M'N'JV ma t c h -l a Tl CCRPORAT'CN- Sand, shell and permanent mold castings of rcr->B''Ous f^eta-s ken-more. N v. AMERICAN BEAR NG D'ViS'ON. P'ems-on sleeve bearings, bearing seals, bush ngs arc mac>~- ~e parts -^ = acolls. ind. GOLDSMITH d iv is io n Preccus ^etais and metal oxides. Chicago, 111. JONATHAN MANUFACTURING CO.: Precision parts and services. FoiieHor. CaMomia MAGNES'UM D'Visic-N Magees Salt Lake City Utah metal and chlorine (on-stream late J971J- MAGNUS METAL DivSiON Brass a~d bm-ve loumai bear-r.gs and castings. Chicago. I'l. MAGNUS ROLLER BEa RiNG D'v'SiCN: Precis-cn tapered roller beadngs. COc 311. Ohio MORRIS P KiPK & SON. INC PEN) Hum ^um. lead and zmc alloys, tabr.catec mac products a-o ea: cx cies. Los Angeles. California PIONEER a l u min u m -n o . . 765U Aymmum and shoe! a:rcraft extrusions and cast arum nwr~ tod ng piatcs L:s A--geles, Cal'fcrn,a REGAL MOLDS. INC.: Meta! wes for plastics and forgmgs. Toledo. Ohio SCREW MACHINE DiV'SiCN Hydraulic brake cylinders & pistons. Chicago. III. SOUTHERN SCREW DIVIS!0N: Complete hne of screws and other metal fa$teners Statesville. N.C. STEEL PACKAGE DIVISION Small steel shipping containers. St. Louis. Mo. TEXAS MINING & SMELTING DIVISION: Antimony metal and antimony oxide. Laredo, ^exas THE BUNT1NG BRASS AND BRONZE COMPANY: Brass, bronze, iron and aluminum, pads Toledo, Oh..: HOYT METAL COMPANY: Anti-friction metals. London, England Titanium Pigments TITANIUM PIGMENT O' VISION- 7 Tan mm pigments and chemicals for the paint, paper, piastds and rubber industries. Sayreville, N.J. CANADIAN TITANIUM PIGMENTS, LTD.- Titanium pigments: gellants: lead pigments: stab;,izers. z.rccn.jm arc titanium compounds. Montreal. Canada DERIVES du TiTANE, S.A. TTanrjm pigments. Langerbrugge. Belgium KRONOS TITAAN N.V.- Titanium pigments; gellants; lead pigments. Rotterdam. Netherlands KRONOS TITANIUM PIGMENTS. LTD.: Titanium pigments. London, England SOCIETE BEIGE du TITANE S.A.: Titanium pigments; gellants. lead pigments. Brussels, Beigium TITAN CO. A.S.: Titanium pigments,- gellants; lead pigments; stabilizers. Fredrikstad. Norway TITANGESELLSCHAFT m.b.H.: Titanium pigments; gellants; lead pigments. Leverkusen, West Germany T1TANIA A 'S Ilmen.Te ore mining. Hauge i Daiane, Norway Die Castings DOEHLER-JARVIS DIVISION: Die castings of aluminum, zinc, brass and magnesium, finishing and assembly services. Toledo, Ohio COCHRANE FOUNDRY, INC.: Sand castings. York, Pa. FLOATING FLOORS. INC.: Elevated flooring and site environmental systems for computer rooms. Toledo. Ohio RIDGE MACHINE CO.: Specialized die casting equipment. Cleveland. Ohio BARBER DIE CASTING CO.. LTD.-. Aluminum, brass, magnesium, zinc die castings. Hamilton. Canada LAKESHORE DIE CASTING, LTD.: Aluminum, zinc die castings. Guelph, Canada METAL CASTINGS DOEHLER. LTD.: Die castings. Worcester, England Chemicals A Plastics PIGMENTS & CHEMICALS DIVISION: Antimony oxide; lead pigments and chemicals; lead oxides for batteries; gellants and stabilizers. New York, N.Y. AMOS-THOMPSON CORPORATION: Molded plastics; wood veneer and lumber. Edinburg, Indiana THE BAKER CASTOR OIL COMPANY: Castor oils and chemical derivatives, polyurethane products. Bayonne, N.J. DELORE DIVISION: Barium and calcium pigments. St. Louis, Mo. EVANS LEAD DIVISION. Lead oxides. Charleston, W. Va. INDUSTRIAS DERIPLOM S.A.: Lead oxides. Buenos Aires, Argentina operations/national & international ON Well Materials 4 Services BAROi D Di v1310N 0 ' veu cr ng ~af' a - arc r' > t o -c p(*t.'C-eu~~ npust'y ge-'ars t-ease. a .k -' few "c .-e-- '- perforation ana co^O'et cm nut-ear we- egg r BARCiD dc BRAS'L, S A C :e'\dr 3- . ;: ' : "u BAROiD OF CANADA, LTD. Qu wen d'-Hmg ^ahr a-'s serv Canada : : gar, BAROID INTERNAT!0NAL. 5 z a Ci-: wen ~r 'g .35-- *5 , BAROID OF NIGERIA. LTD.: 0 1 we-'/ drd-ng ~ater a.s .ages N . BAROID {'J K.}. LTD. C,n ar-U'ng a: 3 c vv PERUBAR, s.A.- 0'/ well dr rg mater-ais. L "'3. PiGMENTOS MINER A IS INDUSTRIAL e COMM E PC Al F!GVN-' ' - 3am*?: mining. Salvador, Brazil. Other Products PAINT DIVISION: Dutch Boy paints. New York. N.Y. CHAS. TAYLOR SONS. S.A H.gh temperature refra:tCr = -- 3" g EDGAR PLASTIC KAOLIN CO : Kao< r. z:ay and g.-ass i:.g - r' ELECTRONIC DEPARTMENT Specialty ceramic resistors. H:gi------- a -. N.j . NATIONAL LEAD OVERSEAS CAPITAL CDRP.: European s,,rs r . . ` nar.: rg New vorK, N.Y. NATIONAL LEAD COMPANY OF CHiC: Cowart ope-arm 'C' . : -*c~ : -*, Comm`SSiOn`S urar.'um ore concentrator p^art Fer"3id NUCLEAR DIVISION: Depleted uranium; nuciear sem-ces A-zz-: N.Y. TAM DIVISION: Zirconom oxide, silicates and cne-'-ca s.- z * res. stannafes and opaafiers. New York, N.Y. t h e CHAS. TAYLORS SONS COMPANY: Soeaahzed * gh refractories. Cincinnati. Ohio ',? THE TITANIUM ALLOY MANUFACTURING CO. PTY.. LTD - T:~ C` - Bay, Queensland, Australia TOOL & ENGINEERING DIVISION: Dos. tccimg. prototype asse~ ? y a^c engineering services. Kirk site castings. Chicago. Mhnois Affiliates Not Included in Consolidated Sales ABBEY CHEMICALS LIMITED (52%)- DeHarts and stah :,zers. rr r BARQID AUSTRALIA PTY.. LTD, (99%): 0'/ we// or .--rg ~ater > . % J^ey. Australia BAROID de VENEZUELA, S.A. (92%)-0/7 well cr.ilmg mater a,s. Or-tas, Venezuela BAROID OF LIBYA, LTD, (49%): OH well dr-i: ng materals. 5e~g- L cy = BAROID TRINIDAD SERVICES, LTD. f50%) C a ?., cm.- rg s~'. " West Indies CIA MiNERA y REFINAOORA, S.A. '49m - -cry----- -g. `Y-v . - : *.*r? COLVER, S.p.A. (70%): Paints. Milan. Italy INDUSTRIAS DOEHLER do BRASIL, S.A.; D;e castmgs. Sac pau'c Brz.! KRONOS TiTANPlGMENT A.B. (76%) T.-ra~ um p g~e-;s. ge a-:: eac pigments. Stockholm, Sweden LAKE VIEW TRUST AND SAVINGS BANK '995 ) Cc-mme'C a.'ss'* I' cag: Illinois MINERAL DEPOSITS, LTD. (85%): Mining of mfve. z rcon cus. Su--'ccrt, Queensland, Australia NATIONAL LEAD COMPANY (PHILIPPINES). INC '51%;: Da rs a-r -e are: products. Manila, Philippines NATIONAL LEAD COMPANY, S.A.: Leac products. Bue^cs A ms A-gsr '-a R-N CORPORATION (50%): Process ter tne direct 'edvcLo- a^c of iron ores. New York, N.Y. : a: r SCHRAUBENFA8RIK NEUSTADT GOETZ & C1E GMBH (99%). Scum and fasteners. Neustadt Schwarzwald. West Germany SOCIETE INDUSTRIELLE du TITANE (91%): htamum. lead pigments Paris, France QUEENSLAND TITANIUM MINES PTY. LTD. (7 5%): Mjnmg of rut' e : 'CO' rTin Can Bay. Queensland, Australia THE CANADA METAL COMPANY LIMITED (50%).- Lead oxioes. lead a-d z m alloys, brass and bronze products, fabricated lead products To mm - Sa,'3:r THE CARTER WHITE LEAD COMPANY OF CANADA. LTD. (50%). Lea: 0 oxides; stabilizers. Montreal. Canada TITANIUM METALS CORPORATION OF AMERICA (50%); T.(asponge, ingot and mill products, west Caldwell, N.J ^m5!- WILSON-SNEAD MINING COMPANY, INC. (50%); Bauxite m;n,ng. Erauia. a . (Figures m parentheses represent percentage of voting securities cw^eo 0000-NLI-000018895 6 for 11 7i, 3' y barytes da N.J. mcing f"tals & Bearings 33% : $301 Million -r>y. cadmum. zinc. magnesium and ;c Ene'gy ?ry grid alleys. Pipe, sheet, sclder, shot atmeated products. Metal fasteners, 'doling plate. Precious metals, alloys 03is gold, platmum, and silver, -d inpustrial bearings. unium Pigments 23%: $208 Million ~r-c chloride process titanium pigments r:-e : nt, paper, plastic and ruPber industries. Englanc j- 'ey. I Cast ngs 15%: $140 Million f :cr~ - -"Gouupceer of die cast parts in aluminum, p, bra' s and magnesium. Finishing, assembly -ibya |o.ces 'r auutt<o, appliance and other industries. nnidad. y. Mexic: cago, |ieenmiiicc,a s & Plastics 11%: $104 Million ve pigments, stabilizers, geliants. flame battery oxides and specialty chemicals, iclded plastics. art, 'ated na ziation Well Materials & Services 10%: $90 Million 'iirg --aterials and services. Chemicals for the ;trole_ n and pollution control industries. md rrel an's, Iher Products 8%: $73 Million zmc i^ch E y paints. Nuclear products and services, anada temperature refractories. Titanium and gments: >:on,um chemicals. Specialty ceramic resistors. x! g1 . ula. Ala. $ ned ) (r. nliclateH sales- $915,877,000 0000-NLI-000018896 7 Meta'S ar.c oear-ngs accounted 'or aco'cxsmately 33 per cent of co'sc idated 1970 sa'es a^d 29 per cent of pretax opera! ng ncome National Lead's Metai Divis on nas Deen active for many years as a leading produce" of recycled lead materials. The company purchases used batteries and other lead-based products from scrap aeaiers aop manufacturers. From these mater.a!s it recovers soft lead, arbmcn.a! lead and other alloys by smelting and refining at its sfra:egic3'i, coated recycling slants. Desp.te me shortage of antimony, a metal added to lead to produce a "a-c an'oy. which persisted mmugn much of 1970, tne company was able !c maintain shipments of antimonial lead tc battery manufacturers and other customers by stepping up smelt ng of antimony raw materials in its secondary processing c-ants National Lead also increased antimony ore mining in Mexico, opened a concentrating mil! m Nevada and enlarged the capacity of its Laredo, Texas, smelter, which is a major producer of commercial-grade antimony metal. Although sales of body solder, zinc and zinc alloys were off because of the slow pace of auto production, the division showed increases in sales of fabricated lead products. Increased efficiency in the metals area during the year was also a result of further progress made in decentralizing marketing and manufacturing operations into totally integrated regional profit centers. In addition, more empnasis was placed on the development of products to penetrate special markets. Sales by the Goldsmith Division were reduced in 1970 chiefly because of the decreased use of silver brazing alloys for electrical and electronic contacts. Despite more competition, the division maintained its position as a primary supplier of silver nitrate chemicals to the photographic film industry. Demand continued high for Goldsmith's silver chloride for salt water batteries, which are a vital component of marine sonobuoys. The division also experienced a sharp rise in sales of palladium chloride, a chemical that has found increased applications in electroless plating of circuits and of automotive plastics. Southern Screw Division experienced a slight drop in sales of screws and other metal fasteners following the pattern of its major metals & bearings in [ire w;h - ;reno o' r - ` r; 1977 .-. -= - , contmcog "'ease r sa.es c' tabc-e smew ft: estabi.sned a plant o Are: be. ?,,er'c 9 ;c. ea'; - new fac : ty bo.stered product cn cacao t, o' $:.,,m : 'e w. one of the 'eaders " me country's sma *'astener - The performance n the bear.ngs area a.' rg 19 as gcoc consider ng tne m xed ecorom c state of me 'a m7 customer. Magnus Meta; D,.rs.cn. tne :argesf :ar' segment, increased ts sa'es and profits r 197C r bearings and motor sucport beanngs 'or d ese. c: both contr'buted tc tne nigne' sales record of Mag- machinery, wn.icn was nstaded .ate r tne year w motor support bearings more eff'C.ent > and red '. increase botn the duality and auar.fty of frese cm Performance of 7he Burtmg Brass and B-cnze 1 1970 was not as good a; toe obvious ,ear !':ma; pressures were feit as the tcta; market for ts ored. considerably. For 1971. Bunbng antmpates ncrea in its Auto Forge automatic castmg equ peer; arc cast aluminum. Although sales ot Amen can Beanng D, 7 s on'3 on and gas engine and compressor manufacturer's wem 1970. the division mcreasea the volume o' oea- 'g c to ~ain of gas turbines, promising research arc deve co~-: crK was earned on du'ing the year m bi-metah'C oa'ts *y me fiuid fransmission industry. Construction progress on Naticna. Leac's S7j-" magnesium and chemrcal ccm.ciex shewn pe-ow m of Utan's Great Sait Lake .s mcvr.g anead ou ;k7. Division plant's first Deduction ot tne i.ght. strong ~ s expected late this year with commercla sn pments s 1972. Already, millions of gallons of magneslum r; brine from which the metal will be extracted "ave cm (Rignt) Lead shot, usea for weights, shielding and by soedt^er at our Illinois snot tower. 3y pouring molten lead at me tc tower, lead droplets are formed wrmh harden to snot a; t~ey more than J50 feet ccwr tre ::wer : 0000-NLI-000018897 vulated ill Sales o! t tamum cg^e^ts op.mp.nsed approximately 23 per cent of the ccmcarv's porsonCsTea sa s and 27 per cent of pretax operating income. The year was marked Dy an mdustry-wide price cut in May and by higher costs of labor and raw materials, which adversely affected earnings of the Ttamum Pigment Division in the United States. As part of tne company-wide cost reduction effort, the number of product,on and tecnnicai emp'oyees was reduced. The increased number of captive titan urn pigment plants operated by paint manufacturers, which came on stream in late 1969 and early 1970. tended to reduce the p gment market for independent producers such as National Lead. Although our Canadian and European operations started the year briskly, their markets generally receded into the slow economic pattern experienced in the United States as the year progressed. Compared to 1969. sales to the paint industry were off significantly, and the lower volume to other industries, such as paper, rubber, ceramics, inks and fibers, also reflected the general sluggish economy. Only the plastics industry remained buoyant and there our sales volume was good. In the area of product development, the U.S. Titanium Pigment Division successfully marketed an important, new pigment early in 1971. Designated as t it an o x s 2020, the new pigment provides paint manufacturers with a basic ingredient that can be formulated Into their products to provide high durability, maximum opacity and superior gloss cnaracteristics at no premium in price. This is a versatile type of titanium pigment that can be used also deve'cced and marketed =evera -ew :_oe- m :: - ;~ for the plastics industry. Looking to the future, tne T tamu m P gmem Coens: ms '-~zv on a signihcant plant exD3ns on and mope" oat p':;-a~ tne United States and ove-seas Of cart.ce'ar nee was *-e : ta" of a $6-million expans on of me Te` -es. Noway, nor :e --e ; raise >ts capacity to l-mruon tens c` concentrate arrua- . s development sncu`d p'ace tne ccmpa', " a good cos * m : the grow'ing woridw de demand *cr titan,um p.gment fee: -re- ; Construction aiso oegan on a $L.5-~.' p- -'ag-et -eg- - - - at the MacIntyre Development in ^-estate New vork. T-e production facility w.'i ;'be-ate add t 'cna: 11 = " u~ c.cx ae :Oe: from the limenite o-e maned there as well as mg-ade me : m fy of its magnetite feed used by tne stee1 and hea.y -edh -- .st- e: In Belgium, a mu!timi!:ion-dc:'a- cc-structlm project was peg- at the comoany's Lange-b-ugge p'ant s.te fo- a second `a: ty to expand further the manufacture of titanium p gment. L" dme- - operation now being built at the Leverkusen, West Germaw :a- will increase production of titan um t-'chlcnde for tne Em: sean market. In another phase of titanium pigment coe-ations, sa'es m strontium titanate boules experienced strong growth dmmg 197C This increase refiectec tne greater demand ;o- s mulateo p :~m . jewelry in the fasnion market. The Commerc:a: C-ystais De:a-:~e manufactures these crystals no: ony `c faC'-cat pr .nto gr~ fm but also for various optical applications. tl: PiP-- - - v: Product innovat'On and Quality control are accomplished in more than 30 divisional ana corporate laboratories around fKe world. 4 iab tecnr ; an checks titanium pigment samples tor Quality at one of our vvesf German pta (Right) The pacer and printing mcustries are large users of tne zc '-catitanium pigments. This pigment -s unequaled for its cr g~t~ whiteness anp cpa. 0000-NLI-000018899 10 0000-NLI-000018900 D'e cast.rgs a"ic d e cast --eta.s 'screser.ted apo'Cx;~*3tely 15 oer ce-t o' consc.-datea 1973 sa;es ard 13 oer cent o' pretax operatmg income. ODeratic-s c-f t^e Doe- e'-Jaw .5 Div sion were adve'seiy affected both by me genera; decline of the economy and by the General Motors s`mk c s:nc.e rmJcn c* tne Division s cutout is absorbed by the automoo :e :nd'-ost^y. increased emp'-as.s /.as g.'.en to excans on of the market for magnesium c e cast ngs, 3nd sales m tns area showed a Significant norease V"-e- "~e cc~ca".'s --sgres -m c!ant is ccmoleted, a con-on^mg sco'ce `cr tnis o-e cust.ng meta- wn De assured. Magnes cm, 0 e cast -g$ -ace r'acc, pr-cvec useful because c-f their light we'gr: and g-em smength .n sucn consumer products as hand toois. small acc .ances and onctograpn'c equipment. National Lead continued its leadership in tne development of large, complex aluminum castings. Die cast automatic truck transmission castings, produced oy Doehler for the AlLson Division of General Motors, are the largest and most complex castings ever produced in this country and weigh up to 70 pounds. The settlement of the Genera! Motors strike as well as the increased economic activity wh.ch nas been forecast for the year ahead are expected to strengthen the demand for consumer durables which constitute tne major ma-ket for die castings. Continued emphasis on expanding the market for magnesium die castings should also contribute to the improved outlook for 1971. die castings in Sydney, Austra. a. ~he new * -- sta'ted opens: ms - r - , 1971 as a major suop' er of c e cast pa-s m Ausms. 3 1-. automotive and appliance industries. Naticna1 Lead's CanadLs" S-.bs-o 3nes, Bamer D - Cu- -q 2: Limited and Lakesro'e D e Oast rg. Ltd., eoe' enced 'c' sa 3 earnings owing to tne cecme n tne Ca-ad an amcm.co --cm and the Gene's; Mote's str'ke. ^cwesen a s zap e g'p/.r ~ was experienced by our Br.t,so subs-dia'y, Meta Gas:' g 0,,e' Ltd., which mainta ned ts ieaae'sn.p cos t-on .r. tne Eng - q e casting industry. Floating F!oors. Inc., a subsid ary that produces e;e.e' .; '-oc. site envi'onmentai systems for compute' rooms. rad sa es and earnings as a result o' the dec; mrg econo'". w. 0' .aused heavy emphasis to be maced upon lower cost s:ee! and : to core floor piates ;n tie industry. Although tne unit "are: ~ro in these materials, it has on!y recent!j. begun tc market ms- The company's plastic manufactur r.g capability was ncreased witn tne .nstailation of .nject on-moiding equ P"mt 0 the Doehier-Jarv'is Division at its Grand Rapids, Mien ga' plant. Also mstalled were complete automatic !'nes 'cr e eo.t'oo " -g : paint:ng finishes. Tne new equloment P'oduces cast;::";;' ranging from 28 to 190 ounces 'or motor .-e1' c.es anc e -r ,t' ca; appliances. Die cast parts made by Doehler-Jarvi$ are found in a variety of everyday products ranging from chain saw housings (Right) to large trucK transmission castings (Left). Die casting is a method that offers a fast, economic mass production route from raw material to finished product. Panels in computer rooms (Right) provide easy access to cables, wiring, pipes and ducts that run beneath the floor. 0000-NLI-000018901 12 Lte. ;-e~- 3!5 and plastics products accounted for approximately ;; 3e' cent of 1970 consolidated sales and 10 per cent of pretax ::ers` "g income. Sa m and earrings were increased over those of last year by the (: jme ts and Chemicals Division, whicn manufactures a variety 'spe: aity chemical aac fives for use in coabngs, plastics, rubber, 3. es and -K, cosmetics and other products. It also produces lead oxides me storage battery, glass and ceramic industries and ;tr> iers rfic:' msive pigments for steel structures. 'ier , ns -e-retaraant cnemica! sales also showed an increase, and ($,, ward trend is expected to continue, New government ' ;ret. -egu.'ations 'equire that specified textiles, fabrics and past s be flameproofed and, early in 1971, the division introduced irs and = me f sophisticated flame retardants designed to enable these iS mate - u:s to meet these standards. tj Ss. is of viscosity regulators and geHants increased over 1969, | -"es- products are employed as suspension and flow control agents lets 1 - o astics, paints, inks and cosmetics. T' e recession in home and industrial building and the strike Ir m- auto industry adversely affected our additives market in the by 'col) ml chloride (PVC) plastics industry. This business Aiii "prove in 1971 if expected government subsidies stimulate and -~ew ouslng construction. PVC plastics are used to make many lents I croc ers ranging from house siding and furniture upholstery to rsu fed wire, pipe and electrical conduit. Tv. - new plants presently under construction in Europe will come licals & plastics on stream n 1971 and he:c to excarc Nat-cral Lead's market them, T*e Belgian plant w ii make me articcrosive pigments used to protect metal structures. This w |i be tne first plant of its k.nd In Europe, ben t o n e* geliants w 1 be ma"ufacfu'e3 at a new West German facility. During the year, the company j scontmued the manufacture o' acrylic plastic sneet and of battery separators made of encapsulated cellulose Both operations nad become uneconomic. Sales and earnings cf Amcs-Thcmpsen Corporation plashes and wood products declined, but sales increases resulted from the manufacture and assembly of automotive gr.lis in mjeclicn-molaea plastic. Tn:s product sector appears promising for 1971 `'em tne standpoint of new orders. Sales and earnings by the Baker Castor Oil Comoany reflected a continued increase over those of last year. Early in 1970. National Lead acquired the remaining capita' stock of this producer of commodity castor oil and cnemical specialties. The chemical derivatives business continues to be a top sales performer. During the past year, Baker developed a number of new commercial products, one of wnich was a castor-urethane adhesive used for installing artificial plastic turf. The outlook appears favorable for this adhesive with increasing use of this artificial turf in sports arenas and recreational areas. Baker is also active in other fields such as additives for protective coatings, surface active agents, and various spec sit es for textile and metal finishing. (Above) Vinyl stabilizers made by the company are used ir plastic and vinyl products hire raincoats, boots and umorellas. (Left) National Lead's ONCORr pigments prov.de metaiip structures suer, as this French radio tower witn the best protection against cohesion Pa ms tor highway traffic mar ring and steei bridges also contan in's orcdjct. 0000-:V LI-000018902 13 M*um Saies and services to the o.i, chemical and other industries by the Baroid Division accounted for 10 per cent of consolidated sales and 17 per cent of pretax operating income. Baroid is a leading international supplier of oil well drilling materials, and services. In 1970, the division moderately increased its sales over the previous year's level. Gams were made in the sale of drilling muds in overseas markets, particularly in the North Sea, Southeast Asia and South American areas. Growth was also achieved in sales of chemicals used for water treatment and corrosion and scale control as well as in products marketed to the mineral exploration field. Decreased activity ,n the drilling industry in the United States during 1970 adversely affected the division's performance. Increased demand was recorded for the logging, perforating and other wireline services of the McCullough services department, which was acquired in 1969. These sen/ices relate directly to the production capacity of oil wells so that the industry can get maximum output of petroleum and natural gas. Baroid's new $4-mil!ion mineral synthesis plant, adjacent to its present manufacturing complex in Houston, was completed and went on stream late in the year. Market testing of several new products from this plant, including catalysts for petroleum refining, is underway. The division's chemical manufacturing facilities, also in Houston, were placed in full operation during 1970, The intermediate organic chemicals produced by the plant are used in many of Baroid's products thereby achieving cost savings over materials previously purchased. rr> Baroid continued oe-e oz~e-' c '5 Pus ress -g *~e treatment o* waste water end omer pc,,u'a"s - me p-;**: re production indusby. In 197C. t 3;S0 concentrated on ;m~o; new products and equipment :c aid n -- r ~ z -g a-q . - pollution that results from o l we'! cr.itrg. car: ary : offshore operations. Because shipping costs are a 'a-ge 'actc- n sues y -z Oc;i muds to remote locations, the chv's.on nas de coed a ;// product that cuts bulk and weignt. Irit al emeu;* on c* s concentrated, hign-performance viscoslfier :c amwe' f s 'eec commenced in 1970. Baroid has mining operations and reserves c` harite basic raw materials for d'lll.rg mud lr. Severn >P3t'c- s ' m s country as well as in Canada, Italy and Latm America. Cm" g 1970, the division's searen for new soumes nc'uded A m-mata where both barite and bentonite depeshs were explcre: 3"d developed as possible *aw materia! sources `or me gm.-. "g Southeast Asian oil well drilling market. The outlook for 1971 is for increased saies desp :e mcerta r: in some industries. A substantia! increase n domes*': m lling activity would materially improve 1971 prospects. Aim; ..g" mer; are favorable indications for such an increase, be t m rz s indefinite. The primary factors needed to stimulate r ' g are increased prices for crude oil and natural gas c'us regu a-'y scheduled offshore lease sales. On a wor'd.viae bas s, a t'-menc demand for energy virtually assures increased d- cmg *: boost: and gas reserves. 0000-NLI-000018903 14 :gmi;c. nc uces d u t c h bo y * paints, soec-alized im ting Dll.ng . zirconium and t.tamum pnemicals, kaonn clay -" "g.r .ear products ana automat.ve prototype tooling : 5 accounted for approx mate;y 8 per cent of consolidated per cent of pretax operating .ncome. $3>es - toe Paint Division decreased slightly during the year, and ling . - A ,V . ~ : um paced me of paint under tne a c c l a im - .vas introduced to the national market, p and van',,sh manmactunng operations were closed *ed e San Franc sco o'ant and transferred to Los Ange'es. The sco D'ant hap been m con* nueus operation smee 1891. ther `1, d u t c h bo y ca,nts "as planned a vgorous advertising and is a! campaign that will feature the d u t c h bo y trademark iri tne : ogan. "If there's a d u t c h bo y on the outside, there is >a. :^3!:ty : he inside." This campaign will appear on television agazmes and newspapers throughout the major ~3rKe!' n the United States. tK TAM Division, sales were of' for the year as a result of amties g there femes: z markets In the electronics and home-buiiding must' s. Milling capacity of zirconium silicates, used in the r-anu'm's'ure of ceramic the and glazed brick, was expanded with -a in.s' "at'on of new equipment. re At * ? Chas. Taylor's Sons Company, a softening in the world i . market, particularly blast furnace refractories, led to a endous :eo -e ' earnings. This subsidiary manufactures stoii i -.gn-te"--erature refractory products for the steel, glass and processing industries. Dimng '"e year, ~ay c* spvred pmoucrcr at a r.g* scecalfy refractor/ and cement p.ar.; n D ncmoati These proc_cts are used to buiid and mamfa n melt ng furnaces, esoec ally `nose of the new induction type The year also -named !he first 'u 1 12 months of ope-abon of expanded and modem zed *ac 1 * es bum under an $8-rrnii-on capita' expend.fore prcgram. Product improvements we-e made n efemea1 bonded multte bricks used by the metals industry. A new gunning casfab'e was also developed for not patching or maintenance of bias* 'urnaoes and soaking p-ts in steel mills. Edgar P'astic Kaolin Company continued to modernize :ts facilities. Located m Florida, this subsidiary mines kaolin c'ays `m the production of china and glassware. In the Nuciear Division new applications for depleted uranium, a very high density metal, were made ocss.bie by the deve!cpment of a new casting method called "Unicast." This versatile technique increases the number of cast shapes that can De produced and reduces manufacturing costs. Expansion of services in me si:ppmg of spent nuclear power fuel snouid also grow with new shipp.ng cask designs the division has developed. Tne researen reactor he;d is steadily declining and the division plans to phase out tnis coe-at'cm Production of prototype auto body tooling, carts and assemblies continued at a good pace during the year in the Tool and Engineering Division, and prospects for 1971 appear faveab'e. This division prepares special dies and tooling for prototype auto bodies and parts for future car models. 5S Zircon opac/fiers. known for their ability to improve color and texture, are utilized in the manufacture of ceramic glazes and tile for swimming pools, bathrooms and laboratories. Dutcn Boy paints uses the medium of television extensively >n its nationwide marketing. This is the filming of a Dutch Boy commercial that will appear this year. 0000-NLI-000018904 15 Titanium Metals Corporation of America As a resu't of toe st-etc' cut n de! c` trarscort planes to the airline industry and cutbacks t - govem-r'A^; `und>g of military aircraft and aerospace rmpm-": so as ~ :a' u~ \*eta;s Cc'pcrabon of America (T'v f t ae: -e-d tc iA9.5-7.000, In 0 370. t 'v e t . a 50 per cent owned sub-s o ar.. >\f" Allegheny Lud'um industries, Inc., had a `css 05 Oa ; 000 as compared to a loss of $502,000 in 1969. Di/ r'p t"e year. * tan jm was used increasingly in chemical excess rg a-; e-. mo'-e-fai cant'c1 devices. Titanium consumption fee chem ca' p'dcessvg ecu pr-ent has oeen rising at a 20 per cent Acc'cx ~=:e'> 52 r--n cc in t;tan.um was sold in 1970 for em m"-e-;a cc-t-c aevees .Vestingncuse Electric Corporation wn1, use CPCE/.e l c - : tar urn tub ng from t imet in an ac.d mine Carnage mc.ecf -c,-, ce ng built for the state of Pennsylv a. Th.;s c a-; .v i. -ec a'm and puufy 5-rr,Miion gallons a day of brackisr- arc acid.: water hat nas coi'ected in abandoned coal mines and s oc'.ut.rg neax> streams. Efforts to cenehate he oil refinery market with titanium tubing in heat exchangers nave resu'ted n two major commercial installations with se.erai promising possibil ties for the future. Another growth area for t tanium tubing, stT in its infancy, is in the desalinization and purification of seawater. The unique comoS'On-resistant characteristics and electrolytic properties of t tanium tubing permit design and operation conditions never before attainable n electrochemical processing. Titanium anodes are replacing graphite in the manufacture of chlorine gas, and t'tanum cathodes are being used to refine copper and other metals. Both markets for these electrodes are expected to grow considerably in the next several years. Prospects for significant improvement in the titanium industry will be dependent on he sale of McDonnell-Douglas DC-10, Lockheed L-1011 and Boeing 747 wide-bod'ed jet transports to the commercial airlines, the actual construction of the two prototype supersonic transports (SST), adequate federal funding of the Navy's F-14 fighter, the Air Force's F-15 fighter and B-l strategic bomber as well as the increased use of titanium In the industrial market areas. Cake View Trust and Savings Bank had another fine year in 1970. Its earnings after taxes were $4,466,000, compared with rPGSt O' T'CO0r3`6O "* *^"0 *C O 3 ^0 " Br^ 3' to deci'ne aumng most cf 1971. T"e bank, ,`m cr' s *'e e g"' .mges` ' 7" me v r - assets h S3 27 42?.2"77 at , c-ar e' c as :: s cceo - - | f 17. ~: - a bar'K rc c."g cs-^pa''v s-cn as Nat ora'Lead 2r ` r: affer December 31, 19S0 engage nan actutes m-' "ar- h;--. cr act'vities c oseiy m:atec tc bank r.g, sub'ect tc sc s sns t-.v Fedem Reserve Beam may .nocse. Wr, e tne sec: p. ~,,s: ; tself cf cente cf me bane bv December 3!. 1930 t " c't be necessary or adv:sao!e to do so c;or tc hat -sate ` `ce "eder3 Reserve Beam ocjectec to at:cuis ' "s cr new art . t of Nationa- Lead. R-N Corporation, a 50 per cent owned subsdap., s two commercial plants us rg modifications of 'ts process cs rto operation and a third plant completed during he ye a- - re Lc = States, tnere is growing interest m the apciicat:cn of he cmcess '* the treatment of stee! mill waste pcor to Its ccnversc' "to steel The Canada Metal Company Limited, a 50 ce- :-= ewnee A producer of nondemous products and a'hys. Canada eta1 a r. makes zinc and brass `orgin.gs anc bronze bars and sea' "gs Improved earnings 'esulted horn a better Cvera:. ce^c--arce f" included more efficient use of production `'acint.es am --a introduction of several new product lines dunng he yea- Mineral Deposits Limited of Australia continued to p-: duce m ore at an expanded rate during 1970. T'ms 85 per cent :w -ed subsidiary moved to a new headquarters .n Souhccrt. Q,,-ers:arc Its mining machinery department, which has been wide' "g exoc" of separation equipment, is planning to enter he L'.teb Orates market in 1971. Mineral Deposits mines 'utile, zeesn. 'mazhe. s ilmenite, which are the basic raw materials for t;tan:um metal and titanium pigment as well as the zirconium and titanium: compound affinal* Oil refineries, chemical and utihty plants are ^s.ng n-c-easmg arre^ -ts of titanium tubing -n heat exchangers and otner process ecsuipme^t for its superior ant* corrosion characteristics. 0000-NLI-000018905 16 'rc J1'c lectec jales: ;a e; n 1970 amounted to $915,877,000, representing a , dec'ease trom 1969 sales. Foreign sales in 1970 increased 1969, wnereas Umted States sales declined. 1970 1969 United States Foreign $779,226,000 136,651,000 $796,371,000 133,414,000 $915,877,000 $929,785,0~0~0 tamings: Net income for 1970 totaled $38,071,000, or $1.60 per ~jre. v.0iT'D3r3t v6 earr ungs of On.ted States and foreign operations :t Ae'e as follows; bamne 1970 1969 that the On ted States $ 26,406,000 $ 38,106,000 ust dlvestl Foreign 11,665,000 12,569,000 T;e $ 38,071,000 50,675,000 5l =er share of common stock $1,60 $2.12 |t. oer snare hgures stated in this report give effect to the two-for-one United ess fcr tee!. stock spilt whicn was effective April 17, 1969. Lines of Business: The Company's primary lines cf business ;_'tec for approximately the percentages of consolidated net es and of nccme before income taxes (before allocation of net ad executive office expense, parent company interest expense and the (er sales -et ccrtr.butler of the Lake View Trust and Savings Bank), as also -bleated on tne charts to the right. Dividends: On November 24, 1970, the dividend for the fourth :e that :j3rtgr of 1970 was reduced to $.25 per share from $.425 per share, he amount paid in each of the three preceding quarters of 1970. Dividend payments per snare for 1970 totaled $1,525 as compared w.th $1.70 for 1969. :e rutile Taxes on Income: The provision for United States and foreign sland. xports `S axes or, income amounted to $26,987,000 in 1970, compared to f$44,593,000 in 1969, The provision for deferred income taxes arising principally from accelerated depreciation utilized for tax purposes) amounted to $4,096,000 and $3,568,000 for 1970 and ite, and 1969, respectively. The Company's United States income tax and ounds. stums have been examined and settled through 1966. The year 1967 s row under examination. The liability for taxes on income covers consolidated United States and foreign subsidiaries and the Company believes that adequate provision has been made for all rears not yet examined. sales metals & bearings titanium pigments die castings chemicals & plastics oil well materials & services other products 1970 profits metals & bearings 1969 1968 1967 financial report titanium pigments die castings chemicals & plastics oil well materials & services other products 1970 1969 1968 1967 0000-NLI-000018906 17 Financial Position: The Comcany continued to maintain its strong 1 care ai ocsTicn during 1970, Total assets ncreased to 5752,649,000 and shareholders' equity, excius.ve of treasury stock, increased to $420,737,000. The following chart illustrates the growth in total assets and sharenoiders1 equity, exclusive of treasury stock, over the past five years: National Lead Company Shareholders' Equity *753 1966 1967 1968 financial report continued 1969 1970 At Uecemoer j *, n. u, net assets ui vU i/i.uo.ru aggregated 5102,032 000. Book value per snare amounted tc $ 17.17 at the end of 1970. compared with $17.06 at the beginning of the year. Working capita: at year end amounted to $241,739,000, as compared with $186,876,000 at December 31, 1969. This change resulted principally from the conversion of short-term borrowings to 'eng-tem debt. mLane 3uiMac Mining Intang Less - Working capital at year end 1970 and 1969 was as follows.- United States Foreign 1970 $204,233,000 37,506,000 $241,739,000 1969 Mai 5144,359 j j c straig" 42,517 ICCi unit or Dec $186,876 IOC disc c The utilization of working capital is shown in the consolidated Long- source and application of funds statement on page 22. ,here 3 Inventories at the end of 1970 amounted to $196,405,000, an The c - increase of $20,275,000 over the comparable 1969 amount, A comparative summary follows: Raw materials Finished & in process Supplies 1970 $ 50,472,000 126,137,000 19,796,000 4%% 1969 dec $ 41.003.:oc 115.9C5.lo: 19,2 22, ICC .ns thr $1 Ac $196,405,000 $176.130097 696% Property, Plant and Equipment: During the year the Ccmcary be invested $58,635,000 in property, plant and equipment. Ban* Major expenditures were made for the Magnesium Division's plant in Utah; completion of the Baroid Division's mineral syrtnes s plant in Houston; domestic and foreign titanium pigment oceraticrs initial costs for a new West German plant that will manufacture Lear gellants and a plant in Belgium to produce anticorrosive p gmerts; and the launching of a $20-million environmental control program designed to be completed by 1972. se National Lead Company Capital Expenditures and Depreciation (Millions of Dollars) Depreciation Capital Expenditures 1966 1967 1968 1969 0000-NLI-000018907 18 diaries ), pita! 3-term Mar.'j'acturing properties Land Buildings Machinery & equipment Mining properties i-tang'bies not being amortized ' ess reserves 1970 $ 14,851,000 146.107,000 418,038,000 43,676,000 22,492,000 645,164,000 341,363,000 $303,801,000 1969 $ 13,785,000 142,208,000 376,553,000 39,257,000 22,492,000 594,295,000 321,126,000 $273,169,000 59 ' Manufacturing properties are depreciated principally on the 59.00C straight-line method; mining properties are depleted on either the 17.000 jn.t of production or the straight-line method. Depreciation expense for the year 1969 has been restated as 76.000 d'soosed in Note 9 to the financial statements. Long-Term Debt: At December 31, 1970 long-term debt had ipcreased to $180,902,000 from $94,688,000 at the end of 1969. The composition of long-term debt at December 31, follows: JV-C subordinated '69 >03,000 05,000 22,000' debentures, due in annual installments of $850,000 through 1973 and $1,297,000 thereafter to April 1988 30,000 6r2o deutsche mark bearer bonds, due 1972 any through 1979 'Bank loans incurred for purchase of Bank at lesis prime interest rates, due itions; 1972 through 1976 Loans from banks under the nts; terms of a $135,000,000 am credit agreement, at prime rates, due in equal semi-annual installments from 1972 through 1975 5V'2% to 9% bank loans * Other 1970 $ 24,798,000 16,275,000 34,200,000 94,938,000 5.090.000 5.601.000 $180,902,000 1969 $ 24,798,000 16,275,000 38,000,000 8.694.000 6.921.000 $"94,688^000 The 4%% subordinated debentures outstanding at December 31, 1970 and 1969 are after deducting $1,665,000 and $2,515,000, respectively, representing the principal amount of debentures held by the Company. In January 1970, the Company entered into a credit agreement with banks which provides for the borrowing of up to a max'mum of $135,000,000. Initial borrowings were used to settle short-term loans outstanding at December 31,1969 under the terms of a previous credit agreement. The credit agreement provides that the Company must maintain consolidated working capita! of at least $100,000,000 and contains certain restrictions on additional borrowings. Application of these restrictions would limit the amount of retained earnings available for cash dividends to approximately $142,000,000 at December 31, 1970, In January 1971, the Company issued $100,000,000 of 7V2% debentures, due December 15, 1995, the proceeds of which have been used to repay indebtedness to banks. Commencing in 1976, the Company is required to make annual sinking fund payments sufficient to retire $5,000,000 principal amount of debentures. Also commencing in 1976, at its option, the Company may annually redeem, at face value, $5,000,000 of debentures. The Comcany has a further option to redeem outstanding debentures at decreasing premium amounts until 1990 and at face value thereafter. Debentures redeemed at the option of the Company may be credited against sinking fund obligations. 1970 r 0000-NLI-000018908 National Lead Company Consolidated Statement of Income and Retained Earnings Revenues: Net sales Equity in majority owned foreign companies (after taxes) (Note 1) Lake View Trust & Savings Bank (Note 1) Other Income (Note 8) Costs and expenses: Cost of goods sold Depreciation, depletion and amortization Selling, general and administrative Interest (Note 1) Minority interest Years ended December 31 1970 1969 $915,877,000 2.085.000 2.790.000 2.273.000 923.025.000 $929,785,000 1.435.000 3.004.000 3.987.000 938,211,000 680.918.000 25.319.000 140.756.000 10.684.000 290,000 857.967.000 676.925.000 22,651,000 136.178.000 6,577,000 612,000 842.943.000 Income before United States and foreign income taxes Provision for United States and foreign income taxes (Page 17) Net income Income per common share (based on average shares outstanding) Retained earnings at beginning of year.- National Lead Company Acquired Companies Less.Dividends paid--1970, $1,525 per share; 1969, $1.70 per share Adjustments relating to acquisitions (Note 2) Retained earnings at end of year 65.058.000 26.987.000 38.071.000 $1.60 327.683.000 365,754,000 36,261,000 1,357,000 $328,136,000 95.268.000 44.593.000 50,6757000 $2.12 323.286.000 266,000 374.227.000 40.272.000 6,272,000 $327,683,000 Reference is made to accompanying notes 0000-NLI-000018909 20 mi* ,,-en* assets: ' r^n. including time deposits Ya'xeiable securities tc'ounts and notes receivable, less allowances I* $2,630,000 in 1970 and $1,991,000 in 1969 ip'.entores (Note 3) c-ecaid exoenses J Total current assets l-yesiments: Lake View Trust and Savings Bank (Note 1) unconsolidated subsidiaries (Note 1) Associated companies (Note 4) and other investments, at cost, less reserve ' toedy, plant and equipment, at cost, less accumulated depreciation and cec'et'on of $341,363,000 in 1970 and $321,126,000 in 1969 (Page 18) jtner assets Liabilities Current liabilities-, f Loans payable I Accounts payable and accrued liabilities Taxes on income Total current liabilities ujngterm debt (Page 19) deferred taxes on income (related principally to accelerated depreciation) Otner liabilities and reserves P riority interest (Note 2) Shareholders' Equity (Notes 2, 5 and Page 18) Common stock, par value $2.50; shares authorized 60,000,000; issued 24,177,168 shares lanital surplus Detained earnings Less treasury stock at cost: 1970, 361,126 shares,- 1969, 495,787 shares 1970 $24,949,000 957,000 142,015,000 196,405,000 3,927,000 368,253,000 45,395,000 12,962,000 15,511,000 303,801,000 6,727,000 $752,649,000 $39,202,000 79,384,000 7,928,000 126,514,000 180,902,000 23,877,000 8,732,000 3,709,000 60,443,000 32,158,000 328,136,000 420,737,000 11,822,000 408,915,000 $752,649,000 Reference is made to accompanying notes 1969 $23,489,000 3,160,000 141,580,000 176,130,000 3,974,000 348,333,000 41,535,000 10,645,000 15,944,000 273,169,000 5,634,000 $695,260,000 $68,766,000 74,753,000 17,938,000 161,457,000 94,688,000 19,781,000 8,093,000 7,266,000 60,443,000 32,104,000 327,683,000 420,230,000 16,255,000 403,975,000 $695,260,000 t OOOO-iVLI-OOOO 18910 21 National Lead Company Consolidated Statement of Source and Application of Funds Source: Net income items not requiring the use of funds: Depreciation Deferred income taxes Minority interest Equity in income of subsidiaries consolidated on an equity basis, net of dividends received Funds provided from operations Long term borrowings, net Disposals of fixed assets Exercise of stock options Other Application: Dividends 'nvestments: Lake View Trust and Savings Bank Other, net Cap'tal expenditures Purchase of treasury stock Dividends to minority interests Other ncrease decrease) in working capital Details of the above increases (decreases) are as follows: Cash Marketable securities Accounts and notes receivable Inventories Prepaid expenses Loans payable Accounts payable and accrued liabilities Taxes on income Years ended December 31 1970 1969 $38,071,000 $50,675,000 25,319,000 4,096,000 290,000 ( 4,769,000) 63,007,000 86,214,000 2,684,000 -- 1,371,000 153,276,000 22,651,000 3,568,000 612,000 ( 4,680,000) 72,826,000 39,927,000 533,000 297,000 110,000 113,693,000 36,261,000 -- 1,521,000 58,635,000 89,000 240,000 1,667,000 98,413,000 $54,863,000 40,272,000 37,620,000 247,000 39,830,000 12,035,000 404,000 1,057,000 131.465.000 $(17,772,000) $1,460,000 ( 2,203,000) 435,000 20,275,000 ( 47,000) 19,920,000 29,564,000 ( 4,631,000) 10,010,000 34,943,000 $54,863,000 $(13,298,000) 1,050,000 24,912,000 21,708,000 869,000 35,241,000 (45,256,000) ( 8,104,000) 347,000 ( 53,013,000) $(17,772,000) Reference is made to accompanying notes 0000-N LI-000018911 22 Consolidation Principles. T^e consolidated finance- statements . ,e --e accounts of me Company, ail domestic subsidiaries _;.^e 'Oew Trust and Savings Bank' and major wnoily-owned i.. -- ;_ns d aries translated at appropr:ate rates of exchange. u-'-ert: cans ai data regarding foreign subsidiaries is shown on - arc 18. ;-~rar'> s 'nvest^em n major unconsolidated majority-owned E- subs.d.aries and in Lake View Trust and Savings Bank are a: cost, adjusted for subsequent changes in equity. The r:ludes m income its equity in the net income of such d anes. ;,.,irg ; a summary of pertinent financial information relating -e Sank: (In Thousands) Assets 1970 $327,429 1969 $311,178 Deposits & otner Labilities 301,278 288,714 hasena Lead's equity in Bank's ret ,ncome .ess !n:efest cost to National Lead, after applicable tax benefit of $1,617,000 r. 1970 and $1,690,000 in 1969, or *_ods borrowed to purchase Bank \e*. income attributable to Bank $ 4,459 1,669 2,790 4,514 1,510 $ 3,004 See Report of Affiliates, page 16, for comments relating to the Bank i-c ding Company Act of 1970. Acquisitions. During 1970, the Company exchanged 138,091 scares of ts treasury stock for all of the outstanding stock of Regal Mo'ds. Inc. and the remaining outstanding stock of j tie Baker Castor Oil Company. The acquisition of Regal Molds, -c. has been accounted for as a pooling of interests and. accordingly, the results of operations for 1970 include the et income of Regal Molds, Inc. for the entire year. No adjustment -as been made for the prior years since the effect would not be material The acquisition of the minority interest of The Baker Castor Oil Company has been accounted for as a purchase and me results of operations for 1970 include the earnings applicable :c t h is minority interest since the date of its purchase. As a esul! of these transactions, capital surplus was credited $54,000 and retained earnings was charged $1,357,000, ^presenting principally the appropriate portion of the excess of 'me cost of treasury shares issued over the fair or carrying value of the net assets acquired. iInventories. Inventories are valued at the lower of cost principally average cost) or market. Certain metal inventories ye valued using the last-in, first-out method, which results in such inventories being stated at less than current replacement cost at December 31, 1970. The valuation of a portion of these same inventories is further reduced by the use of the base stock method. Pursuant to such method, an inventory reserve . amounting to $11,471,000 in 1970 and $10,572,000 in 1969) 'S maintained based on quantities deemed normal at fixed prices. \notes to financial statements 4. Associated Companies. T.-.e ecu t> m me Ccmca'-y .r me ret assets of Than urn Metals Corpora! on o' America, a 50 per cent owned company, exceeded the investment wnicn is earned at cost by $12,067,000 at December 31, 1970andby $14,888,000 at December 31. 1969. The Company's snare of the net osses of Titanium Metals Corporation o( America .'which is net included m the Company's consolidated statement of income! for the years ended December 31, 1970 and December 31. 1969 was $2,821,000 and $251,000, resDectiveiy. No dividends were "eceived in 1970 or 1969. The equ-ty of the Company in the net assets of the other 50 per cent owned companies exceeded the cost of the Company's investment by approximately $3,942,000 at December 31, 1970 and $3,778,000 at December 31, 1969. The Company's equity in the net mcome of these Companies m 1970 and 1969 approximated dividends received. 5. Common Stock and Stock Options. Under provisions of the 1968 Stock Option Incentive Plan. 700 000 shares of the Company's common stock have been reserved for issuance to officers and to other key employees. Under the plan, options may be granted to purchase common stock at 100o of the market price at the date of grant and are exeresabie over a period of five years from date of grant. Details of shares under option at December 31, 1970 and transactions during the year follow. Balance at January 1, 1970 Granted 179.000 216,400 Balance at December 31, 1970 395.400 Price per share of shares granted and outstanding at December 31, 1970 Shares exercisable $20 to $36 395,400 Available for future options at December 31, 1970 304,200 With respect to the 1958 stock option plan, all remaining options expired in 1970 and no additional options may be granted under this Plan. In connection with the acquisition of The Bunting Brass & Bronze Company in 1968, the Company granted to holders of stock options previously granted by Bunting, substitute stock options. During the year, no options were exercised and options for 476 shares at $20.50 per share are outstanding at December 31, 1970. In connection with the acquisition of Jonathan Manufacturing Company in 1969, the agreement provides for the delivery of additional Company stock, not to exceed 135,904 shares, contingent on the amount of Jonathan Manufacturing Company's net income (as defined) for the years 1969, 1970 and 1971. The Company is authorized to issue 5,000,000 shares of preferred stock without par value. The rights of the preferred stock as to dividends, redemption, liquidation and conversion will be determined upon issuance. 6. Pensions. The Company and its subsidiaries have various pension plans covering the majority of their employees. Total pension costs approximated $10,100,000 in 1970 and $9,400,000 in 1969. Current service costs under the plans are charged to income as they accrue and are funded as to the major plans. The major portion of the prior service costs is being charged to income and funded over a period of thirty years. Unfunded vested benefits at December 31, 1970 amounted to approximately $13,500,000. 7. Litigation. See comments regarding pending litigation on page 5. 8. Other Income. In 1970, a gain on the sale of land of $1,727,000 and provisions for losses in connection with the sale or disposal of certain properties of $2,750,000, are included in other income. 9. Restatements. Certain amounts in the 1969 financial statements have been restated to conform to classifications used in 1970 with no effect on net income or shareholders' equity. 0000-NLI-000018912 23 auditors' report To the Shareholders of National Lead Company New York, N.Y. Lybrand, Ross Bros. & Montgomery Certified Public Accountants 2 Broadway, New York, N.Y. We have examined the consolidated balance sheet of NATIONAL LEAD COMPANY and its Consolidated Subsidiaries as of December 31, 1970 and the related consolidated statements of income and retained earnings and of source and application of funds for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We were furnished reports of other public accountants upon their examinations of the financial statements of certain consolidated and unconsolidated subsidiaries and fifty per cent owned companies. Our opinion expressed herein, insofar as it relates to the amounts included for such subsidiaries and companies, is based solely upon such reports. We made a similar examination of the financial statements of the Company and its Consolidated Subsidiaries for the year 1969. In our opinion, the aforementioned financial statements present fairly the consolidated financial position of National Lead Company and its Consolidated Subsidiaries at December 31, 1970 and 1969 and the consolidated results of their operations and the source and application of funds for the years then ended, all in conformity with generally accepted accounting principles applied on a consistent basis. LYBRAND, ROSS BROS. & MONTGOMERY New York, February 18, 1971 National Lead Company ten year review of operations m thousands of dollars, except per share figures Net sales 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 $915,877 $929,785 $858,195 $818,905 $865,687 $837,215 $735,189 $664,606 $615,269 $599,357 Income before taxes Net income Per common share Dividends paid on common shares Per common share Current assets Current liabilities Working capital Property, plant and equipment, net Property expenditures Depreciation Total assets Shareholders' equity 65,058 95,268 96,298 93,540 113,379 114,637 108,086 96,888 95,853 100,135 38,071 50,675 49,985 54,309* 61,634 61,252 56,763 50,116 49,546 52.157 1.60 2.12 2.08 2.27* 2.56 2.54 2.43 2,13 2.03 2.14 36,261 40,272 39,062 38,786 38,295 38,378 38,036 38,049 38,034 38.017 1.525 1.70 1.625 1.625 1.625 1.625 1.625 1.625 1.625 1.525 368,253 348,333 312,077 331,851 310,311 296,548 300,974 276,069 270.275 263,656 126,514 161,457 108,444 102,187 97,721 97,599 99,600 91,461 80,280 30.918 241,739 186,876 203,633 229,664 212,590 198,949 201,374 184,608 189.995 182,738 303,801 273,169 252,883 226,060 214,725 196,134 174,961 170,263 171.696 171,595 58,635 39,830 45,010 32,860 32,440 41,096 20,447 14,558 15,712 18,241 25,319 22,651 18,187 20,120 18,302 17,249 16,286 15,523 15,159 14.349 752,649 695,260 593,591 588,803 570,754 520,861 497,296 467,264 460,973 452.710 408,915 403,975 404,764 399,640 388,586 356,956 339,744 320,873 360.737 354,576 All per share figures reflect the 2 tor l stock split which took place in 1969. *includes extraordinary income of $3.049,000 (after income taxes of $1,083,000) or $.13 per share. 0000-N,L,l-000018yiJ 24