Document 4O9xK65oy6O8QakekgdmyDxG

/it jt (mi- tor? THE EAGLE-PICHER COMPANY AND SUBSIDIARIES To THK SlIARHlHU.nKHS UV THE EAGLE-PICHER COMPANY: ' . .' . wtlFhc'flimaal.-rcport of your .Company for the fiscal year ended, November 30, 1949, together withA ! iiirancial NeatenientS as reported Yipori bv*Messrs. Barrow, Wade, Guthrie fk Company,; independent accountants, is presented herewith in ad.var.ee of the .Annual Meeting of Shareholders to be held on ;March2$, 1950.!)'! !A. (A. A iAA. A-.'. -A---. SUMMARY (A; Net sales of The Eagle-Picher Company and domestic subsidiaries for the year ended November 30, 19-19, amounted to $63,349,82.1, compared with $79,47S,724 for the year ended November 30,; 1948, a decrease of 20.3%. A A Ncr credit to'surplus; amounted to $2,747,147, equivalent to $3-09 per share, compared with .$4,067,741,;or $4.37 per share, in 1948/ The net-Credit to surplus in .1949 was. after a trans^.. Ter of $4,704,441 from tiie reserve for,future; decline in; inventory values, while in 1948 it was after an appropriation of $1,500,000 to that reserve. At November .30,1949, the net worth of your Company (i.c.- Capital and Surplus) was $24,113,250, compared, with $22,966,441 at the close of the preceding fiscal year. Net current assets decreased from $14,195,1 hi at the end of the'194S fiscal year to $12,753,933 at November 30, 1949. VOLUME OF BUSINESS . Consolidated net sales for the year ended November 30, 1949,; amounted to $63,349,821, compared with $79,478,724 for the year ended November 30, .1948, a decline of 20.3%- A portion of the decline in dollar sales was dueito lower metal prices. The 'average price of lead (New York) was 18.0436 per pound in 194S and 15-3646 per pound in 1949; the average price of zinc (East St. Louis) was 13.5896 per pound in 1948 and 12.144e per pound in 1949. The volume of business handled by the Mining and Smelting Division was more nearly normal. Tri-State mills treated 2,618,917 tons of ore and produced therefrom 104,077- tons of concentrates. Corresponding figures for 1948 were 2,091,790 tons of ore and 88,177 tons of concentrates. Slab zinc production at the Henryetta, Oklahoma, smelter amounted-to 42,39S tons. Operations at the St. Xavier mine and Sahuarita mill, near Tucson, Arizona, produced 20,419 tons of concentrates, com pared with 18,658 tons in 1948. Operations in die Illinois mines were started in April, 1949, and to November 30 had produced 7,242 tons of concentrates.. Currently, about 2,000 tons of concentrates per month arc being produced in Illinois. .. . -- Sales in dollars in the Manufacturing Divisions of:your Company showed a decline of 24.9%. The decline came at different times of the year in varying degrees for different products. For example, when the price of lead started to decline, the retailer of baetcries, fearful that he might sustain in ventory losse's, sold out of stock. * In turn, the manufacturer, wanting to reduce' his tnventory;'to a v jiiinimuhiyipurchased; :less)lead oxides than he was consuming!. Conseqnenrlyr cven'though sales! to A- the public LLkLup welf in many -lines where our products were used, the reduction!i;n(inventories!;; .caused' a considerable decrease in our sales . Unseasonable weather also had art adverse effect on sales A of some products, such as oxides used inthe manufacture of replacement batteries, and on sales of home insulation and aluminum storm windows and screens.; , .! . We believe that our customers inventories arc at a minimum for the present rate of business and that our sales in J950 should be at the approximate rare of sales to the consumer. EARNINGS credit to surplus for the fiscal year ended November 30, 1949 amounted to $2,747,147, equiva lent to $3.09 per.share, .compared with $4,067,741, or $4,57 per share, for the fiscal year ended Novem ber 30, 194S. Several items in the statement of profit and loss and earned surplus merit explanation. 7 he lartjc reduction in gross operating profit before depletion and depreciation is due, in part, to lower sales volume and, in part, to the fact that production and manufacturing costs in 1949 reflect the absorption of substantial inventory price declines. _ -'.f.f For the year ended November 30, 1949, taxable profits required a provision for Federal and State income taxes ol $l,364,OOC and losses resulted in a carry-back credit of $1,731,000. The net of these two items-- $367,000is a credit to the profit and loss and earned surplus account. Also during the year, we obtained clearance of our Federal income taxes for the years ended November 30, 1947, 1943, 1944, and 19-15. The settlement released an excess provision in the reserve of $287,900 and this amount was restored to earned surplus by a credit: through the profit and loss account. Your management has long been cognizant of the fact that in companies such as Eaglc-Picher, where raw materials are a major factor in costs and where principal commodities fluctuate widely at times, profits are abnormally high in rising markets and abnormally low in declining markets. A policy of providing a reserve for future decline in inventory values by appropriations from income was ..instituted in tlic fiscal year ended November 30,1941. This reserve, which amounted to $1,300,000 . at November 30, 1946*-was increased at November 30, 1947 to $4,600,000, an amount sufficient to margin the metal content of inventories to 6.5d per pound for lead and 5e per pound for zinc. To main tain this margin, it was necessary to increase the reserve to $6,600,000 at November 30, 194S. `flic metal content of lead and zinc in our inventories at November 30, 1946, 1947, and 1943, totaled 51,979 tons, 55,173 tons, and 42,896 tons, respectively. The latter figure was the Company's lowest inventory tonnagcwisc, with one minor exception, in the last twenty years and we entered the 1949 fiscal year in a most favorable position from a tonnage standpoint. During 1949, prices of lead and zinc fluctuated widely, as shown by the following tabulation: riSICK IN' EFFECT (IX Le a d Ne w Yo k e I'R1CE in E f f e c t o n Zin c E. St . Lo u is December 1, 1948 March 8, 194!t March 14 March 28 April ! April 6 Mav 0 May 19! May 26 July 8 . July 12 July 111 July 25 July 2G August 2 August -8 August 18 September 26 October 3 October 7 October 14 November 10 November 1G November 21 21.500 19.50 18.00 17.00 1G.00 15.00 14.00 13.00 12.00 13.00 13.50 14.00 14.25 14.50 14.75 15.00-15.125 15.125 14.75 14.25 13.75 13.00 .12.75 12.50 12.00 December 1, 1948 March 28, 1949 April 5 April 14 April 19 April 28 Mav 9 May 24 June 2 Junes June 9 June 15 July 18 July 25 September 1 September S October 3 October 27 November 1 November 9 November 14 I7.50c 16.00 15.00 14.00 13.00 12.50 12.00 11 00 10.75 10.00 9.50 9.00 9.50 10.00 10.00-10.50 10.00 9.25 9.50 9.75 9.75-10.00 9.75 From the above, it will be noted that lead was selling at 21.5p per pound at the start of our fiscal year on December !, 1948. Beginning with March 8, 1949, there were eight price reductions to and including May 26, when the price became 12^ per pound. This was a decline of 9-5c per pound or 44% in 80 days. It was the most rapid decline in the price of lead over the period of years for which statistics arc available. From a low of J.2c on May 26, it rose in eight successive seeps to 15-I2V on August IS and declined to 12p on November 21, the price in effect at the close of 1949. Fluctuations in zinc were similar to those in lead. Zihc was selling at 17.5c per pound at the start of the year. It was reduced to 16c on Match 28 and reached a low of 9c on June 15. This was a decline of 8.5e or 48% in 80. days. At the close of 1949, zinc was selling at 9.75c. Initially, rise, reserve -for future decline in inventory values was funded by investment in short term. O. S.yGiivernment obligations. When tin's fund had grown so large that investmenf in such low yield securities seemed to exact too great a penalty, the reserve was deducted from the value of ' inventories,. Both of these procedures were adopted for the purpose of cushioning the effect upon working capital and current ratios of the price declinesWhich.it vvas felt certain would ultimately have to be; sustained.. In recent years, the Securities and Exchange Commission has expressed .the opinion that this reserve should.nqt be deducted from inventories but should beshown on. the lia bility side of the balance sheet as aistirplus reserve. As an alternative. We had the option of going on the so-called base-stock method, yvhcrcuhder. predetermined base-stocks' are carried at fixed prices,; .This generally accepted accounting method, in effect, permits the application of reserves in reduction of invcntui-ies. dlcnce, as at November 30, 1949, wc elected to adopt this method. At that date, the inctal: content of lead anil zinc ii) iaVcntoricS; totaled 35,871 tons, consisting of 18,895 tons of lead and 16,976 tons of zinc.: After careful Consideration, your management fixed 15,000 tons of lead and 10,000 tons of zinc as base stocks, which should lie 'minimums under almost any circumstances. To earn' these tonnages of lead and zinc at 6.5c and 5c per pound, respectively, required a .'reserve-.-acy November 30, 1949 of. $1,S95,559, thereby releasing $4,704,441 of the previously accumulated reserve lor credit to earned .surplus through die profit and loss.account. We believe that the reserve -method of accounting has given; our .shareholders a better picture of, our operations than if \ve had riot created and used the'.reserve for future decline in inventory values. Flic following cable is interesting if one, bears in 'mind that, the prices of lead on November 30,.1946, and November 30, J949, were II.8e and 12e jx-r pound, respectively, and the prices of zinc on the same dates were 10.5c and 9.75c per pound, respectively. m Net Profit or (Loss): for fiscal year). ..j ,.;y..... Transfer from (1949) and appropriations to (1947 and 1948) the reserve for future decline in in ventory values...............................Am,3'.;. .. Net credit co surplus.'., ............................ 1947 $6,605,842 (3,000,000) $3,605,842 1948 1949 -Total. . $5,567,741 ($1,957,294)':$.10,216,289. (1,500,000) 4,704,441 204,441 $4,067,741.('$2,747,147,.;''$r6'42a73O;- From the above, it should he noted chat ihe accumulated net profit for the three years, before any adjustments to or from the reserve, totaled $10,216,289, and the net credit to surplus,, alter ad-' justments to and from the reserve, totaled; $10,420,730-. The appropriations to the.reserve in the ,two years ended November 30* 1947 and TS48,. when prices were rising, totaled $4,500,000 and the trims-; fer from this reserve in the past year of declining; prices amounted co $4,704,441. So the three-year cycle of postwar adjustment resulted in a-net charge of,$204,441 to: the reserve for future decline in inventory values. In other words, had no .reserve been created, the net credit to surplus for the three fiscal years of 1947, 1948, and 1949 would have been $204,441 less than tinder: the.reservemethod used..' A While it is true that the procedures followed have had the effect of leveling earnings, particularly. .. during the. last three years) this was not the primary purpose.; "As consistently explained in previous ' . annual reports since .the inauguration bf the inventory reserve, the real purpose was to;set aside, from,; ; Vindicated .earnings*, profits realized soIelyTroin appreciation, of inventories, which disappeared when the cycle.reversed itself and inventory'values declined. FINANCIAL POSITION . At Flpvcriiber;...3'6j'..l949,'.-the ne t Worth of your; Company vvas:$24,113,250, equivalent to S27-J2 ' per share, compared with $22,966,441, qr,$25.83 per share at November 30, 1948.  Ncr'. working capital at November 30, 1949 amounted to 512,753,933, as compared with $14,195,110 at the close of the previous fiscal year, a decrease of $1,441,177. Current ratios were 4.4:1 and 2.4:1 at the respective balance sheet dates. 1 he decrease of $1,441,177 in net current assets is explained bv the following: bands Provided. Net. Credit transferred to surplus......... .. ................................... . Add: . $2,747,147 Provision (or depletion and depreciation .................................. .. ... .. . d : Miscellaneous non-cash items, net.......... ... ........................... $1,477,895 38,589 1.516,484 4,2631b 31 handy Applied Capital additions less-retirements, etc.v; :.. ...... .... .. . . : . : Dividends paid ;'. c, .D: .ddL ... d... d. . d....... .. .dd . ded,: ;-d = Increase in investments in atid advances to y- .. d. d 2.621,787 1,600,337 .: Mexican subsidiaries.......... .. . . . . . . . . .d. ... $843,613 ._ . Associaicd company....................... ..................d;.. 203,(DO ; 1,046,613 Increase in other assets, net. . d. . .: . .; . ... ...... . "./Dd 436,071 Decrease in work in g capital during year'. .. , ..... . .... ... 5,704,808 . $1,441,177 The incrcasc.of $84.3,613 in investments in and advances to Mexican subsidiaries substantially completes the investment necessary.to place the mines at San Pedro and Parral in operation. Since operations there arc .in the preliminary stages, it is too early to. forecast intelligently the results to he ex|x-ctcd from these operations. The net additions to the property account in 1949, after adjustments, exceeded depiction and. depreciation charges hy $l,OR9,076. Since the program of-rehabilitation, modernisation, and expan sion of mining and production facilities, inaugurated several years ago, was practically completed during the past fiscal year, it now appears that capital .expenditures in 1950 will probably he less than current depletion and depreciation charges; At the close of the previous fiscal year, your Company owned a majority interest in tile AlstonLucas Company, manufacturers of paints;sold principally under .the Alston-Lucas brand name. In the early part of 1949, it was decided that a new line of interior and exterior paints, enamels, and varnishes should he produced and sold under the Eagle-Picher brand. In connection therewith, it became desirable to purchase tire minority interest in the Alston-Lucas Company. This was done, the Alston-Lucas Company was liquidated, and the assets and liabilities were transferred to the Paint and Varnish Division of The Eagle-Picher Company. DIVIDENDS The regular quarterly dividend of 45c per share, inaugurated in March, 1948, was maintained throughout the year. On January 24, 1950, your board of Directors declared a regular quarterly dividend of 30c per share, payable March 10. Even though the Company is in a strong financial position, the directors felt that a reduction in the rate of the dividend at this time was prudent and to the best interests of all stockholders. During 1947, 1948, and 1949, dividends declared amounted to $4,534,287.60 or about 45% of earnings for those years. On the other hand, due to acquisitions and the expansion and .modernization program,. net current assets actually decreased during this period. It was felt,; therefore, that dividends should be kept on a conservative basis and,; if possible, working capital should be increased. With the capital expenditure program practically completed and with no ad ditional acquisitions contemplated in the near future, should earnings exceed expectations and should working capital improve faster than anticipated, the Directors undoubtedly will give consideration to increasing the amount paid out in dividends. 'TTdTa.L T-;.V' There seems to be a rather general opinion than the volume of business activity in 1950, while probably somewhat lower than that in 1949, will be high and that many of those industries which have undergone sizeable readjustments in 1949 will do better in 1950. ; .The principal favorable factors in the'business outlook.for 1950 are: (1) building activity should , be at a high level; (2) farm income,-although somewhat lower than 1949, will remain large; and (3) ! governmen t spend ing will:continue at, a high rate. . \. Many industries have passed through a period of wholesome postwar adjustment without im pairment of confidence. .'-.Consumer' incpmcTs .high . liquid assets in the hands of the public arc very- , large, and ready purchasing power will be increased further by the distribution of 2.S biilion dollars in insurance dividends'tb/vetcrans; W.-TV;---rv;- '..' ' /.- ; On the ptheP hand, our shareholders,- pur custofncrs, and our employees undoubtedly ate more interested i-n/the.long-term outlook rather than in chc immediate future, On the long-renu/favorablc side, we believe- that the most important influence/will be the tre- mendous increase in population which has taken place in the past decade. It has been estimated that the 1950 census will show the population of the United States to be in excess of 151 million, or 19 million more than in 1940. This is the largest increase in population in any ten-year period in the His tory of the country, and there is no present indication that die rate of growth is slowing down ma terially. The tremendous economic .significance of this increase in population cannot be discounted. On the unfavorable side from the long-term viewpoint, the most important single facr.o", with the possible exception of the international situation, is the unsound fiscal policy of pur Federal govern ment. It seems inconceivable that-the Federal government must run ac a deficit in excess of 5 billion dollars in a year of high income and high taxes. If we must continually increase debts against the future, if we must continue to have waste and cxtravagat; a in government, then there can be but one answer-- the purchasing power of the dollar will decline, our standard of living will be lowered, and democracy will have failed. We believe that, the great majority of our shareholders favor a bal anced budget. There arc two possible wavs that this can be accomplished: (1) by increasing revenue through higher or additional taxes or (2) by eliminating useless and unnecessary expenses. It would be most constructive from an economic standpoint if the latter possibility were given serious considera tion by more of our representatives'-in Congress. It seems evident that what this country needs is a period'of stability in which there is a slow but steady rise in the purchasing power of the dollar, based upon a steady increase in the efficiency of labor and a steady decline in the cost of government. One thing is certain -- competition in the next decade will be keener than in any other period in our history. In an attempt to be prepared for this competition, we have improved our mining and manufacturing facilities, we have continued to diversify our business, we have instituted cost reduc tion programs in all of our divisions, and we have emphasized the necessity of a capable, efficient, hard-hitting organization. As a result of this preparation, we believe that your Company is in a position to continue its progress in the era that lies ahead. Your managementwishes to take this opportunity to express its appreciation of the help, coopera tion, and assistance which it has received from the Board.of Directors and members of the organiza tion without which the results accomplished would not have been possible. ' y order of the Board of Directors. CINCINNATI, OHIO FEBRUARY 23, 1950 ;T;/v; W i 'V >";vv if-?'--,.;. / p,: CTi/p-aiW /;vv;T//.'/ M.Jo e l Bo w l b y Chairman T. Sp e n c e r Sh o r e President TH E EAGLE-P(CHER COM PAN YjffjtSr/'</ ~$fff<rjfcf' Y//tcrf ASSETS CURRENT ASSETS: NOVEMBER 30, 1949 NOVEMBER 30. 1948 . Cash in hanks ;uul on hand........ .. .v. /fvv.clkd $ 3,157,534.34 $ 5,527,541.40 . LI. S. Government;oblimitions---- at cost -(market. value k ; ' >t'Nitvcmbcr 30, 19-19- -$626,438.81)............................... 625,000.00 625,007.30 y Accounts and norcs receivable'. ................................................. $ 3,168,837.30 $ S,175,227.5S . / <*.u. Reserve for doubtful accounts and noses .. . :. . c. . .v 373,452.38 4,795,384.92 392,581.87- 7,782,645.71 Inventories: of raw materials,1 work in process., finished: V products and supplies: . k 6; ()res, metals and mctal-bcariiu; products - - Note 1 ,. .5,006,050.64 12,536,203,94 Las:' Reserve ior future decline in values.. . .. ... .. . 6,600,000.00 OLh.er products, merchandise for resale, and mam:- 5,936,263,94 f.u uiriny .materia Is and supplies - - at cost! . . . . . . 2,920,257-93 7,926,308.57 4,0-15,520.81 9,981,784.75 OTHER ASSETS: '-"^Repair parts and maintenance supplies:.,.i..kd. . ... . Investmctit in ai-K! advances to associated, company, and 1,032,561.54 . sundry securities . at or below cost M iscellaneous accounts and advances.. :.. . . k. . . 270,872.43 k) 108,757-47 16,504,227.83 . 1,412,191.44 1,046.997.76 67,959.43 : 139,310.17 23,916,979.16 1,254,267.36 INVESTMENT IN AND ADVANCES TO FOREIGN SUBSIDI ARIES NOT CONSOLIDATED- NOTE 2: , Mexican subsidiaries................................ .......................... Canadian subsidiaries;. ... . .. , . . ...... :.. . . .. . .. . 2,934,669.77 ; k: 748,472.78 k 2,091,057.27 3,683,142.55 770,904.98 2.861,962.25 |F 1 X E D AND INTANGIBLE ASSETS: : tVIininit lands anil leases; mills,, snickers and fabricariny plants; and railroad and miscellaneous properties . 41,919,810.58 Las: Reserves for depletion, depreciation, etc.. ... ........... ,29,586,707.94 40,160,810.20 ;28,91<5,7S3.38 Cost of stocks of consolidated subsidiaries in excess of -: book value, at elates: of acquisition, of iict assets acqmreo ......................................................... .. ................... . .. . Patents, goodwill, etc... .. . . . . .. . ... . .. . ... . . ..;kk : .12,333,102.64 11,244,026.S2 1,409,833.07 1.00 13,742,936.71 . 1,375,505-50 1.00 12,619,533.32 TREASURY STOCK --10.924 sliares at cost ... ... .... .... . . PREPAID AND DEFERRED CHARGES: .Prepaid freight, insurance, etc.. . . ..... . :, . , .. . . .-c: Miscellaneous deferred charges .....: . . .. . .. . : . ; V 61,797.56) 61,797-56 213.824.50 39-1,768.24 608,592.74 $36,0.12,888.S3 180,737.05 203,221.39 383.95S.44 $41,093,498.09 No j li 1. r~ As >af November 30,;. ]948, the inventories oforcSj' metals'and nictiil-btfaring5'products v^rued nf the j lower of cost or market value of inetal content plus manufacturing costs on materials in process and finished products. - Tlie. reserveior future decline in inventory valuesi amountingto,$6,600,OCX) at that date, was deducted therefrom* As of November' 30,: 1949, 'the hase-srockmethod :of inventory valuation was'applicd to base quantities of 15,01X1 tons of.lead and .10,000 tons of zinc at fixed prices based on 6,5 cenrs per pound."for: lead (Mew York) and 5 cents per . pound mr zinc (East. Sc;. Louis). . The remainder of the inventory metal content was priced, as heretofore, at the lower of average cost or marker. To effect this change, $1,893*559 was required to reduce the values of the base-stock in ventories, to their fixed . Values and the reserve for future /decline in inventory values,. ainounring to $6,600,000, was eliiuinatcd. The net credii: to earned surphis from these adjustments \vas > / *v On the basis of. valuing metal content' at irhe lower of average cost or market plus manufacturing costs on materials in process and finished products, the aggregate value of ores, metals and metal-nearing products was $6,903,609.64 as of November 30, 1949, comparable to $12,536,263.94 as of November 30, 194S.. ':A N D D OWES TICS U B SI DlA R I E $ <r/ ..Acr-mtSO, 0009 a >u0- 1998 LIABILITIES CURRENT LIABILITIES: Accounts payable. ..................... ........................ ............... Dividend payable,... ., ... ................. ............. .. ,Y,!. NOVEMBER 30. 1949 S 1,922,349.53 400,084:20 Accrued liabilities: :.Y / Wages and salaries..................................................................... :":$'o S340v872.O4'v : .Taxes otlie'f than taxes on ihctunc.:. ,, .AAA y,'-UY 202,038.77 S Otlier.......................................................................... . . ..... Provision lor Federal and State taxes on income less refund claims /.....-. . . ............... ... . ....... ' 244,630.78 7S7.541.59 640,319. (X) NOVEMBER 30. 1948 S 4,143,369.51 400,084.20 551,963.47 258,692.37 340.19S.57 1,150,354.41 4,022,561.76 PURCHASE MONEY OBLIGATION: Payable serially to March 1, 1952. . ... ... .....-............. .. l.tis: ('ontingent obligation,: {xivablc frotn cdrnitigs <if aatuired subsidiary, if anti to the extent earned, not in excess: of. . .. .................... ............. .. ................ .. . .; ; .. ,. . Fixed obligation . . . . ... ............... ...... . .. .... ... .. ... . Less: -Payments, due currently ^included in accounts payable' . .. . .. . ........................ ..,................................ 3,750,294.32 663.994.56 441,361.25 222,633-31 / SS, 272:2 5 : 134.361.06 937.3S4.71 9,721,869.83 441.361,25 496,023.46 273.390.15 222.633-31 THREE PER C E N T N 0 T E S-- P AYA B L E S ERIA ILLY SEPTEM BER 1, 1953 TO SEPTEMBER 1, 19G7 . . ................. ......... 7,500,000.00 7,500,000.00 RESERVES FOR SELF INSURANCE: Vi, orkmen's compensation................................................. .... Fire and tornado........... .. .............. . . . . . ......... . 386,508.80 128,473.70 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 514.9S2.50 375,466.41 121,415.00 496.SS1.41 190,672.43 COMMON STOCK -- par value .?J0: / Authorized.. ...........1,000,000 shares'. Y.T Issued and outstanding.V .. . . . 900,000 shares. .. .. 9,000,000.00 9,000,000.00 SURPLUS: Capital surplus................................................................................. T/'Earn.ed-surpltis/^'per.:iccoinp:tnyuig statement -- Note 3 1,900,999.32 1,900,999 32 13,212,251.63 15,113,250.95 12,365,441.74 13,966,441.06 $36,012,888.S3 $41,09S,49S.09 No t e 2 -- The equity of The Bagle-i'icher Company and domestic isubsidiaries 'in'foreign subsidiaries not consoli dated has increased $72,640.87 since dates of aCtjCiisicion, as a result of profits, losses and dividend distributions. During the year: ended November 30, 19*19 such equitydecreased ^574,679-J 2 as a result of'net losses of the foreign subsidiaries. No t h 3 ~ The 3% notes contain a covenant which, so long as any of th,* notes remain bittstandirig.'restricts the amount which may be declared as'diviclends (other than those payable in stock of the Company) or applied in the purchase, redemption or retirement of/the Company's capital stock.; At November 30, 1949 the amount available for such purposes was $3,266,370.26:- - v.c-. :,,v ` P~\V A,-.-. ---------------------- --------- ------ -------- -------'-------h -w *r.-------------------------------------------------------------------------------------------- ----------- THE' EAGLE-:PIGHER/: COWP^RYT^ATID^ DOMESTIC SUBSIDIARIES (fjot/Jr:/fr/((/f'f/. J/ff/cjjtt'ti/j sj <1/ /VyV/ Yfjtf/ ffjff/ (WfJ'MCf/ .JffJ'/t/ffj FOR THE YEARS END'ED NOVEMBER 3 0, 1949 AND 194 8 NET SALES......... ....... ............. ; . . .. .. . PRODU CTION AN D MANUFA CTURIN G COS T S. . . GROSS OPERATING PROFIT- before' depletion and depreciation.......................................................... EXPENSES: Selling. ... ........................... ...:. <...... ............... .......... Trallic, -warehousing and shipping .... General and administrative . .............. . ................ . NET OPERATING INCOME OR (LOSS) - before depletion and depreciation: Mining and manufacturing ................. . Northeast Oklahoma Railroad Company . ... : OTHER INCOME. ...... INTEREST PAID: On long term debt ...................... ...............:...... Other.-.................................................................... ........ DEPLETION, DEPRECIATION, ETC.: Provision for depletion and depreciation ........... Exploration and prospecting expenses and Joss or gain on disposition of capital assets.......... NET PROFIT OR (L0 S S) -- before Federal and State Income taxes ............................... . . FEDERAL AND STATE INCOME TAXES: Provision for vear . .. ... ........ ............. Net taxes recoverable from carry-back of net operating losses....:.v................... Excess provision for prior years' taxes........... MINORITY INTEREST IN NET LOSS OF CONSOL IDATED SUBSIDIARY . . ..................................... . . NET PROFIT OR (LOSS) F 0 R Y EAR. ......... CREDIT arising from transfer of reserve for future decline in inventory values, less adjustment to reduce base-stock inventories to their fixed values (1949-Note 1); and appropriation to reserve (1948) ............ .................................................. NET CREDIT TO EARNED SURPLUS....................... EARNED SURPLUS AT BEGINNING OF YEAR... DIVIDENDS PAID AND ACCRUED............................. EARNED SURPLUS AT END OF YEAR.................... NOVEMBER 30. 1949 .$63,349,821.9(i 59,790,534.33 NOVEMBER 30, 1948 $79,478,724-59 . 64,746,592)48 . 3,559,267,63 1 14,732,132ill $2,311,324.41 377,383.79 1.933,329.0$ 4,842,237:28 $2,062,949.02 717,523.50 2,179,660.52 : 4,960,133-04 (1,282,969.65) .462,483.63 (, 826,484.02) ; 9,771,999.07 385,843.54 To,157,842.61 94,404.11 ( 726,079.91) 204,275.52 10,762,118.13 225,000.00 55.9SS.30" 280,988.30 (1,007,OSS.21) 225,000.00 11,936.94 236,936.94 10,125,181.19 1,477,S95.03 1,027,694.53 127,231.24 1,605,126.27 . 238,069.92 1,265,764.45 (2,612,194.48) , 8,859,416.74 367,000.00 287,900.17 654,900.17 (1,957,294.31) . (1,957,294.31) 3,360,000.00 5,499,416.74 68,324.85 5,567,741.59 4.704,441.00 2,747,146.69 12,065,441.74 14,812,5S8.43 1,600.336.80 $13,212,251.63 (1,500,000 00) 4,067,741.59 9,59S,036.95 13,665,778.54 1,600,336.80 $12,065,441.74 .