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Saint Joseph Lead Company Annual Report -- 1941 America's Corporate Foundation; 1941; ProQuest Historical Annual Reports Pg- 0J Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY Incorporated March 25, 1864, under the Laws of the State of New York Executive Offices, 250 Park Avenue, New York BOARD OF TRUSTEES Clinton H. Crane, Chairman Frederic E. Camp, East Blue Hill, Me. Daniel K. Catlin, St. Louis, Missouri C. Merrill Chapin, Jr., Vice-President Hendon Chubb, of Chubb & Son Irwin H, Cornell, Vice-Pres., and Sales Manager Firm in V. Desloge, St. Louis, Missouri Stanly A. Easton, Pres., Bunker Hill & Sullivan Mining & Concentrating Co. Andrew Fletcher, Vice-Pres., and Treasurer James H. Grover, 8 Pres., St. Louis Union Trust Co. J. Howard Holmes, St Louis, Missouri Edward V. Peters, Vice-President Fred W. Shibley, New York, N. Y. EXECUTIVE OFFICERS Clinton H. Crane, President Irwin H. Cornell, Vice-Pres., and Sales Manager Andrew Fletcher, Vice-Pres., and Treasurer C. Merrill Chapin, Jr., Vice-President Edward V. Peters, Vice-President George I. Brigden, Secretary and Comptroller Robert Bennett, Asst. Secretary and Asst. Treasurer Charles Fleig, Assistant Secretary James G. Colvin, Assistant Comptroller STOCK TRANSFER OFFICE 250 Park Avenue, New York REGISTRAR i: City Bank Farmers Trust Company, New York Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The attack of Japan upon our Nation; followed by the declaration of war by Germany and Italy, has marked 1941 as a year of transition from peace time operations to the necessities of war time production. Your Company has given our Government full cooperation and assistance--it will con tinue to do so. The stockholders should appreciate that their mines are now being worked beyond their economic capacity and that investments are being made in plant and equipment which may be of little future value. But whatever may be our individual views on the economic considerations, there can be no doubt that our immediate responsibility is to obtain maximum production of lead and of zinc, both vitally needed for a successful conclusion of the war. Consolidated Earnings The consolidated net income for the year ended December 31, 1941 after all charges amounted to $4,893,455.18 as compared with $5,111,941.70 for the previous year. The Federal income and excessprofits taxes increased from $1,305,670.04 in 1940 to $2,740,699.45 in 1941. The comparative consolidated earnings for the ten years ended December 31, 1941 are shown below: Year Income after Interest but before Other Deductions Net Income ------------Provision for--:-------- before Depreciation Fed. Inc. Taxes Depletion, Etc. Provision*1' for Depletion, Etc. 1932 1933 1934 1935 1936 1937 . 1938 1939 . 1940 . 1941 . .. .... .. . .. ... ... . *$287,881.11 1,316,485.60 1,936,908.95 2,005,781.59 4,473,237.08 10,035,885.12 2,873,815.43 7,586,972.10 8.287,597.10 9,070,705.65 $1,011,845.62 1,022,922.73 1,121,960166 1,072,013.14 1,063,605.02 1,055,575.37 1,059,034.49 1,058,924.04 1,064,639.12 994,436.94 $78,862.23 35,502.59 307,944.03 1,329,491.03 173,922.80 672,485.97 1,305,670.04 2,740,699.45 *$1,299J26,73 293,562.87 736,086.06 898,265.86 3,101,688.03 7,650,818.72 1,640,858.14 5,855,562.09 5,917,287.94 5,335,569.26 $1,606,310.78 1,461,310.72 1,548,604.47 412,043.61 590,686.46 522,873.57 309,601.68 562,654.53 805,346.24 442,114.08 * Loss. ; ** Includes abandoned leases for the years 1933 to 1937 inclusive and provision for obsolescence of the Doe Run Mill for the years 1935 to 1937 inclusive. On page 8 are given the comparative figures of prices, production, sales and stocks. Dividends A dividend of fifty cents per share was paid on the tenth day of March, June, September and December, making a total of two dollars per share for the year. These dividend distributions, aggre gating $3,911,360.00 were paid entirely out of the surplus earnings of the Company accumulated after February 28, 1913 and are, therefore, subject to Federal income taxes. The following is a record of dividends for the years 1932 through 1941: Year 1932 .............. .. 1933 .. 1934 . . 1935 . . .. . 1936 , . .. Amount $292,569.75 586,701.30 782,269.30 1,955,676.90 Per Share $.15 .30 .40 1.00 Year 1937 1938 1939 1940 1941 . .. . .. . .. Amount $4,889,198.50 1,955,680.00 3,911,360.00 4,400,280.00 , 3,911,360.00 Per Share $2.50 1.00 2.00 2 25 2.00 1 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Financial Information The consolidated balance sheets as of December 31,1941 and December 31,1940 of St. Joseph Lead Company and Subsidiaries, and the related Summaries ,of Consolidated Net Income and Surplus for the years ended December 31, 1941 and December 31, 1940 are submitted herewith as a part of this report. All subsidiaries of the St. Joseph Lead Company are included in these statements, with the exception of Aguilar Corporation and its foreign subsidiary, whose statements are shown separately. No future commitments have been made for the purchase and sale of commodities which would have a material effect on the financial position of the Company. The Company owns $3,(XX),000.00 U. S. Treasury Tax Anticipation. Notes and $125,000.00 par value of Federal, State and Municipal securities. The latter are not available for sale, being on deposit with New York, Pennsylvania and Missouri Industrial Compensation Commissions and the United States Department of the Interior. Capital expenditures by the St. Joseph Lead Company and consolidated subsidiaries amounted to $672,761.68 in 1941 in comparison with $1,024,578.24 in i94Q, $274,632.31 in 1939, and $442,787.44 in 1938. During 1941, the Company liquidated the balance of its liability to the Metropolitan Life In surance Company for annuities under the Retirement Plan for Salaried Employees covering service prior to December 1, 1940. This balance amounted to $778,141.69. In accordance with the Company's policy, pensions and retirement expenditures are included in operating expenses. Cash funds accumulated through realization of depleting assets were paid by Compania Minera Aguilar, S. A. to its Parent Company, Aguilar Corporation, which applied such funds, to the extent of $849,785.03, pro-rata at a premium, to retire a portion of its outstanding capital stock. From this source, St. Joseph Lead Company received $684,152.79. The Company increased its ownership in Aguilar Corporation from 89% to 90% by purchasing additional shares of preferred and common stock from another stockholder for $46,100.33. In the audit of the books by Messrs. Haskins & Sells, verification of inventories was again made by physical tests of the quantities shown by the records as being on hand. In order to simplify accounting, this firm also handled the 1941 audit of the Argentine operations. The Accountants' Certificate addressed to the stockholders is given on page 12 of this report. United States Operating Information Although at the beginning of the year, it was felt that the lead production outside the United States would be sufficient to insure against any shortage, the war so greatly increased the demand that, upon request of our Government, the Southeast Missouri properties were placed in October on a six day week instead of five days. In order to maintain this schedule and to be prepared, if neces sary, to operate the mills seven days per week, priorities have been received and orders placed for approximately $1,500,000.00 for the equipment and material needed for increased development work. The production from the two zinc mining properties located in Northern New York, which were already operating in 1940 on a six day week schedule, was increased during 1941 by approximately and steps are being taken to obtain somewhat greater output. Your Company has taken constructive steps to increase its zinc smelting facilities which are vitally needed due to the German seizure of a large portion of the world zinc smelting capacities. At the electro-thermic smelter and sulphuric acid plant located at Josephtown, Pennsylvania, ex penditures for plant and equipment have totalled $1,142,288.60 during the past two years. These ex penditures have enabled the smelter to produce approximately 66% more zinc metal equivalent per month, the present capacity being 5,000 tons against 3,000 tons per month in 1939. Provided priorities are obtained, the production should be somewhat further expanded. Arrangements have been made to place the Block "P" zinc and lead mine, located at Hughesville, Montana, in production during the first quarter of 1942. This property was closed down in 1932 be cause of low metal prices. The expenditures during 1941 for rehabilitation amounting to $155,805.72 have not been capitalized but were charged to deferred operating expense. 2 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. In the Joplin area, it was necessary to shut down the Jarrett mine of Kansas Explorations, Inc. due to exhaustion of its ore reserves. The Ritz mine, located in Oklahoma, was operated at full pro duction during the year; two adjoining 40 acre tracts have been leased, which should tend to lengthen the operation of this relatively short lived mine. The new Snapp property was placed in production in July with satisfactory results and an encouraging future ore reserve outlook. The 1941 development work in the lower levels of the Sheep Ranch mine, a small gold property in California, was most disappointing. It is probable that, due to lack of ore, this mine will be closed down in 1942. The Exploration Department diamond drilled an area in Maine and one in Vermont, examined a prospect in California and a mine in Oregon, and also studied the possibilities of a number of prop erties that were offered during the year. The results were not encouraging and no properties were accepted. It is believed that the premium price of 9.25 cents per pound for over-quota lead produc tion and 11.00 cents per pound for zinc, which have been guaranteed for the next two and one-half years by the Government, will greatly increase the number of properties that will be brought to the Company's attention, South American Operating Information The Aguilar mine, located in the Province of Jujuy, Argentina, was operated at the rate of approximately 900 metric tons of ore per day. The comparative production, sales and inventory tonnages are as follows: Year Lead Concentrates-------------- , (in metric tons) : ' ' t ' . ' SrAto__c_ik__s___ait Production Sales End of Year ,---- --------- Zinc Concentrates (in metric tons) cStocks at Production Sales End of Year 1936 1937 1938 1939 1940 1941 .. 10,467 19,709 29,836 , 36,728 36,866 27,867 9,409 19,782 28,816 33.307 *35,778 31,193 ;, 1,058 985 1,873 5,294 6,382 3,056 7,548 12,116 29,478 42,250 65,032 65,939 5,276 6,250 4,467 26,179 f36,182 116,021 2,272 8,138 33,149 49,220 78,150 28,068 * Does not include 5,000 metric tons of lead concentrates sold for future delivery. t Does not include 5,038 metric tons of zinc concentrates sold for future delivery. The 1941 capital expenditures amounted to 644,696.34 pesos which is equivalent to $151,354.28 at the rate of exchange prevailing during the months of such expenditures. Although The Metals Reserve Company, a company owned by the United States Government, has requested that consideration should be given to increasing the Aguilar output of lead and zinc concentrates, until additional railroad facilities have been made available by the Argentine authori ties, efforts will be confined to the improvement of operating efficiencies, as even the present output has not been moved by the railroad. The Consolidated Balance Sheets of Aguilar Corporation and Subsidiary at December 31, 1941 and December 31, 1940, together with Summaries of Consolidated Net Income and Deficit for the years ended on those dates are submitted as a part of this report and will be found on pages 9 to 11. The comparative consolidated earnings since the property was placed in operation are as follows: Year 1936 1937 1938 1939 1940 1941 . . .................. ............... . . * Loss. Income after Interest but before Other Deductions $ 192.78 998,294.21 807,923.50 930,981.17 867,790.12 938,733.60 Provision. for : *" . Depreciation $115,340.41 130,214.52 149,105.03 175,793.81 193,667.52 207,305.29 Net Income before Depletion *$115,147.63 868,079.69 658,818.47 755,187.36 674,122.60 731,428.31 ,----------Provision for Depletion -- On Cost On Appreciation $ 35,143.18 $ 322,584.30 63,407.60 73,447.08 100,082.61 579,914.66 671,733.70 915,337.33 121,188.16 127,786.09 1,108,320.38 1,168,708.13 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Stockholders The number of stockholders of record on December 31st of each year since 1931 and a classifica tion of their holdings are as follows: Year 1932 , . . .... 1933 ............... .. 1934............ . . 1935............ . 1936 . . . .... 1937 .. .. . 1938 . . ,.. .. 1939 . . . . .. 1940.. . .. 1941 . Number 5,360 5,145 5,300 5,304 5,560 5,992 6,463 6,586 6,697 6,858 19 or Less 1,584 1,511 1,549 1,491 1,483 1,571 1,719 1,695 - ' 1,772 1,751 20-99 1,796 1,684 1,712 1,748 1,851 2,038 2,213 2,260 2,263 2,393 100-199 875 835 873 911 1,000 1,139 1,227 1,337 1,371 1,417 200-Over 1,105 1,115 1,166 1,154 1,226 1,244 1,304 1,294 1,291 1,297 General The Stockholders are again reminded that the net value of the capital assets set forth on the accompanying Consolidated Balance Sheets are depleted and depreciated figures based on appraised values as of and after March 1, 1913 or on cost as stated. They do not indicate the present day values or prospective future values of the Company's property, plant and equipment, as such values could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rate of production, cost of labor and other factors. Although the appraised value of areas owned on March 1, 1913 have been entirely written off the Company's books by depletion de ductions, ore is still being mined from these areas at a profit, and probably will be for years to come. Due to the additional ore which has been developed through prospecting, or made available by reason of the improvement in mining practices, the basis of determining depletion was changed as of January 1, 1935, by dividing the undepleted book value by the estimated tonnage of ore in the mines and applying the unit value thus determined to the tonnage sold. This change results in a consider ably lower provision for depletion than in years prior to that date. Clinton H. Crane, President. New York, February 18, 1942. f 4 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Summaries of Consolidated Net Income For the Years Ended December 31, 1941 and 1940 Net Sales ................................................................................ Cost of Sales (exclusive of depreciation and depletion) , . . .. ............... Year ended December 31, 1941 1940 $42,647,811.11 $38,507,829.10 32,859,532.94 29,153,371.25 Gross Profit from Operations before Depreciation and Depletion................... Deduct: Selling, general and administrative expenses Capital stock and miscellaneous taxes . . , $ 789,802.95 108,028.04 $ 9,788,278.17 897,830.99 $ 748,953.94 73,815.05 $ 9,354,457.85 822,768.99 Net Profit from Operations before Depreciation and Depletion ................ Other Income (*Deductions): Profit on sale of real estate, etc . ....................... $ 142,358.06 Interest, dividends, etc................................................ . 91,825.88 Loss on sale of stocks ......................................................... -- $ 8,890,447.18 234,183.94 $ 86,952.91 18,190.45 *294,836.57 $ 8,531,688.86 *189,693.21 Income before Depreciation, Depletion, and Income and Excess Profits Taxes .................................................................................................................... $ 9,124,631.12 Provision for Depreciation ...................................................................................... 994,436.94 $ 8,341,995.65 1,064,639.12 Income before Depletion and Income and Excess Profits Taxes. $ 8,130,194.18 $ 7,277,356.53 Provision for Depletion and Income and Excess Profits Taxes: Depletion .. Federal normal income taxes, etc. (including in 1941, $87,833,55 applicable to prior years) . . Federal excess profits taxes (including in 1941, $158,395.65 applicable to prior years) ... State income taxes......................................................... . $ 442,114.08 1,500,890.04 1,239,809.41 53,925.47 $ 805,346.24 1,050,924.66 3,236,739.00 254,745.38 54,398.55 2,165,414.83 Net Income for the Year. $ 4,893,455.18 $ 5,111,941.70 Summaries of Consolidated Surplus For the Years Ended December 31, 1941 and 1940 Surplus at Beginning of the Year (including surplus from revaluation of ore reserves--1941, $94,774.86; 1940, $313,327.67) .. . ............. Year ended December 31, 1941 1940 $10,606,133.99 $ 9,894,472.29 Additions: Net income for the year...................................................... .. .......................... 4,893,455.18 5,111,941.70 Total ..................................... ..... .. .................. .............. .......... $15,499,589.17 Deductions: Cash dividends paid during the year .... .. . . . c. .......... 3,911,360.00 $15,006,413.99 4,400,280.00 Surplus at End of the Year (including surplus from revaluation of ore reserves--1941, $78,171.80; 1940, $94,774.86)............................................... $11,588,229.17 $10,606,133.99 Notes: (1) All subsidiaries of the parent company, with the exception of Aguilar Corporation and its foreign subsidiary, are included in the above summaries. The equity of St. Joseph Lead Company in the net income of Aguilar Corporation and its foreign subsidiary, not included in the above summaries, before pro vision for depletion of ore reserve values in excess of cost, was $543,453.76 for the year 1941 and $489,893,72 for the year 1940; after provision for depletion of ore reserve values in excess of cost, St. Joseph Lead Company's portion of the net losses of said subsidiaries was $515,846.98 for the year 1941 and $304,097.34 for the year 1940. Gross profit, before depreciation and depletion, of the foreign subsidiary on its sales to St. Joseph Lead Company of products which remained in the inventories of the latter at December 31, 1941" and 1940 amounted to approximately $169,000.00 and $293,000.00, respectively. (2) For a statement relating to payments by the Company under the Pension and Retirement Plans, see comments in the text of this report on page 2. s Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1941 and 1940 ASSETS Capital Assets (Note 1): Ore reserves and mineral rights: Appraised value as of March 1, 1913 Less reserve for depletion ...................... December 31, 1941 $13,500,000.00 13,500,000.00 ------- December 31, 1940 $13,500,000.00 13,500,000.00 Additions subsequent to March 1, 1913 (at cost) Less reserve for depletion ... .. . Appreciation arising from revaluation subsequent to March 1, 1913 ........................... Less reserve for depletion , .. . $21,352,876.44 16,358,106.33 $ 4,315,000.00 4,236,828.20 $ 4,994,770.11 78,171,80 $21,242,952.67 15,932,595.31 $ 5,310,357.36 $ 4,315,000.00 4,220,225.14 94,774.86 Total ore reserves and mineral rights, net $ 5,072,941.91 $ 5,405,132.22 Shafts and underground equipment (at cost) $ 5,265,561.18 $ 5,233,264.01 Less reserve for depreciation .... . . ; 4,347,419.14 918,142.04 4,198,852.66 1,034,411.35 Land, buildings, plant and equipment (at cost) .... Less reserve for depreciation.................................... $18,696,387.00 12,951,876.09 $18,534,033.08 5,744,510.91 12,407,000.29 6,127,032.79 Railway construction--Cost being refunded .. . 11,780.00 26,435.00 Total capital assets, net . . .. $11,747,374.86 Investments and Advances: Aguilar Corporation (1941, 90% owned; 1940, 89% _ owned)--(Note 2) ... ......................... Mine La Motte Corporation (at cost--50% owned) Sundry securities, loans, etc. (at cost, less reserve, $200,000.00) ... ... ... $ 137,759.72 672,450.00 299,127.27 1,109,336.99 Current and Working Assets: Cash on hand and in banks .. .................... $12,751,361 05 Federal tax anticipation notes ............... .............. ................ 3,000,000.00 Notes and accounts receivable--trade (less reserve-- 1941, $18,933.02; 1940, $19,880.26)............. ...................... 3,623,105,43 Other notes and accounts receivable ,. 79,566.96 Inventories (valuation not in excess of market): Finished lead, zinc, etc. (at cost, exclusive of de preciation and depletion) ... 756,621,44 Lead, zinc, etc., in process _ (at cost, exclusive of depreciation and depletion) Purchased lead and zinc (at cost) .................... .. . 647,775.00 1,284,917.62 Materials and supplies (at cost, less reserve for slow-moving items--1941, $112,919.15; 1940, $111,496.16) . ............................... 2,644,242.20 24,787,589.70 Miscellaneous Assets: Federal, State and Municipal securities on deposit with Federal and State departments (at amortized cost; market quotation value--1941, $139,941.88; 1940, $142,690.00) . . .... Cash in closed banks . . , ,. $ 121,061.19 17,875.42 138,936.61 Deferred Charges: Deferred operating costs Prepaid insurance, taxes, etc. ... . $ 169,094.48 . .. 190,811.67 359,906.15 $12,593,011.36 $ 775,812.18 730,484.63 279,644.27 $12,400,614 17 1,785,941.08 2,584,797.75 58,046.33 798,140.05 910,123.03 1,291,818.15 2,080,203.72 20,123,743.20 $ 120,815.89 18,508.75 $ 7,579.39 142,267.68 139,324.64 149,847.07 Total . . .... .. $38,143,144.31 $34,791,867.35 Notes: (1) The net value of the capital assets shown in the above consolidated balance sheets should be con sidered in the light of the comments included in the text of this report on page 4. (2) All subsidiaries of the parent company, with the( exception of Aguilar Corporation and its foreign subsidiary, are included in the above consolidated balance sheets. The decrease in the amount at which the investment in Aguilar Corporation is stated, from $775,812.18 at December 31, 1940 to $137,759.72 at December 31, 1941, is explained in the text of this report on page 2. The equity of St. Joseph Lead Company in the net income of Aguilar Corporation and its foreign subsidiary, since acquisition, not in cluded in the above consolidated balance sheets, before provision for depletion of ore reserve values in excess of cost, was $2,708,316.38 at December 31, 1941 and $2,083,580.14 at December 31, 1940; after provision for depletion of ore reserve values in excess of cost, St. Joseph Lead Company's portion of the net losses of said subsidiaries, since acquisition, was $1,390,201.70 at December 31, 1941 and $1,058,396.50 at December 31, 1940. Gross profit, before depreciation and depletion, of the foreign subsidiary on its 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1941 and 1940 LIABILITIES Capital Stock: Authorized, 2,500,000 shaies of $10.00 each . December 31,1941 .. $25,000,000.00 December 31,1940 $25,000,000.00 Issued, 1941, 1,996,840.35 shares; 1940, 1,996,840.25 shares .. Less in treasury, 1941, 41,160.35 shares; 1940, 41,160.25 shares .... ........................... $19,968,403.50 411,603.50 $19,968,402.50 411,602.50 Outstanding, 1,955,680 shares Scrip outstanding . , $19,556,800.00 $19,556,800.00 5.00 $19,556,805.00 6.00 $19,556,806.00 Current Liabilities: Accounts payable--trade .... . Due to subsidiary not consolidated.............. Wages payable. .................................................. Accrued taxes: Federal income and excess profits . Other ....................... ................................. . $ 2,657,077.80 440,071.51 105,563.45 $ 1,646,555.40 175,610.27 144,191.53 . 2,618,888.74 . .. 253,505.20 6,075,106.70 1,346,687.79 181,275.58 3,494,320.57 Deferred Credit: Unrealized profit from sale of houses, etc. 1,895.17 12,543.67 Reserves: For injury claims and workmen's liability insurance . $ 164,751.02 For employees' life insurance and retirement ; 446,418.70 For contingencies . . 309,938.55 $ 219,485.92 592,638.65 921,108.27 309,938.55 1,122,063.12 Surplus: Earned . .. Revaluation of ore reserves . ............................... . $11,510,057.37 . ....................... . 78,171.80 $10,511,359.13 11,588,229.17 94,774.86 10,606,133.99 Total .. $38,143,144.31 $34,791,867.35 Notes Continued: sales to St. Joseph Lead Company of products which remained in the inventories of the latter at De cember 31, 1941 and December 31, 1940 amounted to approximately $169,000.00 and $293,000.00, respec tively. Aguilar Corporation was in arrears in dividends on its $7.00 cumulative preferred stock (80% owned by St Joseph Lead Company at December 31, 1941 and 79% owned at December 31, 1940) in the amounts of $771,716.75 and $1,030,393.00 at December 31, 1941 and December 31, 1940, respectively. (3) St. Joseph Lead Company and the foreign subsidiary of Aguilar Corporation were contingently liable at December 31, 1941 to refund to customers the sales price, $1,406,935.95, of concentrates paid for by the cus tomers and stored in Argentina, in the event any future Argentine law should prevent shipment thereof, and were similarly contingently liable at December 31, 1940 in the amount of $827,779.87. (4) For a statement relating to payments by the Company under the Pension and Retirement Plans, see comments in the text of this report on page 2. 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. U. S. REFINED LEAD STOCKS, LEAD AND ZINC PRICES Comparative Annual Statistics Year Tons of IT. S. Refined Lead Stocks At End of Year 1932 . ............. 1933 . .. . .. 1934 . ... . . 1935 ... . ......... 1936 ... , ....... 1937 ............ ... . 1938 ........... ........... 1939 ............. . .. 1940.. .. . .. . 1941 . ,. ........... 176,157 203,061 235,457 222,306 171,856 129,131 115,902 58,777 40,926 20,185 Average Lead and Zinc Prices in Cents Per Lb. Lead F.O.B. St. Louis E. & M. J. Average Lead F.O.B St. Louis : St. Joe Average Zinc F.O.B. St Louis E.&M.J. Average 3.042 3.735 - 3.724 3.915 4.560 5.859 4.589 4.903 5.029 5.643 . , 3.0S5 3.652 3,700 3.878 4.534 6.015 4.598 4.942 4.986 5.617 2.876 4.029 4.158 4.328 4.901 6.519 4.610 5.110 6.335 7.474 ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Production in Tons Year 1932... . .. 1933.. .. . . 1934............ . . 1935............ .. . 1936............ . 1937 ........... ..,. 1938 .. . . . 1939..... .. 1940. . .... 1941 ... . . Ore Mined 3,233,172 2,652,944 3,269,864 3,382,403 3,804,451 5,536,952 3,816,637 5,255,960 6,209,863 6,192,805 ' Lead Concentrates 147,242 114,651 124,240 133,044 147,160 212,827 157,188 202,003 225,041 219,819 Pig Lead Equivalent 99,242 78,248 86,060 92,611 101,999 14&,2i74 107,600 138,307 154,281 149,035 Zinc Concentrates 34,677 34,741 46,353 47,214 54,590 71,031 60,797 74,681 85,571 88,236 Slab Zinc Equivalent 27,017 16,898 22,389 22,857 26,400 34,519 29,606 38,188 44,406 45,907 Lead Sales and Stocks at End of Year in Tons Year 1932 .... .......................... 1933 ......... ........................... 1934 .......... ........................... 1935........... ....................... 1936 ........... ............................ 1937............ ........................... 1938............ ........................... 1939 ........... ........................... 1940......... .......................... 1941............ ............................ Lead Sales St. Joe Production 81,467 72,462 84,964 87,077 126,846 160,091 97,865 172,481 178,111 155,475 ! Purchased Lead Sold 53,473 47,988 39,566 : 41,714 47,776 38,930 50,782 39,347 60,199 60,241 Total Lead Sales 134,940 120,450 124,530 128,791 174,622 199,021 148,647 211,828 238,310 215,716 *Pig Lead Equivalent of Stocks 96,484 100,453 103,918 108,849 83,575 72,969 79,775 46,173 30,737 20,767 * Includes purchased lead and estimated recoverable lead in concentrates together with other lead stocks in process of refining at smelters. 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Summaries of Consolidated Net Income For the Years Ended December 31, 1941 and 1940 Net Sales (Including sales to St. Joseph Lead Company--1941, $841,566.22; 1940, $1,481,326.03)............. ............................. '..................... Cost of Sales (exclusive of depreciation and depletion)....................... Gross Profit from Operations before Depreciation and Depletion ... . Deduct: Selling, general and administrative expenses . .. , ... Taxes . .................................................................... $103,372.98 23,656.01 Net Profit from Operations before Depreciation and Depletion Other Income ................................................................ ......................... Gross Income before Depreciation and Depletion ........................... Interest on indebtedness ...................................................................................... Income before Depreciation and Depletion...................... ..................... Provision for depreciation........................................................ ;. ................... Income before Depletion....................................................................................... Provision for depletion computed on cost (Note 4).................................. Net Income for the Year before Provision for Depletion Computed on Appreciation of Ore Reserves ........... .... . . , , ; . ..... Provision for depletion computed on appreciation of ore reserves (Note 4) . ... , : Net Loss for the Year .............. .... ...... Year ended December 31, 1941 1940 $3,402,908.73 2,367,258.69 $2,612,023.14 1,662,320.31 $1,035,650.04 $ 949,702.83 127,028.99 $ 908,621.05 38,479.09 $ 947,100,14 8,366.54 $ 938,733.60 207,305.29 $ 731,428.31 127,786.09 $85,215.64 13,601.58 98,817.22 $ 850,885.61 23,652.25 $ 874,537.86 6,747.74 $ 867,790.12 193,667.52 $ 674,122.60 121,188,16 $ 603,642.22 1,168,708.13 $ 565,065.91 $ 552,934.44 1,108,320.38 $ 555.385.94 Summaries of Consolidated Deficit For the Years Ended December 31, 1941 and 1940 Deficit at Beginning of the Year.................................... .. Add Net Loss for the Year................................................................................. Year ended December 31, 1941 19-0 $1,166,081.42 $ 610,1 `5.48 565,065.91 555,385.94 Deduct: Total........................................................................................... Adjustment as of January 1, 1941, resulting from change in method of determining provision for depletion (Note 4) . $1,731,147.33 208,301.20 $1,166,081.42 --. Deficit at End of the Year ................................................ . ... .......... $1,522,846.13 $1,166,081.42 Notes: (1) Included in the above summaries are Aguilar Corporation and its only subsidiary, Compania Minera Aguilar, S. A. (a foreign corporation). (2) The operations of the foreign subsidiary are included in the above summaries in U. S. dollars at the approximate average free rate of exchange for the year except as to provisions for depreciation and depletion which have been converted on the basis of the rates of exchange at which the balances in the related asset accounts are stated. (3) No provision has been made in the above summaries for Argentine income taxes as the basis for assessment has not been agreed upon with the Argentine tax authorities, nor has provision been made therein for United States Federal income taxes, if any. (4) Effective January 1, 1941, the method of determining provision for depletion of ore reserves and mineral rights was changed from the basis of tons of ore mined to the basis of tons of lead concentrates sold. If the basis in effect in 1941 had been in effect in 1940, net income for that year before provision for depletion computed on appreciation of ore reserves would have been $6,156.25 more and net loss for the year (after provision for depletion computed on appreciation of ore reserves) would have been $62,415.98 less, , : '. .i; i ; ... : 9 , Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Consolidated Balance Sheets, December 31, 1941 and 1940 ASSETS Capital Assets: December 31,1941 December 31, 1940 Ore reserves and mineral rights: Cost, including exploration and development prior to the commencement of operations . . .. $ 1,507,858.82 Less reserve for depletion 500,523.97 $ 1,007,334.85 $ 1,507,858.82 393,268,63 $ 1,114,590.19 Appreciation arising from revaluation .. Less reserve for depletion . Total ore reserves and mineral rights, net Land, buildings, plant and equipment (at cost) Less reserve for depreciation . . $13,790,750.50 4,578,828.05 $13,790,750.50 9,211,922.45 3,597,890.37 10,192,860.13 $10,219,257.30 $11,307,450.32 $ 2,520,054.48 970,153.07 $ 2,368,700.20 1,549,901.41 762,847.78 1,605,852.42 Total capital assets, net $11,769,158.71 $12,913,302.74 Current and Working Assets: Cash on hand and in banks .. ... . $ Argentine Government treasury notes due January 24, 1942 .. . .. . ... Accounts receivable--trade ., Due from St. Joseph Lead Company (Parent Company) Other accounts receivable 249,007.05 94,339.62 124,796.88 440,071.51 17,567.56 Inventories: Lead and zinc concentrates (at cost, exclusive of depreciation and depletion; less than estimated market) . ............ .... Silver (at estimated value)... ... . . .. Materials and supplies (at cost) . 155,609.28 60,815.73 689,444 89 $ 388,133.95 120,376.60 175,610.27 11,068.00 1,831,652.52 593,543.63 24,314.01 549,161.89 1,862,208.35 Goodwill ....................................... . .................... 50,000.00 50,000.00 Deferred Charges ................................................. , 50,397.60 30,881.78 Total ............................................. . $13,701,208.83 $14,856,392.87 Notes: (1) Included in the above consolidated balance sheets are Aguilar Corporation, a domestic holding company, and its only subsidiary, Compania Minera Aguilar, S. A., incorporated and conducting business in Argentina. (2) Current assets, current liabilities, deferred charges and reserves of the foreign subsidiary are included in the above consolidated balance sheets in U. S, dollars at the closing quoted rate of exchange at Decem ber 31, 1941 and 1940, respectively (except in a few instances at December 31, 1941 where original dollar values applicable to foreign transactions were used). Capital assets and related reserves and capital stock and capital surplus accounts reflect the approximate dollar equivalents at the rates prevailing at the dates of the transactions of which the balances in these accounts consist. (3) The above consolidated balance sheets do not include liability for Argentine income taxes as the basis for assessment has not been agreed upon with the Argentine tax authorities, nor liability, if any, for United States Federal income taxes. 10 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Consolidated Balance Sheets, December 31, 1941 and 1940 LIABILITIES Capital Stock: Preferred stock--$7.00 cumulative shares without par value (entitled upon redemption or liquidation to $115.00 a share): 1941--Authorized 89,776 shares: issued 9,976 shares at a stated value of $1.00 a share .$ 1940--Authorized 94,059 shares: issued 14,259 shares at a stated value of $49.00 a share . Common stock--Shares without par value'--authorized 248,070 shares: issued, 88,470 shares at a stated value --1941, $.05 a share; 1940, $1,00 a share December 31, 1941 December 31, 1940 9,976.00 $ 698,691.00 4,423.50 $ 14,399.50 88,470.00 $ 787,161.00 Current Liabilities: Loans payable--bank................................................... Accounts payable--trade .................... Wages payable. ...................................... Accrued taxes (Note 3) . . Proceeds from sales of concentrates for future export Estimated expenses on concentrates held for future delivery............... Other accounts payable . . .. $ -- 110,920.19 20,611.46 7,566,84 233,900.00 888,307.67 4.577.48 $ 429,229.71 122,406.24 19,008.36 2,684.47 311,047.47 1,265,883.64 354,220.84 3,436.31 1,242,033.40 Reserves: For possible additional freight on concentrates For compensation and accidents .. For other expenses ................. ... . .$ . . 21,140.80 35,665.83 10,012.00 Surplus: Capital surplus: Arising from revaluation of ore reserves (of which $13,387,254.16 was transferred by the subsidiary to its capital stock account)... . $13,790,750.50 Arising from reduction in stated value of capital stock--$768,478.50 in 1941 and $989,800.00 in 1940, less cost of stocks purchased in excess of stated values thereof--$845,502.03 in 1941 and $826,573.78 in 1940 .................. , , .. 86,202.69 ^ 66,818.63 _ 31,152.06 8,151.11 $13,790,750.50 163,226.22 39,303.17 Total capital surplus . , $13,876,953.19 $13,953,976.72 Earned surplus (deficit): Surplus based on depletion computed on cost Deduct depletion computed on appreciation of ore reserves . . .. $ 3,055,981.92 4,578,828.05 $ 2,431,808.95 3,597,890.37 Earned surplus (^deficit) $*1,522,846.13 $*1,166,081.42 Remainder 12,354,107.06 12,787,895.30 Total . $13,701,208.83 $14,856,392 87 Notes Continued: (4) Cumulative dividends on the $7.00 preferred stock have not been declared since its issuance, and at December 31, 1941 and 1940 amounted to $771,716.75 and $1,030,393.00 respectively. (5) The foreign subsidiary and St. Joseph Lead Company were contingently liable at December 31, 1941, to refund to customers the sales price, $1,406,935.95, of concentrates paid for by the customers and stored in Argentina, in the event any future Argentine law should prevent shipment thereof, and were similarly con tingently liable at December 31, 1940, in the amount of $827,779,87. (6) Contingent liabilities also existed in respect of customs duties on materials and supplies imported into Argentina duty free, not yet officially exempted; from duties, and from additional railroad freights on con centrates sold but not delivered which may be imposed if special tariff arrangements with the Argentine State Railways which expired on December 31, 1941 are not renewed. The Company does not anticipate that any loss will result from these sources. 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS a SELLS CERTIFIED PUBLIC ACCOUNTANTS 22 EAST 40TH STREET NEW YORK ACCOUNTANTS* CERTIFICATE To the Stockholders of St* Joseph Lead Company; We have examined the consolidated balance sheets of St, Joseph Lead Company (incorporated in New York) and its wholly-owned subsidiary companies, and of Aguilar Corporation (incorporated in Delaware--a majority-owned subsidiary--not consolidated) and its subsidiary, Compania Minera Aguilar, S. A. (incorporated under Argentine law) as of December 31, 1941 and the related summaries of consolidated net income and surplus for the year ended that date, have reviewed the accounting procedures of the companies, and have examined their accounting records and other evidence in sup port of such financial statements. Our examination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all auditing procedures we consid ered necessary, which procedures were applied by tests to the extent we deemed appropriate in view of the systems of internal control. In our opinion, the accompanying consolidated balance sheets and summaries of consolidated net income and surplus, with the footnotes thereon, fairly present the financial condition of St. Joseph Lead Company and its wholly-owned subsidiary companies, and of Aguilar Corporation and its foreign subsidiary company at December 31, 1941 and the results of their operations for the year ended that date, in conformity with generally accepted accounting principles and practices, which were applied on a basis consistent with that of the preceding year except for the change in method of computing depletion of ore reserves for the foreign subsidiary of Aguilar Corporation, as explained in Note 4 on the related summaries of consolidated net income and deficit, which change we approve. HASKINS & SELLS New York, February 18, 1942. 12 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY PRESIDENTS ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR 1941 O O X o Gft Jgg* $58u>Qh n< xa<noa ot~ a< Reproduced with permission of the copyright owner, Further reproduction prohibited without permission.