Document 5ko51LErnOgzGZpbZ7zQRD7a5

THE GLIDDEN COMPANY CLEVELAND, OHIO TO THE SHAREHOLDERS: December 31, 1934 The Certified Annual Report of The Glidden Company for the year ending October 31, 1934 is herewith submitted. Comparisons with previous reports can easily be made as there has been no change in accounting procedure. The plan worked out for the retirement 'at par and interest of a portion of The Glidden Company Five Year 53-2% Notes and the extension of the balance to a maturity of June 1, 1939, has been successfully carried through. Both the sales and profits of the Company show an improvement as compared to the previous year. The operating profit for the last half of the fiscal year was reduced because of the longshoremen's strike on the Pacific Coast. The Company was forced to close four of its important plants and when the strike was finally over the vegetable oil crushing plants at Berkeley, California and at Portland, Oregon were unable to operate continuously because of the delay in receiving new cargoes of copra and sesame seed from the Orient. Profits were further adversely affected by the excise tax of three cents per pound placed by the United States Government on vegetable oils produced from imported seeds and nuts. There was a long delay in the issuing of explicit Treasury Department regulations and resultant loss of markets. In cooperating with the Government in its efforts to reduce unemployment, the Company put through an extensive program of maintenance and repair work. While the expense incurred was a drain on the profits, yet the plan has resulted in putting each of our plants on a highly efficient operating basis. During the year, the Company has completed a modern Soya Bean Oil extraction plant at Chicago.. The plant has a capacity of one hundred thirty tons of soya beans per day and since December 15th has been in full operation. In connection with this plant, and designed to utilize its by-products, there are now being installed facilities and equipment for the manufacture of Lecithin and Soya Protein. These departments will be in pro duction within the next few weeks. Early in the year the American Zirconium Corporation was organized for the purpose of manufacturing Titanium Pigments. Ownership of this Company is shared by Metal & Thermit Corporation, which controlled many valuable patents. Work was immediately started on a manufacturing plant at Baltimore, Maryland. 1 his plant was completed December first and is now in operation. The American Zirconium Corporation controls secret processes and basic patents which enable it to manufacture products of the highest quality. The Company owns a controlling interest in the Nelio-Resin Corporation and during the year this organiza tion has erected new plants at Jacksonville, Florida and Collins, Georgia for the manufacture of Nelio-Resin from crude pine products. These plants are now in operation. Each of these new plants supplies products of which The Glidden Company, in its manufacturing operations, is a very large consumer. This important back-log of business not only puts these plants in position to meet com petition but insures immediate profits. For November, the first month of the new fiscal year, the profits as compared with those of November last year have nearly doubled. Prospects are most encouraging for the new year. The employees of the Company and of its subsidiaries and affiliated companies have earned the appreciative recognition of the Officers and Directors for the fine conduct of their work during the year. By order of the Board of Directors. ADRIAN D. JOYCE President. GLD000532 CONDENSED CONSOLIC THE GLIDDEN COMPANY -- CLEVELAND, AND SUBSIDIAF ASSETS Current Cash on Hand, on Deposit and in Transit Customers' Notes and Acceptances Receivable $ 156,143.69 Customers' Accounts Receivable 3,516,112.51 3 953,376.47 Less: Reserve 3 3,672,256.20 189,350.98 3,482,905.22 Miscellaneous Current Accounts and Creditors' Debit Balances Balance in Brokerage Account Against Commitments of Subsidiary for Future Delivery of Cottonseed Oil Inventories--Raw Material, In Process, Finished Merchandise and Supplies on basis of lower of cost or market value (Certified by Management) 100,168.84 105,689.71 7,902,063.03 3 12,544,203.27 Other Assets Securities of Affiliated Companies--At Cost (Note A) $ 493,200.00 Advances to Affiliated Companies 238,628.58 Cash Surrender Value of Life Insurance 306,724.00 Deposits in Closed Banks, Less Reserve 94,130.36 Officer's Note Receivable for Purchase of Common Stock--5,100 Shares 169,985.85 Miscellaneous Notes, Accounts, Salesmen's Advances, Sundry Investments, etc. 111,467.47 1,414,136.26 Permanent Land Buildings, Machinery, Equipment, Etc., on Basis of Cost or Appraisal Value, Less Special Write-down 3 1,779,233.36 14,055,739.08 Less: Reserve for Depreciation and Depletion 3 15,834,972.44 4,780,959.17 11,054,013.27 Investments in California Mining Companies (at Cost) Mining Companies--Fully Owned (Not operated during current year): Investment in and Advances to The California Zinc Company and Afterthought Zinc Mining Company (Note B) Good Will, Patents, Trade Marks, Reorganization Expense, Etc. (See Comments) Good Will $ Patents and Trade Marks Rights to Manufacture, Secret Processes, Formulas, Etc. Reorganization Expense 2,492,007.93 176,024.42 72,098.34 365,921.09 1,027,388.05 3,106,051.78 Deferred Special New Products Development Inventory of Advertising Stock, Stationery, Uncxpircd Insurance Premiums, Prepaid Taxes, Etc. 3 34,035.65 313,771.59 347,807.24 3 29,493,599.87 The Glidden Company, December 26, 1934 Cleveland. Wc have made an examination of the consolidated balance aheet of THE GLIDDEN COMPANY-- CLEVELAND and its fully owned subsidiaries (exclusive of California mininf companies) at at October 31, 1934 and cf the statement of income and surplus for the year ended at that date. In connection therewith we examined or tested accounting records of the Companies and other supporting evidence( and obtained in* formation and explanations from officers and employees of the Companies; we also made a genera) review of the accounting methods and of the operating and income accounts for the year, but we did not make a detailed audit of the transactions. In our opinion sufficient provision has been made for doubtful notes and accounts receivable. Inven tories have teen test checked by us as to method of valuation and computations and arc stated on the basis of the loner of cost or market values. No inter-company profits arc included in the inventories. Notations arc included on the balance sheet and income statement regarding investments in and advancea to affiliated companiei and fully owned California mining companies. Good W ill, Patents, Trade Marks, Reorganisation Expense, etc., are stated it the sggregate carrying value of 13,106,051.78. The Good Will, Patent and Trade Mark value* originated largely from values assigned thereto as of the dates of acquisition of assets for capital stock of the Company and/or cash and 'v* values GL DO 00 53 3 I AT ED BALANCE SHEET ES AS OF THE CLOSE OF BUSINESS, OCTOBER 31, 1934 LIABILITIES Current Notes Payable for Money Borrowed from Banks Accounts Payable for Purchases, Pay Rolls, Etc. Accrued Taxes, Interest, Insurance, Royalties, Etc. Five Year 5)4% Gold Notes--Due June 1, 1935 First Mortgage 6% Bonds of Subsidiary Company Due April 15, 1935 $ 1,975,000.00 1,112,382.15 649,786.56 44.000.00 18.000.00 $ 3,799,168.71 Long Term Debt (Exclusive of Amounts Shown as Current) Five Year 5)4% Gold Notes Due June 1, 1939-- Outstanding (Including Notes Extended up to December 24, 1934) First Mortgage 6% Bonds of Subsidiary Companies, Less Held in Treasury $ 3,224,000.00 108,200.00 3,332,200.00 Reserve For Contingencies (Including Amount of $67,912.46 Provided from Capital Surplus in 1932) Nominal Capital Stock Prior Preference--7% Cumulative Authorized 75,000 Shares Less: Unissued and Redeemed 10,000 Shares $ 7.500.000.00 1.000. 000.00 $ 6,500,000.00 122,100.45 Common--Without Par Value Authorized 800,000 Shares Outstanding 650,000 Shares Stated Capital $5.00 per Share Surplus Capital Profit and Loss $ 8,240,951.64 4,249,179.07 3,250,000.00 12,490,130.71 22,240,130.71 (Note A) (Note B) (Note C) (Note D) Securities of affiliated Companies include investment in approximately 54% of common stock of one Company at cost which was $7,255.57 in excess of the equity in that Company's net assets at October 31, 1934. The principal part of the balance of securities of affiliated Companies consisted of a 50% interest in common stock and 100% interest in preferred stock of another Company which had not reached a full operating basis at October 31, 1934. Investments in California mining companies are stated herein at cost which amount was $135,242.67 less than the book value of the assets of those com panies at October 31, 1934. The properties of these companies are not being operated and the value of the investments therein is indeterminable at this time. The Company was reported as having letters of credit outstanding in the amount of $684,300.45 and it was contingently liable for subscriptions to capital stock of other corporations in the amount of $203,200.00. This balance sheet is subject to the comments submitted herewith. $ 29,493,599.87 hare been used for amortization purposes, for federal taxes ind in the accompanying Income account, only to the extent of a gross amount of >48,239.40 and a net amount of $46,314.95. No amortisation has beta provided against the reorganization expense. Charges hive been made against reserve for general contingencies during the year for items considered ai having keen specifically provided for therein at the beginning of the year including application of the amount of $80,000.00 against deposits in closed banks and the amount of $27,561.18, provided out of capital surplus in 1932. against charges incident to certain litigation. The excess of enarges incident to the litigation referred ro over specific provision therefor has keen charged against the current year's income. General Counsel for the Company has informed us that no liability is anticipated in connection with certain litigation and the official* of the Company express the same opinion as to other suits pending, which they consider of minor importance. In our opinion, based upon our examination, the accompanying consolidated balance sheet and related statement of income and surplus fairly present the consolidated position of the Company and its subsidiaries* excepting California mining companies, at October 31, 1934 and the results from operations for the year ended at that date. Further, it is our opinion that the statements have been prepared in accordance with accepted accounting principles and on a basis consistent with the preceding year, aubjeet to the foregoing comments* Close It Ernst, Certified Public Acconntante* GLD0 00 53 4 CONDENSED CONSOLIDATED OPERATING STATEMENT THE GLIDDEN COMPANY-CLEVELAND, AND SUBSIDIARIES For the Fiscal Year Ended October 31, 1934 Net Sales (Excluding inter-company and subsidiary sales and transfers) $29,820,273.91 Profit Before Interest, Depreciation and Other Deductions Other Deductions---Net Less: Discount on S14% Gold Notes Purchased and Retired Interest on Funded Debt Other Interest Expense Profit Before Providing for Depreciation and Federal Income Tax Provision for Depreciation and Depletion Profit Before Federal Income Tax Provision for Federal Income Tax $ 2,529,704.61 $ 111,653.14 7,267.62 104,385.52 $ 2,425,319.09 $ 192,512.61 28,009.12 220,521.73 $ 2,204,797.36 478,473.37 Net Profit $ 1,726,323.99 194,000.00 $ 1,532,323.99 (Note A) No provision has been made in the foregoing statement for(l) loss of fully owned non-operated California mining companies for the year amounting to $59,188.62, including provision for depreciation in the amount of $46,343.95 and (2) portion of loss amounting to $6,099-61 applicable to the company's interest of approximately 54% in common stock of an affiliated Company. (Note B) Discount and expense on notes and bonds of the Companies were charged to capital surplus as of November 1, 1931 as authorized by the Board of Directors. If these items had been amortized on the basis of money in use, the amount of $22,140.00 would have been charged against income for the year ended October 31,1934. Capital Surplus Balance October 31, 1933 SURPLUS ACCOUNTS $ 8,194,404.39 Additions Excess of selling price over cost of 2,116 Shares of Prior Preference Stock sold Credit on Sale of Property Previously Written off $ 46,123.25 424.00 46,547.25 Balance October 31, 1934 $ 8,240,951.64 Profit andLoss--Surplus Balance October 31, 1933 Addition Net Profit from Operations for the Fiscal Year ended October 31,1934 Deductions Dividends paid: Prior Preference--7% Common-$1.15 a share $ 3,903,360.33 $ 1,532,323.99 $ 440,345.50 746,159.75 1,186,505.25 345,818.74 Balance October 31, 1934 $ 4,249,179.07 GLD00053 5