Document 85agK2GmKb8zpqv874pBpd56B

0000-NLI-000018446 I THE COVER The "Dutch Boy" was painted in 1907 by Lawrence Carmichael Earle, the distinguished portrait artist. This figure, used consistently since then, has become a nationally-known trademark and a symbol for high-quality products. f l 0000-NLI-000018447 National Lead Company INCORPORATED DECEMBER 8, 1891 61st ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1952 0000-NLI-000018448 TABLE OF CONTENTS Officers and Directors................................................................. 3 Financial Highlights.............................................................. 4 President's Message...................................................................... 5 Financial Statements and Notes................................................... 22 Auditors' Report........................................................................ 27 Ten-Year Review of Operations................................................... 28 Branches and Divisions..............................................................32 Affiliated Corporations..............................................................33 Products....................................................................................... 34 Company Facilities Map............................... Inside Back Cover 0000-NLI-000018449 BOARD OF DIRECTORS LEONARD T. BEALE WILLIAM V. BURLEY ALFRED H. DREWES JOSEPH A. MARTINO DAVID A. MERSON GEORGE L. RATCLIFFE JOSEPH H. REID WINTHROP SARGENT, JR. JAMES A. TAYLOR HERMAN T. WARSHOW WILLIAM J. WELCH HARRY C. WILDNER EXECUTIVE COMMITTEE Chairman: Jo s ep h a . ma r t in o WILLIAM V. BURLEY ALFRED H. DREWES DAVID A. MERSON JOSEPH H. REID HERMAN T. WARSHOW HARRY C. WILDNER EXECUTIVE OFFICERS President: Jo s e p h a . ma r t in o Vice-Presidents: WILLIAM V. BURLEY ALFRED H. DREWES FRANK J. KOEGLER DAVID A. MERSON GEORGE L. RATCLIFFE JOSEPH H. REID HERMAN T. WARSHOW HARRY C. WILDNER Secretary: JOHN B. HENRICH Treasurer: JOSEPH j. MORSMAN, j r . Comptroller: GEORGE a . d e w e y Assistant Treasurer: MICHAEL USS Assistant Comptrollers: Th o ma s f . o w e n s ARCHER D. SARGENT Executive Offices: 111 Br o a d w a y , n e w Yo r k 6, n . y . General Counsel: Al e x a n d e r & g r e e n , 120 Br o a d w a y , n e w Yo r k , n . y . Stock Transfer Agent rim c h a s e n a t io n a l b a n k , 11 b r o a d s t ., n e w Yo r k , n . y . Registrar of Stock: b a n k e r s t r u s t c o ., 14 w a l l s t ., n e w Yo r k , n . y . 3 0000-NLI-000018450 FINANCIAL HIGHLIGHTS ' SALES 1952 1951 $358,048,435 $389,941,313 ll 1 I I 4 EARNINGS 1952 1951 $ 23,060,054 $ 22,993,717 TAXES 1952 1951 $ 28,828,899 $ 39,943,741 DIVIDENDS PER SHARE 1952 1951 $ $ 1.45 1.4i 2/3 EARNINGS RETAINED FOR USE IN THE BUSINESS 1952 1951 $ 6,149,249 $ 6,454,155 0000-NLI-000018451 m THE PRESIDENT'S MESSAGE March 17, 1953 To the Stockholders and Employees of National Lead Company: OMPANY OPERATIONS during 1952 resulted in earnings C equivalent to those of the previous year. And yet, generally speaking, the factors contributing to the showing were somewhat different from those which applied in 1951. The record is out lined in the pages which follow, reflecting to a great extent the advantages which the Company enjoys as the result of the wide scope of its interests. EARNINGS The Company's net income for 1952 amounted to $23,060,054 or $2.06 per Common share, compared with $22,993,717 or $2.05 per share for 1951. Net income, the second highest in Company history, was 6.4 per cent of the sales dollar, an improvement over the 5.9 per cent reported in 1951. Dividends received from foreign subsidiaries and partiallyowned domestic companies, which likewise enjoyed a favorable year, are included in the above earnings figure. The Company's equity in the 1952 undistributed earnings of these affiliates, be fore considering foreign exchange fluctuations, is estimated at 6$ per Common share. The Company's equity in the net tangible assets of these affiliates at December 31, 1952 amounted to $23,725,000, as compared with the Company's investments of $9,381,000. DIVIDENDS Cash dividend disbursements in 1952, totaling $16,910,805, were the largest in the Company's history. Regular quarterly pay ments aggregating $2,181,161 were made to Preferred share- 5 0000-NLI-000018452 holders. Common stockholders received $14,729,644. Payments consisted of four quarterly dividends of 25^ per share and an extra payment of 45^ in December 1952. The total of $1.45 per share compared with the $1.41% paid in 1951. Since the issuance of the Preferred A stock in 1892 and the Preferred B stock in 1927, the Company has maintained con secutive quarterly dividends on these shares. Dividends have been paid continuously on the Common stock since 1906. Dividend disbursements in 1952 accounted for 73 per cent of the net income and the remainder--$6,149,249--was added to Earned Surplus account. SALES Company sales totaled $358,048,435 in 1952, off 8 per cent from the record high of $389,941,313 in 1951. The principal factor in this decrease was a sharp price break in the lead, zinc and antimony markets. Physical volume showed a slight decline from 1951. Increased imports of foreign metals, supplementing domestic 6 0000-NLI-000018453 production, caused the supply of lead, antimony and zinc to ex ceed demand for the first time since 1949, with a consequent weakening of price structure. Lead, which sold at 19i per pound in January, 1952, dropped to 14%^ at year-end; zinc fell from 19V2^ to 12V2^, and antimony from 50^ to 34V2^. Lead and zinc continue to show price weakness and are currently selling for 13^2^ and 11^, respectively. These lowered prices, although in fluencing the composite dollar sales picture, do not materially affect earnings. In the metals field the Company's primary interest is not the production of non-ferrous metals, but rather the fabri cation of products which are sold at fixed differentials over the base prices of the metals. Total units sold during 1952 declined only 2 per cent from the shipments for the previous year. The Company's long-range plan of product diversification minimized the effects of fluctua tions in the sales of individual products, since increased business in one line of activity tends to offset a temporary decrease in another. All divisions of the Company kept pace with the de mands and growth of the industries which they serve. The Titanium Division has completed the expansion program started 7 w 0000-NLI-000018454 in 1930 and is in excel lent position to satisfy increased demands for its products. Baroid Sales Division plant units operated at capacity throughout the year. As an addition to the "Dutch Bov" mixed paint line, the "Dutch Bov" Color Gallery has been introduced. ottering the consumer a wide variety of colors m interior paints and enamels. A source of great satisfaction to your Management is the con tinuous sales yrowrh of products developed within past years in the Company's research laboratories. Lead chemicals and stabil izers. basic silicate w hite lead "-n X," bentones, and various new chemicals used in oil well drilling were sold in substantially greater volume during 19D than in any prior year. I A X I.n Provision for various taxes amounted to 328,828,899 in 19s2 and represented about 76 per cent of earnings before such taxes, or 32.84 per share of Common stock. Total taxes for 197 1 were 339.9-1.3.7 il. Federal income tax requirements were lower than in the pre- 8 Baro/./ S.ilc- Division engineers provide ./ c/c, ice to .7 u-..: drillers hi solving then- s/;;///;;; Bdroi-J ga:>: oo.\teJ its oil well dnlliog niAU-- f ohiem c >l 1'0'J. KTc* " 0000-NLI-000018455 0000-NU-000018456 huptition room at ;l:e Indianapolis plant of cinninan Btm:ns Corporation, ulnae precision bearing} for \nbma-\t plant}, locomotives and stationary engine< are maun'... / //. ./. ceding year. The total decrease amounted to S1L28T714. (Jf which $4,620,000 represented reduction in excess profits tax requirements. PLANT INVESTMENT The gross property account was $161,540,966 at December 3 1, 1932 compared with 5154.012,668 at close of preceding vear. a net increase of $7,528,298. Among the important additions to the plant account were expenditures for completion of the Titan ium Division expansion program at Sayreville, New Jersey. and for the nickebcopper-cobalt plant under construction at l'redericktown. Missouri. It is estimated that this latter plant, con structed with Government funds under a certificate of necessity and scheduled for completion by the end of Idas, will cost 71 a million dollars. 10 0000-NLI-000018457 i Ji For increased production of oil well drilling muds, the Baroid Sales Division continued a program of expansion at its. Magnet Cove, Arkansas, mine and mill. Late in 1952 construction of a new production unit began at Corpus Christ!, Texas. This facility started operation early this month. The De Lore Division started construction of a new plant for the production of its new pigment extender "Lorite." The unit will be located near the source of raw material at Edson, Kansas. Demand for "Lorite" exceeds the capacity of De Lore's St. Louis plant and initial production at the new Kansas unit is scheduled for April 1953. Other expansion projects under way during the year included improved facilities for production of lead and zinc ores at the Baxter Springs, Kansas, mine, additional equipment for manu facture of mixed paints at the Perth Amboy, N. J., and Chicago plants, and expanded capacity for the manufacture of lead chemi cals at the Philadelphia plant. Loading docks at the Company's mine and mill in Nor way, which produce ilmenite ore for titanium pigments. 11 0000-NLI-000018458 Titanium pigment plant in Leverkusen, Ger many, the largest of its type in Europe. Provision for depreciation, depletion and amortization in creased from $4,902,085 in 1951 to $5,193,355 in 1952, reflect ing largely the Company's growing plant investment. LITIGATION The program of adjusting the Company's stockholdings in foreign companies, as required by the final decree heretofore entered in the civil anti-trust suit brought by the Government, has been completed. The Company has purchased the entire ownership of Titangesellschaft m.b.H., manufacturers of titan ium pigments at Leverkusen, Germany, and has sold its interest in the Japanese company, Titan Kogyo Kabushiki Kaisha. The Federal Trade Commission handed down a decision on January 12,1953, ordering the Company to cease and desist from 12 0000-NLI-000018459 certain activities in the sale and distribution of lead pigments, held to be at variance with the Federal Trade Commission Act and the Clayton Act. A strong dissenting opinion was filed in I this case and the Company plans on taking an appeal. In July of 1952 the United States District Court in San Fran ! tl cisco held that the Dutch Paint Company was not infringing the "Dutch Boy" trade mark by its use of the term "Dutch Paint." The Company has taken an appeal from this decision. It has previously been reported that in February, 1951, two actions were filed against the Company in the United States Dis trict Court in Houston, Texas, by individual patent owners, alleging that some phases of the well logging operations of the Company's Baroid Sales Division infringe certain United States letters patent. One of these cases was tried last December, but no decision has as yet been handed down. Meanwhile, the patent Nickel plant at Nicaro, Cuba, operated for the United States Government by Nickel Processing Corpora tion, in which the Company has the majority interest. 13 w "MO-NU-OOOOIS^o Production capacity of the titanium pigment plant in Sayreville, New Jersey, has been expanded considerably by the addition of this new unit. owner whose case has not yet been tried, filed in January of 1953, a further suit against the Company, alleging infringement of another patent owned by him in the well logging field. There have been no changes in the status of the following cases mentioned in the Annual Report for 1951: the proceedings by the Government against the Company, with respect to the sale of used storage batteries and lead salvaged therefrom; the treble damage suit instituted by Dutch Paint Company in regard to the sale and distribution of titanium pigments, and the action by the Government with respect to the alleged violation of price stabili zation regulations by the Company in the sale of some products. PERSONNEL Relations with Company employees and their various union organizations continued on a satisfactory basis during 1952. Of the 14,318 employees on the Company payroll at the year- 14 0000-NLI-000018461 end, 6 per cent had been employed for 25 years or more and had been presented with gold watch awards, 18 per cent had service for 15 years, and 51 per cent for five years or more. Executive officers average more than 23 years of service. Extra compensation was again paid in December 1952 on the same basis as in the preceding three years. Earnings were like wise sufficient to permit a contribution by the Company to the profit-sharing trust established by stockholders' action in 1945. Past service pension liability was further liquidated by the net payment in 1952 of $950,697, charged to the Reserve and deductible for tax purposes. At the end of 1952 a total of 880 pensioners were receiving Loading 1500-pound titanium metal ingots aboard an air transport at Las Vegas, Nevada, for shipment east, where this critical metal is fabri cated into sheet, wire, bar and forgings for jet engines and structural parts for aircraft. Henderson, Nevada, is the plant site of the Titanium Metals Corporation of America, largest titanium producer in the country. 15 annuities under a plan originally established in 1912 and liberal ized in 1937 and subsequent years. Group life insurance claims aggregating $604,881 were paid during the year on behalf of 104 employees. A total of 592 employees are or have been in military service in the period between June 15, 1950 and December 31, 1952. 16 0000-NLI-000018463 With few exceptions those released from such service have re turned to Company employment. TITANIUM METAL Demand continues to mount for titanium metal--that versatile material possessing the rare combination of strength with light ness and high resistance to corrosive forces. Defense agencies recently forecast titanium metal requirements for 1955 at 22,000 short tons, a revision upward from the 10,000 tons previously estimated. The potential growth prospects for titanium metal may be gauged from the fact that total output of the industry in 1951 was only 500 tons. To meet the revised requirements it will be necessary to increase productive capacity by 4300 per cent within four years, a remarkable feat for an industry still in its beginning stages. Titanium Metals Corporation of America, jointly owned by National Lead Company and Allegheny Ludlum Steel Corpora tion, continues to occupy a prominent place in the development of the industry. The country's first large-scale production unit is rapidly nearing completion at Henderson, Nevada, and goals established for existing facilities are within sight. Additional properties adjacent to the present Henderson plant have been leased and are available, should further expansion be necessary. The present accelerated demand for titanium metal comes primarily from the Armed Services and aircraft industry. When defense requirements have been satisfied, increasing quantities of the metal will find their way into civilian applications where research indicates the uses will be many. The future of the metal in a civilian economy rests largely on the attainment of lowered production costs. To this end are directed the combined energies and facilities of Titanium Metals Corporation of America and its parent companies. 17 Over-all view of the die shop in one of DoehlerJarvis Division plants. Here some of the 20,000 "live" dies used for manufacturing customer parts are made. THE YEARS AHEAD On February 28, 1953, the Company acquired the assets and business operations of the Doehler-Jarvis Corporation on the basis outlined in the president's letter to stockholders dated De cember 16, 1952. The sale of the Doehler-Jarvis corporate assets was approved by its stockholders on February 6, 1953. With this new acquisition, which is being operated as the Doehler-Jarvis Division, the Company has become an important factor in the die casting of non-ferrous metals. 18 0000-NLI-000018465 Negotiations commencing shortly after the end of World War II culminated in 1952 in the acquisition by your Company from I. G. Farbenindustrie of the remaining 50 per cent capital stock interest in Titangesellschaft m.b.H. of Leverkusen, Ger many. This wholly owned subsidiary, operating the largest plant of its type in Europe, produces titanium dioxide pigments for European consumption. The important raw material, ilmenite, is supplied by Company-owned mines in Norway and sales are handled through subsidiaries in Norway, France, Belgium and the Netherlands. Current output is nearly three times that of preWorld War II capacity, providing an important contribution to the rehabilitation of western European economy. Chicago plant of the newly-formed Doehler-farvis Division, a major producer and finisher of die castings. In 1952 National Lead Company acquired the majority stock interest in Nickel Processing Corporation, contract operator of the United States Government-owned nickel plant at Nicaro, Cuba, by joining with Fomento de Minerales Cubanos S. A. in the purchase of the stock interest of N. Y. Billiton Maatschappij. In cluded in the acquisition were rights to certain processes which may further expand the output of the plant. This operation is scheduled to add 30 million pounds or more per year to our sup ply of a vital metal. The Minnesota Linseed Oil Company, partially owned by National Lead Company, is enlarging its flaxseed storage capacity by U/2 million bushels. In October 1952 the Pioneer Alloy Products Division of dre Company was formed. This unit will produce corrosion resisting valves and acid and heat resisting castings, mainly of stainless steel, in its plant at Ellwood City, Pennsylvania. The Company is actively engaged in the Atomic Energy Pro gram operating a sampling plant at Middlesex, New Jersey, and a $78,000,000 feed materials production center at Fernald, Ohio. Employees at these locations total 1250 and key super visory personnel have been drawn from various operating units of the parent company. Several facilities of the Fernald center are now in operation, contributing vitally needed materials to Atomic Energy Commission installations at other locations. EXECUTIVE PERSONNEL Frank J. Koegler was elected a Company vice-president in February 1953. Mr. Koegler, president of the Doehler-Jarvis Corporation, was also named general manager of the DoehlerJarvis Division of the Company. 20 0000-NLI-000018467 OUTLOOK FOR 1953 The Company's business in the first two months of the year has been somewhat better than at the start of 1952. It seems quite reasonable to expect favorable comparisons for the months ahead, and further building of the Company's capacity to produce and earn, even though the high cost of the United States' present leadership role in world affairs seems certain to keep the tax burden heavy. Other handicaps on industry, however, show signs of lightening. Acknowledgment of the debt any company owes to its em ployees and their good work has become fairly routine. However, the nature of the Company's business puts an unusually high pre mium on the intelligence, resourcefulness, and plain hard work of its men and women. There is no doubt that the Company's employees will give as much toward its prosperity during 1953 as they unfailingly have in the past. The number of Company stockholders showed a gratifying increase during 1952--from 21,365 at the end of 1951 to 23,813 at December 31,1952. This report will be presented to the stock holders at their Annual Meeting, which will be held at Sayreville, New Jersey, on April 16, 1953. By Order of the Board of Directors, C President. 21 0000-NLI-000018468 NATIONAL LEAD COMPANY AND ITS WHOI.I.Y OWNED DOMESTIC SUBSIDIARIES Consolidated Balance Sheets DECEMBER 3 1, 195 2 AND 1951 Current Assets: ASSETS 1952 1951 Cash............................................................................. $ 18,730,699 $ 23,418,857 United States Government securities, at cost (ap proximately equivalent to amounts at market quo tations) (Note 1)................................................. 16,035,442 2 2,76 2.TI 8 Other marketable securities, at cost, less reserves of: 1952, $109,181; 1951, $129,960 (at market quo tations: 1952, $3,685,060; 1951, $3,129,564) (Note 1).................................................................. 1,593,089 817,964 Accounts and notes receivable, less reserves of: 1952, $1,999,338; 1951, $2,047,334 ............................ 29,296,224 30,927,413 Notes receivable from employees............................ 255,013 302,519 Inventories (Note 2)................................................. 56,960,027 55,404,739 Total current assets....................................... 122,870,494 133,634,210 Investments (at cost or below) in and advances to unconsolidated subsidiaries, less reserves of: 1952, $3,801,088; 1951, $4,776,385 (Note 3) .... 10,787,483 10,342,746 Miscellaneous investments and advances, at cost or below, less reserves of $45,826 ................................. 2,760,019 1,760,703 Plant, property and equipment, at 1915 appraised values, subsequent additions at cost (including in tangibles of $20,692,311 not being amortized) less reserves for depreciation, depletion and amortiza tion of: 1952, $75,944,349; 1951, $71,215,202 . . 85,596,617 82,797,466 Patents and licenses, less amortization............................ 32,464 40,027 Prepaid expenses, deferred charges, etc........................... 1,863,473 1,740,516 $223,910,550 $230,315,668 The accompanying notes to financial stater-22 0000-NLI-000018469 NATIONAL LEAD COMPANY AND ITS WHOLLY OWNED DOMESTIC SUBSIDIARIES Consolidated Balance Sheets DECEMBER 31, 19=12 AND 1931 LIABILITIES Current Liabilities: Accounts payable and accrued liabilities .... Payable to unconsolidated subsidiaries...................... Provisions for taxes, including federal taxes on income .................................................................. Dividends payable January 30, 1953 and February 1, 1952 on Class B preferred stock............................ Total current liabilities................................. 1952 $ 16,497,533 547,985 38,238,944 135,277 $ 55,419,739 1951 $ 15,401,310 231,162 50,283,364 135,277 $ 66,051,113 Reserves: Pension........................................................................ Inventory (Note 2).................................................. CAPITAL Capital stock: Preferred Class A, 7 per cent cumulative, non- callable (par value $100); shares authorized 2 50,000, issued 243,676 ....................................... Preferred Class B, 6 per cent cumulative, non- callable (par value $100); shares authorized 250,000, issued 103,277 ....................................... Common (par value $5); shares authorized 20,000,000, issued 10,158,375 (including 398,700 issued under Stock Purchase Plan, Note 4) . Earned surplus: Appropriated: Eire insurance reserve............................................ Employer's liability reserve................................. Contingencies reserve............................................ Unappropriated............................................................ $ 728,363 13,509,584 $ 14,237,947 $ 24,367,600 10,327,700 50,791,875 85,487,175 4,797,284 426,664 4,080,358 66,426,199 $161,217,680 $ 1,679,060 15,011,777 $ 16,690,837 $ 24,367,600 10,327,700 50,791,875 85,487,175 4,797,284 426,664 4,080,358 60,276,950 $155,068,431 Less: Reacquired capital stock, at cost (Note 5) ... Employees' notes receivable under Stock Purchase Plan (Note 4)....................................................... $ 2,583,081 4,381,735 $ 6,964,816 $154,252,864 $ 2,583,081 4,911,632 $ 7,494,713 $147,573,718 $223,910,550 $230,315,668 integral parts of these statements. 23 NATIONAL LEAD COMPANY AND ITS WHOLLY OWNED DOMESTIC SUBSIDIARIES Consolidated Statements of Income and Earned Surplus Unappropriated FOR THE YEARS ENDED DECEMBER 31, 1952 AND 1951 Sales, less returns and allowances (Note 6) . Cost of sales (Notes 2 and 6)........................... Depreciation, depletion and amortization . Administrative, selling and general expenses . Taxes, other than federal taxes on income . Other income (Note 7)...................................... Other charges and additions to reserves (Note 8)............................................................ Net income before provisions for federal taxes on income........................... Provisions for federal taxes on income (includ ing excess profits taxes: 1952, 14,150,000; 1951,18,770,000)............................................ Net income for the year........................... 1952 $358,048,435 $263,323,357 5,193,355 42,611,966 3,502,790 $314,631,468 $ 43,416,967 5,030,104 48,447,071 60,908 48,386,163 25,326,109 $ 23,060,054 1951 $389,941,313 $284,245,815 4,902,085 40,299,081 3,329,918 $332,776,899 $ 57,164,414 4,070,915 61,235,329 1,627,789 59,607,540 36,613,823 $ 22,993,717 Earned surplus unappropriated, January 1 Net income for the year...................................... Dividends: On Class A preferred stock, $7 per share . On Class B preferred stock, S6 per share . On common stock, $1.45 per share in 1952. $1.412/3 per share in 1951........................... Transfer to common capital stock account in connection with reduction in par value and split of the common stock................................. Earned surplus unappropriated, December 31...................................... $ 60,276,950 23,060,054 $ 83,337,004 $ 1,640,051 541,110 2,181,161 14,729,644 16,910,805 $ 16,910,805 $ 66,426,199 $ 61,343,176 22,993,717 $ 84,336,893 $ 1,640,051 517,755 2,157,806 14,381,756 16,539,562 7,520,381 $ 24,059,943 $ 60,276,950 The accompanying notes to financial statements are integral parts of these statements. 24 0000-NLI-000018471 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The following cost amounts of securities were on deposit at the respective balance sheet dates: 1952 mm In connection with self-insurance of workmen's compensation risks, etc.: United States Government securities . . . $552,681 Other marketable securities........................... 881,452 $1,010,545 As collateral for bank loan of an unconsolidated subsidiary: United States Government securities . . . . 750,241 750,275 2. Inventories are priced at the lower of cost (on various "average," "first-in, first-out" or last-in, first-out" bases) or market. The inventory reserve has been maintained on the basis of the following quantities and prices of normal stocks: \rormaI Quantities Fixed Inventory Lead.................................. . 49,6871/2 Tin.................................................................... 1,1241/2 Antimony .... 1,400 Linseed oil...................................................... 5,125 $.03 .21 .05 .06 Replacement was made during 1952 of a substantial portion of the quantities of certain metals which were lower at the end than at the beginning of 1951. The excess of replacement cost ovr cost determined under the Lifo method has been charged to income in 1952, and a related portion of the reserve, provided in 1951, has been credited to 1952 income. The inventory reserves include, in addition to the normal stock reserves, general inventory reserves of $800,000 at both December 31, 1952 and 1951. Intercompany profits in inventories are not considered to be material in amount. 3. Unconsolidated subsidiaries comprise domestic subsidiaries more than 50, but less than 100 per cent owned and foreign subsidiaries. Based upon financial statements as of the close of their respective fiscal years, National Lead Company's equity in the net tangible assets of unconsolidated subsidiaries (other than those in Continental Europe) approximated $23,725,000 at December 31, 1952 and $25,500,000 at December 31, 1951. Such equities exceeded the company's investments in and advances to these subsidiaries, after deducting applicable reserves on the books of National Lead Company, by approximately $14,344,000 at December 31, 1952 and $15,323,000 at December 31. 1951, representing a decrease in such excess of approximately $979,000 in 1952 and an increase of $1,494,000 in 1951. These changes are after various adjustments in 1952 and are after dividends of $2,259,147 in 1952 and $2,364,733 in 1951 paid by the unconsolidated subsidiaries and included in consolidated net income. Total equities of $23,725,000 and S25.500,000 shown in the preceding paragraph include $11,307,000 and $12,908,000. respectively, represented by foreign net tangible assets, trans lated into U. S. dollars at appropriate rates of exchange. The realization of foreign assets and foreign earnings is subject to various exchange and other restrictions imposed by the respective foreign governments. Unaudited financial statements as of September 30, 1952 and 1951 received from the Continental European subsidiaries indicate that National Lead Company's equity in the net assets thereof approximated the following foreign currency amounts at the respective dates: Norwegian kroner Belgian francs Dutch florins . French francs . German deutschemarks September 30 1952 1951 12.425.000 20.520.000 1,540,000 47.920.000 16.698.000 11.420.000 17.680.000 1,300,000 36.480.000 25 0000-NLI-000018472 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued National Lead Company's investments in and advances to Continental European sub sidiaries, less reserves, approximated $1,406,850 at December 31, 1952 and $1 36,120 at December 31, 1951. Dividends of $48,867 (U. S. dollar amounts) were received in 1952 Irom a Norwegian subsidiary and are included in consolidated net income. 4. Under the company's Stock Purchase Plan for Officers and Other Key Employees, adopted in 1950, certain officers and employees contracted to purchase common stock of the company. The purchase prices (markets at the dates of execution of the purchase contracts) are evi denced by promissory notes bearing interest at 3 per cent payable within 10 years from dates thereof, the shares serving as collateral. Payments against interest and principal of the notes shall be not less than fifty per cent of the dividends paid on such collateral shares. The employees have the option to, and the company may require that they, withdraw the collateral in hundred-share lots as payments become equal to the purchase price thereof. Upon death or retirement of an employee the company shall, if requested, repurchase at the original sales price shares not then fully paid for. Under other circumstances if the employee shall not complete payments the company shall have the option of so repurchasing shares not then fully paid for but may exercise any legal right to compel completion of the contract. Shares held as collateral aggregated 302,700 at December 3 1, 1952, and 333,1 00 at December 3U 1951. 5. Reacquired capital stock, carried at first-in, first-out costs, comprises: Preferred Class A Preferred Class B Shares 9.3S3 13,092 Cost $1,147,727 1,435,354 $2,583,081 6. Intercompany transactions between consolidated companies have been eliminated from sales and cost of sales. 7. Other income comprises: 1952 Dividends received (including $2,308,014 from unconsolidated subsidiaries in 1952 and $2,364,733 in 1951).................................................$2,847,143 Reserves no longer required: Investments............................................................ Advances to unconsolidated subsidiaries . . Inventory (see Note 2)....................................... Interest and miscellaneous...................................... 406,542 1,276,381 500,038 $5,030,104 1951 $2,973,695 640,495 456,725 $4,0 70.91J_ 8. Other charges and additions to reserves comprise: 195: Additions to reserves: Investments in and advances to unconsolidated foreign subsidiaries............................................ Inventory, net (see Note 2)....................................... Excess of cost of subsidiaries' stocks acquired dur ing year over book amounts of net assets thereof at dates of acquisition............................................ Net loss on sales and other retirements of fixed assets ...........................................................................$54,278 Miscellaneous................................................................... 6,630 $60,908 19M S -12.945 1.345.147 201,098 35.834 2,765 $1,627,789 9. Numerous differences exist between taxable income and book income, including certain fluctuations in the inventory reserves; percentage depletion; depreciation charges; and purchases of past service annuities deductible for tax purposes but charged on the books to reserve for pensions. 10. An Agreement and Plan of Reorganization between National Lead Company and Doehler-Jarvis Corporation providing for the acquisition by National Lead Company of all 26 0000-NLI-000018473 of the assets, property, business and good will or Doehler-Jarvis Corporation in exchange tor shares of common stock of National Lead Companv and tire assumption hv National Lead Company of all of the liabilities of Doehler-Jarvis Corporation, was approved by share holders of Doehler-Jarvis Corporation on February 6, 195 3. The shareholders of DoehlerJarvis Corporation also approved the dissolution of that company. In accordance with the provisions of the Agreement, National Lead Company, as of February 28, 1953. will issue 1,222,1 18 shares of its common stock and will acquire all of the assets, property, etc., of Doehler-Jarvis Corporation. National Lead Company has an investment (included in other marketable securities) of 67,575 shares of common stock of Doehler-Jarvis Corporation for which National Lead Company will acquire, as a shareholder of Doehler-Jarvis Corporation, 77,711 shares of its own common stock. These treasury shares will be recorded at the same amount as the cost of the present investment in shares of Doehler-Jarvis Corporation. The business of Doehler-Jarvis Corporation will be continued as a division of National Lead Company. General : Under agreements with the Atomic Energy Commission, two consolidated subsidiaries are operating plants constructed with funds supplied by the Commission. Neither the assets, liabilities, nor results of operations of such plants are included in the accompanying financial statements. Annual fixed fees received by such subsidiaries as contract-operators arc included in other income in the accompanying financial statements. Refunds under the Renegotiation Act of 1951, if any, are not considered to be material and no provision has been made therefor. Reference is made to comments included in the president's message on the status of litigation under antitrust laws, Federal Trade Commission and Clayton Acts, Defense Pro duction Act and patent infringements. No provision has been made for such taxes as may be paid if and when accumulated earn ings of subsidiaries are distributed to the parent company, since such taxes may never accrue. LYBRAND, ROSS BROS. & MONTGOMERY Certified Public Accountants 90 Broad Street, New York City To the Stockholders of NATIONAL LEAD COMPANY, NEW YORK. N. Y. We have examined the consolidated and individual balance sheets of Na t io n a l Lead Co mp a n y and its wholly owned domestic subsidiaries as of December 31, 1952 and the related statements of income and surplus for the year then ended. Our examinations were 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 have also examined or have received reports of other independent public accountants upon their examinations of the balance sheets and related statements of income and surplus of the major domestic subsidiaries more than 50, but less than 100 per cent owned and the major foreign subsidiaries other than Continental European, for their respective 1952 fiscal years. Similar examinations were made for the 1951 fiscal years. In our opinion, based upon the above-outlined examinations and the above-mentioned reports of other independent public accountants, the accompanying consolidated balance sheets and related consolidated statements of income and earned surplus unappropriated present fairly the consolidated financial position of National Lead Company and its wholly owned domestic subsidiaries at December 31, 1952 and 1951 and the consolidated results of their operations for the respective years then ended, in conformity with generally accepted account ing principles applied on a consistent basis. Ly b r a n d , Ro s s Br o s . & Mo n t g o me r y New York, March 3, 1953. 27 0000-NLI-000018474 Net Sales...................................... $148,622,919 $166,168,715 $167,562,928 $167,447,: Net Income before Taxes . 13,537,168 18,304,136 11,218,228 16,713,-1 Federal Taxes on Income . 8,336,291 10,740,382 4,679,720 7,036.; Net Income........................... 5,200,877 7,563,754 6,538.508 9,677. Earned Per Share of Common Stock (Adjusted to present capi talization) 0.34 0.60 0.48 () Preferred Dividends .... 2,031,323 2,031,323 2,059,323 2,059,; Common Dividends...................... 2,317,998 3,090,664 3,090,664 4,6357 Current Assets: Cash...................................... U. S. Government and other Marketable Securities . Notes and Accounts Receiv able ...................................... Inventoriesf ...................... 12,742,150 10,313,702 9,571,663 11,681,0 17,002,791 16,131,607 17,902,254 18,393,5 12,560,223 21,787,559 14,859,530 23,601,398 15,171,135 29,361,453 15,573,0 32,617,3 Total Current Assets ... 64,092,723 64,906,2 37 72,006,505 78,265,'i Total Current Liabilities 19,054,627 21,566,069 16,843,516 22,410,0 Net Working Capital .... 45,038,096 43,340,168 55,162,989 55,854,9 Gross Property Account 94,198,239 98,025,024 100,794,666 106,793,6 Reserves for Depreciation Depletion and Amortization 41,464,768 46,250,242 55,147,610 56,018,9 Net Property Account .... 52,733,471 51,774,782 45,647,056 50,774,7 * Includes cash dividends of $3,86l1,137 and 5% s tock dividend valued at $31 3er share. 28 0000-NLI-000018475 1952 $268,026,394 $320,457,301 $257,461,599 $342,727,911 $389,941,313 $358,048,435 23,904,417 26,606,510 21,191,579 54,557,799 59,607,540 48,386,163 11,724,285 13,302,155 6,442,568 28,067,155 36,613,823 25,326,109 12,180,132 13,304,355 14,749.011 26,490,644 22,993,717 23,060,054 1.09 2,059,323 6,181,328 1.21 2,085,512 8,671,502* 1.29 2.41 2.05 2,134,451 2,134,451 2,157,806 7,317,900 13,430,651 14,381,756 2.06 2,181,161 14,729,644 12,953,907 9,304,183 17,961,612 24,370,746 23,418,857 18,730,699 11,500,197 2,524,445 10,517,353 22,731,445 23,580,682 17,628,531 21,461,427 44,550,399 28,120,306 59,118,313 16,114,669 43,857,133 35,524,20 6 48,824,480 31,229,932 55,404,739 29,551,237 56,960,027 90,465,930 99,067,247 88,450,767 .31,450,877 133,634,210 122,870,494 30,252,412 35,359,277 25,864,583 56,402,753 66,051,113 55,419,739 60,213,518 63,707,970 62,586,184 75,048,124 67,583,097 67,450,755 122,739,173 133,879,240 133,252,879 135,578,755 154,012,668 161,540,966 57,407,848 59,856,625 65,331,325 74,022,615 64,080,311 67,390,015 71,215,202 69,172,568 68,188,740 82,797,466 75,944,349 85,596,617 f Inventories for 1943 and 1944 are shown net of normal stock reserves. 29 0000-NLI-000018476 YESTERDAY AND TODAY 30 Development of product and processes has gone hand-in-hand with advance ments in transportation and packaging. In 1953, as in past years, improvements will continue to insure the fine reputa tion of "Dutch Boy" products in their wide-range service to industry. 0000-NLI-000018477 1907...Earliest example of the "Dutch Boy" trademark on an oaken white lead keg, opposite its means of de livery. 1909 . . , The steel package for white lead, which National Lead Company pioneered, was a notable development. 1953.. .The blue-c d-white label, with trademark in full color, distinguishes today's "Dutch B< y" mixed paint line package. 0000-NLI-000018478 BRANCHES AND DIVISIONS ATLANTA BRANCH . . . -100 Bishop Street, N. W . Atlanta G. W. Pendery. Aianager ATLANTIC BRANCH ... Ill Broadway, New York R. M. Bennett, H. E. Freiherr, Aianagers BALTIMORE BRANCH . .. 214 West Henrietta Street, Baltimore H. A. Getz, Manager BAROID SALES DIVISION . ,. 2404 Danville Street, Houston G. L. Ratcliffe, General Manager . .. Oil Well Drilling Mud Service CHICAGO BRANCH . . . 900 West Eighteenth Street, Chicago P. J. Pater. Aianager CINCINNATI BRANCH , . . 659 Freeman Avenue. Cincinnati H. W. Hundley, Alm/ayer CLEVELAND BRANCH ... 1776 Columbus Road, Cleveland E. G. Oriing, George Sathre, Aianagers DE LORE DIVISION . . . Carondelet, St. Louis A. J. Wetzel, Aianager . . . Barium Sulphate and Calcium Carbonate Pigments DOEHLER-JARVIS DIVISION . . . Smead Avenue, Toledo F. J. Koegler, General Aianager . . . Die Castings EVANS LEAD DIVISION . . .Charleston, W. Va. R. M. Evans, Aianager. . . Lead Oxides E. W. BLATCHFORD CO. BRANCH ... Ill Broadway, New York M. J. Friday, Sr., Manager . . . Type Metals and Blatchford Base MAGNUS METAL DIVISION ... 111 Broadway, New York W. V. Burley. General Manager Railway Car Journal and Diesel Locomotive Bearings NATIONAL LEAD CO. OF MASS___ 800 Albany Street, Boston Karl Fischer, G. A. Savage, Managers PACIFIC COAST BRANCH . . . 2240 Twenty-fourth Street, San Francisco D. D. Roberts, Aianager PHILADELPHIA BRANCH . . .2607 East Cumberland Street. Philadelphia J. W. Gardiner. Jr., G. A. Watts, Aianagers PIONEER ALLOY PRODUCTS DIVISION ... 111 Broadway, New York W. J. Welch, Manager . . . Stainless Steel Valves and Castings ST. LOUIS BRANCH . . .~22 Chestnut Street. St. Louis E. E. Busse, R. R. Stamm, Aianagers ST. LOUIS SMELTING ^ REFINING DIVISION ... Fredcricktown, Missouri H. A. Krueger, Manager SOUTHWESTERN BRANCH . . .959 Terminal Street, Dallas W. H. Lessmann. R. R. Stamm, Aianagers STEEL PACKAGE DIVISION . . .722 Chestnut Street. St. Louis W. T. Trask, Aianager TEXAS MINING & SMELTING DIVISION ... Laredo, Texas J. C. Archibald. Jr., Aianager . . . Metallic Antimony and Antimony Oxides TITANIUM ALLOY MFG. DIVISION. . .111 Broadway, New York J. M. Johnston, Aianager . . . Products of Titanium and Zirconium TITANIUM DIVISION . . .111 Broadway, New York J. H. Reid, Manager . . . Manufacturers of Titanium Products; Miners of Ilmenite and Magnetite Iron Ore 32 0000-NLI-000018479 irwuimuMia CORPORATIONS in Which National Lead Company is Interested Through Ownership of All or Part of the Capital Stock AMERICAN BEARING CORPORATION*. .. Indianapolis Peter Lambertus, President . . . Manufacturers of Precision Bearings BAKER CASTOR OIL COMPANY ... New York I. M. Colbeth, President . . . Manufacturers of Castor Oil CANADIAN TITANIUM PIGMENTS LIMITED*. .. Montreal G. N. Bates, Sales Manager . . . Distributors of Titanium Oxide Pigments DOEHI.ER-JARVIS CORPORATION*. . Toledo E. I. Koegler. President . . Distributors of Die Castings EVANS LEAD CORPORATION*. .. Charleston, W. Va. R. M. Evans, President . . . Distributors of Lead Oxides HOYT METAL COMPANY OF GREAT BRITAIN, LTD.*... London J. C. Hart, Managing Director . . . Manufacturers of Anti-Friction Metals MORRIS P. KIRK & SON. INC. . . . Los Angeles J. Paul Kirk, President . , . Manufacturers of Lead Alloys and Oxides MAGNUS BRASS MFG. CO.*. .. Cincinnati W. V. Burley, President . . . Manufacturers of Locomotive Specialties MAGNUS METAL CORPORATION*. .. Chicago W. V. Burley, President. . . Railway Car Journal and Diesel Locomotive Bearings MASTER METALS, INC. ... Cleveland L. H. Herthneck, Manager . . . Smelters of Secondary Metals MINNESOTA LINSEED OIL CO. ... Minneapolis E. H. Russell, President. . . Manufacturers of Linseed Oil NATIONAL LEAD CO. OF OHIO*...New York J. A. Martino, President NATIONAL LEAD CO. S. A. (ARGENTINA)*. . .Buenos Aires C. M. Merrell, President NICKEL PROCESSING CORPORATION . . .Nicaro, Cuba H. C. Wildner, President . . . Manufacturers of Nickel Oxides THE CANADA METAL COMPANY, LTD.*. .. Toronto J. A. Taylor, President Manufacturers of Lead Products, Brass and Bronze, Dross Smelters THE CHAS. TAYLOR'S SONS COMPAND *. .. Cincinnati C. R. Taylor, President . . . Manufacturers of Refractories TITAN CO. A 'S . . . Fredrikstad, Norway Enk Anker, Managing Director Manufacturers and Distributors of Titanium Oxide Pigments SOCIETE BELGE DU TITANE S. A,, Brussels, Belgium TITAN COMPANY, INC.*. .. Wilmington, Del. Erik Anker, Vice-President Manufacturers and Distributors of Titanium Oxide Pigments SOCIETE INDUSTRIELLE DU TITANE, Paris, France TITAAN N. V.. Rotterdam, Netherlands TITANGESELLSCHAFT, m.b.H., Leverkusen, Germany TITANIUM METALS CORPORATION OF AMERICA . . . New York H. C. Wildner, President . . . Distributors of Titanium Metal Products TITANIUM PIGMENT CORPORATION*. .. New York J. A. Martino, President . . . Distributors of Titanium Oxide Pigments * Wholly owned. 33 0000-NLI-000018480 PRODUCTS o PAINTS AND PAINT MATERIALS Sold under the DUTCH BOY brand name Exterior House Paints Interior Wall Paints Enamels Varnishes Metal Protective Paints Linseed Oil Lead Mixing Oil White Lead Red Lead Colors Flatting Oil Liquid Drier PIGMENTS AND CHEMICALS Basic Carbonate White Lead Basic Silicate White Lead (45X) Lead Acetate Lead Silicates Lead Oxides Calcium Carbonate Barium Sulphate Copperas-Iron Sulphate Zinc Chloride Copper Sulphate Antimony Oxides Lead Chemicals for the Plastics Industry Lorite OILS Linseed Oil Special Paint Oils Castor Oil LEAD PRODUCTS Lead Pipe Sheet Lead Lead Traps and Bends Lead Cames Lead Sash Weights Ingot Lead Bar Lead Lead Shot Lead Wire Lead Washers Lead Wool LEAD ALLOY PRODUCTS Solder Bearing Metals Type Metals Electrotype Metal Stereotype Metal Antimonial Lead Tellurium Lead Storage Battery Plate Metal DOEHLER-JARVIS DIVISION Raw & Finished Die Castings (Zinc, Aluminum, Brass, and Magnesium) 34 0000-NLI-000018481 NATIONAL LEAD COMPANY OTHER METAL PRODUCTS Railway Journal Bearings Satco Bearing Metals Diesel Engine Bearings Kirksite "A" Die Metal Pressure Die Castings Pewter and Britannia Metal Antimony Stainless Steel Valves and Castings ACID HANDLING EQUIPMENT Chemical Lead Pipe Chemical Sheet Lead Acid Pumps Acid Concentrators Lead Lined Pipe Lead Lined Valves Lead Lined Fittings Tin Lined Pipe Tin Lined Valves Tin Lined Fittings Hard Lead Valves OIL WELL DRILLING MATERIALS Clays Colloids Weighting Agents Suspending Agents Thinners Logging Service TITANIUM ALLOY MANUFACTURING DIVISION Ferro Alloys of Titanium Titanates Titanium Dioxide (natural Rutile) Zirconium Chemicals Zirconium Ceramic Materials Zirconium Metal TITANIUM PIGMENTS Sold under the TITANOX brand name Titanium Dioxide (Rutile) Titanium Dioxide (Anatase) Titanium Calcium Pigments Titanium Dioxide (Technical Grade) GENERAL PRODUCTS Magnetite-Iron Concentrates Magnetite Sinter Ilmenite Concentrates Journal Lubricator Pads Locomotive Lubricating Devices Titanium Metal Linseed Oil Cake and Meal Expansion Bolts Screen Plates for Paper Mill Industry Small Steel Containers Bentones Refractories 35 0000-NLI-000018482 0000-NLI-000018483 tional Lead Company Facilities in the United States