Document JNRx07ZeY8zpq1ydLYmqk8g62

rri?; j- V*.! . V-,, - THE GLIDDEN COMPANY CLEVELAND, OHIO ; /. 1 '-'..IT' +x .............. . V,- .. . ___ -V - v -: i: `` . .. .. : ' - , ' "IV*-\ v W,7" ' W - ^ -r-?. >- - :->. v. v.;x v, t , .. - * ' *. .. . * ... . .5 ^ :! s? i' , / 1 1 - ] CVf !: GLIDDENV- /;>/" 1; .' - : * ANNUA L REPORT Fiscal Year Ended October 31, 1937 _ . '> -. . . v.; " . :' "- - r " .i " S J' y^ r r Hm ! <'f v. ~ ;`M GLD000365 Th e Gl id d e n Co mp a n y CLEVELAND, OHIO December 31, 1937 To the Holders of Common Stock of The Glidden Company: There is enclosed formal notice of the annual and a special meeting of the shareholders of The Glidden Com pany, to be held at: 1396 Union Trust Building, Cleveland, Ohio, on January 20, 1938 at 10:00 o'clock a.m. In addition to the usual business to come before the annual meeting two special matters are to be considered at this meeting, namely: Amending the Articles of the Company so as to permit action to be taken by the vote or consent of the holders of a majority of the Common Stock. Section 49 of the General Corporation Act of Ohio provides* in effect, that notwithstanding any provision of the Act requiring for any purpose the_vote of a designated proportion of the voting power of a corporation or of any class or classes of snares, the Articles may provide that such action may be taken by the vote or consent of a greater or less proportion but unless expressly permitted by the Act, the proportion shall be not less than a majority. Due to the large number of shareholders of The Glidden Company, it has become increasingly difficult to obtain the presence, in person or by proxy, of sufficient holders of Common Stock to take action on various matters which now requires the vote of the holders of at least two thirds of the outstanding Common Stock. This is due to various reasons such as the practice of carrying stock in so-called street form, holding stock in trust, etc. The proposed amendment does not affect the voting rights of the Preferred Stock hut it will facilitate the taking of action which from time to time the Board of Directors may deem ad visable in the interests of the Company and the shareholders. The other matter to be considered at the meeting is the acquisition of the assets of Southern Pine Chemical Company by 7'he Glidden Company. Your board of directors at a meeting held on December 14,^1937 approved an Agreement and Plan of Reorganization between Southern Pine Chemical Company and this Company which provides, among other things, for (1) the acquisition by this Company of all of the property and assets of Southern Pine Chemical Company, free and clear of all liabilities and'encumbrances, in consideration of which this Company will issue 34,697 shares of its authorized but unissued Common Stock, and (2) the distribution of said Common Stock by Southern Pine Chemical Company among its shareholders, upon liquidation thereof, as follows: (a) three (3) shares of Glidden Common Stock for each share of 6% Cumulative Preferred Stock of Southern Pine Chemical Company, with dividends accrued thereon, and (b) the balance of said Glidden Common Stock, pro rata, among the holders of Common Stock of Southern Pine Chemical Company, subject, however, to the applicable provisions of the General Corporation Act of Ohio re specting the rights of the shareholders of Southern Pine Chemical Company upon the sale of assets, liquidation and dissolution, and the satisfaction of such rights by Southern Pine ChetriicahiSompany. Your attention is called to the fact that certain directors and officers of The Glidden Company are the holders of substantial blbcks of stock, both preferred and common, of Southern Pine Chemical Company, and upon the distribution by Southern .Pine 'Chemical Company of the Glidden Compion Stock to be Received by it upon the sale of said assets^ said directors and officers will receive their proportionate share of Glidden Common Stock, on the basis set forith' above. The directors and officers of The Glidden Company who are shareholders of Southern Pine Chemical Company were the holders of record of the following shares of said Company as of December 10, 1937: Number of Shares Name Preferred Common Adrian D. Joyce R. H. Horsburgh R. W. Levenhagen W. J. O'Brien P. E. Sprague Clifton M. Kolb 1153 103 none none 25 21 12185 454 600 500 150 643 Southern Pine Chemical Company is engaged in the production of turpentine, resin, naval stores and similar products, some of which are used by The Glidden Company in its manufacturing operations. The acquisition by The Glidden Company of the assets and business of Southern Pine Chemical Company will enable The Glidden Company to further diversify its products. Based upon an audit of the books of Southern Pine Chemical Company as of October 31, 1937, made by Messrs. Ernst & Ernst, independent public accountants, and based upon an appraisal of the property, plant and equipment of said Company as of the same date made by the American Appraisal Company, an independent appraisal company, your directors believe that the property and business of said Company have a fair value of {51,040,910. As stated above, 34,697-shares of authorized but unissued Common Stock of The Glidden Company will be issued for said assets on the basis of 230 per share. Your board of directors has given careful consideration to this matter and believes that it is in the interests of the shareholders to acquire said assets. If you regard such purchase favorably, please sign and return the en closed proxy which will be voted affirmatively on the proposal. ADRIAN D. JOYCE, President GL.D0003 66 THE GLIDDEN COMPANY CLEVELAND, OHIO December 31, 1937 To the Shareholders of THE GLIDDEN COMPANY: On behalf of the Board of Directors, the certified annual report of The Glidden Company for the year ending October 31, 1937 is herewith submitted. . Our fiscal year closed with the largest volume of sales in the history of the organization. The net sales aggregated more Than Fifty-four Million Dollars and showed an increase over the previous year of a little more than 21%. v During ten months of the year the profits were satisfactory,'running well above the previous year, but in the last two months, of the year the commodity markets declined very rapidly so that on the last day of the fiscal year the commodity index reached the lowest point since 1934.:: f T'5 ' : In taking inventory at that time, raw materials, having a quotable market, were written down to the lower of market or cost. While this adversely affected the showing for the fiscal year last closed, yet it placed our business in a good inventory position for the new fiscal year. V'-> At the present time uncertainty is the controlling factor in taxes, labor and security markets. Because of this uncertainty it has been impossible to make: :, constructive plans for the next year. If the labor situation could be stabilized . ; and the undistributed profits tax could be repealed, and if business could be : given an opportunity to properly plan for the future, a great number of men now, unemployed could be quickly put to work and prosperity would result. : : . ;. There is-a tremendous dormant demand for Paints and Varnishes. On; every hand there is need of new construction and of renovizing. Under normal' conditions it would take several years to catch up with painting requirements. ; The increased use of color and the desire of the people for modem homes, better ; living conditions, and better finished furniture and household equipment all add GLD0003 67 to the good prospects for the Paint and Varnish industry,when"political factors' will permit it to function normally. , ;J " \v jv,\ ,''. '1^511 <- ,'V. Our Food Division is in excellent position on inventories, and owing to the ' - low costs of vegetable oils such products as oleomargarine, shortening, cooking - oils, etc. are enjoying a good sale. Regardless of conditions, people must eat and > the prospects for the Food Division are most encouraging. ` *,v-' In our Soya Bean manufacturing operations we have spent large sums r V during the past year on research, sales, and advertising with the result that our, products are well established in the markets of the country . Our new units are r-hr^* 1 - functioning perfectly and prospects are favorable. . In the Chemical and Pigments Division our lead, lithopone and titanium pigment operations are proceeding satisfactorily and we are finding an expanding market for the products. -- h *V The annual report will indicate that ^the Company is in good financial position and all the properties of the Company are in fine physical condition. The processes, machinery and equipment are all modern and production "can" . be maintained on a competitive basis. -, ................. - ' . t'uv '' t ;v'. : Notwithstanding the higher expenses caused by the various State'Income Tax laws, and by the Social Security taxes and all-time peak wages, had it not'^^^^p'r been for the slump in commodity prices, final results would have been, most gratifying. In spite of adverse conditions, encouragement is found in the' fact' ^^ 1 * a. m m M r* mmm mm m" A* C Ail* 4* A**.** Jm> A, mm a*l la*. M Am m* :'A mmi l' v i :kj'i J `I?St v good Your Directors are gratified with the mutually satisfactory labor cohdi- i tions existing throughout the organization. ' They take this .opportunity" of expressing their satisfaction with the good work of the executives and employees ,;'-y . whose loyal efforts have contributed in maintaining the satisfactory relations ; with our customers which have enabled us to make a new sales record. . - .'VtizS- ' By order of the Board of Directors, . ADRIAN D. JOYCE, '.. President. - r-T, GLD000368 CONSOLIDATED The Glidden Company and C October ASSETS CURRENT ASSETS Cash....___ ______________ ______________________ Trade Rotes and acceptances receivable.----------------Trade Accounts receivable------------ .----------------------- 2 1,234,817.92 2 163,823.30 4,339,060.66 Less reserves1-- 24,302,883.96 127,340.36 4,375,543.40 Inventories--at lower of cost or market except as stated in Note A: . Raw materials, in process, finished goods and supplies___ ________ .________________ _____ Other current accounts receivable and advances on purchase commitments____________:------------------ . 11,778,663.43 549,302.55 217,938,327.30 . INVESTMENTS IN SUBSIDIARY AND AFFILIATED COMPANIES California mining companies--at less than cost-- Y . Note B; . Y\.. Capital stock (wholly owned)_______________ 2 15,000.00 Bonds--principal amount 2500,000.00_________ 187,500.00 Advances..; ______________________________ 857,481.46 2 1,059,981.46 Affiliated company--at cost--Note C: Capital stock....... ........................ ............ ... ..... ;__ 600,000.00 1,659,981.46 OTHER ASSETS AND INVESTMENTS Cash surrender value oflife insurance........................ Claims against closed banks, less reserve___________ Sundry investments, less reserve__________________ Miscellaneous notes and accounts, advances to sales men and sundry deposits_____________________ 2 399,629.25 50,725.15 165,551.64 60,183.69 676,089.73 PROPERTY, PLANT AND EQUIPMENT Land at cost'or less........ _..____________ __________ Buildings, machinery, equipment, etc., at cost or less Less reserves for depreciation and depletion INTANGIBLES Patents and rights to manufacture, at cost, less amor tization............;______________ ________________ 2 1,995,463.92 17,242,069.60 219,237,533.52 6,293,458.33 12,944,075.19 95,213.87 DEFERRED CHARGES Inventory of advertising stock, stationery, unexpired Y : insurance premiums and prepaid expenses_______ : i Special new products development_______ 2 428,203.48 115,916.91 544,120.39 . : . ;Vv ;;;;y 'V 233,857,807.94 ".V .V-y i .i ' i ~ i ii sag -,r; GLD000369 ;. LIABILITIES, CAPITAL STOCK AND SURPLUS CURRENT LIABILITIES............... . Notes payable to banks and through broker.________ Accounts pajvbl-___1 Accrued taxes, royalties, insurance, etc:-'V-,j J}'~~ v '' P-o'-ie'-.r. IV ft.ieral and state taxes on income--r esrimated. $ 3,750,000.00 _ _ . : , ?,,5 < 1,373,904.44 -5\VV- ' . - ---.--- -> 67,885.56V , ix aI Reserved for^r eon veision s?. - 179,946 shares `stated Capital_____________ ' '* Snip as. \ ?pl 3* ..._______1____ .. Earned surplus__________ _______ 1 -* * - r <st Ler: treasury i'o' k---at cost: 1.100 rharf'' -ommon__ >*, ,1 ``.yj J, i- 4,006,705.00 14,003,705.00 - t ^r- * ' ` ' ' - -` ` * 7,520,063.39,::>f 6,319,469.211 13,839,532.60 r, ?27,843t237.60l ^ViSwV'L` ; vV36,403.37.27,806,834.23;?$^" {533,857,807.94 , #" * *V - ^' ' ' ' ' *!*- ' -1,*-~ i, r 'S'*; rt i r *' v Jj -.* ........ssaasasasaa ,, 'J.-f f'Ote A--lrvertory pf ole resin (raw material from which nelio resin is produced by a patented! process).is included on --. j - i_ Mr <w rvA e than market value computed on the basis of quo- made in respect 'oflih|l:i!w material'inventory. *,-"' ? the Quantity whieh u being carried and which is Jibe Loip^.iy committed to purchase certain raw materials at znarre'- pners *t the date of this balance sheet by approximately N te B- imcstiD',rf* ta California mining companies, whose assets are n : 1 e**n at !** tLsa cost, which carrying value, on the basis ^ GLD000370  t -V- - - SURPLUS ACCOUNTS ' -.-if - > : :r-^:-'V;-.M..X;: ; f The Glidden Company and Consolidated Canadian Subsidiary October 31, 1937 .. ' CAPITAL SURPLUS ; ;: : f *- Balance October 31, 1936---- ------- --- ------------------ ~. DEDUCTION Registration and other expenses in connection with . 1 offer to common - 78,400-12/25 ; Less excess ofselling value of 741 $ 7,524,343.82 : EARNED SURPLUS.,; -. . Balance October 31, 1936...__.............. ...........-- ' ' ad d it io n \ . .:..V. ' Net profit for the fiscal year ended October 31, 1937- $ 2,542,793.30 :- * Less dividends paid:''-; V.' -' % "'. Convertible preferred--S2.25 a 8hare...l.......i.;....c..._ - 449,920.08 -". Common--2.60 a share...._...,,;'........._..-.........^._..-;; 2,080,126.00:- 2,530,046.08 t! 12,747.22 ; BALANCE OCTOBER 31,193? 6,319,469.21 ,t ` i?" "S', i Note---In prior years certain items of discount and expense, provision for contingencies and losses on dismantlement have been charged to capita) surplus. If such items together with additional depreciation claimed for federal income .tax ^. purposes for the years. 1932 to 1936, inclusive, had been charged against earned surplus instead' of capital surplus, the respective amounts of such surplus accounts would be $5,602,488.81 and $8,237,043.79 as at October 31, 1937.v." The\-.-r Company's federal income tax return for the year 1937 was not completed at the date of this statement hut depreciation ? to be claimed therein will exceed provision charged to profit and loss for the year ended October 31, 1937., -' *- 1V CL0Q00371 CONSOLIDATED PROFIT AND LOSS STATEMENT The Glidden Company and Consolidated Canadian Subsidiary For die fiscal year ended October 31, 1937 Net sales1---------------- --- -------- --,--------------------- -------- --Cost of goods sold, selling, administrative and general expenses (exclusive of depreciation)--------- _------- ---------,--,--------------------------------------- $54,052,233.p7 50,870,807.32 PROFIT BEFORE INTEREST, DEPRECIATION AND OTHER INCOME Other income ($609,631.58) less other deductions ($162,353.99)----------- $ Less interest expense--,------ --------------------- ----------------------------------- $ 3,181,425.75 447,277.59 48,971.29 398,306.30- rivv/rii DJbruiui x iwvu/inu roxv i/i>i : AND FEDERAL, DOMINION AND STATE TAXES ON INCOME $ 3,579,732.05 ,; Provision for depreciation and depletion : ----------- :--.-- 607,735.02 . ' PROFIT BEFORE FEDERAL, DOMINION ! . . AND STATE TAXES ON INCOME _ rovision for estimated federal normal income tax andAominion and : : state taxes on income (no provision for surtax on undistributed profits considered necessary)______________-------------- ------------------------------ -- '- ' v ` $ 2,971,997.03 .- ,; : .- 429,203.73 NET PROFIT $ 2,542,793.30 Notes: ^ : - c f - ` -'y ` \ No provision has been made In the foregoing statement for loss of wholly owned son-operating California mining com panies for the year, amounting to 44,792,84 including provision for depreciation in the amount of 27,908.64. The Company's federal income tax return for the year 1937 was not completed at the date of this statement but de-. predation to be claimed therein will exceed provision in this statement due to depreciation claimed on costs written oif or credited to revaluation reserve during 1932. Reference is made to Note A to the balance sheet concerning pricing of certain raw material inventories. ERNST & ERNST ACCOUNTANTS AND AUDITORS SYSTBM SERVICE CLEVELAND V Union Trust Bmlding v j: The Glidden Company, December 24, 1937 Cleveland, Ohio. ' " `V -v - . ... We have made an examination of the balance sheet of THE GLIDDEN COMPANY and its wholly owned subsidiary - THE GLIDDEN COMPANY, LTD., (California mining companies excluded) as at October 31,1937, and of the statements of profit and loss 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 information and explanations from officers and cm- , ployed of the Companies; we alto made a general 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. Based on our tests of prices used in the inventories, it is our opinion that the inventories are stated on the basis of the lower of cost or market prices except certain raw materials referred to in Note A to the balance sheet. Property, plant and equipment are stated on the basis ofcost or less, reduction having been made in 1932 to eliminate , appreciation and to provide for further write-downs. ` -I,; Officers of the Companies have expressed the opinion that pending lawsuita are of minor importance and that no material losses will result therefrom. In our opinion, based upon our examination and excluding the California mining companies, the accompanying balance sheet and related statements of profit and lots and surplus fairly present the consolidated position of the Company and The Glidden Company, Ltd., at October 31, 1937, and the consolidated results from their operations for the year ended ' at that date. Further, it is our opinion that except for the inclusion of certain raw materials in inventories at cose which ex--. ceeded market price at October 31, 1937, as stated in Note A to the balance sheet, the statements have been prepared in ac- :: cordance with accepted principles of accounting and on a basis consistent with the preceding year. .. . : ^ e r n s t &e r n s t -.:;/. '. : ' ' ' ; . ......' . : Certified Public Accountants . .. .. .V . . / -. 1; >? .' ' -/: ; : r'-^ri'ifiiiTiif^ 'Wltliiftriii fffifiii*HigiritirfrrT iliiffn'1st ilfrl'Ti-Y ^'i'tTifftis~ii`p*i >4e* GL00003 72 THE GLIDDEN `COMPANY' CLEVELAND,OHIO " V' FACTORIES FROM COAST TO COAST . BRANCHES IN PRINCIPAL CITIES 7;. '" Atlanta, Ga. . Long Island City, N. Y. : Bakersfield, Calif. Louisville, Ky. Baltimore, Md. ' Miami,'Fla. - Berkeley, Calif. . . Minneapolis, Minn. Binghamton, N. Y. Montreal, Canada Birmingham, Ala. New Orleans, La. Boston, Mass. Norwalk, Ohio . Buffalo, N. Y. Oakland, Calif. Charlotte, N. C. Oklahoma City, Okla. Chicago, 111. *, Orlando, Fla. < . . * Cleveland, Ohio Pittsburgh,'Pa. - ` \_ Chico, Calif. . v1 s .^ Collins, Ga. . ` ' - Reading, Pa. -2 . ' Collinsville, III. . . Sacramento, Calif. . ' ~ . Dallas, Texas -. San Antonio, Texas - Detroit, Mich. San Francisco, Calif. Elmhurst, L. I., N.Y.. , 7.... San Jose, Calif. " El Paso, Texas ' '?;Scranton, Pa. ' 7 Evansville, Ind. St. Louis, Mo. , . Ft. Worth, Texas 7 ; >... k , St. Petersburg, Fla. / Fresno, Calif. ''- ' .7;'-- Stockton, Calif. -'!r Halifax, N. S. Tampa, Fla. Hammond, Ind. Toledo, Ohio Houston, Texas Toronto, Canada Honolulu, T. H. . Valdosta, Ga. Jacksonville, Fla. Washington, D. C. Knoxville, Tenn. - Winnipeg, Canada Los Angeles, Calif. Wilkes Barre, Pa. West Palm Beach, Fla. GLD000373