Document NNNp37vRgyaY12bDB0repLJp8

N11769 ^liilYC 00010023 CAPITAL STOCK December 31, 1932 Authorized, 12,000,000 shares, $50 each Issued, 8,919,086 shares, $50 each $600,000,000 445,954.300 OFFICERS Chairman of the Board . JOHN D. RYAN* President.................................... CORNELIUS F, KELLEY Vice-President........................ BENJAMIN B. THAYERf Vice-President........................ JAMES R. HOB BINS Vice-President and Treasurer . ROBERT E. DWYER Secretary and Assistant Treasurer DAVID B. HENNESSY General Auditor........................ JAMES DICKSON Assistant Secretary .... KENNETH B. FRAZER John D. Ryan* Cornelius F. Kelley Charles T. Fisher Andrew J. Miller IN MEMORIAM JOHN D. RYAN October 10, 1864 February 11. 1933 John D, Ryan. Chairman of the Board of Directors of this Company, died on the 11th day of February, 1933. ft is eminently fitting: that,there should be recorded in the Minutes of this Company a t^stsmdnial td his character as a man and his worth as an officer of this Company. For many years the name of Anaconda and that of his own were regarded as practically synonymous. i Mr. Ryan was elected, a,Trustee of the Anaconda Copper Mining Company on June 2SL 1904. , JJe was .elected: President of, the Company on June 9, 1905, serving in that capacity until June ip. 1909. From that date until 1913 he served as President of the Amalgamated Copper Company. Upon the dissolution of the latter Company, Mr. Ryan was:reelected 'President of this Company, on May 25, 1915. He served in that capacity until .pjSidpIraip'tment:as Assistant Secretary of War, on September 3, 1918, necessitated his rasighaifidfiS 'ffe1 .returned"after the Armistice and was elected Chairman of the Board on DpceHi&ep:3,T,918. This brief statement tcords chronologically the years of his service to the Company: but thdl'tidult'pf ith^t service is in a large part the.history of the growth, development and progress of the Company under his leadership. When Mr. Ryan assumed the direction of the Company it was a comparatively small enterprise. Under his direction it grew through the years to its present proportions. i It was notjaione in the expansion of the Company that Mr. Ryan displayed his gifts for organisation and finance, but also in the inspirational quality of his leadership. In the soundness and the future of the Company he had supreme confidence; a faith that was demonstrated throughout the past three difficult years, during ail of which time and at his deathj;'h|1'ipas;!p5 fardts largest individual stockholder. Be it Re s o l v e d b y t h e Bo a r d o f Dir e c t o r s : That its late Chairman, John D. Ryan, served the Company faithfully and well; that in ms death the Company has sustained an irreparable loss; and the Directors of this Board and his business associates have been deprived of a wise counsellor, a loyal friend, and a helpful associate. Be it Fu r t h e r Re s o l v e d : That the Board of Directors tender their sympathy to the bereaved family of the iJtiriise TTleaset^immoAnniiea]l aonnrdl PRaeesAollnutttiAonn hbea Aonrdlaepraeed4 ssnprraeeardj iutipvoenn the MMlinniutetaeas ao!f ind that a copy thereof, suitably engrossed, be sent to the family of the [Adapted by the Board of Directors, March 23, 1933.] IN MEMORIAM BENJAMIN BOWDiTCH THAYER October 20, 1862 February 22. 1933 Benjamin Bowditch Thayer, senior Vice-President of this Company, died on the 22nd day of February, 1933. The greater part of his active and useful life was Spent in its service, Mr. Thayer fitst entered the employ of the Company as a miner, in 1885, shortly after his graduation as a mining engineer. Later he left the employment of the Company, re entering its service as a Director on June 10,1909. On the same day he was elected President of the Company, a position which he filled until May 23,1915, whereupon, the Amalgamated Copper Company having been dissolved, Mr. John D. Ryan was re-elected President of this Company, and Mr. Thayer was elected, Vice-President, a position which he filled to the date of his death. During his long and active connection with the mining industry, Mr. Thayer witnessed and participated: in its growth and development. Keenly interested in every detail of the operation, his active mind, indefatigable industry and untiring effort were exerted toward the progressive improvement and perfection of the methods and processes of the Company in its manifold activities. Endowed with qualities that commanded respect, and a person ality that evoked a waa-m and genial comradeship, Mr. Thayer was universally admired and esteemed by all wifh whom he came in contact. Be it Re s o l v e d b y t h e Bo a r d o f Dir e c t o r s : That in the death of Mr. Thayer this Company has lost a faithful, valued and loyal officer; that the members of the Board have been deprived of a helpful and esteemed associate. Be x t Fu r t h e r Re s o l v e d : That the Board of Directors tender their sympathy to the bereaved family of the deceased, and that this Testimonial and Resolution be ordered spread upon the Minutes of this Meeting, and that a copy thereof, suitably engrossed, be sent to the family of the deceased. (Adopted by the Board of Directors, March 23, 1933.) IN MEMORIAM ALBERT HUBBARD MELIN July 6, 1857 September 23, 1952 Albert Hubbard Melin, Secretary and Treasurer of the Company, died September 23, 1952, after a continuous service of thirty-nine years with the Anaconda Copper Mining Company and some of its subsidiary companies. During that period he held the following positions: From November 1, 1893, to June 5, 1894, Auditor of the Butte, Anaconda and Pacific Railway Company, subsequently elected Secretary and Treasurer. He was an Officer apd Director of that Company at his death. From December 21, 1899, to November 28, 1911, Assistant Secretary and from January 31, 1905, to November 28, 1911, Assistant Treasurer of this Company. From November 28, 1911, to his death, Secretary and Treasurer. In addition to which he held other offices of trust and responsibility in various sub sidiaries of the parent organization. During this long record of service the deceased brought to the faithful discharge of his duties; a never-faiiing loyalty, an unimpeachable honesty and the highest integrity. The Board of Directors of the Company, by the adoption of this Testimonial, records the high appreciation of the Company for the services rendered; by the deceased during his long incumbency in office and the deep regret and sense of loss of his associates in this Company that has been occasioned by his death. It is Re s o l v e d ; That this expression of the Board be spread upon the records of the Company, and that To the Shareholders of Anaconda Copper Mining Company: In submitting the report of the operations and business of your Company tor the calendar year 1932, it is pertinent to briefly review the general conditions which prevailed in the non-ferrous metal industry during the period. Production of copper continued to exceed consumption during the first seven months. Subsequently stocks of copper have decreased about four thousand tons per month. World production was approximately 1,000,000 tons, of which the preliminary report of the U, S. 8ureau of Mines credits 264.000 tons to the United States, leaving a balance of 226.000 tons from foreign sources. World consumption of primary copper was about 950,000 tons. Using the formula of stocks plus production and imports minus exports, a consumption of approximately 250.000 tons is indicated for the domestic market, and 700,000 tons in foreign markets. As compared with previous years, world consumption was the lowest since 1921 (788,609 tons). It was 48.44% of the year 1929 (1,965,593 tons), and 70.78% of the average for the twenty years ended 1930 (1,342,165 tons). Domestic consumption during 1932 was the Ipwest since that of 1908 (222,255 tons); waa 29.1S% of 1929 (857,640 tons), and 44.01% of the average for the twenty years ended 1930 (568,094 tons). Foreign consumption was Relatively well maintained at 63.19% of 1929 and 90,43% of the average for the twenty years 1911-1930. Domestic consumption per capita declined to 3.95 pounds compared yith 5.02 pounds in 1908, 5.68 pounds in 1921, 14.18 pounds in 1929, and 10.61 pounds for the twenty years 1911-1930. Ail non-ferrous metals established new low record prices. The price of copper, as reported by the Engineering and Mining Journal, was 7.0235 on January 2, advanced to 7.273(1 on January 12, and declined to 4.775)5 on December 8, which level was maintained to the end of the year, averaging over the period 5.553)!. The price of lead was 3.75)! at the 5 beginning of the year, declined to 2.656 on July 18, and closed at .36, with an average price of 3.188. Opening at 3.18 a pound, zinc declined to a low of 2.3126 on May 17, advanced to 3.4738 on September 8, closing at 3.1258. with, an average for the year of 2.8768. Silver opened at 30.37,58 per ounce, advanced to 318 on February 23, declined to 24.238 on December 29, and closed at 24.3758, with the year's average of 27.8928. During1 tpe year Congress, as part of the revenue legislation enacted, imposed a tax of 48 a pound on copper imported into the United States. Owing to the accumuladon of stocks prior to the effective date, the tax has had no appreciable effect upon domestic price. Financial The gross sales and earnings of the Company upon a consolidated basis totalled $52,295,610.84. The cost sales, including all operating expenses, current development, maintenance charges, repairs, selling and general expenses and taxes, amounted to $57,240,906.30, resulting in an operating loss of $4,945,295.46. Other income amounted to $610,063.60. Deductions from income for depreciation and obsolescence, interest on current obligations, interest and discount on bonds, and the expense of carrying non-operating units, totalled $12,558,008.40, resulting in a loss for the year of $16,893,240.26. The current liabilities totalled $79,731,792.22 as compared with $71,338,989,05 in the prior year. The increase of $8,392,803.17 was all in the item of Notes Payable. Of this amount $4,515,000 was advanced to the Inspiration Consolidated Copper Company on its promissory notes, secured by the First Mortgage 7% Gold Bonds of that Company of like principal amount. The balance, $3,877,803.17, represents the total additional amount of money borrowed for the requirements of the Company. No money was borrowed from July 1st to the close of the year, during which period the Company maintained itself upon a cash basis. This Company owns approximately 28% of the shares of the issued stock of the Inspiration Consolidated Copper Company. The International Smelting Company, a wholly-owned subsidiary of Anaconda, owns the copper smelter at Miami at which all 6 sulphide concentrates from the Inspiration mine have been treated during the life of the property, and through another subsidiary, the Raritan Copper Works, provision for the re fining of the Inspiration product has been made. Under conditions approaching normal, the Inspiration property itself is and will continue to be a large and valuable copper producer for many years. There were retired during the year St ,614,000 of debentures of the Chile Copper Company and $105,000 of mortgage bonds of the Butte. Anaconda & Pacific RailwayCompany. a total of $1,719,000. Capital expenditures amounted to $2,148,985.35. Inventory Adjustment* The low prices of metals at the close of the year again adversely affected the value of the inventory of metals on hand carried over from the prior year and, notwithstanding that such prices were at practically the low point of which there is any record, it was decided, for balance sheet purposes, to value unsold metals on hand at such prices. Metals sold on firm contracts were valued, at sales prices. This adjustment necessitated an inventory write-down amounting to $9,914,440.23, which was charged to surplus. Decline of Business and Reduction of Expenditures The demand for copper depends upon the relative activity or depression of other lines of industry which utilize the metal and its products. The most important of these are electrical manufactures and equipment, telephone, telegTaph, power and light lines, auto mobiles and building. The decline in these activities was of necessity reflected in the copper industry. The following table shows the extent to which gross sales and earnings of the Company have declined, upon a dollar basis, during the past three years and the extent to which the cost of sales has been reduced: Year 1929._____ . Year 1930______ Year 1931______.......... Year I932-......... Grow Said aad Earo'mf* $305,7$ 1,876.46 179,332,797.51 96,387,705.50 52,295,610.84 %of 1929 100.00 58.65 31.52 17.10 Coce of Sale* $223,972,464.43 150,903,305.39 89,978,278.14 57,240,906.30 %of 1929 100.00 67.37 40.17 25.56 ./. I PNYC 00010030 As the decline in business from 1929 progressed, constant effort was made to adjust expenditures to diminished income. During the period of expansion the organization had been developed for a scale of maximum operations. Some of the largest units of the Company are located at remote outposts in foreign countries, where long-time contracts of necessity had been entered into with staff officials. Because of the distance from markets for supplies, accessories and spare parts, large stocks were carried and maintained, and while reductions had been made in expenditures; mines, plants, factories and equipment had been maintained with key organizations capable of resuming operations whenever conditions warranted so doing. This policy, justified at the time, proved in error as the depression continued and deepened, and in the Spring of 1932 was changed. A further curtailment to the present scale of operations was effected in April. The organization was further reduced as rapidly as was consistent and equitable. A greater division of part-time labor was enforced. Additional drastic reductions in salaries and Wages, particularly in the higher brackets, were made, and mines and plants for which there was no immediate operating prospect were put upon a complete shutdown basis. The result was, that notwithstanding large items of fixed expense over which control cannot be exercised, the cash expenditures were brought within balance with the receipts of the Company during the last half of the year. OPERATIONS Copper The production of Anaconda and its subsidiary companies from operations for the year '1932 was as follows: Anaconda Copper Mining Company-.... Andes Copper Mining Company-............ C^iile Copper Company............................. Greene Cananea Copper Company-....... International Smelting Company-.......... Copper lb*. 97,573,887 23,237,111 81,370,608 36,820,166 39,676,660 Silver oz*. 2,027,675.17 23.650.94 259,619.62 426.974.31 Gold ox*. 18,551.497 1,991.425 9,596.421 16,128.540 Total.................................................... 278,678,432 2,737,920.04 46,267.883 Of the above, 40,042,332 pounds copper, 479,108.89 ounces silver and 29,331.396 ounces gold were produced from custom ores and ores treated on toil. 8 [ Prior to suspension of operations on May 6, 1932. production of electrolytic zinc amounted to 33,904.565 pounds. In addition, metals in residue produced amounted to 1.335,510 pounds lead, 295,433 pounds copper, 119,985.39 ounces silver, and 1.532.291 ounces gold. Of this amount 143,143 pounds copper. 5.497.00 ounces silver and 19.528 ounces gold were treated through operations of the Copper Plant. The Lead Plant of the International Smelting Company, Tooele, Utah, produced from custom ores 45.738,773 pounds lead, 2.294,649,41 ounces silver, and 8,665.222 ounces gold. Miscellaneous Product* Miscellaneous production consisted of: 27.784,851 feet 11.523 tons 6,548 " 38,786,286pounds 8,607,787 " 68,365 " 200,600 " 1,313,673 " lumber. treble superphosphate and arsenic. zinc oxide. white lead. cadmium. nickel sulphate. copper sulphate. phosphoric acid. Silesian-American Corporation The principal amount of bonds outstanding at the end of the year was reduced to $8,608,500. The London price of zinc averaged 2.14e per pound, as compared with an average of 2.52c in 1931. At the end of the year the average price for spot and future was 2.22i per pound. The sale of coal in export markets was adversely affected by England's going; off the gold standard, the Polish zloty remaining practically at par throughout the year. Principal production for the year was as follows: Zinc............................................................................ 70,661*198 pounds Lead............................................................................. 18,506,364 " CoaL--------------......................................................... 1,622.664 metric tons Sulphuric Acid................ 35,02,7 " " Superphosphate^...... ............................................... 13,532 " " Employment and Relief -Many of the Company's operations are conducted in towns, cities and districts in which almost the entire population is dependent upon its activities for their maintenance and support. The increasing decline in the demand For the products of the Company limited output and employment. At the outset of the depression the policy of spreading work was adopted, and with further slackening in demand, has been extended throughout the entire organization. In co-operation with the Red Cross, Salvation Army and local charitable organizations, provision has been made for housing, food, fuel, clothing and necessary hospitalization and medical supplies. The relief extended by the Reconstruction Finance Corporation in the communities to which its services were extended, has been of material and necessary assistance in caring for the greatly increased requirements. As a result, there has been no real destitution. Everywhere the employees have recognized the Fact that the present depression affects not only their locality and this Company, but the whole allied i ndustry. The morale has been excellent. to Number of Stockholders The number of registered stockholders appearing on the books at December 31, 1932 was 126,944. There is attached hereto a Consolidated Balance Sheet showing the financial condition of the Company and its subsidiary companies at the close of business December 31, 1932, together with an Income Statement fpr the year, prepared and certified to by Messrs. Pogson, Peloubet &. Company, Certified Public Accountants. By Order of the Board of Directors. New York, N. Y.. April 27, 1933. CORNELIUS F, KELLEY. President. 11 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--31st December, 1932 Fix e d : ASSETS Mines and Mining Claims, Coal Mines. Timber Lands. Phosphate Deposits, Water Rights and Lands for Metal Producing and Manufacturing Plants...................................... $297,665,164.45 Buildings and: Machinery at Mines, Reduction Works, Refineries: Manufacturing plants. Saw mills. Foundries, Waterworks, Steamships and Railroads--.... ................................... 264,069,546,95 Investments in Sundry Companies.............................. 27,547,968.48 $589,282,479.86 De f e r r e d Ch a r g e s : Scrippingand Development.......................................... Discount on bonds,-....................................................... $7,995,417.55 5,788,444.17 H,781.861.72 Cu r r e n t : Supplies on hand, advances on Ores and Expenses prepaid..................................................................... $25,152,551.05 Inventories: In process--at cost-.-........................................... Metals and manufactured products--sold at sales price; unsold at market........................ Notes Receivable of Inspiration Consolidated Cop per Company--secured......................................... Accounts Receivable...... ................................................ Marketable Securities--at cost (market value $941,998,32)..... Cash........................ i......................................................... 10,016,444.94 37,515,241.65 4,515,000.00 7,287,338.23 2,461,026,60 6,070,759.07 93,016,361.52 $694,080,703.10 We have examined into the affaire of Anacoada Copper Mining Company and of iu Subsidiary Companies and have vended the Aaaeta and Liabilities shown above and the relative Surpiue and Income Account*. The Net Lose is after deducting Development expenditure of the year. Depletion of Coal and Timber Lands and Depreciation of Plants and Equipment. We hereby certify that this Balance Sheet shows the financial condition at 3!st December, 1932 of the companies aa an aggregate whole and that the accompanying Surplus and income Account* for the year ended that data are correct as stated. New York and Butte, 6th April, 1933. POGSON, PELOUBET 4 CO,, ^ Certified Public Accountants, 12 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--31st December, 1932 LIABILITIES Ca p it al St o c k of Anaconda Copper Mining Company: Authorized, 12,000,000 shares of $50.00 each Issued, 8,919,086 shares.................. Held; through Subsidiaries, 246,416 shares.................. Ca p it a l St o c k , a n d Su r p l u s of Subsidiary Companies owned by Minority Interest.......................................... $445,95-1,500.00 12,520.800,00 $453,655,500.00 4,724.964.82 Bo n d s Ou t s t an d in g : Chile Copper Company Twenty Year 5% Gold Debentures, due 1947............................................. Butte, Anaconda & Pacific Railway Company First Mortgage 5% Sinking Fund Gold Bonds, due 1944-....................................................................... $35,586,000.00 1,929,000.00 35,315,000.00 Re s e r v e s : For Depredation............................................................ For Insurance, Renewals and Contingenries.............. $96,972,742.15 1,641,157.54 98,613,899.69 Cu r r e n t : Notes Payable................................................................. Taxes and Interest Accrued......................................... Accounts and Wages Payable--................................... $70,500,000,00 2,164,604.28 7,067,187.94 79,731,792.22 Su r p l u s ...................... 42,061,546.37 $694,080,703,10 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Surplus Account--Year Ended 31st December, 1932 Add, Minority Interest: Balance 31st December, 1931...................................... Less acqtiired during year and adjustments............... *69,613.562.38 $179,117.71 160,372.47 18.745.24 *69,632,307.62 Net Loss of the year 1932, per Income Account: Anaconda Copper Mining Company........................... Minority Interest... ........ ............................................. *16,855,870.58 37,369,68 16,893,240.26 *52,739,067.36 Deduct, dividends paid by Subsidiary Companies to Minority Interest ............ 851.00 *52,738,216.36 Inventory adjustment to reduce all unsold metals to market. ....... ..................... ... ................................... Sundry adjustments applicable to prior years.................... Minority Interest (deficit).......................... .......................... *9,914,440.23 785,489.94 10,699,930.17 *42,038,286.19 23,260.18 Surplus 31st December, 1932, per Balance Sheet__ *42,061,346.37 To ihe Board of Directors, An a c o n d a Co p p e z Min in g Co mp a n y . 25 B&OADWAy. New Yo r k . We have made a,general audit of the books and records of ANACONDA COPPER MINING COMPANY and its forty-four subsidiary corporations (companies 75% or more owned and directly or indirectly operated under. Anaconda1 Copper Mining Company management) for the calendar year 1932. and in accordance there with subm^ herewith a Consolidated Balance Sheet, Surplus Account and Income Account, duly certified. Minps and Mining^Claims are valued at post, no effect being given to increased valuations recorded for income tax purposes on the books, Phis cost ia the case of property acquired for capital stock being the par value of such stock. Buildings and Machinery are .stated either at original cost or depreciated book value when acquired. Total original cost of existing plants is approximately $19,400,000 greater than the figure shown on the Balance Sheet; -Tfiedbrnpah^1 sl'^hcy:i^1'Conservativei-irrresphctof capital expenditure arid we are satisfied, that.the capital'cha|^^:{hud4fp!?brpsehtdistinct.additibha'ltb1 the' plant*' The Reserve for Depreciation has.increased by the amount charged-Income less chat portion of. dismantlements and disposals which'are chargeable to the reserve. Investments in Sundry Companies are shown at cost less reductions made for known permanent losses. Expenditure for Stripping and Development is seated at cost and the credits to that account are taken at ra.tesffixOd by the Govetrimeht for income tax purposes, which credits determine the dpveiopment fexpenditure of"t'heilyea^laiieciipt'the'3utte' mines where .all'development isi;charged:o:tf currently. Operating Supplies, constituting the greater part' of'the item .of $25,15X551.03* are taken at cost as are meta.l:s||;ih'jp;rOGess. Advances' ofillpres.^which^are. 'oft considerable' afTiount in the aforesaid figurt, presumably will not be,j liquidated until volume of operation warrants. Finished 'me'til*and.products are valued in the Bafancidli^eet'ilcini a^'rpafkei basis; Accounts Receivable were examined in detail and those considered doubtful have been reserved for. Of those shown oh'thS^Bala'nce. Sh'Set^iS.; good and collectible some, due to present conditions, may be slowed than usual. ' ^ "!" ' Assets and liabilities haye bees verified by Inspection, certificate or ;correspondence (investments, market- ab!fe.'SpcUiifiSs,:|cpIli:teni!J, redeiyableindpaTable,bondsaad!capitalstock)1 :and found in order and ail lknpiyh!!:l:ik||itiieSf;icbntfnierib:;pr'l:pther,:are!iproyided'''fbr.ipYhei:BlaiaaCe'lSheet.'' - No significant or material change has bees made tn the companies' accounting methods and procedure from' thacot past years and .jcbnjijqi|ently the'.Balahce Sheets at the beginning and end of the yehr 1932 reflect as i^uafirchkngO^pccurringi.d'Uring'1 the year, including the drop' in metal prices. The Iakome Account is ecated as in previous yean on a cose basis, the cost of metals sold representing the'cpitibf ,'fchbie plrodbcbdi'I^Ih' the Ittcdrah Account bf the year no advantage has been' taken of prior writing down of inventories! nude for Balance Sheet purposes. The usualj depreciation has been charged, that of metal producing plants being calculated on a unit of production oasis. No proportion of general and administrative expense is included in the charge of 2,625,631 09 pertaining to non-operating units. No depletion on metals, other on a coat or on the Treasury We have also audited the books and records of your principal affiliated companies (Anaconda Wire and Cable Company, Silesian-Amencan Corporation and Walker Mining Company--not consolidated in these Accounts) and! all cbeir Subsidiaries upon which we report separately........ Respectfully submitted, POGSON, PELOUBET & CO., Certified Public Accountants. New York, 6th April, 1933. 1 i 16 1