Document NkqnZEjx7OG40wE1n53gR5Rg

161 Gltddtn Anmul Rpet > ' *tf.YJ kxX the Glidden company 1961annual report *6 the president's report the long view For soiiR! time now, wo have boon taking a long look at Glidden's operations, and as we move into fiscal 1962, we have in mind some basic long term objectives. First, we intend to deepen penetration of our present markets by improving present products and developing new products to meet new cus tomer needsi We have Ix-en laying the ground work for this by stepping up our research efforts, expanding and modernizing our plant facilities, and enlarging our distribution system. Second, we intend to diversify further into areas allied to ones we are now in ... those which are particularly suited to our research know-how, our manufacturing methods, and our marketing abilities. The most recent example of this is the merger into (Hidden of Pemeo Corporation, a leading producer of porcelain enamel frits, ceramic ;frits and inorganic colors. This merger enables (Hidden to offer a full lino of coating materials to meet varying customer needs. It also combines the talents of two excellent research organizations to work in the fields of high tem perature coatings, ceramic-metal combinations and the use of ceramics in electronics. Another example is the acquisition of a plant at'Johnstown, Pennsylvania, which manufac tures ferrous and other metal powders. 'Phis complements our already successful non-ferrous metal powders operation, and enables us to offer a full line of these powders to industry. Purchase of the assets of a small maker of fiber glass reinljoreed paneling has given us our first entry into the building products field. We are consider ing further expansion of our grocery products line. Together, these moves with others we plan in the near future should take us far down the road toward our long range objectives. sales up; profits down For fiscal 1961, sales were $206,702,216, a 4.7 per cent increase over the previous fiscal year. Be cause of the sluggish economy, sales in the first half ran behind the first half of the previous year. In the third quarter, we had a slight increase over the same period in I960. With the gathering steam of the national economy during the spring and summer, fourth quarter sales were 13 per cent higher than the fourth quarter of I960. Nearly all product lines contributed to this gain. learnings per share were $2.78, including a non-recurring gain of 31 cents per share from sale of the company's soybean processing and grain storage facili ties. Net income was$6,416,983, compand witli $6,090,356 for fiscal 1960. This decrease was dote to two major factors: 1. Current expense budgets for the year were based on higher sales levels than we reached. 2. Expenditures designed to improve our long term profit potential were not reduced, and in most eases were increased. We continued to plaee greater emphasis on broader research and devel opment programs and expansion of our marketing and production facilities. Capital expenditures for the year were $7.8 million, down slightly from the previous year. The money was used mainly for the new Carroll ton Jcr tor] oil fac bet or| Du nat res. ma Int Ale > Th wei Gre Hei ch; cla bet Th Co, SCO act vie, sue tlli Ift OUI tha one ess GL D0000C3 V ort. Glidden company november 13,1961 derllcts pin 11 the p<>r Hofirsl car. jvor win mid put irly B rorn and )83, 'his 'pro )p<l. nng ! in ace velit'K 17.8 >ar. oil- ton, Texas, coatings plant; tlie Lakehurst, New Jersey, ilmenite mine; tiie Jacksonville, Florida, terpene chemicals plant; expansion of edible oil refineries and coatings and resins production facilities. Capital outlays for fiscal 19f>2 will run between $7 and $9 million. organizational changes During the year, a fourth major group--Inter national-was formed in the company, which is responsible for Glidden's interest in foreign markets, including the operation of Glidden International, an unconsolidated subsidiary. Mr. Alexander D. Duncan is vice president in charge. You will note the use of the word "Group." This year, the. company's four major divisions were re-named, and are now known as the Foods Group; the Chemicals Group; the Coatings and Resins Group, and the International Group. This change was made for reasons of organizational clarity, and we. believe the new designations will 1letter serve our long range organizational needs. The former Faint Division was also re-named the Coatings and llesins Group, to relied the broader scope of its research, production and marketing activities. Mr. Paul W. Neidhardt was elected vice president of the Coalings and Resins Group, succeeding Mr. Duncan. the years ahead If the nation's economy continues to improve and our long range plans begin to unfold, we expeel that the coming year will lie better than the last one. Proceeds from the sale of the soylienn proc essing and grain storage facilities amounted to $8,550,000, and greatly strengthened the com pany's financial position. No new financing should be necessary to take advantage of growth oppor tunities. We intend to continue, and increase where necessary, our research and development work and oilier activities connected with long range growth. Though this policy means sacri ficing short term profit, we believe it is in the best interests of the company and its shareholders. We face the future with a strong management team. I have just completed 40 years of service with Glidden, and in recent years, 1 have conrent rated on developing younger men for key management jobs. We now have a number of aggressive young men in their 40's, who have gained several years experience as top corporate officers in the company. These men are bringing in new ideas and fresh approaches. As they continue to develop under the guidance of our present senior executives, 1 am confident that The Glidrleii Company will lie in good hands in the years to come. Chairman and President GL D000004 3 PAUL W. NIOIDHARDT, Vice President REGIONAL VICE PRESIDENTS T. N. Armel R. B. Simpson J. L. Beauchamp 11, F. Winger Pl a n t s Atlanta, Georgia New Orleans, Louisiana Carrollton, Texas Portland, Oregon Chicago, Illinois (2) Reading, Pennsylvania Cleveland, Ohio St. Louis, Missouri Los Angeles, California San Francisco* California Marietta, Georgia Tulsa, Oklahoma Minneapolis, Minnesota Montreal, Quebec ; , Ontario Total sales for the Coatings and Resins Group reached an all time high for the seventh year in a row- $91,367,01 G for fiscal 1961, compared with $89,914,001 fpr; the previous yean Sales of consumer products increased, while industrial sales, Ivit hy the economic downturn, ended the year slightly below 19(50. Profits, however, were down from the previous year. This is mainly because, despite the reces sion, we continued; or increased expenditures re lating to long range growth and profit potential. We intensified research efforts and marketing on coatings of various kinds- acrylic, waterreducible, organosol, steel coil, paper, container, mill-applied primers and top coats for the himlier industry, and others. We stepped:up research, production and marketing on polyester resins and polyurethane foams and are selling increasing quantities of both for a greater variety of indus trial uses, including insulations, seals and pro teetive coatings. Last year, we established a market development group, which is developing new specialty markets, as well as pointing the way to wider and more efficient distribution of industrial coatings and resins. \ sys add this voli had ing to paii C pro mei was nov Cat due in t and fad cost grai Tw in t S tori GL D000005 4 Wo improved and expanded ilie distribution system. During the past two years, wo liavo added 50 new branches, and we are continuing this program. Because it takes time to build volume iti a now operation, we have temporarily bad an increase in costs without a correspond ing Riles increase. We have added personnel to broaden coverage' of the maintenance and painting contractor markets. Capital outlays to reduce costs and increase productivity have continued. A major improve ment project on the St. Louis, Missouri, plant was completed last year, and additional work is now being started. A new coatings plant at Carrollton, Texas, near Dallas, is starting pro duction, to take advantage of the growing markets in the Southwest. This plant is the latest design and houses tiro most modern equipment, to manu facture coalings products at the lowest possible cost. We have begun major improvement pro grams involving more than $1 million at Chicago, Toronto and Atlanta, and these will be completed in fiscal 1952. Spied House Paint, the new latex-base ex terior coating, gained much wider customer acceptance during the year, and we plan to pro mote this and other consumer paint products extensively during the year. (Hidden has made its first entry into the build ing products field with Hie purchase of the assets of (he Me I'hron Corporation of Marietta.Ceorgia, a manufacturer of filler glass reinforced panels. This operation is known ns the Architectural Products Division. We arc nmv marketing these panels through our distribution nutlets in that pari of ttie country. Though this step is a modest one, it is in line with the company's long range growth and diversification objectives. We are now studying additional opportunities for dis tributing building products and home decorating materials through our marketing channels. There is every reason to lielicve that the invest ments and programs of ttie past two years, along with the rising economy, will enable the Coatings and Resins Group to produce increased net profit in 1952 ('veil though such projects as the Carroll ton plant and additional branch expansion will exert tem|Hiiarv downward etTect. GLD000006 * group HARVEY L. SLAUGHTER, Vice President DIVISIONAL VICK PRESIDENTS George F. Atkinson, Kdihle Oil Products Paul 1). Huvsli, Grocery Products 1*1. A NTS Berkeley, California Bethlehem, Pennsylvania Chicago, Illinois (2) Ixniisville, Kentucky During fiscal 1961, the Darken Famous Foods Group made suhslantial gains, both in sales and profits. Total sales were $88,024,008, compare*! with $79,433,510 for 1960, an increase of nearly 11 per cent. Those gains were accomplished by more inten sive sales effort and the benefits of an expanding line of produets, backed by increased advertising and sales promotion. We intensified sales efforts to institutions, hospitals, restaurants and other mass food preparation establishments, and will continue to do so in the future. Also contributing to the higher sales and profits were large capital expenditures to expand and modernize food processing plants, and reduce operating costs. Capacities were increased at all three edible oil refineries- Chicago, Louisville and Berkeley. A new toiler installation at Chicago has reduced fuel eosls of refining oils. A new building was completed at Berkeley, to house both bulk and consumer spice processing opera tions. This facility has reduced toth handling and processing costs of these products. During 1961, construction was begun on a new filling, packing: and warehousing facility adjacent to the Louisville refinery, which will be in use in the 'Phis dling plant equip refini ing o also hous varie Th phasi food at al the i modi at th Penr laboi resoE We i for t for i Lr Oil devt Tint poly It h oil i whi uns; bent tero is h K orgs to i of tl into a PP Pro fine tion Pro groi 1 Bu org ere; are me: i J vi; p i \d rsi'l M-\K |.; JlK'l'i Kit 61. D000007 in i the second quarter of the current fiscal year. This wilt improve efficiency of'filling and han dling operations, and free space in the present .plant for installation of additional production equipment. Construction of a major edible o"> refining addition to the Chit ago plant is mov ing on schedule, and fl should he in production also in die second .quarter. This addition will house the latest equipment for processing n variety of edihie oils. 'J IlilfBMiiliSB - '- - J The Foods Group is placing additional em phasis on research, to develop new and improved food products. Wo expanded laboratory facilities at all locations, including a major addition to the research center at Chicago. A newer, more modern home economics facility was completed i|*jj at tlie grocery products operation at Bethlehem, Pennsylvania. In addition to expanding research laboratories, we added a number of personnel to research and development staffs in all locatioits. We are working on specially edible oil products for the battery trade, and convenience food items for institutional and household use. Ia s I summer, Glidden and Pacific Vegetable fc,u ejiih. l-'hinjitMtuiiA Oil Corporation entered into an agreement to develop and market a safflower margarine oil. ids This oil has been recognized as the most highly nd poly-unsahirated edible vegetable oil available. -ed 111 has been receiving ailf ntion from the edible rly oil industry because of recent medical research which indicates that substitution of poly- upsaturaled oil for Saturated fats in the diet is r-n- beneficial as a means of controlling serum choles ing terol. Research and development on safflower oil ing is high dh the priority fist of the Foods Group. rts rer Effective September 1, 15)01. we made major yilt organizational realignments in tiie Foods Group, to improve efficiency and management control of the entire operation. The group was organized fits into two major divisions. George I1'. Atkinson was nd appointed vice president of the new Edible Oil ice fucts Division, and will be in charge of re>7 nil dry operations, including marketing of inslittiHr al and retail bakery products. Paul D. Hursli go was appointed vice president of the Grocery f'W Products Division and will be in charge of alt ISP grocery products sales. ra ng The food industry is extremely competitive'. But with continued efforts to strengthen the organization, expand research activities and in ew crease ojierating efficiency, we feel the prospects >nt are good for continued stiles and profit improve ise ment during the current year. . . a n d i Kumae TAsrir.it c a k k s . u x i. Gl. DO 00 005 group OEOnOE M. HAISEY, Viet* President V1CIS PRESIDENT'S Geoifge S. Warner Richard H. Turk Pl a n t s Baltimore, Maryland (3) Hammond, Indiana Jacksonville., Florida Jolnisonhurg, Pennsylvania Johnstown, Pennsylvania Port St. Joe, Florida Sales of the Chemicals Group were $27,311,192, compared with salts of $28,143,320 in fiscal 1960. Existing operations showed an increase over the previous year, as sales in I960 included $3,750,000 from the gum naval stores operation, which was disposed of during the third quarter of that year. All operations exce.nl fine terpenc chemicals showed a profit improvement. Continued large development costs at the new ilmenite mine and the synthetic merrihol plan: resulted in lower earnings for the Chemicals Group than those of the previous year. Profits were also affected hy increased research and development work, as we are continuing to expand our research efforts in every phase of operation. Salts of titanium dioxide and other pigments improved, and resulted in an increase over I960. We reorganized the research and sales organizations to place greater emphasis on these efforts and make more efficient use of personnel. Several improved pigments intro duced during the year are already gaining excellent customer acceptance. fc J b. n a: c< w cl a e: al tl P a. r Cl tj II ai si ft niouotrmii., c a in s t a k in i; u k s k a iic h ... an al y s is i-Si -- ----- IIKMII ' 'V ; ' M J'S-v'i-iJ; 1 . '"iiSp. i f.JO'l'P.h .. iiKui) nr.ro',y ry SI . " i1'iv; '`^c},n :,.r,. !V.` . , - -.i'Sj.p jj'ii'.v T v:^. - . V........................ . 1 ililiiliifliSBIiWBBiiHiiiSSiilHilllliifflfflliB :>7fV SL 0000009 * Construction has begun on production facilities for the new simenite ore mine at Lakehurst, New Jersey, .and we'cxpeet the mine to be in operation by the summer of 1962. Tills mine wiii supply ore required for production of titanium dioxide. Qij , February T 1961, Glidden acquired the assets of i'nc Metals Division :;f Crane Company, consisting of a p;ant el Johnstown, Pennsylvania, which prociuces metal pwscvB-.of various kinds, chiefly iror-, nickel, silicon, manganese and ferro alloys. The Johnstown plant has returned an excellent profit to the company- in 'act, consider ably better than originally forecast. Because of this, we *>lan to add productive capacity for new products and increased volume. Gliciden aisc acquired Magnetic Powders, Inc., Johnsonburg, Pennsylvania, a producer of powders for use in cores for radio, television, sonar, radar and oilier types of electronic equipment. The Hammond, Indiana plant, where non-ferrous metal powders and chemicals are made, had a good year and showed both a sates and profit improvement over fiscal I960. Total sales of organic chemical products were slightly below I960, because of a decline in sales of basic terpene chemicals, Sales of tall oil re finery products were about the same as the pre vious year, due to a raw material shortage in the first half :v the year. Profit sc the lad oil opera tions increased substantially, however, because of improved productive efficiency. We have en countered techircai problems in connection with certain, phases of terpene synthesis at tiie Jack sonville, Florida, plant. Some of these were over come in the closing months of the year, when we accomplished commercial scale production of synthetic mom hoi. This operation still requires largo development and research expenditures. During the year, we made prngiess in strength ening and developing the. research, operating and sales organization of the Chemicals Group, and we should have a considerable improvement in operating results during the year. The addition of J'emco will complement and further strengthen our research and sales activities, and make a substantial contribution to the long range objec tives of ihe Group. ... moil) p r o d u c t io n c o n t u o i-s a m. a d d ur t o imi'k o v k d c iik mic a i, ritouuurs. GLD000010 <;|,II)UMN "QUALITY lKOI)lKTS,, AUK J'liOiHJIT'I) TMIUnUiMDlir THK UtKK worn.!). w International group ALEXANDER D. DIJNOAN, Vice VresUivni The International Group was formed in fiscal 1961, to he responsible for all company activities outside the i United States and Canada. This includes export sales of our products, licensing agreements, capital invest ments, and all of the operations of our wholly owned subsidiary, (Hidden international, C.A. As economies grow throughout the free world, they offer excellent outlets for Glidden products, and Inter national is developing long range plans for expansion in these areas. However, we are examining each oppor tunity carefully, as we want to move only into countries I; which offer political stability, and which we can enter on terms favorable to The. Glidden Company. During the year, we made our first direel entry into the European Common Market with the purchase of a one-third interest in Hermann Wulfing Wingsl,airkfabrik, one of the leading paint companies in West Germany. We also own a 25 per cent interest rin A/S Fjoi'd-l'last, a Norwegian firm which manufactures polyester boats and other plastic products. We. now have financial investments in West Germany, Norway, Mexico, Panama, Ecuador, Guatemala, Japan I and Puerto Rico, In addition, companies are licensed 4 to produce Glidden paint and chemical products in t I Australia, British West Indies, Chile, Columbia, Guatemala, Peru, Denmark, Norway, Sweden, Ecuador, Finland, France, Germany, Iceland, Japan, The Netherlands, Spain and the United Kingdom. Quality Products GLD000011 nwiciiT i*. j o v c k Chairman oj the Hoard and President Corpora Officer I!. W. MAXKY Vice President Finance IIAHVKY I.. SI.AIH'.HTKH Vice President JOHN II. WKIIKS Vice President Personnel m. h a i-s k y Vice President a. S. WAKNIvU Vice President J. W. I*01,1,Alt!). .lit. Vice President engineering 1(. I). IIOItNKIt Secretary and General Counsel it k uurroN A ssistant Secretary GL DOOOQ12 Gliddenfinancial review______the company sales Net sales for the fiscal year ended August 31, 1961, were $206,702,216 compared with sales of $197,490,831 for the previous year. The source of 1961 sales by Groups was: Amount (000) Coatings and Rosins . .. $91,367 Poods ........................ $88,024 Chemicals..................$27,311 l'er Cent of Total 44.2% 42.6% 13.2% gross profit Gross profit in 1961 was $56,529,709, and gross profit margin to sales was 27.3 per cent. The comparable figures for the 1960 fiscal year were $54,681,558 and 27.7 per'cent. income from operations The gain in gross profit was offset by increases in selling and administrative expenses. As a result, income from operationsdeclined from $14,066,045 in 1960 to $12,679,387. The addition of personnel, required by expan sion of marketing and distribution programs, resulted in an increase in selling and administra tive salaries of $1,100,000. Research and devel opment expenses increased $550,000 and techni cal service expenses increased $300,000. net income Net income after all taxes and charges was $6,416,983, equal to $2.78 per share, compared with $6,690,356 or $2.90 a share in 1960. On a comparative quarterly basis, net income was: Quarter Rndcd Nov. 30 Feb. 28 May 31 Aug. 31 19G1 Amount Per <000) Share $1,077 686 1,623 3.031 $ .47 .29 .71 1.31 I960 Amount Per (000) Share $1,415 1,011 2,002 2,262 $.61 .44 .87 .98 The fourth quarter of 1961 includes non-recur ring net income of $716,000, equal to 31 cents a share from sale of the company's soybean processing and grain Storage facilities. depreciation Depreciation and amortization charges against income increased to $7,440,940 in 1961 from $6,959,971 in 1960. These charges included $5,466,680 taken against properties operated by the company anti $1,974,260 taken against the soybean processing and grain storage facilities which were sold on August 31, 1961. dividends Dividends totalled $4,621,743, liased upon the regular $2.00 annual rale. In fiscal 1961, 72 per cent of net income was distributed to share holders as dividends. During the 1961 calendar year, the following quarterly dividend payments were made: Heron! Date 1 lecemlwr 8 March 10 June 8 September 8 Date Paid January 3 April 3 July 3 October 2 Amount Per Share $.50 .50 .50 .50 The indenture, under which the company's 4% per cent Sinking Fund Debentures are issued, restricts the payment of dividends after August 31, 1958, to consolidated net income earned sub sequent to that date plus $10,000,000. At August 31, retained earnings of $16,888,632 were free of such restriction. working capital Working capital of $68,061,010 at the year-end represented a new all-time high. The ratio of current assets to current liabilities was 5.4 to 1. inventories Inventories at August 31, totalled $41,602,106, compared with $40,665,766 at the end of the GLD000013 191 lov mi firs co: cai wh pis elii pr Ca eqi wit 191 I ex* soj Sa bet Stl At we sto for 10, we cat by pla gra m On the Th of Fit sta y 1960 fiscal year. Inventories are valued at the lower of cost or market, using the average cost preferred slock will bo convertible into GHdden common at a conversion ratio of 1.125 shares method on the major portion, and the last-in, of common stock for each share of preferred stor k. ur- first-out method on certain edible oils and other nts commodities. At August 31, 1961, inventories wages and salaries an carried on a LIFO basis amounted to $1,366,956, which was approximately $60) ,000 less than re Total wages, salaries and employee benefits placement market. AH obsolete stocks have been amounted to $41,798,041 in 1961 and were 20.2 eliminated or written down to disposable value. per cent of sales. The comparable figures for fiscal 1960 were $39,484,429 and 20.0 per rent. The lsl retirement plans for salaried and hourly em >ni property, plant and equipment ployees are non-contributory, the company pay ad by he Capital expenditures for new property, plant and equipment were $7,823,199 in 1961, compared ing the entire cost. At August 31, 1961, the un funded liability for past service costs under the ies with $8,764,000 in 1960. The percentage of the plans was estimated to be $3,600,000, and the 1961 total invested in each Group was: annual current service cost (which does not in clude funding of the past service cost) was estimated to be $1,044,000. Coatings and Resins...................35.7% er Foods ..................................... 30.3% taxes c' - Chemicals................................ 34.0% rIhxes on income were $6,321,000, equal to $2.73 per share. Drees other than on income amounted g to $2,366,469. On August 31, 1961, Central Soya Company exercised an option it held to purchase Glidden's soybean processing and grain storage facilities. Sale price was $8,550,000, and payment has been received. litigation In 1958, two legal proceedings were brought against the company by approximately 125 former employees, who alleged that they had 1 stock options lieon denied seniority rights under their union contract when the company dosed down its I At the beginning of the. 1061 fiscal year, options coconut and condiment plant at Elmhurst, Ixmg 1 were outstanding for 98,300 shares of common Island, and established new operations at stock pursuant to restricted stock option plans Bethlehem, Pennsylvania. One of these cases s for key personnel. During the year, options for proceeded to trial, and the court held that the 1, 10,000 shares were granted; options for 655 shares employees' seniority rights had expired. The it were exercised, and options for 4,100 shares were appellate court reversed this decision, ruling that >it cancelled. At August 31, 1961, options were held by key employees for 103,545 shares under the employees have the right to employment with seniority at a new location even though the con plans, and 71,300 shares were available for the tract which created seniority rights has expired granting of future options. and their employment has'keen terminated. The appellate court's decision has received 1 merger of Pemco Corporation considerable national publicity because of its potential effects upon future labor-management f On November 3, Glidden shareholders approved relations, and an appeal is now pending before the merger of Pemco Corporation into Glidden. the Supreme Court of the United States. Even The merger agreement provides for the exchange , if the ultimate decision is adverse to the com of 199,840 shares of a new $2,125 Cumulative pany, it is the opinion of counsel that the Preferred Stock of Glidden for the 99.920 out company's potential financial liability under standing shares of Pemco common stock. 'Pile new those cases will not be material. GLDC00014 13 Gliddenconsolidated balance sheets the company and assets CURRENT ASSETS Cash................................................................. Short-term securities -- at cost......................... Amount receivable from sale of Chemurgy properties....................................................... Tlade accounts receivable, less allowances of $419,879 (1960-$433,521)........................... Inventories -- generally at the lower of accunnilated-average cost or replacement market: Hawr materials and work in process . . . Finished products................................... Other current accounts and investments . . Prepaid insurance and other expenses . . . To t a l Cu r r en t As s e t s 1961 $ 8,076,305 1,991,447 8,500,000 21,836,602 $ 18,982,647 22,619,459 $ 41,602,106 932,380 496,056 $ 83,434,896 1 ! ; I960 | $ 7,395,990 6,484,490 1I -0! 18,859,483 ! $ 18,433,436 22,232,330 i $ 40,665,766 904,054 599,013 : $ 74,908,796 PROPERTY, PLANT, AND EQUIPMENT Land and mineral deposits -- at cost .... Buildings -- at cost........................................ Machinery and other equipment - at cost . . Less accumulated depreciation, depletion, and amortization.................................................. Chemurgy properties leased to Central Soya Company -- net.................... To t a l Pr o p er t y , Pl a n t , a n d Eq u ip me n t -- Ne t $ 5,109,153 26,177,778 57,328,330 $ 88,615,261 33,924,289 $ 54,690,972 -0- $ 54,690,972 : $ 4,933,451 24,559,667 52,026,932 ; $ 81,520,050 ! 29,030,133 ! $ 52,489,917 1 9,616,328 i ! $ 62,106,245 DEFERRED CHARGES an d OTHER ASSETS 1,913,610 $140,039,478 | 1,018,563 | $138,033,604 * l | i )t. i i si. ? i i j I i j l 1 t i l i GL nooooi 5 n Quality Products Canadian subsidiary august 31,1961 and august 31,1960 liabilities and shareholders' equity i i CURRENT LIABILITIES 1961 f t Accounts payable............................................. $ 7,647,668 Accrued taxes, interest, and ot her expenses . . 1,708,550 Dividend payable............................................. 1,155,633 Income taxes payable -- estimated .... 4,862,035 I I To t a l Cu r r e n t Ij a r il it ie s $ 15,373,886 1960 $ 7,485,283 1,535,204 1,155,295 5,011,080 $ 15,186,862 l i j i ? 4%% SINKING FUND DEBENTURES i -- payable $1,500,000 annually 1964-1983 . . $ 30,000,000 f \ l * SHAREHOLDERS' EQUITY f Common Stock, par value $10 per share: Authorized -- 3,000,000 shares Reserved for options -- 174,845 shares (1960 - 179,400) i Outstanding -- 2,311,245 shares (1960 - 2,310,590)................................... $ 23,112,450 ! Additional capital paid in.............................. 10,204,144 Earnings retained for use in the business, including retained earnings of Canadian subsidiary $5,728,730 (1960 - $5,468,246) 61,348,998 To t a l Sh a r e h o l d e r s ' Eq u it y $ 94,665,592 $140,039,478 4 $ 30,000,000 | $ 23,105,900 10,187,084 59,553,758 $ 92,846,742 $138,033,604 ? i r ` \ i : ? Srr "Financial Review" in this report for information regarding sale of Chemurgy properties, dividend restrictions, stock options, retirement plans, and merger of Romeo Corporation. Gt 0000016 I ic consolidated income and earnings retained for use in the business the company and Canadian subsidiary Years ended August 31, 1961, and August 31, 1960 income Net sales............................................................ Operating costs: Cost of products sold................................... Sidling and administrative expenses . . . Tn c o mk Fr o m Op e r a t io n s Other income and (deductions): Interest on long-term debt ......................... Other interest expense ....... Rental income -- Chemurgy properties . . Depreciation -- Chemurgy properties . . Gain on sale of Chemurgy properties . . . Other items -- net ........................................ In c o me Be f o r e In c o me Ta x e s Provision for income taxes: Federal.................... .................................. Dominion and state.............................. . Ne t In c o me Provision for depreciation and amortization, including Chemurgy proix-rties, was $7,-HO,910 (I960- $6,959,071) 1961 $206,702,216 $150,172,507 4 (1,850,322 $191,022,829 $ 12,679,387 1960 $197,490,831 $142,809,273 40,615,513 $183,424,786 $ 14,066,045 $ (1,425,000) (47,687) 2,175,000 (1,974,260) 907,932 422,611 $ 58,596 $ 12,737,983 $ (1,425,000) - 0- 2,175,000 (2,013,837) -0836,148 $ (427,688) $ 13,638,356 $ 5,920,000 401,000 $ 6,321,000 $ 6,416,983 $ 6,390,000 558,000 $ 6,948,000 $ 6,690,356 earnings retained for use in the business Balance at beginning of year......................... Net income........................................ ... . . Cash dividends declared -- $2.00 per share . . Balance at end of year ........ $ 59,553,758 6,416,983 $ 57,484,102 6,690,356 $ 65,970,741 $ 64,174,458 4,621,743 ; 4,620,700 $ 61,348,998 : $ 59,553,758 Gl DC 00 017 SI ai tl Ye l * f ii \ \ i i ) ! a Sh Tti CU Sill a in pr< st a the of Opi bn* Cl. Oc summary of source and application of funds the VJiluUUll company and Canadian subsidiary Years ended August 31, 1961, and August 31, 1960 source of funds From operations: Net income......................... ........................ Provision for depreciation and amort ization. which did not involve current expenditures To t a l Fr o m Op e r a t io n s Sale of Chemurgy properties......................... Less gain on sale (recognized in determination of net income shown alrove).................... Sale of Common Stock under option plan (1961 -- 655 shares; 1960 -- 2,740 shares) application of funds Dividends declared........................................ Expenditures for property, plant, and equipment............................................. Loan to unconsolidated subsidiary .... Other applications (sources) -- net .... Increase in working capital.................... ..... 1061 $ 6,416,983 7,440,940 $13,857,023 $ 8,550,000 907,9.32 $ 7,642,068 2.3,610 $21,523,601 $ 4,621,743 7,823,199 400,000 339,583 8,3.39,076 $21,523,601 1960 $ 6,690,356 6,959,971 $1.3,650,.327 $ -0- -0$ -0- 98,479 $13,748,806 $ 4,620,700 8,764,000 -0- (1,109,487) 1,473,593 $13,748,806 accountants3 report Shareholders anti Hoard of Directors The Glidden Company Cleveland, Ohio We have examined the consolidated financial statements of The Glidden Company and its Canadian subsidiary for the year ended August 31, 1961. Our examination was 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 thr circumstances. We made a similar examination of the financial statements for the preceding year. In our opinion, the accompanying balance sheet, statements or income and earnings retained for use in the business, and summary of source and application of funds present fairly the consolidated financial position of The Glidden Company and Canadian subsidiary at August 31, 1961, and the consolidated results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Cleveland, Ohio October II, 1961 GL 0000028 17 a ten year comparison (All dollar amounts are oxpressed in thousands, except figures given on a per share basis) 1961 INCOME Net sales..................................................................................... Cost of products sold................................................................. Selling and administrative expenses................................... .. .. .. Income from operations............................................................ Income before taxes................................................................. Taxes on income...................................................................... Net income ................................................................................ .. I lividends on common shares.................................................. learnings reinvested................................................................. Depreciation, depletion and amortization......................... .. .. .. $ 206,702 lf>0,173 -13,850 0,117 4,022 1,795 7,441 FINANCIAL POSITION Working capital...................................................................... l'roperty, plant and equipment -- net................................... . . 51,091 I-ong-term debt........................................................................... Shareholders'equity................................................................. PER COMMON SHARE Net sales............................................................................... ..... . . Net income................................................................................ Depreciation, depletion and amortization ...... . . Dividends . ................................................................................ . . Shareholders' equity....................................................... .... . . . Price of Glidden common shares*-- High.............................. -- Iaw.............................. . . $ 89.43 3.22 2.00 40.90 35.75 OTHER STATISTICS Kxpcnditures for property, plant and equipment .... . . % net income to shareholders' equity................................... . . % dividends to net income....................................................... . . Itatio of current assets to current liabilities......................... . . $ 7,823 0.8% 720% 5.43 Common shares outstanding.................................................. . . Number of shareholders.................................................. Number of employees............................................................ . . 2,311,245 0,372 PRO FORMA {winding opcntliom o/ Chrmurgy Division lor the fiscal y* 1952-1958) Net sales.................................................................................... . . Income from operations............................................................ . . Income before taxes . ......................................... Net income................................................................................ . . $ 200,702 12,079 0,417 ' (`ali-nilur year*, excvjit 11K51 which is to Octolrfir V.i, I960 12 Months 1959 August 31 3958 $ 197,491 142,809 40,610 14,006 13,638 0,918 6,690 4,621 2,009 6,960 $ 59,722 62,106 138,034 30,000 92,817 $ 85.47 2.90 3.01 2.00 40.18 45.63 34.75 $ 8,76-1 7.2% 69.1% 4.93 2,310,590 20,969 0,151 $ 197,491 14,000 13,038 0,0i)0 $ 195,704 142,535 36,803 16,426 15,920 8,292 7.634 4,610 3,024 6,579 $ 217,353 168,979 34,149 14,225 12,350 6,287 6,003 4,596 1,467 5,838 $ 58,248 00,907 137,552 30,000 90,679 $ 52,572 59,992 133,240 26,000 87,304 $ 8-1.82 3.31 2.85 2.00 39.29 50.25 41.88 $ 94.58 2.64 2.54 2.00 37.99 47.00 28.00 $ 7,607 8.4% 60.4% . 4.45 2,307,850 20,993 6,023 $ 9,214 6.9% 75.8% 3.64 2,298,170 22,405 6,353 $ 195,761 10,420 15,926 7,634 $ 185,380 11,923 10,294 5,076 GLf)0000l9 Quality Products tlvs August 31 >59 1958 1957 195(1 10 Months August 3! 1955 12 Months -- Ortoiler 31 1954 1953 1952 5,764 >,535 5,803 5,426 5,926 1,292 ',634 1,610 1,024 1,579 $ 217,353 168,979 34,149 14,225 12,350 6,287 6,063 4,596 1,467 5,838 $ 225.537 176,874 32,995 15,668 15,387 8*123 7,264 4,594 2,670 5,046 ,248 .,907 ',552 ,000 ,679 52,572 59,992 133,240 26.000 87,304 $ 53,100 59,517 140,370 27,500 85,837 4.82 3.31 2.85 2.00 9.29 0.25 1.88 $ 94.58 2.64 2.54 2.00 37.99 47.00 28.00 $ 98.14 3.16 2.20 2.00 37.35 37.50 29.50 607 $ 9,214 $ 12,465 4% 6.9% 8.5% 4% 75.8% 63.2% 4.45 3.64 2.96 850 2,298,170 2,298,170 993 22,405 21,686 023 6,353 6,455 764 $ 185,380 $ 190,424 426 11,923 13,590 926 10,294 13,590 634 5,076 6,402 $ 226,290 177,538 31,974 16,778 16,451 8,304 8,147 4,592 3,555 2,870 $ 35,696 53,414 118,738 7,500 83,091 $ 98.56 3.55 1.25 2.00 36.19 41.12 34.50 $ 16.637 9.8% 56.4% 2.27 2,295,990 20,758 6,387 $ 190,483 13,956 14,252 7,091 $ 180,525 142,047 24,047 14,431 14,325 7,212 7,113 4,589 2,524 2,235 $ 209,084 167,845 27,701 13,538 14,235 7,142 7,093 4,582 2,511 2,333 $ 47,156 39,993 106,762 9.000 79,513 $ 51,226 34,493 102,670 10,500 76,923 $ 78.65 3.10 .97 2.00 34.64 44.50 36.12 $ 91.16 3.09 1.02 2.00 33.54 42.50 28.75 $ 8,155 8.9% 64.5% 3.58 2.295,350 20,019 6,397 $ 4.021 9.2% 64.6% 4.36 2,293,455 19,174 6,198 $ 151,752 12,706 13,102 6,526 $ 169,823 11,362 12,271 6,150 $ 211,758 170,492 26,739 14,527 14.834 7,725 7,109 4,578 2,531 2.185 $ 46,005 33,234 102,750 7,000 74,324 $ 92.44 3.10 .95 2.00 32.44 38 12 27.88 $ 4,150 9.6% 64.4% 3.15 2,290.794 18,726 6,120 $ 170,717 12,414 12,907 6,184 $ 205.113 161,890 26,238 1.3,985 14,204 7,255 6,919 5,134 1,815 1,965 $ 46,475 31,391 101,958 8,500 71,644 $ 89.78 3.04 .86 2.25 31..36 42.62 32.88 $ 3,043 9.7% 73.9% 3.13 2.281730 18,310 6,127 $ 164,283 11,779 12,249 6,010 r F L 1 V GlD0000?0 19 DWIGHT T. JGYCK ALEXANDER D. DUNCAN H. W. MAXEY JOHN II. WEEKS R D. HORNKK W. G. IMIII.UTS HARVEY I.. SLAUGHTER G. M. HALSEY G. S WARNER W. T. SMITH PAUL W. NEIDHARDT RICHARD H. TURK Corporate Data Executive Offices 900 Union Commerce Building Cleveland, Ohio Thistee Sinking Fund Debentures First National City Bank of New York New York, New York IVansfer Agents - Common Stock Chemical Bank New York lYust Company New York, New York The Cleveland TYust Company Cleveland, Ohio Registrars -- Common Stock The Chase Manhattan Bank New York, New York Central National Bank of Cleveland Cleveland, Ohio The debentures and common slock of the Company are listed on the New York Stock Exchange and the common stock has trading privileges on other major stock exchanges. The annual meeting of stockholders will he held on Thursday, December 14, 1961, at ten o'clock in the morning, in the Euclid Ballroom of the Hotel Statler-llilton, Cleveland, Ohio. Quality Products 2o GLD000021 n o , I'uouucr ik coon t h a t h c a n n o i1 h i-: iMniovr.ii. w it h -mis Tnonoitr. oi.mmiN k i:s k a h < WlMIK TO nlAKK -lOllAY'S <|HAI.ITV liWllH'CTK" I.VI'.N IH'.T I l.ll l ull Till; ! UHIOMKHS nr TOMnlllil )\V. GLDOOOO 23