Document QkMVeOeZZ3445ODLa6MJbXK2R

ANNUAL REPORT An a c o n d a Co p p er Min in g Co mp a n y 1945 Th e Ame r ic a n Br as s Co mp a n y (o wholly owned subsidiary) Amac pn o A The Co.mocnv'j facilities we?e fully occupied during the greater oort of the year for the production of materials necessary for the prosecution of the war. Following rhe surrender of. Jaean. immeaicte steps ef* tpk^n tb recon vert o rhe manutacture of peacetime reauirements, which transition toot plgce without serious; difficulty. The American Brass Company is industry's largest and most completely coordinated source of supply for cooper end copper-base alloys in commercial forms, such os sheet, wire, rods and tubes. Frprn the mining of the ore, through oil 'the operations of smelting, refining and fabri cation of the raw mQfenals info commercial forms and finished mill products, the utmost ir quality and uniformity is assured y careful supervision ot every stage of prodvCt!on,from mine td consumer. A corefylly organised network of plants, offices agencies. 'warehouse*.and authorized distributors provides efficient distribution, of the. Company's products, m every manufacturing section of. the United States and Canada As mentioned i,n this report lost yeor prospects for continued demand for the Company's peacetime, products appear extremely bright. Air-Condrtiontng Automotive Aviation Building SOME OF THE INDUSTRIES SERVED Chemical Electrical Equipment Hardware Heating jewefty Light ond Power Machinery Mining Petroleum Plumbing Pulp ond Paper Railroad Refrigeration Shipbuilding Textile Welding PRINCIPAL PRODUCTS COPPER, BRASS, BRONZE AND COPPER-NICKEL ALLOYS--SHEETS, WIRE, RODS, TUBES Airplane Gas, Oil and Pressure Lines Ammunition Metal Brass and Copper Pipe Brazing Solder Bronze Screen Wire Bus Bars and Shapes Cartridge Discs and Cups Condenser Head Plates Condenser and Heater Tubes Copper-Nickel Alloys Copper Tubes and Fittings Drawn Sections Everdur* and Super-Nickel Took Plates Extruded Shapes Eyelets, Grommets, etc. Flexible Metal Hose and Tubing Free Cutting Brass Rods Phosphor Bronte Pressure Die Castings Hot Pressed Parts Shell Rotating Bonds Tobin * Bronte Shafting Turbine Blading Welding Rods ***. u. S. Pet. O#. LOCATION OF MANUFACTURING PLANTS Ansonia, Conn. Buffalo, N. Y. Detroit, Mich. Kenosha, Wis. Torrington, Conn. Waterbury, Conn. Anaconda American Brass Limited, New Toronto, Ontario, Canada Atlanta, Ga. Boston, MassBuffalo, N. Y. Chicago, til. Cincinnati, Ohio Cleveland, Ohio OFFICES ARE LOCATED IN THE FOLLOWING CITIES: Denver, Cole. Detroit, Mich. Houston, Texas Kenosha, Wis. Los Angeles, Calif. Milwaukee, Wis. Minneapolis, Minn. Montreal, Canada Newark, N. j. New York, N. Y. Philadelphia, Pa. Pittsburgh, Pa. Providence, R. I. Rochester, N. Y. St. Louis, Me. San Francisco, Calif. Seattle, Wosh. Syracuse, N. Y. Toronto, Canada Washington, D. C. General Offices: Waterbury 88, Connecticut An a c o n d a Co p p e r Min in g Co mp a n y CAPITAL STOCK iK*cemhcr :S\, l!H-> Auth'tnZfl. H.ODQ.UOO 'hart-? *50 vach nut.'tiuuiim:, 674.J.'VJ shares t?ach :<)OO.oim,nui) Wii.TUKrtmi OFFICERS ( hairman of the Board. President Executive Vice-President Vice-President Vice-President in Charge of Mining Operations Vice-President in Charge of Metallurgical Operations Vice-President and General Counsel Vice-President Assistant to the President Assistant Vice-President Comptroller Treasurer Secretary and Assistant Treasurer Assistant Secretary and Assistant Treasurer Assistant Secretary and Assistant Treasurer Assistant Secretary ... CoRNEt-IUS F. Kel l ey Ja me s R. Ho b b ix s E,Ro b e r t Dw y e r Da n ie l M. Ks a Cl y d e E. We e d Fr e d e r ic k La is t W. H. Ho o v e r El b e r t 0. So v e r u in e Fr a n k O. Ca s e Ric h a r d S. -Ne v u s W. Ke n n e t h Da l y Ja me s E. Wo o d a r d C. Ea r l e Mo r a n B.Ke n n e t h Fr a z e r Th o ma s E. Co n r a d Je r e mia h D. Mu r p h y DIRECTORS Ro b e r t E. Dw y e r E. Ro l a n d Ha r b l ma n Ja me s R. Ho b b in s Cl a r e S. Juno Co r n e l iu s F. Ke l l e y Ma u r ic e Ne w t o n Wil l ia m C. Po t t e r S.Go r d o n Re n t s c h l e r D.Wil l l a m Th o r n t o n OFFICES An a c o n d a , Mo n t a n a Bu t t e , Mo n t a n a 45 Br o a d w a y , Ne w Yo r k 4, N. V. An n u a l Re p o r t of An a c o n d a Co p p e r Min in g Co mp a n y For the Year Ended December j r, xp^5 To the Shareholders of Anaconda Copper Mining Company: The gross sales and earnings of the Company upon a consolidated basis -after elimination of inter-company items; totalled..................... Other Income, including dividends from non-consolidated subsidiaries, was. . ............................................................ 3328.463,669.00 1.216,714.34 making total gross income................................................... $329,682,383.34 The cost of sales, including all operating expenses, develop ment and maintenance charges, repairs, administrative, selling and general expenses and ail taxes except income taxes, amounted to................................ $279,933,423.83 Provision for depreciation and obsolescence and for depletion of timber lands and phosphate deposits amounted to...................... ................................. 12,530,862.98 making total deductions from gross income........................ 292,484,286.83 $ 37,198,096.31 United States and foreign income and excess profits taxes amounted to........................................................................ 16,661.904.34 Net income, without deduction for depletion of metal mines, was....................................................................................... $ 20,536,192.17 Of which minority share amounted to.................................... 133.415.90 Leaving consolidated net income of........................................ $ 20,402,776.27 Gross income decreased $68,774,721.61 or 17.26% from 1944. Net income decreased $11,020,352.80 or 35.07%. Profit per share without deduction for Capital Depletion *>f 3 Metal Mines was $2.35. compared with $3.62 in 1944 and $3.89 in 1943. Net income as heretofore is based: upon invoices to customers. Inventories are based on. "last in T*** out method at the cost of various metals on hand and in process, such value being below market prices for the various metals and products at December 31. 194.5. During the year 1945 scrip certificates equivalent to six shares of stock were transferred to treasury shares, reducing the amount outstanding to 8.674,332 shares. Dividends on the. capital stock of your company amounted to 321.685,836.30 or 82..59 per .-hare, continuing the same rate paid during the previous four years. Current assets as of December 31. 1945. amounted to $210,528,151,76, of which 8128.286,614,33 was; in cash and Government securities. There was no indebtedness except for Current accounts and wages. $14,440,012.34 anJ accrued taxes $25,237,982.59. a; total of $39,i677,994i,93; leaving .net current assets of 8170,850,156.83 equivalent, to $19.70 per share, an increase of $6,960,033.87 or 80.SO per share for the year. The Company and its subsidiaries had on hand at the end of the year United States government Securities of a par value of $73,730,000. During the year purchases accounted to $29,000,000 par value. 825.215.000 par value matured or were applied fo tHe payment of Federal income taxes. The Company's. Canadian subsidiary purchased $2,000,000 par value Canadian Government bonds during the year. An equal amount matured during the year. Total on hand at December 31,1945 at cost in Canadian currency was $4,145,375, the same as at end of 1944. As in previous years, additional labor costs and the shortage of labor adversely affected production and income. Strikes of employees at the properties of Chile Explora tion Company and Andes Copper Mining Company in Chile and the Kenosha Branch of The American Brass Company likewise diminished profit of operations, but the principal cause of the large decrease in net incoine compared with 1944 was the position taken by OPA in refusing to recognize and make necessary adjustments in price schedules required by the cancellation of all Government contracts shortly after V-J Day, and the reconversion of the Copper and Brass fabricating industry to a peacetime basis. Not withstanding the substantial increases that had occurred during the war period in wages, salaries and supplies, the OPA maintained the schedule of prices that had been fixed by it and that had prevailed in 1940, although repeatedly requested by the industry to make appropriate adjustments. In the case of The American Brass Company, a wholly owned subsidiary of your Company, the difference between the operating profit for the last six months pf 1944 and the operating loss sustained during the corresponding period in 1945, due to the above position of OPA, was approximately $8,500,000. PNYC 00010250 C ac et al Ex p e n d it u r e s less sales of capital assets m 1945 amounted to as follows- Mines. Minina claims anil Lands Buildings. Machinery and Equipment at the Mint.-. Smelting. Refining anti Manufacturing Plants of tin' Company and it'uli'i'lianes L->7ti.7:i4.l)l +.:)4:!.:m4.!W Pales Bonk Value. A net increase of Miscellaneous--Including acquisition of shares of stock of subsidiary companies. UM.s-lT.nn *.).8U.TiH.nn :I7.00..H Co r p o r a t e Tr a n s a c t io n s During the year the Company increased its holdings in shares of subsidiary com panies by purchase of SAD shares of Chile Copper Company and 11 shares of Amies Copper Mining Company. These transactions increased Company holdings to 4.578.lOii shares '99.15%i and .'build.trio shares A)7.77%'s. respectively, of the issued capital stock of those companies. During the year the Company purchased a small high grade lead-silver mine called The Darwin Mine, located in Inyo County, California. This mine when purchased was equipped with a 150-ton mill and most of the necessary mining equipment. The Company assumed operations on August 1, 1945. Concentrates and direct shipping ores from this mine are sent to the Tooeie. Utah plant of the International Smelting and Refining Company. Exploration work and operating results have been satisfactory. Exploratory work was continued at the Victoria Mine located in Elko County. Nevada, on which an option was acquired in 1941. Indications of copper ore in this prospect are promising but the development work has been handicapped by labor shortage. The Company acquired in 1941 an interest in a Sow grade disseminated copper property located in Lyon County, Nevada known as the Yerington Property. Since then sufficient exploratory work has been done to delimit the ore body, estimated to contain approximately 50,000,000 tons of ore having a copper content of 1.08%, and all interests have been acquired. The lease which this Company held on the property of Copper Canyon Mining Company was cancelled as of December 1, 1945. 5 1 PNYC 00010251 Op e r a t io n s Increasing shortage of manpower was primarily responsible for the further decrease in production of copper, lead and zinc in' the United states, affecting the operations of your Company in common with those of other producers. Total production of primary copper in the United states, as reported by Copper Insjtitute. was 7:">.!d!> tons, a decrease of In o'-"- from 1914 and -2>4.7r" less than peak production in 1943- Total deliveries,to fabricators were 1.517,844 tons, of which 7s;3,S40 tons were domestic primary popper, 19.341 tons came from secondary materials treated at refineries and .684,461 tons came from, foreign producers principally Chile', imported by pvletaj's Reserve Companytftndi sold to consumers at DPA ceiling price. Deliveries by the: fabricators contained 1.464,440 tons of copper compared with 1,656.034 tons in 1944 and 1,701.753 tons in 1943. Due to restrictions against general use, an ample supply of all non-ferrous metals was available for war purposes and at the end of the year Metals Reserve Company held relatively large tonnages of copper and zinc, but only a small stock of lead, which metal is ip world-wide demand in excess of supply at prices in foreign countries higher than the ceiling price in the. United States. Except for small quantities sold to Latin American countries, the copper produced by the subsidiary companies in Chile and Mexico during the war period and up to October 31,1945 was sold to United States Government agencies, contributing in a large measure to the successful conclusion of the war. The Surplus Property Act of 1944 provided for the stockpiling of critical and strategic minerals and metals so essential for the defense of the country. This legislation wa$ of a temporary nature. A proposed law providing for permanent stockpiles to be released only in time of war or during a national emergency with respect to common defense was passed by the Senate on December 41, 1945 and is now being considered by the j House of Representatives- In view of the serious depletion of the natural resources in Continental United States this legislation is an essential precaution for the future defense of the country. During the war the demand for silver both for monetary and industrial purposes greatly increased. There was a steady decrease of production in the United States proportionate with the decreased output of copper, lead and zinc, the ores of which contain most of the silver produced in this country. A fair price for silver, the objective of pending, legislation in Congress, is extremely important to the mining industry in PNYC 00010252 1 making possible the extraction of ores containing copper, lead and zinc, which would rayt be commercial were it not for the credit value of silver and gold contained in the ores. The following is a summary of the output of principal products of the Company in 1 !j>4o compare*! with 1944: Output Pmmd By-product materials .old to others: From Company Mines. From Other sources. Finished Copper. From Toll.. .. From Purchased ores, concentrates ami secondary metals......................... From Company Mines................. I.U98.626.33S 1,195,223,047 D3.501 1.333.020 1.097.197,817 221.149,429 9.447 101.79.5 1,195,112.765 226.250,803 14,441.212 861.607T76 21,680,512 947,181,450 Total Production--Pounds. From Toll..................................... From Purchased materials.. From Company Mines................... Contained in by-products sold to other companies............................. Zinc Dross..................................................... Produced on toll for the Company by others. Secondary Metal......................................... Electrolytic Zinc at Companv Plants........... 380.489.939 440,193.044 138,664.165 1.634.750 17.544.457 583.436 3,859.940 358.504,306 473.978.0S6 305,365.098 168,069,948 543.040 15,679,704 8,434,004 143.119 1.139,344 448,781.739 Total Production--Pounds........................ From Purchased ores, concentrates and other materials......................... From Company Mines.............................. Contained in by-products sold to other companies.................................................. Produced in metallic form............................. 71.237.709 65,745,616 5,494.093 18,605.648 52.6S2.06l 68.970.646 68,635,434 335,192 19,140,918 49,849.708 00010253 Silver Total Production--Ounces From Purchased Materials From < *'tnrpany Mines Contained in by-products sold to other '`mipanic? IV>dured- in metallic form 1915 0.620.647 4,317,388 5.303.259 1,859,930 7,700,717 /344 11.105.295 .5.105,112 6.000.133 1.707.481 9.307.814 Total Production--Ounces. . From Purchased Materials.. .. From Companv Mines............. Contained in by-products sold to other companies................................ 1 Produced in metallic form............ 77.995 41.488 36.507 11,048 66,947 105.333 63,364 41.369 11.046 94.287 Manganese Nodule Production--r-LongTons.. Assay--Mn.................................. Arsehic--Short Tons.................................. Cadmium--Total Production--Pounds... . Molybdenite--Pounds................................. Treble--superphosphate and phosphoric acid--Tons. ., Lumber--Feet.............................., ... 120,477 60.24% 6,271 1,508,944 2,856,670 53,785 65,354,524 117,781 60.62% 9,745 2,036,612 2,986,396 65,133 103,508.146 Pther miscellaneous products were bismuth, gallium, indium, nickel sulphate, palladium, platinum, selenium, vanadium red cake precipitates, white lead and zinc oxide. Fabricating Plants: The shipments of manufactured products from the plants of The American Brass Company (including Toronto Plant) and Anaconda Wire and Cable Company amounted to 1,087,615,629 pounds, a decrease of 12.81% from the year 1944. In addition ship ments from the Fabricating plants operated for Government account in excess of ship ments of manufactured products from Company departments to those plants amounted to 174,895,424 pounds, making combined total of 1,202,511,058 pounds or 18.27% less than during the prior year. Emp l o y e e s During the year 1945 the average number of employees of the Company am! its consolidated subsidiary companies was 46.40-1. Of these. -29.183 were within the United Suites, compared. with 0-2.779 in 1944. Purchases of "War Savings Bonds with par value ..f -12.70U.7OO were made in 1945 by approximately HdCj of the employees in the United State'. As of December 31. 1045,. total employees of the Company including its tinhcnn.'plidated subsidiary companies numbered 48.978; in addition to which employee' in Government properties operated by the Company numbered 108, making a total of 4!j).086. ' During the war 14.408 employees of the Company and its Subsidiary Companies i joined the Armed Services of our country and its Allies. Many of these have returned to 1 tvprk for the Company . tVe record with regret that 374 have made the supreme sacrifice or have been reported as missing in action. Gr o u p In s u r a n c e The Group Insurance at the close of the year amounted to $79,627,633 covering 33f858 employees. The amount of insurance paid to beneficiaries during the year was 81,020,287. Nu mb e r o f Sh a r e h o l d e r s The number of registered shareholders appearing on the transfer books of the Company' at December 31. 1945 was 120,545 compared with 117,240 the beginning of the vear. Fin a n c ia l St a t e me n t s There is attached hereto as a part of this report a Consolidated Balance Sheet showing the financial condition of the Company and consolidated subsidiary companies at the close of business December 31, 1945, together with a Consolidated Income Account and a Consolidated Surplus Account for the year, certified by Messrs. Pogson, Petoubet & Co., Certified Public Accountants. By Order of the Board of Directors, New York, N. Y,, April 13, 1946. CORNELIUS F. KELLEY, Chairman of the Board. JAMES R. HOBBINS, President. 9 PNYC 00010255 ejsswupi An a c o n d a Co p p er Min in g Co mp a n y and Subsidiary Companies Consolidated Balance Sheet--December 31. 1945 An a c o n d a Co p p er Min in g Co mp a n y and Subsidiary Companies Consolidated Balance Sheet--December 31. 1945 LIABILITIES CURRENT LIABILITIES; Accounts ami wages, payable. Accrued taxes--ee notes H and J * u.44<i.'>u .'A 2.5.2:!7.9'*-.> .'.ft < -i DEFERRED CREDITS TO INCOME RESERVES: For w-orkmen's compensation insurance. For contingencies--see note K... 4 l,m,7S9.5S 3.2.50.000.00 'i.7 >s CAPITAL STOCK AND SURPLUS of consolidated subsidiaries owned by minority interest,. 1.hi CAPITAL STOCK of Anaconda Copper Mining Company: Authorized--W.000.000 shares of the par value of 850 each Issued... Held ih treasury.. Outstanding.-- S.919.080 shares 8445,954.:500 00 244,754 shares 12.237,700.00 8,674.`JSi shares 4:id,7lG.bt>0 "O SURPLUS--see note G. W7.98:*.S77 Hu ADVANCESBYGOVERNMENT AGENCIES for extension and operation of metal producing facilities, lest repayments--per contra.......... See explanatory notes, pages l-> and 14. 11 d.320.405 66 *6i8.05*.:74.37 a^iOTTitiisiSSiffliinsiEawia.>t An a c o n d a Co p p er Min in g Co mp a n y and Subsidiary Companies Consolidated Income Account--Year Ended December 31. 1945 NOTES TO FINANCIAL STATEMENTS-DECEMBER 31, ms NOTE A--BASIS OF CONSOLIDATION T!:*' financial -utenieru* include 7 . . more. p?f ui icnvficant -uHsi.iuir.es ,ti which the tnck .nien<t'..f Me cnmoun- NOTH B~.\--ETn AND l.N< OME IN FOREIGN COUNTRIES A'-etijin foreign c>uotr:e#. principally those of subsidiaries.- .operating m South America. Mexico and Canada, are pprr.t.mateiy per cent, of the net amount oc .fixed assets. nmslrnenU ami deferred charges, less reserves, and. approximu teiy *ven Per r" t mount of net current assets including cadi balances in `uch Countries of 2.321.i:I2.74`..h.owa on the ('wn-- lidate-i B.VI.iro - The greater part of the a->ets:m South America and Mexico were acquired for United States dollars isee note EasMi.a-.-yr .islets-'. tho*e acquired for foreign currency, not -umiocant. in amount, being, converted at rates of exchange current at the acquisition. Ass'ets in. Canada have been converted at rates of:exchange current at dates of acquisition adp-.ste>i .n the = rujrreat assets to the exchange me at December dl, 104o. Consolidated bet income includes 13,2(57,656.87 as Anaconda Chipper Mining Company's proportion of the income suhc.'. operating; in ?oUtb America and Mexico. aU of which has- been received m Cnited States funds. aDd 823,71 9.40. the equivaie Cjnted States dollars of the net income of. the anaritan subsidiary which, paid no dividends during the year. NOTE! C--EQUITY IN ASSETS AND INCOME OF UNCONSOLIDATED SUBSIDIARIES vestment1 of the parent Company in its principal unconsolidated subsidiaries (Anaconda Wire and Cable Companv and M.'.uraj;r, ty Copper Company') is: included in the Consolidated Balance Sheet at 4.414.234.DO less than the company's equity m the net assets1 of these subsidiaries; as shown by. their books. The company's proportion of the net earnings of such subsidiaries (without, in the case of mining companies, making any prov;-.i,-,n For depletion of metal mines) exceeded dividends received in the year by 145.122.44. Such dividends received, amounting - > *2j99,722.0G(, are included in the.Consolidated Income Account. NOTE D-METALS AND MANUFACTURED PRODUCTS--FINISHED AND IN PROCESS Finished metals; held for sale or in process of fabrication are earned at cost, principally on the last-in, first-out basis, except -uvri and molybdenite which are carried at market or less. All other inventories in process or finished are carried at co.it. The costs are not in excess of current market values. NOTE E-FIXED ASSETS--BASIS OF VALUATION a) Property, plant and equipment is included in the Consolidated Balance Sheet on the basis of cost to the consolidated ; in cash or in stock of the parent company at par value. Investments in securities of subsidiaries not consolidated and other investments are included in the Consolidated BaLm.. : at cost or less. Other investments include 333.000 shares of Inspiration Consolidated Copper Company. ..r *9.249,107.31. (b) Asrequiredby the United States Treasury Department, valuations as of March 1,1913 of mining properties then owneo : ; recorded on the books for the purpose of computing the amount allowable as a deduction for depletion in arriving it 1 income under the Federal income tax laws. These values have not been reflected in the published accounts of the < Th^ Company has consistently followed the practice of publishing its accounts without deduction for depletion of metal no such deduction is included in these financial statements. Depletion baaed on cost of timber and phosphate lands has been deducted from income in the Consolidated Income A-* | also from the cost basis shown in the Consolidated Balance Sheet. (c) Fuied assets carried on the above bases do not indicate current values which could be determined only by current appm--.. 13 X N'OTE F-FUND* PROVIDED BY GOVERNMENT AGENCIES Under the contract pursuant to which the amount of SIS, 198,550. li. not included in assets shown in the Consolidated Balance hheet, was expended, certain options were granted, to the' ujbijtdiarv with which the contract was entered ioto wuh respect to discharge - i `'hl^attoas m connection, therewith There is no hasis at t"he present t;me for determining whether any of tbese.option* will he `^erctied- {"ruler the construction contract the -subsidiary is obligated, to operate the property' at cost, one of the principal coDsidera .vrst tHe experiiiiturers jn<J advances aboye referred to. U none of the options are exercised, the facilities are to be riispo>e*i .,{ in<l contractual accounting' made'. I:n the year 1945. 41,559.757 pound? of Copper were produced and delivered under this contract, $t cost, to the Government agency, but neither the cost nor funds received in repayment have been included m the Consolidated Income Account. NOTE G-r-SURPLUS Consolidated surplus.includes fa) a credit of i20.816.138.49, the excess of the proceeds over the par value of an issue of 3.109.598 54 shares1 of stock of the company and. tb) a charge of 811,907,4S8;.50 in connection with bonds redeemed by proceeds of stock tr.en' tioheii1; under '' a), being discount and expense on issuance, and premium on redemption of bonds. See paragraph, i.b) of note as to practice regarding depletion. NOTE H--FEDERAL INCOME AND EXCESS PROFITS TAXES Audits of ilncome and excess profits tax returns for the taxable years up to and including December 31. 1939 have been made by the United' State? Treasury Department and additional assessments have been paid. Audits of subsequent years have not been * completed. It has been) determined that no liability to the United States Government existed in connection with renegotiation of 1944 sales contracts of Thi American Brass Company. It is believed that no liability exists with regard to renegotiation of 1945 contracts. The Canadian Government may require a refund of war profits from a subsidiary of The American Brass Company but it is believed that any possible liability is adequately covertd by the reserve for contingencies. NOTE I--jGROS5 SALES AND EARNINGS Sales of metals and of manufactured products ate included in income as billed and delivered to customers. Undelivered sales contracts arid purchase commitments are not given effect to m the Consolidated Income Account. Sales include the excess over the current prices of metals received under certain contracts and agreements with agencies of the United States Government. Such contracts for metals produced outside of the United States terminated September 30. 1943. -AMORTIZATION OF EMERGENCY PLANT FACILITIES Expenditures for emergency plant facilities, amounting in total to *8.309,740.66, have been fully amortised as permitted under the Presidential Proclamation of September 29, 1943 for Federal income tax purposes, in accordance with the provisions of the Internal Revenue Code. In these accounts amortization at the rate, of 20% per year was continued throughout the year 1945 and Federal income taxes are :hjed in the Consolidated Income Account on this basis. The renaming balance of facilities unamortized at December 31. 1943, 83,609.617.27, is offset to the extent of 81,800,000.00. being the estimated tax reduction applicable to 1945 and prior years resulting from the additional amortization allowable for tax purposes which has been credited to taxes accrued. NOTE K-fRESERVE FOR CONTINGENCIES 81,150,000.00 representing expenditures in prior years for development on leased properties and for equipment which reverted to the lessors on abandonment of the lease baa been charged to reserve for contingencies. NE.JV YORK Po g s o n , Pe l o u b e t & Co. c er t if ied pu bl ic ac c o u n t an t s ^ EC2 i :i:;: 25 BROADWAY NEW YORK i . To the Board of Directors, Anaconda Copper Mining Company, 25 Broadway. New York 4. X, Y. We have examined the Consolidated Balance Sheet as of December 31. 1945 of Anaconda Copper Mining Company and the other corporations whose accounts are consolidated with its accounts as stated in note A to the financial statements, and their Consolidated Inrome and Surplus Accounts for the calendar year 1945; have reviewed the system of internal control and the1 accounting procedures of the Company and its subsidiaries and. without making a detailed audit of the transactions, have examined or tested accounting records of the Company and its subsidiaries and other supporting evidence, by methods and to the extent we deemed appropriate. It was not practicable^ to obtain direct confirmation of balances owing hy departraents and agencies of the United States Government, as to which we'have satisfied ourselves by other auditing procedures. Our examination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all procedures which we considered necessary. The practice of the Company and its subsidiaries in computing their net income or net loss without deduction for depletion of metal mines is in accordance with accepted accounting procedures in industries engaged in the mining of copper, zinc. lead, silver and gold, and is in agreement with long established and consistently maintained accounting practices and pro cedures of this Company and its subsidiaries and others similarly situated, and the Company is advised by counsel that such procedure is in accordance with legal requirements. In our opinion, the accompanying Balance Sheet and related Income and Surplus Accounts, together with the notes attached thereto or appearing thereon, present fairly the consolidated position of; the Company and its consolidated subsidiaries at December 31. 1945 and the combined results of their operations for the calendar year 1945, in conformity with generally accepted accounting principles which have been applied on a basis consistent in ail material respects with that of the preceding year. New York, March 29, 1946. POGSON. PELOUBET & CO.. Certified Public Accountants 15 I An a c o n d a Wir e a n d Ca b l e Co mp a n y j (A Subsidiary Company) Production for war ourposes required the entire facilities of our plants at increasing tempo in the first half of 1945, teaching's peak on V*J Doy. During the yea/ several high commendotions from the Armed Forces were added to the long list of "E11 awards received in prior yean. Now that fh* war is r w* can bring to the wtn of wir* and cable products the benefits of research over a long^perrod of years and the additional development* resulting from intensified efforts during the: war period. Our Staff of engineers are now, available to assist the light, power: and manufacturing industries in the selection and imtpUatidn of equipment to meet their requirements most efficiently and economically. Automotive Aviation Building Chemical Communication SOME OF THE INDUSTRIES SERVED Construction (Heavy) Electric Utilities Electrical Manufacturing Food Marine Metal Fabrication Mining Petroleum Radio Railroad Rural Electrification Shipbuilding Textile Telephone and Telegroph Bare Wire and Cable Cable Accessories Communication Cable _ Copper Rods Cords PROOUCTS ELECTRICAL WIRE AND CABLES OF EVERY DESCRIPTION Hollow Conductor Cable Magnet Wire and Coil* Nn*Metalfie Conduit Power Cable: Rubber, Paper, Vomished Cambric Parkway Cable Rubber Covered Building Wires Shipboard Cables Slow Burning Wire* and Cables ,, Synthetic Insulated Wire ond Coble Weatherproof Wire and Cable LOCATION OF MANUFACTURING PLANTS Anderson, Ind. Greet Foils, Mont. Hastings-on*Hudson, N. Y, Marion, Ind. Muskegon, Mich. Orange, Calif. Sycamore, ill. Atlanta, Go. Boston, Meat. Charlotte, N, C. Cincinnati, Ohio Cleveland, Ohio OFFICES ARE LOCATED IN THE FOLLOWING CITIES* Dallas, Texas Denver, Colo. Detroit, Mich. Kansas City, Mo. Los Angeles, Calif. Milwaukee, Wis. Minneapolis, Minn. New Orleans, La. Philadelphia, Pa. Pittsburgh, Po. Rochester, N. Y. Sr. Louis, Mo. Son Francisco, Calif. Seattle, Wash. Washington, D. C General Offices: 25 Broadwoy, New York 4, N. Y. Chicago Sates Offices: 20 North Wocber Drive i i i i PNYC 00010262 PNYC 00010263