Document R27aek2RGrLeQD0bx1XVxx2pn

Cleveland Hi NOTES POE ANNUAL MEETING DECEMBER 11* 19$8 December 3, 19$8 Mr0 Dwight P. tToyce ccx Mr, V. C. Lighter B. W0 Maxey R. D, Horner Mr. W. G. Phillips Mr. G. S. Warner Mr. R. K. Dutton Mr. R. R. Augsburger Mr. D. E. Erskins Acquisitions General Paint Co, - 6/1/58 Dascription of thi3 is found in Annual Report under Paint Division. Detail of expenditures is: Inventory Less: Inventory acquisition gain ? 61x7037 ^(18,181) Misc. Other Assets? Fixed Assets 7,186 11x9.276 $78$,318 Non-recurring acquisition expense was $ 1x9.86$ Personnel taken over totaled 186. H. C. Pauli ft. Sons - 10/1/58 Subsequent to the end of our fiscal year, we entered a contract for the pur chase of the bulk spice business of R. C. Pauli 6 Sons effective November 1* 19$8. This firm is well known on the West Coast and is active in foreign markets Under the contract, vie purchased inventory and equipment which will be moved, no later than January 1$, 19$9, to s location in Berkeley which we have leased for the manufacturing operations. Proposed costs of this operation are: Purchased by contract Inventory Equipment $132,99$ $0,000 $182,99$ Additional expenditures Dismantling $. moving eqpt, ? New equipment Improvements -leased bldg. 12,000 26,7lxO 7,11$ $ lx$.8$$ $228,8$0 GLD003323 The lease is for 2 years, with 2-year renewal option, 20.135 FC~ AIUIUAL .MRETIIIO DECEMBER 11, 195b Dsceabnr 3, ?-.Sr^ Iu addition to the contract of purchase, ve have entered employment contracts for one year with Harold and Thomas Pauli at salaries of $12,000 and $10,000, respec tively, and also consultant's contracts with both men for five years, at a total fee of $62,500 each. Dispositions and Shutdowns Annual Sales Last Full Year Profit or (Loss) Last Full Year Avg. Profit or (Loss) Last 4 Yrs. Operated Pre-Tax After Tax Profit or Cash & Asset (Loss) on Utilization Sale or Last Full Abandonment Hammond 7/16/51 Oakland 10/25/54 Feed Mill 8/10/54 Portland 9/13/52 Cambridge 7/l/55 Yadkin Jojaba - Castella Barytes Mines Buena Park 8/31/5^ Eastern Marg. & Salad Prod. 2/l/57 Elmhurst Bldg. A, 8/ 31/ 57: S, 8/1/ 58 Scranton 6/9/58 St. Helena 3/31/58 Buena Park Land 1/28/58 Cheaurgy 9/1/58 Southern Pine 2/28/58 $ 4,076,147 627,505 4,423,653 2,941,393 1,308,733 m> w 4,033,465 $ (234,346) $ (373,225) $ 142,235 (226,221) 39,296 96,376 65,538 15,608 (290,471) 92,554 13,771 (19,369) (60,579) (9,537) (6,542) - - (8,149) - - 50,597 (11,032) (67,338) (253,580) 2,044,710 997,955 2,417,154 1,224,149 851,472 58,673 125,640 11,679 1,095,247 9,996,663 (372,378) (414,580) (197,934) 2,383,320 am 1,100,590 M am 31,982,480 1,070,947 52,028 am 1,477,859 103,448 66,056 - 1,503,501 68,240 (252,240) 30,690 (1,215,239) 174,957 1,258,763 (76,237) 1,269,854 455,467 925,924 136,635 27,555,267* 292,555 TOTAL $ 886,871 $ 841,792 (566,143) i and Abendcaments *t 6-3Q,103 Jj h l injgrsegirJl Book Value After Tax Cash Received Excess Cash Over Book Value Fixed Assets - Sold Fixed Assets - Abandoned 1958 Abandonments $17,072,644 $18,440,613 1,198,246 ^638^59 1261,895 1958 SaleB Of Units Abandoned - $32,937,052 (Will not have in 1959) Pre-Tax Profit (Loss) on 1958 /sbandonments: St. Helena (Published) All Others $(1,215,239) 43,618 ^1,171,621) After Tax Cash Profit Flov frost Sales and Abandonments Profits Applicable to Future Years (Chomurgj) Pre-Tax $1,337,631; After Tax * Estimated on exercise of option to buy property S/l/6l* Sale of Eastern Margarine and Salad Products Horu&lk equipment and business and Iron Street business sold to Miami Margarine on 2/1/57* Macon plant and business sold to J. H. Filbert on j/l/57* Total cash freed up on basis of last 4-year average assets v&s $2,248,600 and total Net Loss eliminated on basis of last 4-year's average vas $4l4,58O. In fiscal 1958, refinery tonnage sales of oil to Miami and Filbert vare 3,600,000 pounds mors than sold to these companies end used ourselves in margarine and salad production in -the last full year before the sales* Gross Profit on -these increased pounds vas $51,000, against which there vert! only nominal celling expenses, in addition, ve received $73,192 in royalty incon from Miami. GLD0033 24 MOTES FOR ANNUAL MEETING DECEMBER 11, 1958 -3 - December 3, 1958 Move of Elmhurst During fiscal 1957 and 1958, we closed Elmhurst and moved the refinery opera tions to Louisville and the C&C operations to Bethlehem. Shutdown and moving expenses incurred were: Fiscal 1957 Fiscal 1958 Total Shutdown Elmhurst & Idle Plant Moving Refinery Moving C&C and Start-Up $268,906 98,678 16,562 $110,276 6,511 187,503 $1*09,182 105,189 20l*,065 Total Nonrecurring Oper. Costs $381,116 Loss on Elmhurst Equip. Aban. cr Sold 267,959 (Gain) on Elmhurst Eldg. Sold finds, two adjust, taken on books in f.y. *!59) $331,290 18,2*73 C3li.l92) $718,1*36 286,1*32 (3k,192) Total At Esthlehem we have: $652,105 $318,571 $970,676 Investment in new equip, and install, of both new and old equip. Building Alterations Annual Rental Cost $1*70,012 316,31*0 67,500 Lease Term - 20 years to August 1, 1977, with option for 10 more years at ?5L,000/yea:r. Final Net Profit for Louisville Pastern Region in 1958 was $283,31*0 compared to $60,1*05 loss for the Elmhurst Refinery in 1956. These increased profits resulted despite a 19? decrease in tonnage. St. Helena Abandonment The abandonment of St. Helena is of a physical plant only, with the business being taken over by the new Adrian Joyce Works. Thus, there is no elimination of sales and profits. The loss of $1,215,239 recorded in 1958 is a total of the loss taken on the sale of the equipment, l*5ll*28; the loss on writedown of inventory, $77,01*2$ and the loss on writedown of land and buildings to a sound appraised value, $686,769. Chemurgy The disposition involving our entire Chemurgy Division on September 1, 1958 is described in detail in our Annual Report. GLD0033 25 NOTES FOR ANNUAL MEETING DECEMBER 11, 1958 -4 - Daceafcer 3, 1958 Extraneous Expenses Reducing Incone 5^4 Per Share The abandonment of St. Helena., start-up expenses at Adrian Joyce Works, Port St. Joe, Bethlehem, and other non-receiving costs reduced earnings 58^ per share. Before Tax After Tax Per Share St. Helena Adrian Joyce Start-Up Port St. Joe Start-Up Bethlehem Start-Up Mlsc. Shutdowns & Capital Losses $ 1,215,239 792,999 407,016 187,503 261,140 $ 2,853,899 $ 583,315 380,640 195,369 90,000 78,342 $175^555 25* 17 9 4 58 We had 29^ start-up and non-recurring expense in 1957 ae follows: Before Tax After Tax Per Shara Elmhurst Moving, Shutdown and Loss on Equipment Margarine -Salad Products Loss on Sale, Moving, and Shutdown Buena Park & Other Capital Losses Adrien Joyce Stext-Up St. Joe Start-Up $ 652,105 303,862 60,715 168,447 188,184 $ 1,373,333 $ 313,010 145,863 29,144 80,855 x J2.M $ S557200 14o 6 l 4 4 29? Advertising Expense Advertising $ To Soles $ To Promotion Sales Total $ To Sales S CM 1958 1957 1956 $3,911,358 4,089,903 4,192,647 1,79$ 1.81 1.85 $529,028 598,953 923,723 .26 .41 $4,440,386 4,688,856 5,116,370 2.03$ 2.07 2.26 The Annual Report states "Adi'ertising expenses were $250,GOO lower, due to elimination of certain margaarine end salad products during preceding year. Mine Exploration The zinc mine exploration commenced in 1951 was abandoned in 1956 at an after tax cost of $563,772. The lease entered for mining of ilmeaite on Cumberland Island was cancelled in Docesiber, 1957, without any activity taking place due to the inability of the lessor to resolve estate and legal problems. Bonus Plan Original plan adopted 2/6/51, revised 2/14/52. At 1955 meeting Gilbert suggested provision preventing bonus to top officers until certain dividends have been paid. GLD003326 n o t e s FOR ANNUAL MEETING DECEMBER 11, 1958 -5 - December 3, 1953 In our plan we must; earn 12$ pre-tax on bonus net capital employed before ve have any Income on vhich to calculate & bonus provision of T> In 1958 ve hed to earn over $13,500,000 pre-tax before any provision could bo made for bonus, so none vas made. With this limitation it is felt our stockholders are veil protected. Since 1951, vith maximum bonus available of $2,383*587, ve have returned to profit $952,087, leaving $1,111,500 for bonus pay-out. Lowest number of awards made in any year 48, highest 212. Gilbert also suggested submitting bonus plan to stockholders every five years, hut vs think this is only necessary vixen there is a material change. Other Income - Published P H The major items this year and lest year vere: Royalties Fire Recovery Gains Interest Earned Gain (Loss) Disposal Capital Assets Other J258 $ 413,654 257,946 107,483 54,731 68,636 $ 902,452 iSSL $ 516,730 718,115 64,108 (448,563) 146,152 $ 996,592 The $103,000 decrease in Royalty income is accounted for by the 1957 Ti02 royalty of $200,000, vhich is only partly ccrapenaated for by the 1958 Pfizer royalty of $110,000. It also should be noted that Interactional had $60,000 of royalty income in 1958 against $6,0C0 in 1957 much of vhich stems from former Glidden licenses. Depreciation Depreciation, depletion, and emortizaticn charges for 1958 vere $5,838,032 against $5,046,378 in 1957. Of the estimated tote?, depreciation charge of $6,800,000 for 1959, there rill be $2,200,000 for Chemurgy property leased to Central Soya vhich rill be fully covered by rental payments from them. Most additions since 1954 have had sum-of-years -digits method applied end there has been rapid smart!zaticn of grain storage facilities. These have given excess charges over straight-line depreciation of: 1953 1957 Rapid Amortization S-Y-D Excess $1,233,558 1,135,863 $1,182,317 946,188 $2,369,421 $2,128,505 GLD003327 NOTES FOR ANNUAL MEETING DECEMBER 11, 1958 -6- December 3, 1958 Increase In Selling, Admlnlat.rti.tlve and General Expense Annual Report P & L 3hows an increase of $l,153,8l6, or 3*5$ while Net Sales hftA a 3.6$ decrease from 1957* Increased Salesmen's Salaries accounts for $1,000,000 of this increase vllb the bulk of this found in Paint Branches which had a 23$ increase in the number of employees from 668 i:. 1957 to 821 in 1958. These additions of stiles personnel are for future pay-off and our Branch Expansion Program has definitely justified itself. The other increase In expense worthy of note was Research, up $340,000. Major Capital Expenditures - 1958 ADJ Phases 2 and 3 Reading Expansion Cleveland Modernization TiQ2 Ore Handling Facilities Port St. Joe Terpene Expansion Jax Lab Addition Geraniol and Linalool Cleveland Fire Replacement Elston Tanka & Piping Bethlehem Paint Central Research Lab Indianapolis Protein Other Regular Expenditures - 1958 Prior to 1958 $-7,450,849 173,601 188,579 - 3,156,038 220,302 - - 421,923 33 183,556 266,040 237,847 To Spend 1958 After 1958 $ 4,065,951 $ 111,227 439,292 293,750 347,840 254,700 21,979 25,688 2,059,429 125,678 32,641 2,254 - 15,257 127,485 86,227 673,913 23,773 - 178,155 597,089 72,294 m 446,081 $ 7,493,187 1,721,203 $ 9,214,395 Research & Development Including Chemurgy Research Soles Development 1957 Actual 5" "8Q9,4'3B 1,479,718 1958 Actual $1,119,043 3! 2 1958 Budget $1,296,939 1,522,710 Research & Sales Develop. Control Lab Total Lab & Research 4 Continuing Divisions Only Research Sales Development Research & Sales Develop. Control Lab Total Lab & Research $2,289,156 1,010,522 $3,5599,678 1957 Actual $ 731,869 1,415,950 $2,147,818 855,273 $3:403,091 $2,628,360 1,170,393 $3,798,753 1958 Actual $1,013,666 1,433,780 $2,447,446 927,648 $3,375,094 $2,819,649 1,155,260 $3,974,909 1958 Budget $1,096 1j **v 7 $2,553,949 999,760 $3,553,709 l759 $1,186,245 1,991,313 $2,777,558 1,003,298 $3,780,856 Inc. 1959 Over Actual 1958 17-0$ 11.0 13.5 8.2 12.0$ GLD0033P8 NOTES FOR ANNUAL MEETING DECEMBER 11, 1958 -7 - December 3, 1958 Inventories Total inventories down $<5,860,000 from $47,388,000 in 1957 to $40,528,000. In thousands of dollars Paint fbods C-P-M Organic Chemical Total Continuing Div. L.I.F.O. Reserve 8/31/58 $ 16,662 11,383 7,328 2,076 37,449 (677) a/3J./5T $ 15,420 15,086 9,825 s2mf60s2 (1.044) Increase (Decrease $ 1,242 (3,703) (2.497 (526. (5,484) 367 Published Total $ 36,772 $ 41,889 $ (5,U7) Chenrurgy 3.756 $ 40,528 (1,7^3) $ lessor The principal items bringing about this decrease of over $5,000,000 in inventory of continuing divisions were: Paints - Acquisition of General Paint ($800,000) end Finished Stock at Branches $ 1,200,000 Food - Trading Inventory dovn $3,100,000 ( 3,700,000) C-PM - Shutdown cf St. Helena end over all realignment (2,500,000) Organic Chemical General re-sdigoment (500,000) $ (5,500,000) All divisions made substantial reductions in Ray Materials and obtained greatly improved control, of all inventories. Turnover - Ernst & Ernst basis sales to year-end net inventory of continuing divisions: 3-958 - 5.91 to 1 3-957 5.38 to 1 GLt) ^ 9 NOTES FOR ANNUAL MEETING DECEMBER 11, 1958 -8- December 3, 195^ Pension Plans Expense Per Books 8/31/58 Trust Funds on Deposit No. of Employees Funded Retired Employees Receiving Benefits Yield Incl. Cap. Gains on Cost U. S. Salary $534,719 $ 9,007,565 1,289 152 4.60$ U. S. Hourly 240,000 2,164,220 911 266 4.89$ Canadian Salary 48,200 520,403 83 6 4.29ft Canadian Hourly 18,000 113,334 _Ji 6 4.60ft Total Funded $840,919 $11,805,522 2,334 430 Suppl. Retirement Plan 82,687 - 46 Total $923,606 $11,805,522 476 Total assets at 7/31/58 and in Annual Report - $11,712,422 As of IO/31/58, the cost and market values vere as follows: Cost Vudue ft Invested in Amount F^xed Income Equities _______ Market Value ft Invested in Amount Fixed Income Equities U. S. Salary U. S. Hourly Canadian Salary Canadian Hourly Total $ 9,104 2,217 530 123 $11,974 63.6ft 69.2 82:. 3 76.4 36.4ft 30.8 17.7 21.6 $10,415 2,521 519 124 $13*579 51.9ft 59.4 79.0 75.3 48.1ft 40.6 21.0 24.7 At the present time, the Pension Funds own 14,800 shares of (Hidden stock with a cost basis of $536,312 ($36.24 per share) and $200,000 of 4-3/4ft debentures purchased at offering price of 99$ GLD003330 NOTES FOR ANNUAL MEETING DECEMBER 11, 1958 Application of Funds Source of Funds: Net Income Depreciation Abandonment of St. Helena Plant Total From Operations Long-term Borrowing Disposition of Fixed Assets Other Sources -9- December 3, 1958 1958 $ 6,063,062 5,838,032 1*215*232 $13,1167333 (1,500,000) 1,565,831 100,810 1957 $ 7,26U,U37 5,046,378 0- $12,310,815 20,000,000 1,315,808 - 83IA16 Disposition of Funds: Dividends Declared $ 4,596,340 Expenditures for Property, Plant aid. Equipment 9,214,395 Increases (Decreases) in Working Capital: CaBh - Incr. (Deer.) $ (285,706) Receivables - Incr. (Deer.) 1,832,770 Inventory - Incr. (Deer.) (6,859,707) Other Current a/c's Incr. (Deer.) (2,013,925) Notes Payable - Deer, (incr.) 3,500,000 Accounts Payable - Deer. (Incr^ 1,535,105 Accrued Taxes on Income - Deer. 1,861,991 Other Changes (98,289) .(gLJg1) $ 4,594,3**0 12,465,415 $4,068,828 98,380 8,895,365 2,428,707 2,000,000 (1,178,360) 504,113 587,251 17,404,284 $13,282,974 $34^464,032 CASH Aim BANKING Bank Relations The Glidden Company maintains 148 active accounts with 113 banks throughout the United States. Glidden, Ltd., has accounts with two banks in Canada; and Glidden International has accounts with eight banks in various parts of the world. All cash is collected and deposited in local bank accounts by divisions and branches* Withdrawals from these accounts are controlled at Headquarters by the Treasurer, Major divisions maintain working fund accounts for payment of bills. Such accounts are reimbursed periodically by transfer from Headquarters1 accounts. Branch depository accounts are operated on the depository transfer plan, which provides for the automatic transfer of amounts in excess of fixed balances to regional banks. Extensive use is made of the bank wire for rapid transfer of funds, and look box arrangements for collection are used, in a number of areas. This enables remittances to be forwarded directly to a post office box in the customer's geographical area, and they are serviced directly by a bank; thus, funds are available more rapidly. Fourteen lock box arrangements are in effect at the present **-- GLD003331 NOTES FOR ANNUAL MEETING DECEMBER 11, 1958 - 10 - December 3, 1958 Short-Term Borrowing A line of credit, for seasonal borrowing use, has been set v for the 1959 fiscal year In the total amount of $10,000,000 and Is carried with 17 banks (schedule attached). For the 1958 fiscal year, the line of credit was $25,000,000 and was carried with 23 banks. In addition to bank borrowing, we have actively used the commercial paper market in order to obtain the advantages of lover interest rate and vide distribution of our paper.. Such commercial paper is sold through Goldman Sachs & Co. Average Short-Term Borrowing Fiscal ' 1958 12,278,082 Fiscal 1957 12,980,822 Estimated .1959. . _ 500,000 Maximum Short-Term Borrowing Amount - Date 22,000,000 26,000,000 5,000,000 (11/29-12/4/57) (H/30-12/6/56) Minimum Short-Term Borrowing - Amount - Date 2,500,000 (8/21-8/28/58) 500,000 (1/31-2/7/57) Year-end Balance 4,000,000 9,000,000 - Average Interest Rate 3& 3.$ The outstanding $4,000,000 short-term loans on our balance sheet at 8/31/58 were paid off In full during September, 1958. Term Bank Borrowing No changes were made In our tern borrowing within the 1958 fiscal year. Loans carried under these categories were as follows: / / ,1. $7,500,000 notes pew-able to 5 banks, $1,500,000 payable annually 9/1/58 through 9 1 62 interest rate 3-1A$- 2, $20,000,000 notes payable to 10 banks under revolving credit agree ment. Due 10/31/60. Interest rate 4-1A#, Since the close of the 1958 fiscal year, the following payments were made against these borrowings. It should be noted that the payments in November were made concurrently with the receipt of the- proceeds of the $30,000,000 debenture issue of November 1, 1958, September $7,500,000 notes payable 1958-1962 $1,500,000 October - November $ ,6 000,000 Balance $20,000,000 notes revolving cre&Lt $4,000,000 $1,000,000 $15,000,000 (Due 10/31/60) CLD003332 NOTES FOR ANNUAL MEETING DEOT-IBER 11, 1958 - 11 - December 3, 1958 Interest Cost Total interest expense and effective rates an ahart-temn and long-term tarroving vas as follows: Effective Short-Term Rate Total Dollars Effective Term Borrowing Rate Total Dollars Over-All Effective Bate Total Interest Eipenas 3.6# 470,918 806,858 3*7# 1,277,776 195a 3.8# 468,275 4*0# 1,093,750 3.9# 1,562,025 Debenture Iosya At the present time, the entire indebtedness of the Company (other than normal accounts payable and accrued expanses) Is represented by the $30,000,000 of 4~3/4# sinking fund debentures dated Novenber 1, 2998, end due November 1, 1983. The indenture provides for a sinking fund commencing November 1, 2964, to retire $1,300,000 of these debentures annually cad is calculated, to retire 100# at or prior to maturity. The debentures were offered to the public an October 28, 1958. Net proceeds to the Company after deduction of discounts of 1# and underwriting ccsmiosions of 1-1/4# and expenses of issue were sroroxUnately $29,220,000* The effective interest cost to the Germany vill be 48$. The indenture restricts the payment of dividends to net incase earned subsequent to August 31, 1958 plus $10,000,000^ The indenture limits Funded Debt (-which does sot include subordinated debt convertible into camtson stock) to 35# of total capitalization* This would permit us to currently borrow on additional $13,000,000. ACCOUNTS AND NOTES RECEIVABLE Accounts Receivable Notes Receivable Total Reservo for Bed Debts and Allowances Net Per Annual Report 8-31-58 $20,357,000 348,000 $20,765,000 5^000 $20,176,000 8-31-57 $18,378,000 471.000 $28,649,000 509.000 $28,343,606 #Bad Debt Reserve to Receivables 2.6# 2.7# Past Due Receivables Dollar Amount # of Gross Receivables Receivables Charged Off Recoveries Against Receivables Charged Off Net Bad Debt Loss. $1,113,000 $ 198,000 . Tj.OOO $ 124,000 $ 1,240,000 6.6# $ 263,000 76,000 $ 191.000 f^LDOO 3333 NOTES FOR ANNUAL MEETING - 12 - December 3* 1958 Bad Debt loss as a percentage of net sales has been as follows: 1958 1957 1956 1955 1954 .0654 .0954 .0454 .0254 .09754 The Accounts Receivable turnover for the entire Company based an year-end Receiv ables was approximately 35 days. For both 1956 and 1957* the turnover was approximately 30 days. The national median turnover is approximately 35 days. It should be noted that our figure is higher because of the Inflation of Receiv ables due to the Chemurgy sale. Turnover; excluding the Chemurgy Division, was 30 days for 1958, compared to 32 days in both 1956 and 1957* A percentage breakdown of total receivables by major division is as follows: Paints Foods Chemicols-Pigments-Metals Chemurgy Organic Chemicals Private Ledger 32SL 53 23 6 14 3 1 io^- J2S1 55 23 6 11 3 2 log It is of significant importance that since August 31* 1958* over 9754 of the Chemurgy Division receivables have been collected and the reserve is adequate to cover the uncollected balance. Decrease of $7*895,000 in Coat of Products Sold $6,418,000 due to decreased Net Sales 1,477,000 $77^95*000 due to decreased cost of raw materials Labor, Wage and Salary Ratios Cost of Products Sold Manufacturing Labor S> 'Wages j> Wages to Coat of Sales $168*979,340 $ 12,344,327 7.31^ $176,^74,019 $ 13,162,132 7.44# Net Sales All Wages & Salaries i> to Sales $217*352,681 $ 35*203*072 16.2054 $225,537*291 $ 34,621*792 15-3554 Average Assets and Profit Return Paints Foods Chemicals Organic Chemical Chemurgy Total Division Average Assets 'Twmssr 24,667,224 29,799,352 7,981,319 11 $129,705,975 $ Return iiiw 16.8 5.8 4.7 Total Company $139,740,466 8,Qf> Donations The donations policy of the Company provides for reasonable support to educa tional, welfare and charitable organizations. This policy is administered by the Donations Committee under the direction end guidance of the President and Board of Directors. GLD003334 - '*'* .1- *l V. 11- i J- i - 1/ lECEMBER lls 1958 ' -1> -- ..30 , .j Xy""*' Educational support has been given through the following: 1. Awarding of four scholarships under the auspices of the National Merit Scholarship Foundation. 1958 winners were: Ronald Lewis, Chicago (Harvard); Alan Block, 'Louisville (Antioch); Robert Berio, San Francisco (University of San Francisco); and Douglas Chapin, Atlanta (Duke). 2. Cooperative Contribution Plan, under which the Company makes unrestricted grants to degree-granting universities in an equal amount to the dona tions made by employees of the Company to such colleges and universities. 3. Chemistry lectureship grants provided to five United States universities and one Canadian university to provide for lectures by outstanding in dividuals and to help promote understanding and interest in scientific achievement. !i,, Outright grants to selected colleges and universities, such as Case and Western,Reserve. 5. Grants to selected foundations, including Ohio Foundation for Independent Colleges. In the Welfare and Health category, the Company has supported United Fund, Community Chest and Red Cross programs in the communities where it has plants or branches. In addition, selective support has been given to other service organizations and foundations. Contributions are not given to sectarian groups, labor organ izations, etc. ' Education Health k Welfare Other Total Donations % of Net Profit Donations 1555------- 1557---------- WS M 22% 57 70 9 ____ 8__ 31# 61 _____8_ $69,066 1.11$ $70,811 .97% $69,812 .86* Per Employee $10*95 $10.97 $10.93 Insurance FIA coverage on all manufacturing properties except Canada, Buena Park, San Francisco, New Orleans, St. Louis, Minneapolis Varnish only, Portland, Tulsa, Berkeley, Iron Street, Collinsville, Scranton, Jacksonville Southern Pins only, Valdosta and Calumet and River Elevators. This FIA policy for fire, wind, hail, explosion, aircraft, smoke, vandalism and sprinkler leakage. FIA coverage is on agreed ansunt basis, with no co -insurance requirement. Locations excluded are under separate policies for fire, extended coverage and sprinkler leakage. Are on co-insurance basis - no agreed amount. Elevators under Underwriters Grain Ass*n policy. GLD003335 liOT&i FOii ANNUAL MEETING DECEMBER 11, 1958 - Hi - December 3, 195'2 Use and occupancy insurance also in FIA for locations they cover for fire, etc. Use and occupancy insurance other divisions specific with co-insurance* Also carry ocean marine and cargo insurance to extent necessary. Carry boiler and pressure vessel insurance where necessary* All employees bonded in substantial amount. Workmen's Compensation - We cany self-insurance in states where possible (11), with an override $1,000,000 policy for catastrophe. Self-insurance on Workmen's Compensation has saved us over $1,000,000 in the last 28 years. Also carry comprehensive general liability, including product liability. Also liability and property damage. There were no major fires in the 1958 fiscal year. Seven small fires resulted in total recoverable losses of $10,000. Total cost of insurance premiums for fire and extended coverage on buildings, machinery and equipment and -.Inventory, plus use and occupancy, was $257,Urn for the fiscal year 1958. (This figure should not be given out.) Insurable value of all buildings, machinery and equipment owned by the Company, but excluding land and foundations which are not insured, is $107,000,000. Miscellaneous Glidden shares held by Pension Fund are voted by Hafner & Co*, as Nominee of The Cleveland Trust Company, Trustee. No divisions are in red, and the newly started Port St, Joe tall oil department is the only department of continuing divisions which had a loss for the 1958 year* We have eliminated all units considered to be returning less than normal profits and are closely watching the few which are marginal. (See Dispositions.) We have no Treasury stock. See Cash section on Debentures for obvious answer to question on issuance of stock for financing. Stock dividends are always under consideration, but we have no plans now for such. It is felt that stock dividends only spread earnings and value over a larger number of shares, with price adjusting accordingly. We have considered Stock Purchase Plan for Employees, but the Board feels that matters of personal investment should rest with the individual. Stockholders - 8/31/58 - Total 22,105 Individuals Institutions Brokers Nominees Foreign 21,506 299 199 212 159 52^65 % Shares Held 67.805? 3.55 lii.65 13.28 .72 100$ Aver, Shares Held 72 273 1,692 1,261 lOh 103 Total 8/31/57 21,686 CLD003336 NOTES FOR ANNUAL MEETING DECEMBER 11, 195-3 - 15 - December 3, 3.958 Dividends, book value and number of employees all found In 10-year comparison In Annual Report. Attention should be called to the key statistics for period 19^9-1959 found in Annual Report. Directors and key employees - personal information found in "Meet Your Manage ment," October dividend insert. Auditors Messrs. N. T< Halvorson, Resident Partner, and A. A. Wilhelm, Assistant Manager, of Ernst & Ernst will be present at the meeting. Our internal audit staff conducts surprise audits of all operating units of the Company on a schedule calling for visits about once each year. Foreign Business - international Glidden international and its subsidiaries are not consolidated with Glidden. Basic reason is greater risk inherent in foreign investment. Glidden investment in International is $18,018, vhich represents 100# of out standing capital stock. In published Annual Report, this amount is included under other Current Accounts, Advances and investments. In addition, at 8/31/58 International owed Glidden $126,105 for merchandise purchases from Glidden dur ing August. International1s funds have basically been secured from bank borrowing. At 9/31/58, total bank borrowing was $950,000. This note is guaranteed by Glidden. Interest rate is 3-1/2#. At 8/31/58, international had investments as follows: Colombia - Pinturas ico - I'aint - one-third interest Ecuador - Pinturas Ecuatorj.anas and Distribuidora Americana - Paint - one-third interest $315>504 $ 62,837 In addition, International had the following wholly-owned subsidiaries vhich were consolidated in the international Audited Financial Report (not in Glidden's Consolidated Report). Mexico Panama Inactive subsidiary Paint Branch International also is holding a 25# interest in Soya Glidden Argentina, but this stock will be turned over to Central Soya if the option is exercised. The main office of international Js in San Jhan, Puerto Rico, and a paint branch also is operated in Puerto Rico. Glidden international has 7 foreign licensees. Sales and profits of Internationa], were as follows: S&lCG Fiscal 1956 $ 560,112 Fiscal 1957 $1,684,178 Fiscal 1958 $3,012,840 GLD003337 Profits $ 32,709 $ 56,603 $ 68,190 Foreign Business - The Glidden Company In addition to these sales of International, Glidden sales, indirectly or directly, to overseas companies totaled $5,599,120 (this excludes Glidden sales to International). The Glidden Company has 18 foreign licensees (in addition to international). Glidden owns 24,000 shares (15#) of capital stock of Fabrics (Cuba) and 777,406 shares (2-1/4#) of the common stock of Ishihara (japan). fiO'i'ES FOR ANNUAL MEETING DECEMBER 11, 1958 - 16 - December 3, 1938 Government Business Total in 1958* about $2,000,000, includes Federal agencies, state and local government. A. small factor find has no problems in Renegotiation or other government control or adjustment. Mostly on bid basis. Sale and Leaseback 1 Has been extensively investigated, but is not applicable to our manufacturing operations at present. We do not own our branches and generally lease them for 10-year renewable terms. Eethlehem is only factory building presently leased, (Pauli will be.) Salaries Our officers* salary rates, including bonus, are fully in line with studies on this subject, such as AMA. If, anything, slightly lower than companies in similar fields and size. We must be competitive in total salary and in such things as stock options to attract and hold good men. While we do not have an outside director to directly police these things, pay ments are public knowledge in our proxy, and being an inside Board, we are probably more conscious of this feature than if salary rates, etc., were set by outside Board members. Annual Report Cost per copy 210 (last year, 2li0). Stockholders Buying Company Products Should not be granted special opportunities. Too difficult to handle and im practical. Also unfair. Product Diversification No immediate plans for acquiring through outside purchase. Will continue to diversify our present line through our own Research. Cannot at present divulge any potential new products that are in development stages. DEEsmlh D. E. ERSKINE CLD003338 ITHE GL3DIEN COMPANY ' BANK CREDIT LIMES Fiscal Year 1959 City and State Atlanta, Georgia Chicago, Illinois Chicago, Illinois Cleveland, Ohio Cleveland, Ohio Cleveland, Ohio Jacksonville, Florida Jacksonville, Florida Los Angeles, Calif. Louisville, Kentucky New York, New York New York, New York New York, New York New York, New York St. Louis, Missouri St. Louis, Missouri San Francisco, Calif. Bank. Names The Citizens and Southern National Bank Continental Illinois National Bank and Trust Company of Chicago The First National Bank of Chicago The Cleveland Trust Company The National City Bank of Cleveland Union Commerce Bank Atlantic National Bank of Jacksonville The Florida National Bank of Jacksonville Bank of America, Bell Branch The Louisville Trust Company The Chase Manhattan Bank Chemical Corn Exchange Bank The First National City Bank of New York The New York Trust Company The Boatmen's National Bank of St. Louis Mercantile Trust Company Wells Fargo Bank TOTAL Amount $ 500,000 1,000,000 500,000 500,000 1,000,000 * 500,000 500,000 500,000 500,000 1,000,000 500,000 1,000,000 500,000 500,000 500.000 500.000 $10,000,000 * $1,000,000 available to subsidiary. WGP:Jts 10-27-58 N 2252.01 GL0003339