Document VVJaDNp7q0Rm17xmx0rExZvj

Saint Joseph Lead Company Annual Report -- 1956 America's Corporate Foundation; 1956; ProQuest Historical Annual Reports Pg- 0_1 V St. Joseph Lead Co. NINETY-THIRD I GoftkBpcoof`; tftADTS/ON Bfvtsir ANNUAL REPORT TO THE STOCKHOLDERS Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. S T . J O S E P H . L E A JD COMPANY NINETY-THIRD ANNUAL REPORT to the STOCKHOLDERS for the YEAR ENDED DECEMBER 31 1956 Transfer Office St. Joseph Lead Company 250 Park Avenue, New York 17, N. Y. Registrar ' . - City Bank Farmers Trust Company 22 William Street, New York 5, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE O F CON TENTS Trustees and Officers Highlights . , . World Markets for Lead and Zinc Income and Taxes Sales Dividends Working Capital Financing Capital Expenditures Southeast Missouri Edwards and Balmat, New York Josephtown, Pennsylvania Employee Relations ... . Progress in New Areas . Oil Exploration Cia. Minera Aguilar, S.A. and Associated Companies Brunswick Mining and Smelting Corporation Limited Anti-Trust Suit President's Report to Employees Mine La Motte Corporation Deferred Profit Sharing Plan Stockholders Conclusion . . Lead and Zinc Statistics Financial Statements and Accountants' Certificates Page 3 4 5 6 6 6 7 7 7 8 8 8 9 .9 9 . 10 10 10 11 11 11 11 11 12-13 14-22 General Counsel Debevoise, Plimpton & McLean 20 Exchange Place New York 5, N. Y. Auditors Haskins & Sells 67 Broad Street New York 4, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY INCORPORATED MARCH 25, 1864, UNDER THE LAWS OF THE STATE OF NEW YORK EXECUTIVE OFFICES . 250 PARK AVENUE . NEW YORK, 17, N. Y. Clinton H. Crane . . Irwin H. Cornell . . Andrew Fletcher . . Hendon Chubb . . . C. Merrill Chapin, Jr. Arthur M. Anderson . George I. Rrigden . . H. DeWitt Smith . . John R. Shepley . . . Francis Cameron . . Bernard F. Desloge . Eli Whitney Debevoise James W. McAfee . . Board of Trustees Year Elected ............................. .......................................... Chairman . Vice President, Cornell Iron Works, New York, N, Y. ........................................................................President .................................. .... Chubb & Son, New York, N. Y. . . . ... . .............................Vice President .Member Board of Directors and Executive Committee, J. P. Morgan & Co. Incorporated .......................................Vice President and Treasurer ........................ Considting Engineer, New York, N. Y. . . . Vice President, St, Louis Union Trust Company .............................................................. Vice President ......................................................... St, Louis, Missouri . . Debevoise, Plimpton & McLean, New York, N. Y. . . President, Union Electric Co in puny of Missouri, St, Louis, Missouri 1911 1913 1921 1928 1933 1944 1945 1948 1950 1953 1953 1954 1954 Executive Officers Clinton H. Crane......................... , . . . . . . Chairman Andrew Fletcher............................................................ President C. Merrill Chapin, Jr............................................ Vice President Francis Cameron ....................Vice President George I. Brigden . . ... . Vice President and Treasurer Charles R. INCE . . . . . Vice President and Sales Manager R. J. Mechin............................................................ Vice President Robert H. Ramsey.................... ..... ......................... Secretary James G. Colvin ..... Comptroller and Asst. Treasurer William J. Elliott.......................... . . . . Asst. Secretary Edward P. Merrell . . . . ... . . . Asst. Treasurer Donold K. LOURIE . . . . . . . ; . . . Asst. Secretary United States Division Managers MINES Elmer A. Jones Southeast Missouri SMELTERS John G. Wehn Josephtown, Pennsylvania Marshall G. Jones Edwards-Balmat, N. Y. William T. Isbell Herculaneum, Missouri Consultant George F. Weaton Cia. Miuera Aguilar, S. A. Argentina Donald B. McGilvra . . . .... . . . . Vice President 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HIGHLIGHTS Sales of metals, etc. Taxes on income Net income (after taxes) Dividends paid i Shares of capital stock outstanding Per share on capital stock: Taxes on income Net income Dividends Current assets . Current liabilities 1956 1955 $119,909,612 $5,280,519 $10,291,357 $121,497,456 $6,478,177 $12,729,820 $8,148,666 2,716,222 $8,148,666 2,716,222 $1.94 $3.79 $3.00 $49,625,248 $11,383,335 $2.38 $4.68 $3.00 $47,421,282 $13,805,252 Net current assets . Cash Short term marketable securities Capital expenditures Number of employees Number of stockholders $38,241,913 $6,515,084 $18,000,000 $3,527,931 5,213 13,219 $33,616,030 $7,210,350 $20,000,000 $2,230,305 5,101 11,263 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. NINETY-THIRD ANNUAL REPORT FOR THE YEAR 1956 ST. JOSEPH LEAD COMPANY To the Stockholders: The Ninety-third Annual Report of St, Joseph Lead Company covering- the year ended December 31, 1956, is submitted herewith. Con solidated Balance Sheets as of December 31, 1956 and 1955, together with Summaries of Consolidated Net Income and Earned Surplus for each year for St. Joseph Lead Company and Subsidiaries, are included herein. Similar statements for Cia. Minera Aguilar, S. A. are also included. The accounts of these companies have been audited by Haskins & Sells, Certified Public Accountants, and their certificates are appended. World Markets for Lead and Zinc Lead was stronger than zinc statistically through 1956. Not only was consumption close to the previous year's level but there was less over-production. Abroad, the use of the metal was practically unchanged while in this country the drop was a negligible one to around 1,185,000 tons--the third highest figure on record. On the other hand, world consumption of zinc fell below the 1955 rate; the decline in the United States of approximately 10% to about 1,000,000 tons was due to lower auto mobile production and the effects of the mid year steel strike; in the United Kingdom the lower rate was also due to the recession in the motor industry and credit shortage, which re sulted in nearly 14% less zinc being taken by the die casting and brass industries. Production of lead and zinc was higher here and abroad in 1956, the gain in output amount ing to about 5% for each of the two metals. In the United States the increase in mine produc tion can be chiefly attributed to fewer work stoppages; the higher prices which prevailed were offset by increased costs resulting from higher wage rates, increased transportation charges and more expensive fuel and supplies. A feature of the year's production figures was the all-time high output of U. S. zinc smelters at 1,063,000 tons. Prices were remarkably firm throughout the year with the domestic market for zinc at 13.5^ per pound, up 10% from 1955, and lead at 16(S an increase of 6%. Abroad, the London Metal Exchange prices, which fluctuate daily, moved within narrow ranges and at no time did the differential from the U. S. price threaten the stability of quotations here. The apparent paradox of firm prices in the face of higher production and lower consumption is easily explained--the U. S. Government re moved the metal surpluses from the world mar kets. Domestic zinc smelters and lead refineries are estimated to have delivered 160,000 and 75,000 tons, respectively, to the stockpile dur ing 1956. In addition, considerable tonnages of zinc, and a sizable quantity of lead produced outside of the United States were also delivered to the Government. While domestic stockpiling appears to be nearing its tonnage objectives and may terminate, the barter program, under which U. S. perishable agricultural surpluses are traded for non-perishable strategic ma terials of foreign origin, should continue to be a major factor in keeping the lead and zinc markets in balance. The billions of dollars invested in surplus farm commodities should enable our Government to continue such barter trades almost indefinitely. However, no long term goals have been announced for this pro gram, and the U. S. mining industry awaits with interest whatever clarification may be Y,... . 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. forthcoming- from Washington to substantiate the Administration's announced policy of assur ing a healthy mining industry. Income and Taxes During 1956, after provision for all charges, the Company earned $10,291,357 as compared with $12,729,820 in 1955. Based on 2,716,222 shares of capital stock outstanding, earnings per share were $3.79 for 1956 compared with $4.68 for 1955. The 1956 earnings were ad versely affected during the second and third quarters by the steel strike and by the change over to new models in the automotive industry. The higher earnings for 1955 reflected a non recurring sale of 17,007 tons of lead and 1,436 tons of zinc from inventory. Dividends received from Cia. Minera Aguilar, S. A. and other foreign affiliates amounted to $756,878 in 1956, as compared with $754,188 in 1955. Approximately 47% of the gross earnings of the Company came from zinc and 53% from lead, in comparison with 46% for zinc and 54% for lead in 1955. The earnings per share by quarters were as follows: 1050 1055 First Quarter Second Quarter Third Quarter Fourth Quarter $1.08 .78 .85 1.08 $1.24 1.24 .89 1.31 Total $3.79 $4.68 The provision for Federal and State taxes on income was $5,280,519 which is equivalent to $1.94 per share, as against $6,478,177 or $2.38 per share for the previous year. Audits of the Company's Federal income tax returns by the Internal Revenue Service have been completed through the year 1954, result ing in an unpaid liability of $247,000 for ex penses disallowed, which the Company is con testing. The Company has filed suit against the U. S. Government to obtain a refund of the taxes paid on percentage depletion disallowed on the sales of lead produced from remilled tailings during the years 1949 to 1953, inclu sive. The total amount involved is approxi- 6 mately $712,000 exclusive of interest, and has not been set up on the books. The table below gives a record of the Com pany's earnings for the ten-year period ended December 31,1956 : TEN-YEAR EARNINGS 1947-1956 Year 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 Consolidated Net Income $12,537,761 9,636,737 8,564,436 12,211,615 13,577,237 9,638,455 6,300,342 7,523,503 12,729,820 10,291,357 After Income Taxes of $ 4,479,659 3,776,836 2,889,925 7,976,468 13,819,817 5,667,894 4,344,733 4,628,764 6,478,177 5,280,519 Sales The total sales in 1956 amounted to $119,909,612 which is 1.3% lower than the comparable figure of $121,497,456 for 1955. Lead sales from St. Joe's production were lower than in the previous year and amounted to 137,772 tons as compared with 155,755 tons in 1955. Sales of zinc content in slab zinc and zinc oxide were slightly lower than in 1955 and were 132,652 tons as compared with 136,723 tons. The table on Page 13 shows the tonnage of lead and zinc production, purchases and sales for each of the last ten years. Dividends A total of $3.00 per share was paid during 1956, in four quarterly dividends of 75^ each. The same amount was paid in 1955. The follow ing is a record of the cash dividend payments for the ten-year period through 1956: DIVIDENDS 1947-1956 Year : Per Share Amount 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 . $2.18 2.36 2.36 2.36 2.95 2.88 2.75 2.00 3.00 3.00 $5,926,368 6,420,232 6,420,232 6,420,232 8,023,749 7,776,373 7,468,290 5,432,076 8,148,666 8,148,666 * After giving effect to 10% stock dividend paid June 10, 1952, and 25% December 11, 1950. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Working Capital The financial condition of the Company remains strong. Current assets at the end of the year were $49,625,248--current liabilities $11,383,335. Thus the Company had $4.36 of current assets for each dollar of current liabilities at the close of the current year. Net working capital (cash resources, receivables and inventories, minus current liabilities) was $38,241,913 at December 31, 1956, compared with $33,616,030 at December 31, 1955, an increase of $4,625,883. A summary of the principal items responsible for the changes during 1956, is as follows: Net working capital at January 1, 1956 Additions: Net income after all charges Charges to income for depreciation, depletion, other re serves and other items which did not affect working capital Sale of investments including 95,000 shares of The New Jersey Zinc Company Stock $33,616,030 L0,291,357 3,086,307 5,437,827 Deductions: $52,431,521 Dividends paid $8,148,666 Capital expenditures 3,527,931 Investment in Brunswick Mining and Smelt ing Corporation Limited 5% Income Bonds due 1968 . Other Investments and Advances Payment to Trustee Under Retirement Plan 1,575,000 (248,661) 1,186,672 14,189,608 Net working capital at December 31, 1956 $38,241,913 Financing 95,000 shares of the Company's investment in The New Jersey Zinc Company stock were sold in 1956 to assist in financing the 100,000 kw coal-fired steam power plant now under construction on property adjacent to the Joscphtown zinc smelter, and estimated to cost approximately $18,000,000. In addition, arrangements have been made with the Pittsburgh Consolidation Coal Company to borrow $8,500,000 on the Company's 3% 7c Notes at the rate of $2,000,000 per month, beginning July 1, 1957. These notes are to be repaid in twenty semi-annual installments, the first payment to commence not later than eighteen months after the completion of the power plant. At the time of payment of any semi-annual instalment, any number of additional instalments may be repaid at face value. Capital Expenditures Last year approximately $3,528,000 was invested for construction of new facilities as compared with $2,230,000 in 1955. Approximately two-thirds of the expenditures for construction in 1956 were made at the Josephtewn zinc smelting division, in connection with increasing the slab zinc production capacity at this plant from 10,000 tons to 12,000 tons per month. Engineering is progressing satisfactorily and all major equipment has been contracted for, so that the first unit of the Company's Jcsephtown power plant should be placed in operation April 15, 1958, and the second unit a month later. Construction will be slower than originally estimated because of the Westinghcusc strike. It is believed that about $12,600,000 will be ex- 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. pended on the power plant in 1957, and that capital additions for the other divisions will approxi mate $2,000,000. Therefore, from present indications, it is estimated that total capital expendi tures for the year 1957 will be $14,600,000. Capital expenditures since 1947 are shown in the following table: COMPARATIVE CAPITAL EXPENDITURES Year Lead Belt Josephtown Edwards-Balmat Total 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 $ 830,993 469,093 774,658 903,776 2,549,327 3,798,396 3,972,871 817,306 459,013 723,865 $5,316,460 1,776,183 147,536 177,071 564,768 1,768,048 720,665 208,499 1,769,847 2,798,066 $151,968 81,590 160,553 929,617 685,128 90,896 94,475 99,938 1,445 6,000 $6,299,421 2,326,866 1,082,747 *2,010,464 *3,799,223 *5,652,340 4,788,011 *1,125,743 2,230,305 3,527,931 Includes items capitalized by agreement with the Internal Revenue Service appli cable to prior years amounting to $035,491 in 1950, $559,920 in 1951, $151,784 in 1952 and $92,938 in 1954. Southeast Missouri The mines and mills of the Lead Belt again operated without interruption throughout the year. Ore and chat milled were slightly less than in the previous year and totaled 7,195,413 tons as compared with 7,398,730 tons in 1955. Because of the lower grade ore being mined, lead content, on a 90% basis, also showed a slight decrease from 101,982 tons to 100,707 tons. Zinc recovered in 1956 was 3,152 tons as compared with 3,746 tons in the previous year. The Indian Creek property in Washington County, now in its third year, reached full capacity operation at 2,000 tons of ore per day in the early months of the year. New ore developed at the Southeast Missouri properties in 1956 approximated the tonnage mined during the year. Pig lead production at the Herculaneum smelter was approximately the same as in the previous year, and amounted to 98,380 tons, in comparison with 99,286 tons in 1955, and slab zinc produced at this plant from blast fqrnace slag was 2,856 tons and 1,846 tons for 1956 and 1955 respectively. 8 Edwards-Balmat The mines and mills of this division operated throughout the year without interruption. Zinc concentrate production reached a record high of 107,653 dry tons, and lead concentrates totaled 2,791 dry tons, compared with 101,796 tons and 1,679 tons respectively in 1955. All zinc concentrates produced were shipped to Josephtown and the lead concentrates to Her culaneum. The effect of large-scale construction pro grams at the nearby St. Lawrence River Sea way is being felt at this New York State divi sion in relation to the availability of labor. Josephtown This smelter again operated on a full-time basis throughout 1956, and zinc content of oxide and metal produced totaled 134,023 tons as compared with 136,355 tons the previous year. Very satisfactory sales of specification zinc metal were made to the steel companies for use in their new continuous galvanizing lines. We had spent in previous years large sums in modi fications of process and equipment to be ready to supply this type of slab zinc. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Employee Relations Labor relations throughout the year were harmonious and there were no work stoppages. The number of employees at the end of 1956 was 5,213 compared with 5,101 at the end of 1955. At December 31, 1956 more than 607c of our employees had over 10 years of service and about 17% had been employed for more than 25 years. In line with the general industry experience, wages and salaries at all divisions were in creased during the year. Total payrolls in 1956 were the highest in the Company's history and amounted to $25,682,126 compared with $23,818,704 in 1955. In addition to these pay ments, the Company made substantial pay ments for employee benefits such as retirement annuities, group life insurance and hospitali zation. Progress in New Areas Exploration for new properties continues both in the United States and abroad. In 1956, exploration parties were active in Missouri, Portuguese East Africa, Canada, Argentina, Peru and Colombia. In the following areas, their work has gone far enough to permit men tion of results. In Missouri, a promising new lead prospiect has been discovered in Washington County. Extensive drilling is planned for this area be ginning in the Spring of 1957. Also in Missouri, three centers of iron ore deposition have been discovered about 40 miles northwest of Bonne Terre as the result of an air-borne magnetometer survey in 1951 and subsequent exploration work. One of these, known locally as the Pea Ridge deposit, has been drilled sufficiently to indicate the prob ability of a very large tonnage of commercial grade iron ore at a depth between 1,400 and 3,000 feet below the surface. The other two bodies in the same general area have been drilled less extensively, but are considered as of definite interest. In February, 1957, Beth lehem Steel approached us with a proposal to form a joint 50/50 company to exploit the Pea Ridge deposit. Under the suggested arrange ment, St. Joe would take the major respon sibility of operating the mine and Bethlehem would supply the major financing, their knowl edge of iron ore benefieiation, and a market for the product. We are actively studying this interesting proposal on the basis of an annual output of 2 million tons. Five years of con struction and mine preparation would probably be necessary for such a large-scale enterprise before reaching the production stage. The value to St. Joe, and to Missouri, of another largescale center of mining near the spot where we have worked for 93 years, is obvious. In Peru, during September, 1956, an agree ment was reached with the Santander Mining Company of Delaware, whereby certain mining claims in Peru would be turned over to a new company to be named Compania Minerales San tander, Inc., a Delaware corporation, for 40% of its capital stock. St. Joe will own 60% of the capital stock of the new company, and has agreed to invest, in part as a loan, not to exceed $1,500,000 for the construction of a power plant, a 500-ton per day mill and to place the property in initial operation as an open pit undertaking. Adequate reserves of a copperlead-zinc ore have been developed to justify such an investment. A management contract has been entered into with Administradora de Minas, S. A., a Peruvian company with oper ating experience in that country, who will supervise operations. It is expected the prop erty will come into production by the middle of 1958. Oil Exploration Development of the Harris Ranch leases, Crockett County, Texas, owned jointly by Con tinental Oil and ourselves, is continuing. The net amount expended for oil exploration in 1956 was $301,203 as compared with $49,701 in 1955, after deducting income from the sale of oil amounting to $319,933 and $136,955 for these years respectively. During the year, nine wells were completed, thereby bringing the total producing wells on these leases to fifteen, with one shut-in gas well. It is estimated that our proven oil reserves amounted to approxi mately 3,306,000 barrels at December 31, 1956. An additional well, authorized in 1956, was being drilled at the end of the year, and has since been completed as a producing well. 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The total net cost of our oil program over the past five years, after taking credit for tax savings, amounted to $1,470,481. This entire amount has been written off with the exception of $220,216. Compania Minera Aguilar, S. A. Net income of Compania Minora Aguilar, S. A. for the year 1956 reached an all-time high and was 59,040,989 pesos after deducting special appropriations for replacement and re habilitation of capital assets amounting to 34,830,650 pesos. This was 12,255,499 pesos higher than in the previous year when the net income was 46,785,490 pesos after deducting special appropriations of 23,588,438 pesos. Cash and marketable securities at December 31, 1956 were 209,886,503 pesos, an increase of 7,414,002 pesos over the previous year. Cia. Minera Aguilar, S. A. transferred dividends of $589,171 to the St. Joseph Lead Company dur ing the year, which was approximately 35% of the earnings when expressed in the equivalent U. S. dollars. Lead and zinc concentrate production for 1956 in metric tons as compared with 1955, is shown below: 1956 Tons 1955 Tons Lead Concentrates 30,334 27,879 Zinc Concentrates 42,366 42,204 The rehabilitation program for the mine and mill, which began in 1954, has been completed. Mine prospecting and development continues encouraging. Cordial labor relations were maintained, contrary to the general trend in the country. Costs were satisfactory consider ing the continued inflationary trend, ,, Geological exploration in various parts of Argentina was carried on and some work of this nature was also done in Peru by the Cia. Minera Aguilar staff. Two copper prospects in Argentina were dropped after rather extensive work had been done on the more promising one. Sulfacid, S.A., had its best year to-date, although plagued by a shortage of zinc concen trates due to inadequate railroad facilities, Operating conditions and metallurgical re sults at Austral, S.A., continued to make marked 10 improvement. A most capable, young technical staff has been built up. Progress in the overall rehabilitation of Ar gentina has been disappointing to-date. Con tinuing inflation and the unfavorable trade bal ance, coupled with the problems of lack of fuel, power, and adequate transportation, greatly re tards the much-to-be-desired economic recovery. Labor remains recalcitrant, and along with the great percentage of the people, has not learned that the key to recovery is increased productiv ity, not higher wages and less work. Brunswick Mining and Smelting Corporation Limited During the year, St. Joe advanced $1,575,000 to Brunswick Mining and Smelting Corporation Limited on its 5% Income Bonds due in 1968. This brings the total advanced at December 31, 1956, to $3,500,000. Expenditures by Bruns wick during the year were about $1,711,000. Metallurgical research in 1956 centered on three alternative methods for handling New Brunswick ores, and was carried on at Bat hurst, at Josephtown and at the Battelle Insti tute, Columbus, Ohio. These programs were as follows: 1. Selective flotation to produce lead, zinc, copper and iron concentrates for sale. 2. Selective flotation of a copper and an iron concentrate and bulk flotation of a lcad-zinc concentrate for treatment in a new type of furnace developed in England. 3. Direct roasting and leaching of the ore or a concentrate followed by separate recovery of copper, lead, zinc and iron by more or less conventional methods. Anti-Trust Suit In the last three Annual Reports, the stock holders were advised that the United States had commenced a civil action against St. Joseph Lead Company and American Smelting & Re fining Company in the United States District Court for the Southern District of New York, alleging violations of the Sherman Anti-Trust Act in connection with the lead business of each of the defendants. The stockholders were also advised that the Company vigorously denies that it has in any way violated the anti-trust Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. laws and that the Company stated this posi tion in an answer filed to the Government's complaint. There were no major developments in 1956. President's Report to Employees A copy of the President's Report to Em ployees for the year 1956 will be found under the flap of the rear cover of this report. Mine La Motte Corporation The net income for 1956 for the Mine La Motte Corporation (50r/t owned) was $155,695, after deducting expenses amounting to $183, 690, in connection with the development pro gram, including the sinking of a new shaft. No dividend was declared as it is believed the available cash will be needed to complete this program. Deferred Profit Sharing Plan At the Annual Meeting of Stockholders on May 14, 1956, the Profit Sharing Plan for Sal aried Employees of St Joseph Lead Company adopted by the Board of Trustees, was ap proved. Under the Plan, the Company con tributes an amount equal to 3 percent of its consolidated net income for each year or 10 percent of the aggregate salaries of its mem bers, whichever is less, but such contributions may be made only to the extent that they do not reduce the consolidated net income below $2.00 per share. The Company's contribution to the Plan for the year 1956 amounted to $308,741 and was paid to the Trustee in January of 1957. This is equal to 3 percent of the consolidated net income and amounted to approximately 6Vi% of the aggregate salaries for the year of all employees eligible to participate under the Plan. Of the 662 salaried employees participating, 592 elected to have their share invested in the St. Joe Stock Fund, 51 in the General Fund, and 19 will receive cash because of death, re tirement or severance of employment. Stockholders It is interesting to note from the table below, that at December 31, 1956 we had 13,219 stock holders of record, which represents an increase of 5,334 stockholders since 1947. The number of stockholders of record since 1947, and a classification of their holdings, are as follows: A TEN-YEAR RECORD OF STOCKHOLDER CLASSIFICATION V'rr Total 19 or less 20-99 100-199 200-Oocr 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 7,885 7,823 7,993 8,435 9,023 10,182 10,657 10,497 11,263 13,219 1,834 1,834 1,847 1,794 1,907 2,146 2,257 2,165 2,105 2,718 3,021 3,135 3,123 3,443 3,705 4,235 4,424 4,305 4,830 5,727 1,735 1,611 1,747 1,943 2,076 2,346 2,485 2,511 2,740 3,243 1,295 1,243 1,276 1,255 1,335 1,455 1,491 1,516 1.588 1,531 Conclusion The diligence of our employees and the support of our stockholders contribute to our strong financial position and the results accomplished. We express our sincere thanks and appreciation. Clinton H. Crane Chairman Andrew Fletcher President New York, March 20,1957 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNITED STATES LEAD AND ZINC STATISTICS LEAD Available Supply: U. S. Mine Production From scrap , Imports of concentrates and bullion (Pb content) Metal imports (net) If) 50 (Est.) 348,000 500,000 196,000 282,000 Total , 1,326,000 Adjustment for changes in Stocks at Smelters and Re- fineries , -- 8,000 Total Lead Metal Available 1,318,000 Consumption: Batteries Ethyl gasoline Cables Construction Pigments Other uses ... 366,000 196,000 134,000 121,000 115,000 268,000 Total Consumption 1,200,000 Surplus 118,000 1055 (Final) 338,000 502,000 178,000 293,000 1,311,000 -F 51,000 1,362,000 380,000 165,000 121,000 120,000 128,000 295,000 1,209,000 153,000 ZINC Available Supply: Recoverable U. S. Mine Production Less--used to make pigments Recoverable domestic zinc available to Metal Smelters Scrap zinc Imports of concentrates (Recoverable zinc content) Imports of slab zinc Total . Adjustment for changes in i Syt. ocks at 1 Smel.t ers Total Zinc Metal Available _ Consumption: Galvanizing Zinc Base Alloys Brass Rolled Zinc Other Total Consumption Exports Total zinc metal consumed and exported Surplus 540,000 114,000 426,000 70,000 526,000 245,000 1,267,000 + 28,000 1,295,000 423,000 348,000 124,000 46,000 46,000 937,000 10,000 997,000 298,000 515.000 116,000 399,000 66,000 478,000 196,000 1,139,000 4- 83,000 1,222,000 451,000 431,000 146,000 52,000 40,000 1,120,000 18,000 1,138,000 84,000 12 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Year 1947 1948 ............... 1949 1950 1951 1952 1953 1954 1955 1956 ST, JOSEPH LEAD COMPANY LEAD AND ZINC STATISTICS Lead Lead Pig Lead Concentrates Equivalent Produced of Produced from Lead and Company's Concentrates Purchased Mines Purchased Concentrates Pig Lead Production 164,867 34,573 132,561 130,935 126,589 25,453 98,566 93,838 156,301 49,580 136,219 131,802 169,354 38,951 137,058 141,595 158,579 27,792 121,431 112,754 157,037 39,726 128,141 128,691 160,625 38,294 129,281 130,430 Lead Sales St. Joe Smelter Production 129,621 92,536 121,333 153,933 115,873 125,718 122,062 Purchased Lead Sales 32,257 32,963 32,596 58,217 32,032 34,907 45,130 164,171 162,552 158,861 39,373 43,100 44,353 133,932 136,668 136,921 129,766 138,796 137,429 123,273 155,755 137,772 59,806 56,345 61,522 Year 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 . . Zinc ; : Zinc Concentrates Produced from Company's Mines Zinc Concentrates Purchased Slab Zinc Equivalent of Produced and Purchased Concentrates Slab Zinc Production Including Toll Zinc Content of Oxide and Metal Sales from Smelter Purchased Production Zinc Sales 71,595 53,737 65,124 60,982 60,616 44,152 66,697 78,170 71,781 76,051 75,977 40,755 70,952 81,946 79,769 86,314 71,116 41,702 75,290 72,444 75,238 98,443 94,028 59,198 82,217 69,173 104,744 109,547 109,303 114,138 , 47,659 103,769 112,991 61,640 111,868 126.164 \ 71,077 99,602 98,680 108,959 126,968 121,592 105,610 111,021 134,012 138,201 146,897 ; 136,879 89,047 89,414 103,009 117,611 136,723 132,652 54,540 45,528 49,513 49,931 65,822 48,672 Sulphuric Acid Sales 106,306 129,068 124,621 157,036 156,861 162,712 174,715 147,076 183,609 190,004 13 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1956 and 1955 ASSETS Current Assets : Cash U. S. Government, State, and Municipal short term securities Accounts receivable--trade U. S. Government--claims for income tax refunds Other accounts receivable Inventories (valuation not in excess of market) -- (Note 1): Finished lead, zinc, etc. .. Lead, zinc, etc., in process and concentrates Materials and supplies (less reserve for slow- moving items--195G, $22,852; 1955, $21,837) Advances: Compania Minera Aguilar, S. A. Sulfacid, S. A. Industrial Compania Metalurgica Austral-Argentina, S. A. Comerciai Investments: Compania Minera Aguilar, S. A. (at nominal valuation--OO.O'y owned, not consolidated) -- (Note 2) ...................... Mine La Motte Corporation (at nominal valua tion--5CK1 owned) -- (Note 3) , The New Jersey Zinc Company (at cost, less non-, taxable dividends: 1950, 100,000 shares, 5.1 C owned; 1955, 195,000 shares, 9.9'1 owned) Brunswick Mining and Smelting Corporation Limited (at cost) -- (Note (5): 1,600,000 shares--40C owned 5r/r income bonds, due July 1, 1968 Sundry securities, loans, etc. (at cost, less reserve, $200,000) Capital Assets (Note 4): Mining properties and mineral rights: Appraised value as of March 1, 1913 Less allowance for depletion Appreciation arising from revaluation subse quent to March 1, 1913 Less allowance for depletion Additions subsequent to March 1, 1913 (at cost) Less allowance for depletion Land, buildings, plant and equipment (at cost) Less allowance for depreciation Total capital assets, net Miscellaneous Assets: U. S. Government, State, and Municipal securities on deposit with State departments (at amortized cost) Cash and marketable securities (at amortized cost)--Fire insurance fund (see contra) Deferred Charges: Oil and natural gas expenditures in suspense Deferred past service annuities (Note 5) Deferred exploration expenses Other deferred charges Total ; December 31, 1050 $ 6,515,084 18,000,000 10,049,388 380,765 569,827 2,425,706 5,092,910 6,591,568 $49,625,248 $ 57,833 13,814 29,851 101,498 $1 1 ... 5,724,028 2,339,758 3,500,000 -f. 420,309 11,984,097 $13,500,000 13,500,000 $ 3,500,000 3,500,000 $22,067,818 19,752,538 $50,582,695 33,229,179 2,315,280 17,353,516 $19,668,796 $ 836,589 234,439 1,071,028 $ 120,636 1,837,607 598,578 312,740 2,869,561 $85,320,228 December 31,1055 $ 7,210,350 20,000,000 8,411,916 376,533 374,804 2,120,778 3,551,083 5,375,818 $47,421,282 $ 95,034 1,175 24,670 120,879 $1 1 11,161,854 2,339,758 1,925,000 437,000 15,863,614 $13,500,000 13,500,000 $ 3,500,000 3,500,000 $21,877,896 19,497,366 $47,556,345 30,876,597 l* 2,380,530 16,679,748 $19,060,278 $ 798,771 214,653 1,013,424 $ 156,009 650,935 687,542 247,704 1,742,190 $85,221,667 The accompanying notes to financial statements are an integral part of the above balance sheets. 14 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1930 and 1955 LIABILITIES Current Liabilities: Accounts payable Wages payable Accrued taxes: Federal income (Note 7) Other December SI, 195(1 $ 0,351.793 407,411 4,248,591 315,540 $11,383,335 December 31,1955 $ 7,215,012 384,252 5,820,233 385,155 $13,805,252 Deferred Federal Income Taxes--related to accel erated amortization of emergency facilities Reserves : Injury claims and workmen's liability insurance Employees' life insurance and retirement . Fire insurance (see contra) $ 003,951 399,570 234,439 1,040,032 1,237,900 $ 5(58,142 384,431 214,053 738,985 1,107,220 Stockholders' Equity: Capital Stock, par value $10 per share: Authorized 5,000,000 shares Outstanding--2,710,222.5 shares (after deduct ing 21,414,35 shares in treasury) Surplus: Earned Capital .......................... Total Stockholders' Equity 27,102,225 $20,334,179 18,150,491 44,490,070 $71,652,895 27,102,225 $24,191,488 18,150,491 42,347,979 $09,510,204 Total $85,320,228 $85,221,007 The accompanying notes to financial statements are an integral part of the above balance sheets. 15 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Summaries of Consolidated Income For the Years Ended December 31, 1956 and 1955 Net Sales of Metals, Metal Products, Etc. Cost Thereof (exclusive of depreciation and depletion) 1956 $119,909,012 100,284,350 Gross Profit from Operations Before Depreciation and Depletion Deduct: Selling, general and administrative expenses Exploration: $1,937,453 New mine examination and development expenses Oil and natural gas expenses, net Past service annuities (Note 5) 100,740 ' 301,203 349,130 $ 19,025,250 2,754,520 Net Profit from Operations Before Depreciation and Depletion Other Income: Dividends: Compania Minera Aguilar, S. A. (Note 2) $ 589,171 The New Jersey Zinc Company Other Interest, etc. less charges .................... 185,025 291,037 284,534 $ 10,870,730 1,350,307 Deduct : Depreciation of plant and equipment Depletion of mines ............... $2,394,049 255,172 $ 18,221,097 2,049,221 Provision for Taxes on Income: Federal normal tax and surtax ..................... Federal income taxes--deferred--related to accelerated amortization of emergency facilities State income taxes $4,887,038 307,047 80,434 $ 15,571,870 5,280,519 Net Income for the Year $ 10,291,357 Earned Per Share on the 2,710,222 Shares Outstanding $3.79 1955 $121,497,450 99,042,502 $ 22,454,894 $1,749,5S9 75,107 ' 49,701 195,550 2,069,947 $ 20,384,947 $ 754,188 243,750 57,180 370,085 $2,328,105 280,048 $0,090,210 289,033 92,934 1,431,803 $ 21,810,750 2,008,753 $ 10,207,997 0,478,177 $ 12,729,820 $4.08 Summaries of Consolidated Earned Surplus For the Years Ended December 31, 1956 and 1955 Earned Surplus at Beginning of the Year Net Income for the Year . Cash Dividends Paid During tiie Year, $3 per share Earned Surplus at End of the Year 1956 $ 24,191,488 10,291,357 $ 34,482,845 8,148,000 $ 20,334,179 1955 $ 19,010,334 12,729,820 $ 32,340,154 8,148,000 $ 24,191,488 The accompanying notes to financial statements are an integral part of the above summaries. 16 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH LEAD COMPANY AND SUBSIDIARIES Notes to Financial Statements 1. Inventories of lead, zinc, etc. (finished, in process, and concentrates) are valued at cost deter mined substantially on last-in, first-out (LIFO) method, exclusive of depreciation and deple tion. Materials and supplies are valued at average cost. 2. The remittances of past profits from Argentina are subject to certain restrictions. It is the practice of the Company to record dividends received or receivable from Compania Minera Aguilar, S. A. and associated companies as they are converted into U. S. dollars. Accord ingly, the financial statements of St. Joseph Lead Company and subsidiaries do not include such dividends not so converted as follows: Argentine paper pesos December 31 1956 1955 In bank in Argentina Invested: Compania Metalurgica Austral-Argentina, S. A. Comercial Capital stock (40.5% owned) 5,423,857 9,720,000 5,463,240 9,720,000 Sulfacid, S. A. Industrial--Capital stock (1956, 27.1% owned; 1955, 28.0% owned) Due from Compania Minera Aguilar, S. A.--Dividends declared not paid, less Argentine income tax withheld--1956, 4,514,160 pesos; 1955, 4,754,070 pesos 8,240,000 47,357,857 8,240,000 51,104,212 Total .. 70,741,714 74,527,4G1 St. Joseph Lead Company together with Compania Minera Aguilar, S. A. own 43.3% of Compania Meta- lurgica Austral-Argentina, S. A. Comercial and 50% of Sulfacid, S. A. Industrial. Financial statements of Compania Minera Aguilar, S. A. are included herein on pages 19-21. 3. The Company's equity in the net assets of Mine La Motte Corporation, as shown by audited financial statements, was $589,728 and $511,881 at December 31, 1956 and 1955, respectively, and its equity in the net income for the years then ended was $77,847 and $204,094, re spectively. , 4. The net value of the capital assets as shown in the consolidated balance sheets does not indi cate the present value of the companies' property, plant and equipment, as such value could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rate of production, cost of labor, and other factors. 5. The Company has a Retirement Plan for Salaried Employees and a Pension Plan for Payroll Employees, covered either by a contract with an insurance company or by funds deposited with a Trustee, no part of which is reflected in the accompanying consolidated balance sheets. Both plans are non-contributory and all past service costs have been funded. As of January 1, 1956, the Retirement Plan for Salaried Employees was amended and $1,535,800 was paid to the Trustee to cover additional past service cost. Prior to 1952, the Company deferred past service annuity cost so that such payments would have no effect on net income over the sub sequent years of the 10-year period they were deductible for income tax purposes. The pay ment of $1,535,800 made in 1956, is to be amortized over a 10-year period for both reporting and tax purposes. Current annual cost of both the Retirement Plan and the Pension Plan aggregated approximately $593,000 and $390,000 in 1956 and 1955, respectively. 6. Leadridge Mining Company Limited, a wholly-owned subsidiary, is committed to loan Bruns wick Mining and Smelting Corporation Limited, a 40% owned company; up to $7,500,000 (Canadian funds) as needed for development and equipment. St. Joseph Lead Company has agreed to make $7,500,000 (U. S. funds) available to Leadridge for this purpose. The loan may be subordinated to other indebtedness of Brunswick not to exceed $17,500,000 (Canadian funds) on terms and conditions satisfactory to Leadridge. At December 31, 1956 Leadridge held $3,500,000 of Brunswick's 5% income bonds purchased under the commitment. 7. Reference is made to the text of this report relative to the companies' Federal income taxes, financing, capital expenditures, Anti-Trust suit, and Profit Sharing Plan. 17 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 67 BROAD STREET NEW YORK ACCOUNTANTS' CERTIFICATE To the Stockholders of St. Joseph' Lead Company : We have examined the consolidated balance sheet of St. Joseph Lead Company and its subsidiaries as of December 31, 1956 and the related sum maries of consolidated income and earned surplus for the year then ended. 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 the circumstances. In our opinion, the accompanying consolidated balance sheet and summaries of consolidated income and earned surplus, with the notes to financial statements, present fairly the financial position of St. Joseph Lead Company and its consolidated subsidiaries at December 31, 1956 and the 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. February 28,1957 HASKINS & SELLS 18 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MIN ERA AGUILAR, S. A. Summaries of Income For the 5Vffrs Ended December ill, 195(1 and 1955 Net Sales of Lead and Zinc Concentrates, Etc. Cost Thereof (exclusive of depreciation and depletion) 1956 Argentine paper penos (Note 1) 227,007,142 74,125,093 1955 Argentine paper pesos (Note 1) 177,310,943 54,922,293 Gross Profit from Operations before Depreciation and Deple tion Deduct: Selling, general and administrative expenses Taxes, other than taxes on income 4,778,207 11,023,109 153,542,049 10,401,370 122,418,050 5,875,415 1,913,115 i 7,788,530 Net Profit from Operations before Depreciation and Depletion Income Credits : Dividends (including dividends from partlyowned companies--1950, 1,154,002; 1955, 121,040) --(Note 3) Interest (including interest from partlv-owned companies--1950, 108,055; 1955, 173,590) Other, less charges 7,994,084 1,90G,95G 125,820 137,140,073 10,080,800 114,030,120 4,957,801 2,180,413 702,432 7,840,040 Depreciation of Plant and Equipment (Note 2) 147,227,533 4,853,290 122,470,700 3,030,113 Provision for Argentine Income and Extraordinary Profits Taxes 142,374,243 . 48,502,004 119,440,053 49,000,725 Net Income for the Year before Special Appropriation for Replacement and Rehabilitation of Capital Assets Special Appropriation for Replacement and Rehabilitation of Capital Assets (Note 2) 93,871,039 34,830,050 70,373,928 23,588,438 Net Income for the Year (after special appropriation) 59,040,989 4(5,785,490 Summaries of Unappropriated Earned Surplus For the Years Ended December 91, 1956 and 1955 Surplus at Beginning of the Year Ann--Net Income for the Year (after special appropriation) 1956 Argentine paper pesos (Note 1) 79,335,037 59,040,989 1955 Argentine paper pesos (Note 1) 03,207,705 40,785,490 Total Deduct: Dividends declared or paid durinft' the year: Cash Capital stock Appropriations: ror acquisition of capital stock hoiti treasury Statutory reserve in / 18,000,000 37,200,000 2,800,000 942,210 138,370,020 59,542,210 29,700,000 958,218 110,053,255 30,718,218 Surplus at End of the Year (after charging deficits aggregating pesos 0,395,000 against capital surplus) 78,833,810 79,335,037 Notes: (1) Reference (2) Reference (3) Reference , , ismade to Note 1 to the accompanying ismade to Note 4 to the accompanying ismade to Note 0 to the accompanying balance sheets. balance sheets, balance sheets. 19 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINER A AGUILAR, S. A. Balance Sheets, December 31, 1956 and 1955 ASSETS Current Assets: Cash Marketable securities: Argentine Government (at cost) Other (at cost, less reserve--1950 and 1955, 3,213,871) ..................... Accounts receivable--trade (less reserve--1950 and 1955, 4,111,400) Due from partly-owned company--trade Other accounts receivable, etc. .......... Inventories: Lead and zinc concentrates (at average cost, or less, exclusive of depreciation and depletion --valuation not in excess of market) Materials and supplies (at average cost or less) Investments (Note 2): Sulfacid, S. A. Industrial (at cost--1956, 22.9% owned; 1955, 21.4% owned) Compania Metalurgica Austral-Argentina, S. A. Comereial (at cost--2.8% owned) Capital Assets (Notes 3 and 4): Mining properties and mineral rights: Cost, including exploration and development prior to the commencement of operations Less allowance for depletion Appreciation arising from valuation in 1935 Less allowance for depletion Total mining properties and mineral rights, net Land, buildings, plant and equipment (at cost) Less allowance for depreciation Total capital assets, net Deferred Charges December 31,1950 Argentine paper pesos (Note 1) 40,112,969 68,346,915 101,426,619 23,153,263 12,123,470 5,333,351 52,648,580 49,843,083 352,988,250 7,824,375 673,000 8,497,375 4,396,077 3,502,941 49,446,736 39,700,779 07,859,003 22,816,590 893,130 9,745,957 10,039,093 45,042,413 55,681,500 1,033,846 December 31,1955 Argentine paper pesos (Note 1) 32,480,303 78,885,277 91,106,8G1 7,883,121 5,127,790 4,818,324 40,853,150 32,829,036 203,983,922 6,155,000 673,000 G,828,000 4,384,038 3,502,941 49,446,730 39,700,779 49,340,332 18,000,737 881,097 9,745,957 10,027,054 31,339,595 41,900,649 499,270 Total 418,800,977 343,277,847 Notes: 1 . (1) At December 31, 195G and 1955. the quoted free rate of exchange for a peso was approximately 2,7 cents. (2) The Company together with St. Joseph Lead Company own 50% of Sulfacid, S. A. Industrial and 43.3% of Compania Melaiurgica Austral-Argentina, 8. A. Comereiui. (3) The net value of the capital assets as shown in the above balance sheets does not indicate the present value of the Company's property, plant and equipment, as such value could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rate of production, cost of labor, and other factors. (4) Ore reserves have been estimated by the directors to exceed appreciably those indicated by former sur veys. Had depletion been provided for units sold in each of the years 1956 and 1955 based on the average book values of ore reserves and the quantities of ores on hand and remaining in the properties, as so estimated the amounts would have been approximately Argentine paper pesos 390,000 and 320,000, respectively, and net income for both years would have been correspondingly less. However, no depletion has been provided since 1950, as the 20 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINEEA AGUILAR, S. A. Balance Sheets, December 31, 1056 and 1055 LIABILITIES Current Liabilities: Accounts payable--trade Due to St, Joseph Lead Company (including dividends payable --1950, 47,357,857; 1955, 51,104,212) Due to partly-owned company , Wages payable Accrued Argentine income and other taxes Other accounts payable Deferred Credits--Unearned interest, etc. Reserves: Replacement and rehabilitation of capital assets (Note 4) ( ........................ Employees' compensation under Argentine social laws Accidents Other ...................... Stockholders' Equity: Capital Stock--Nominal value of 80 Argentine paper pesos each: 1956 1955 Authorized 2,500,000 500,000 Issued 1,000,000 Less in Treasury 70,000 500,000 35,000 Outstanding 930,000 465,000 Surplus: Capital surplus arising from 1935 valuation of ore reserves (remainder after transfer of pesos 48,000,000 to stated value of capital stock) ............ Earned surplus: Appropriated: For acquisition of capital stock held in treasury Statutory reserve Unappropriated (after charging deficits aggre gating pesos 6,395,000 against capital sur plus arising from reduction in stated value of capital stock--Note 5) Total Stockholders' Equity Total December 31,1056 Argentine paper pesos (Note 1) 8,213,242 49,523,719 3,580,930 2,074,023 36,852,227 1,744,275 101,988,416 23,324 115,110,950 14,375,332 8,239,189 14,876,999 152,602,470 80,000,000 5,600,000 ; ;' < 74,400,000 1,446,736 5,600,000 3,906,215 78,833,816 88,340,031 164,186,767 418,800,977 December 31,1955 Argentine paper pesos (Note 1) 7,055,249 54,549,200 2,210,780 2,937,869 38,471,537 1,686,771 106,911,406 17,720 80,280,300 12,490,142 6,078,784 13,753,717 112,602,943 40,000,000 2,800,000 37,200,000 1,446,736 2,800,000 2,964,005 79,335,037 85,099,042 123,745,778 343,277,847 Notes Continued: amounts thereof were not considered to be material. A special appropriation of 34,830,650 Argentine paper pesos for replacement and rehabilitation of capital assets has been made out of income for the year 1956. Similar special appropriations were made out of income in the preceding five years aggregating 80,280,300 Argentine paper pesos. (5) The net profit since beginning of operations, pesos 246,130,531 (earned surplus at December 31, 1956 pesos 88,340,931 plus dividends declared pesos 164,191,500 and less aggregate deficits transferred to capital surplus pesos 6,395,000) represents aggregate net profit pesos 400,948,260 (after deducting depletion computed on cost) against which has been charged depletion computed on appreciation aggregating pesos 39,700,779, and special appropriations for replacement and rehabilitation of capital assets aggregating pesos 115,110,950. (6) In accordance with standard practice in Argentina, stock dividends received have been credited to income at par. Amounts so credited during the year ended December 31, 1956 totaled approximately pesos 6,400,000. 21 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 67 BROAD STREET NEW YORK ACCOUNTANTS' CERTIFICATE St. Joseph Lead Company; . We have examined the balance sheet of Compania Minera Aguilar, S, A. (incorporated and doing business in Argentina) as of December 31, 1956 and the related summaries of income and unappropriated earned surplus for the year then ended. 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 the circumstances. A special appropriation of 34,830,650 Argentine paper pesos for replacement and rehabilitation of capital assets has been made out of income for the year. Officers of the Company explain that lack of dollar exchange has prevented acquisition of necessary equipment and supplies for adequate replacement and maintenance, with the result that related expense accounts and net income have not been burdened with amounts which otherwise would have been charged thereagainst; in addition, pro gressive currency inflation has greatly increased the replacement values of capital assets. In our opinion accepted accounting principles require that charges for maintenance be made against income only in the year of expenditure or other definite determination, and that charges for major replacements be capitalized. Similar special appropriations were made out of income in the preceding five years aggregating 80,280,300 Argentine paper pesos. In our opinion, except as described in the preceding paragraph the accompanying balance sheet and summaries of income and unappropriated earned surplus, with the footnotes thereon, present fairly the financial position of Compania Minera Aguilar, S. A. at December 31, 1956 and the results of its operations for the year then ended, in conformity with gen erally accepted accounting principles applied on a basis consistent with that of the preceding year. February 11, 1957. > HASKINS & SELLS ! 22 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. PROXIES FOR ANNUAL MEETING This Report is sent to Stockholders of the Company in advance of the solicitation by the Board of Trustees of proxies for the Annual Meeting* of Stockholders to be held on May 13, 1957 at 11 A.M. Proxies will be solicited commencing on April 12, 1957. 23 Reproduced with permission of the copyright owner. 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JK C S ^ > SpS <0 S 11 yNCoCgDG"* S oU c .!U ^ m 6 .5 . . 3 g "* ^ cl sja:3'G:~'^G o O O a. 10 S y XG G o Gty_-O_ s^ CcG _g ^ co (L&>5 Xrr'tp >,r dH.' . wt) Gn>-,'wXSIooras 1G*wOCEh3-3.3w3jOZLTTcTX.PqcrGGSdJ3Lp\a*O^rXm--S*i3o2oG3^r3-IrJ~ITcicCGoGGi,io*t->GIT^ncoSQCqua?3Oj |XTXHSrot2sEc"'33Ju>2GSi XrZjO02SyG"_P,j38Put-^X^'-<oc^JvoC<ya~^gwf^<.G>ty?L. TX\f--*2G<NwTG(uIg\ U<',,X^x0t5ur*ou00tGT:^-3-- n^,0<fS3t3,,2?xf,T-Xn23w0OGuoG333.qj",,~tOc2DcEr^j3y*JPO " g 3 TJ XG a> ft? ^ G -j* ^ C I -5- XGCI 'xG3PH ,'C-S"x_"a; ^ ^CJ 3 a-3 >'i -Gg>^,, .SnC"W_ C 2r P3 Tri .<2 G o t3J ,N3tn XG CL.V 6^ 2 E P-.OG T S 5 OJO-G B'a . ,, l-s "8o.-xtGgs .50q0 c0C5U G 6c & SCO B i g oo c 11J rQ U s< itnc ug ao ; c?M j=tj on ia. x: -g ex ti a ^G =3>H_ - oc c. wTJg > | ^ 2 ^ G ti .2 ^ y O %G4Si X`GG cigG C C/G) OUTLOOK FOR 1957 Balancing all the economic factors one can observe, it appears that lead consumption should be about the same in 1957 as in 1956. Zinc consump tion reached the near record total of almost 1,000,000 tons in 1956. If automobile sales hold up well, and if recent increases in consumption of zinc for galvanizing are maintained, zinc sales in 1957 should be in the neighborhood of those for 1956. One could be more confident of the outlook if he knew what the Gov ernment intended to do in regard to its policy of aiding domestic lead and zinc miners. The present indication is that stockpiling and the barter deals for the two metals will continue into 1957, but we can not be sure for how long. If the present program is continued, or if a new and effective policy replaces it, one can expect a continuance of the stable markets for lead and zinc experienced in 1956. As you have seen in reading this report, our plans for strengthening St. Joe have taken shape in 1956, and in 1957 they should develop into action on an ever-widening front. We must not, however, allow our interest in new projects and new properties to divert our attention from the fact that our major interest still is in maintaining profitable operations at the four basic divisions that are the mainstay of the Company. The outlook for St: Joe is written not on this page, but in the efforts each one of us will make next year toward keeping costs down and constantly increasing the efficiency of our operations. NEW YORK, MARCH 20, 1957 PRESIDENT Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.