Document YD8eO5ddnqaqM1xbMpDr8abkk

ANNUAL REPORT OF N11798 The EagleTicher Lead Company BOARD OF DIR' EC tT. ORS A. E. ANDI.RSON 'i Ca r l F, He r t e n s t e in Vin c e n t H. Be c k ma n Jo s e p h Hu mme l , Jr . Ar t h u r E. Bf .n d e l a r i A,l Kie f e r Ma y e r Fr e d e r ic k Hf ir t e n s t e i n jtu,,.r Ro b e r t E. Mu l l a n e .I/ iDu.*. OFFICERS Jo s eph Hu mme l , Jr Pres, ami Treas. Fr e d e r ic k He r t e n s t e in , Viet-Pres. Wil l ia m R; Dic h , Executive Vice-Pres. Vin c e n t H. Be c k ma n , Secretary Car l A. Ginsr, Asst. Treasurer DIVISION MANAGERS White Lead-in-Oil Pipments W. H. Ha y t Mil e s ivf. Zo l l h r Insulation--Metal Th u r ma n C. Ca r t e r Antimonial Lead Wil l ia m F. Mu r d o c k TRANSFER AGENT We s t e r n Ba n k & Tr u s t Co mp a n y ; Cin c in n a t i, Oh io REGISTRAR .Th e 'Fif t h -Th ir d Un io n Tr u s t Co mp a n y , Cin c in n a t i, Oh io The Eagle-Picher Mining and Smelting Company BOARD OF DIRECTORS A. E." An d e r s o n Vin c e n t H. B ic k ma n Ar t h u r E. Be n d e l a r i Fr e d e r ic k He r t e n s t e in Ca r l F. He r t e n s t e in Jo s e p h Hu mme l , Jr . A. Kie f e r Ma y e r Ro b e r t E. Mu l l a n e Ge o r g e W. Po t t e r . Jo t in J. Ro w e OFFICERS Jo s eph Hu mme l , Jr ., Pres, and Treas. Fr e d e r ic k He r t e n s t e in , Vice-Prss. Ge o r g e W. Po t t e r , Vice-President Wil l ia m R. Dic e, Comptroller Ca r l A. Gf .is t , Asst. Treasurer 1^9$$$-j; -m- >' -> m '-. .tvs.: `ViJ `AW*-? ; i . ANNUAL REPORT The Eagle-Picher Le;?,d Company and Subsidiaries # : <ilO THE STOCKHOLDERS OF ITHE EAGLE-PICKER LEAD COMPANY: i Submitted herewith is the annual report of the Directors and Officers of your Company for the year ended iDecemiber 31, 1937, accompanied by financial statements and the report of our auditors, Messrs. Barrow, Wade, iGuthrie ft Company. . .. / . ': I Earnings.and. Sales - : nil . Consolidated Net Income for the year was $388,780.82 after all charges including provision for depletion |lind depreciation in the amount of $835,615.00. il Net Sales for 1937 were $24,679,262.00 which compares with $20,873,573.00 in 1536, an increase of ^3,805,688.00 or approximately 18 per cent. Sales tonnage of principal manufactured products was approxi mately 8 per cent below that for 1936. The reduction in tonnage occurred during the last quarter in conformjty .with the severe declines in general business. I During the year the prices of lead and zinc fluctuated violently. At the beginning of the year the price of lead was $6.00 per cwt., New York. During the speculative period of the first quarter of 1937 the price advanced to a high for the year of $7.75 per cwt., but dropped to $6.00 in April and at the close of the year was $4.75 per cwt. Similar fluctuations occurred in the price of zinc which opened at $5-45 per c:wt., advanced to $7.50 per cwt., and closed at $5,00 per cwt. 1 . While a satisfactory operating profit was maintained for the. year, earnings were adversely affected by inventory write-downs of approximately $900,000.00 due to market declines." Your Company can adjust itself to an extended period of comparatively low prices and operate .profitably so long as a reasonable spread is nain:a!nee between the cost of raw materials and the selling price of finished products. However, it is ex tremely difficult to maintain a satisfactory profit margin during a period of frequent and. wide fluctuations in rietal prices, as substantial.time is required for processing rawmaterials. i By action of the Board of Directors, the "normal inventory" method of accounting was discontinued .as qf January 1, 1937- Therefore, the reserve previously provided has not been used in computing earnings for ae year. ' . Dividends In .1.937 dividends of $6.00 per share on the preferred stock and 40 cents per share on the common stock viere paid. The dividends on the common stock were approximately covered by earnings for the year. Balance Sheet Cui rent Assets at the end of the year amounted to $9,766,134.00, anc Current Liabilities $3,597,180.00, avi.ng net working capital of $6,168,954.00 which compares wkli net. working capital of $7,277,395.00 at the pginm'ng of the year. The foregoing reduction in working capital of $1,108,441.00, plus the depreciation ovision of $835,615.00, is accounted for by the increases in Fixed Assets, which are summarized below: Lead and Zinc Properties purch ased........, Mining Equipment, Leases, Development, etc... $; 433,360.17 246,746.76 Central Mill Additions....................... . ............. Zinc Smelting Equipment, etc............................................. '........... . .... 339,273.23 332,116.17 Oil and Natural Gas Leases and Development.............................. ................. . 64,584,04' Manufacturing Plants---Buildings and Equipment, etc................ ........... .,, 486,677.63 . $1,902,758 00 As a result of acquiring properties ana leases, and development work on properties in which we have an equity, our ore reserves in the Tri-State District are estimated by our engineers as 26 per cent greater at the end of the year than at the beginning. It is necessary that we acquire lead and zinc properties when oppor tunities present themselves for so doings if we are to continue producing these metals. Expenditures were made during the year to increase the capacity of our Central Mill near Picher, Okla homa, from 6,000 tons to 10,000 tons of rock per day. In addition, expenditures were made for additional equipment to improve the metallurgy at this plant, thus increasing the recovery of lead and zinc from ores. These improvements were not completed at the end of the year, but are practically finished at the present time. If thefdemand for zinc and lead concentrates continues at a satisfactory rate, the benefits from the im- proveraeats should accrue during iuost of 1938. r ' .. In addition to expansion of our tniniiig.and milling facilities, we added to our smelting1 facilities, opening the smelter at Van Buren,, Arkansas, and installing sintering equipment at Henryetta, Oklahoma. At our manufacturing .plants expenditures have been made to modernize them and to expand production facilities. : During the year the production facilities for one of our most important pigments was doubled. Other additions were made at the various plants for the purpose of increasing efficiency and reducing costs. It is not contem plated that any important additions,wiil: be. -necessary in 1938. During the year our Research Laboratory was remodeled and equipped with modern equipment. Our Laboratory, now has adequate facilities to enable our. Research staff to effectively improve pur products and methods and developmew products. Thus a long term program, originated in 1935; has now been practically completed and we are very well satisfied with the results.' Inventories at the end of the year were approximately $714,000.00 greater than at the beginning of the year. The approximate lead and zinc content at the end of the year was 52,805 tons compared with 46,323 tons at. the beginning of the year. Although we attempted to reduce inventories beginning last September, sales were not large enough during the last four months to offset the intake of metals due to previous com mitments which couldnot be effectively reduced in a short period of time. ' Despite an increase in sales of approximately $4,000,000.00 in 1937. and rather slow collections in the last quarter, our Accounrs Receivable at the end of the year were $400,000.00 less than at the beginning of the year. Production, of Lead and Zinc Concentrates Our production of lead and zinc concentrates in the Tri-State District amounted to 146,707 tons in 1937 which compares with 117,146 tons in 1936, an increase of 25 per cent. This production of lead and zinc con centrates includes production from our own mines as well as from properties in which we have various equities and from ores purchased from contract miners. A summary of production during the last seven years follows: 1937 1935 Zinc Concentrates (tons)... .: 128,330 102,412 Lead Concentrates (tons). . . 18,377 14,734 1935 69,086 11,446 1934 53,647 10,802 1933 51,651 7,423 1932 28,858 3,140 1931 19,626 3,487 . 146,707 117,146. 80,532 64,449 59,074 31,998 23,113 Lead and zinc concentrates produced at our Montana Aline, Ruby, Arizona, during the last four years follows: Zinc Concentrates (tons)... Lead Concentrates (tons)... 1937 5,384 9,224 1936 1935 6,388 6,668 10,203 11,075 1934 2,035 3,560 14,608 16,591 17,743 5,595 The concentrates ^produced from this property in 1937 contained 6,520 ounces of gold and 639,238 ounces of silver. General In 1937 the Company paid Old Age Benefit and Unemployment Insurance taxes totalling $141,000.00. Other taxes, including Personal, Real Estate, Franchise and Capi tal Stock but excluding Income Tax, amounted to $234,000.00. Income Tax provision was approximately $65,000.00. This makes a total of $440,000.00 for , the year, which is interesting to compare with net earnings of $388,780.00. Total wages and salaries paid in 1937 amounted to $4,878,000.00. In July, 1937, the method of operating the manufacturing division of the Company was changed. In accordance with a plan submitted to and approved by the Directors, four opera ring divisions were created as follows: White Lead-in-Oil Division Pigment Division Insulation-Metal Division Antimonial Lead Division These divisions are being operated as nearly as possible as if they were separate companies under the : direction, of division managers,: This results in close coordination between sales and manufacturing. . It is believed, and the results to date indicate, that greater efficiency will result from this method of operating the Company. The separation of activities under thisjdan was. completed during the fast half ofthe year, and: : benefits therefrom should be appreciable in 1938. The personnel of the Company has shown a fine spirit of cooperation in adapting itself to the changes as well as continued loyalty which is sincerely appreciated by the Management. JOSEPH HUMMEL, Jr . : , : . President WILLIAM R. DICE Executive Vice-President Cin c in n a t i, Oh io . : February, 28, 1938.. 4v-v-4vyi4'4:4 :y:4:4y-4--:.4:i--4' i : : - ::::.:4:4::4 ..-4444' ; y.' ' ';4 4 4;44; :y y-vi. J >.:.'4l 4 ' - ?4:4' '44:4 47 44:?.'. CiO LL L' 4 .V, \ 4;.' - -t y ' . 4 X . :-:\44. : ::4 44:i : 4; 4: 4; / yy. -X- v THE, EAGLE'PICHER LEAD ! CONSOLIDATED BALANCE SHEETS AS AT DECEMBER ASSETS Cu r r e n t As s e t s : Cnsh in Brinks rind on Hrind.. . .. .: . .. . . . ... . Accounts and Notes Receivable--Trade......... , Accounts rind Notes Receivable-- Other................ DECEMBER 31, 1937 DECEMBER 31, 1936 $ 1,155,866.56 $ 770,747.09 $ 2,651,727.26 $ 3,077,263.64 42,443-S7 54,561.40 Less: Reserve for Bad and Doubtful Accounts..;. 2,694,171.13 265,823.68 2,428,347.45 3,131,825.04 240,156.62 2,S91,668.42 Advances on Purchase Contracts............................ Inventories of Raw Materials, Work in Process : and .Finished Products -(including merchandise; on consignment to customers): . Ores, Metals and Metal-bearing Products-- , valued on the basis' described in Note A.;. Other Merchandise for Resale--at cost...... 5,165,246.27 384,967.37 39,973.41 4,665,209 95 248,694.64 Manufacturing Supplies and Stores--at cost. 5,550,213.64 591,733.68 6,141,947.32 4,913,904.59 513,735 - 50 5,427,640.09 -Ot h e r As s et s : ..a;.- a ; Surplus Equipment, Repair Parts, Supplies, etc... Less: Reserve for Obsolescence appropriated from Capital Surplus as at January ], 1935................ .. 216,444.04 85,000.00 9,766,134.74 Jill T? ^ ii'i T 227,893.63 85,000.00 9,090,055.60 l S > T- Eniplovees! Loans and Expense Advances......., Miscellaneous Accounts, Advances, etc............. . . 131,444.04 20,678.52 22,774.78 174,897.34 142,893.63 24,416.10 i 127,412.15 -- - 294,721.88 Fix e d As s e t s : Operating Plants and Properties.......;........ Less: Reserves for Depletion, Depreciation, etc... 16,292,156.78 10,637,554.06 15,316,521.65 10,296,784.77 5,654,602.72 5,019,736.88 Non-Operating Plants and Properties................... Less: Reserves for Depletion, Depreciation, etc... 3,378,542.65 3,089,322.83 3,289,196.65 3,028,149.25 289,219.82 261,047.40 Construction Work in Progress____............ : 468,528.83 6,412,351.37 134,696.22 5,415,480.50 Se l f -In s u r a n c e Fu n d Se c u r it ie s : U. S. Treasury Obligations--at cost (Market value at December 31, 1937--$131,085-30)..... 128,156.84 126,330.84 In v e s t me n t s : Stock of wholly owned Subsidiary not consoli dated.................................. Stock of other Subsidiary not consolidated ...... Investment in and advances to Afliliaced Company Sundry Securities--at estimated recoverable values Tr e as u r y St o c k --at cost: Preferred-- > 65 shares............................................. Common--5,924 shares......,................ 1.00 10,200.00 57,357.51 6,943.95 2,330.75 21,797.56 74,502.46 24,128.31 1.00 10,200.00 175,000.00 12,268.88 2,330.75 21,797.56 197,469.88 24,128.31 Pr e p a id a n d De f e r r e d Ch a r g e s : Prepaid Freight, Insurance, Interest, etc..... .... Compensation Claims and Insurance Advances.. . Other Deferred Charges................ .. Pa t e n t s , Go o d w il l , Et c . a........ ............... .. 132,056.22 5,997.00 64,989.05 203,042.27 1.00 109,401.65 5,661.04 48,422.68 163,485.37 1.00 $16,783,214.33 $15,311,673.38 `Italic figures indicate red ink AD COMPANY AND SUBSIDIARIES 1M-EER 31, 1937 AND 1936 -- Subject to the attached report and notes LIABILITIES Cu r r e n t '-Lia b il it ie s :-- Notes:ihiyabl64-Banlcs' and Brokers.................. Accounts Payable. .............. ............ . . ........... .......... . Dividends Payable .......................... .......................... . Advance on Future Delivery Contract.................... Accrued Liabilities: /-A/, Ay 'A `a a ^A Taxes--Other chan Federal Taxes on Income................ Wayes and Bonuses.............. Compensation Awards - -etc............................................ ... Prdvislbn . for Federal .Taxes on Income--estimated;.. Other Accrued Liabilities............... . ... ........... Customers' Credit Balances............................................... $ Rk SI-P.VKS FOR SELF-INSURANCE: - y Workmen's Compensation Liability......... ............ Fire and Tornado Coverage...................... ... . ....... DECEMBER 31,1937 $ 2,500,000.00 580,432.30 8,233.50 94,999.75 129,243.01 124.4S5.92 20,923.61 84,072.30 7.93S.17 $ 366,633.01 46,881.96 3,597,180.5Z 155,551.42 41,865.22 197,416.64 DECEMBER 31,1936 $ 500,000.00 878,953-38 8,233-50 12S.102.12 44,396.15 14,352.29 159,944.96 20,530.56 136,314.83 34,467.74 367,326.OS 58,146.74 1,812,659-70 170,782.57 Re s er v e s f o r .'No r ma l Me t a l In v e n t o r y Pr ic e Fl u c t u a- TION (Note B): : /. , Accumulated by charges to operations to: Dec. 31, 1936,:,, ' : ApprhpfiafeS^from Earned Surplus to Dec. 31, 1937, . A Appropriated from Capital Surplus.as at Jan. L 1935- - 753,013 42 10,919.29 763,932.71 521,067 29 1,290,000.00 758,013.42 758,013.42 521,067.29 1,279.030.71 Res er v es f o r Co n t in g e n c ie s (NotcC): . Appropriated, from Capital Surplus as at Jan. 1, 1935-. Less: Charges to December 31, 1936........ .$213,910.04 Charges for the year ended Dec. 31,1937 42,240.18 600,000.00 256,150.22 343,849.78 600,000.00 213,910.04 386,089.96 Ca p it a l St o c k : Preferred 6% Cumulative--Par Value $100, redeemable y" at $105:. A-A; ;a y-vy. A,' y Ay,.' "-A ( : Authorized and Outstanding--5,554 shares. . ..... Common---Par Value $10: : Authorized....................... .1,000,000 shares._ __... .. .Issued and Outstanding .. 900,000 shares.,,....... 555,400.00 9,000,000.00 : 555,400.00 9,555,400.00 9,000,000.00 9,555,400.00 Su r p l u s Ac c o u n t s : Capital Surplus: 'A Ah- - Balance---January. 1st. ....... ......... Less: Adjustments applicable to period prior to January 1, 1935: Reserve for Normal Metal Inventory Price Fluctuation transferred from Earned Surplus... . .. ... . A, Fixed Assets..;................... ......... ..... ................. Balance--December 31st. ................... i........ .. Earned Surplus since January 1, 1935: Balance--January 1st............................ Reserve for Normal Metal Inventory Price Fluctuation Federal Taxes on Income and Depreciation Adjustments --Prior Years.................................................................... Transferred to Capital Surplus........................................... Net Income for Year -- Per -Profit arid Loss Account (Note D).......................................................................... Unrealized Profit in inventories atAi December 31, 1936.... . ................ .$299,982.66 Dividends Paid and Accrued:,;'-, y1 . Preferred._.....___________ ____. . . . .... 32,934.00 Common................:......... ...:............. .. 357,630.40 , Balance--December 31st.....A A,. . .. . . .. . ...... Co n t in g e n t Lia b il it ie s --In respect of liabilities presently undeterminable,including pending suits___A ........... . 1,375,522.88 2,170.79 1,377,693.67 732,137.56 10,919.29* 2,221.69 388,780.82 1,112,220.78 690,547.06 421,673.72 1,799,367.39 i $16,783,214.33 1,324,430.00 33,000.00 6,167.80 11,925.08 1,375,522.88 573,321.07 37,980.01 6,167.80* 696,383.88 1,301,517.16 32,934.00 536.445.60 569.379.60 732,137.56 2,107,660.44 $15,311,673.38 The Eagle-'Picher Lead' Company and Subsidiaries CONSOLIDATED PROFIT AND LOSS ACCOUNTS ,, For the Years Ended December 31, 1937 and 19.36 .(Subject to attached report and notes) " Nirr Sa l e s ................................................... Pr o d u c t io n a n d Ma n u f a c t u r in g Co s t s . YEAR ENDED DECEMBER 31, 1937 $24,679,262.05 21,232, .91 33 YEAR ENDED DECEMBER 31,1936 $20,873,573.62 17,185,763.64 Gr o s s 'Op e r a t in g Pr o f it --before De preciation and Depletion....... . 3,446,770.72 3,687,804.98 Ex p e n s e s : Selling............................... Traffic, Warehousing and Shipping../.. . General and Administrative........... Bad Debt Proxiisjon--less Recoveries .... S 971,333 63 .278,217 66 810,642. 98 46,420 1.9 2. 2,106,614.46 $ 1,044,704.95 257,311.25 673,373-78 56,172.45 2,031,562.43 Ne t Op e r a t in g Pr o f it ---before De/; predation and Depletion/..... ...,. . Ot h e r In c o me : Royalties..... ......... ............................ . Interest and Dividends. . .......................... Miscellaneous.,:. 72 ...,...,........... 1,340, 56.26 /, c 46,098 44 '"Jj'lS 10,589 17: 51,891 89 108,579.50 :,(556,24 2.55 29,316.25 6,629.46 45,518.77 ' 81,464.48 1,448,735-76 1,737,707.03 In t e r e s t o n No t e s Pa y a b l e 28,151.10 De p r e c ia t io n a n d De p l e t io n , Et c .: . Provision for Depreciation and Depletion --per books....... .................................... Loss on Abandonment of Projects and Prospecting Expenses.. . .......... ........ . Profit on Sale of Capital Assets .. .................. .1,119,934.66 -835,613 74/." 139,412 08"'', /'-id" 8,862 " ;966,165.21; .821,338.28 d-. 57,736.41- '10,871-6.4 1,726,835.39. - 879,144.69: Ne t Pr o f it --before . Provision for Income Taxes Pr o v is io n f o r Fe d e r a l a n d St a t e In c o me - Tax es --estimated: . Federal Normal and,State Income Taxes. Federal Surtax on Undistributed Profits (Note )................................................. 453,819.45 '847,690-. 70/- 64,839. 42' ` 199. 21 .2/137,197 ,,9765,038.33 1 14,108.85 , / 151,306.82/: Ne t Pr o f it f o r . Ye a r ....................................... Adjustments to bring onto comparable basi'- .Net decrease in unrealized profir in inven tories at December 31, 1936 and 1935- Provision for Normal -Metal Inventory .. Price Fluctuation--charged . to opera tions. .... . . .,...... Ad j u s t e d ' Ne t Pr o f it f o r Ye a r En d e d Dec ember 31, 1936--Note D........... Italic figures, indicate red. ink. ; 7/47/383,780/82: ; -.696,363,885 '127,196 ,.34'.: 396,898.06; $ 1,220,478.28- NOTE "A" Explanatory Notes Ores, metals ansi nlctal-bcariri products on hand at December 31, 1937, asderermined by physical inventories taken by the Companies or their agents and confirmed by them as to quantities and condition, were valued at cost or market price of metal content, whichever was lower at ttie close of the accounting period, plus mamifnctirung costs (exclusive of provision for depletion s:'d depreciation) on materials ; in process and finishedproducts. With respecc to the determination of "cost" in The Eagle-picher Mining and Sntclring Company, the independent accountants for that company reported that, consistent with past practice during recent years and in the usual course of opera- tions, ores produced from company-owned mines were taken into the concentrating mill at markct valiie of metal content on date of re ceipt; concentrate production transferred to company-owned smelters was charged Out at the corresponding market price of concentrates on date of transfer; and,such portion of smelter production: as was further fabricated was transferred to the fabricating plants-at the market price of metal on date of transfer. As a result of this procedure, the production "costs" accumulated through the various stages of ptJC" essing and fabrication included unrealised profits or losses to the extent that the valuations at which products were transferred exceeded or were less than actual cost. Effective January 3, 1938, the accounting methods of the Companies were revised to provide, for the future elimination of such.inter-departmental and intercompany profits and losses and thereby insurelnaintenance of actual cost throughout all operations. . y ., /y y . ':v '. `' y v . . "y yy 1 In the accompanying balance sheet as tic December 31,3937, estimated unrealized profit of $76,169.86 at that date has been eliminated, and the,, tjierej:n,st,ated,,yajus^f thc.conibined inventories of ores, metals and metial-hcaring prodnets, reflects, as accurately as determinable, "cost or market vnlue of metal content, whichever was lower." c NOTE "B" Under date of July 29, 1937, the Hoard of Directors adopted .a resolution discontinuing, as of January 1,1937, the "normal inventory" method of carrying normal metal stocks at fixed prices; hut retaining the reserves accumulated to December 33, 1936, and increasing them, by an appropriation of $110,9.19.29 from .Earned Surplus, to an aggregate of $1,120,000.00, a sum adequate to cover a decline in market price from $5.00; to $3.00 per hundred "pound's on normal metal stocks of 26,000 tons of lead and 9,500 tons of zinc. The. Directors were influenced in this action by tile fact that the Treasury Department has refused to recognize the "normal inventory" method in the deter mination of taxable iict income; and, since the incidence of the surtax on undistributed profits imposed by The Revenue Act of 1936, con tinuance of the method makes it difficult to minimize such;surtax liability inasmuch as the appropriations required during a period of rising : commodity prices, while reducing surplus legally available for the payment of dividends, do not, under present regulations of the Depart ment, constitute allowable deductions for normal income, excess profits and surtax purposes. At December 31, 1937, the marker price of lead had receded to $1,75 per hundred pounds New York base and the reserves were, therefore, reduced to $1,290,000.00 by credits to Earned Surplus in the amount of $130,000.00, equivalent to the foregoing decrease of 25c per hundred pounds in the market value of normal lead stocks. Charges to current operations during the year ended December 31, 1936, in respect of reserves for normal metal inventory price fluctuation, aggregated $396,898.06. Continuance of this method during the year ended December 31, 1937, would have resulted in a credit to. operations of $61,10l.6S, with a corresponding increase in the net profit herein reported. NOTE "C" . Charges to Reserves for Contingencies, appropriated from Capital Surplus as at January 1, 1935, amounted to $12,240.18 for the year ended December 33, 1937; and to $7.9,274.S3 (including $32,732.72, in respect of Federal Income Taxes and interest thereon, for the. calendar years 1933 and 1931) for the preceding year. .. , NOTE "D" ' ...The accompanying Consolidated Profit and Loss Account for the year ended December 31, 1936, has been adjusted to give effect to the changes in accounting procedure described in Notes "A" and "B" and thereby bring it onto a basis comparable.with the accounts for the.;, wear ended December 31, 1937. v NOTE "E" 4A;Jta-tbedatcbiipta'atibmitted^ewwitli^hb^provisionhas been made for Federal Excess Profits Taxesaiid surtaxes on Undistributed Profits (except as to the undistributed profits of unimportant subsidiaries) as it is anticipated that the returns, as filed, will show no liability for taxes of this nature. .;y; Ay-'; .yyy 'X ,'yyyey;. y; .y,.: ':yyy ..-yv T --" -.............. -- --- .------- BARROW, WADE, GUTHRIE & CO, (ryirAifflOTOCx* mj i) ACCOUNTANTS AND AUDITORS ONE NORTH U SALLE STREET CHICAGO To Tin: Dir e c t o r s THE EAGLE-PICHER LEAD COMPANY Cincinnati, Ohio We have made an examination of the foregoing Consolidated Balance Sheet of The Eagle-Picher Lead Company and Subsidiaries as of December 3 b 1937, and of the related Consolidated Profit and Loss Account for the year then ended. In connection therewith,-.we examined or tested accounting records of The Eagle-, Picher Lead Company and The Eagle-Picher Sales Company and Subsidiary, and /other, supporting evidence, and obtained information and explanations from officers and employees of the Companies. We also made a general review of the accounting methods and of the operating and. income accounts for the period, but did not make a detailed audit of the transactions. The accounts of The Eagle-Picher Mining and Smelting Company and Subsidiaries, as examined and reported upon by other inde pendent accountants, have been included in the accompanying consolidated stateaments. Based upon the examination made by us, in'..our. opinion, the accompanying Balance Sheet and related Profit and Loss Account, together with-.the explanatory, notes pertaining thereto, fairly present, on the bases indicated therein and in ac, cordance .with accepted principles of accounting consistently maintained during the period under review (except as may be otherwise indicated), the consolidated finan, cial position of the Companies at December 31, 1937, and the results of operations for the year then ended. / . y _ , Illinois ,1938: 9 Ac c o u n t a n t s , a n d Au d it o r s ; '"-too. ''.wy:yo:-yy;.-. gyywy /':/'/y/7 p!y.M y,'// /'/'Ay''/:-7:i;.1 vdfy':yyvyfyi-i -17;/y7:';//' . -// 7f'-y, :;;y'.'y ' MV ' -'... M'b. VV- Ayy/dyfl-fp) //ffio-yl'd'y ffi.yMfy/s/y:-7y/y:y d/vM vvv-v/v.- - -- ' Vygyvy'ffim;.,, '777 /- t,;,. ' W v/y;:./, v;- V./'" 7 7.7 ' d 7. : . - - V ;* v'