Document b5YbDXk3vM70d58Gg8ojo68jk

Saint Joseph Lead Company Annual Report -- 1954 America's Corporate Foundation; 1954; ProQuest Historical Annual Reports Pg -0_1 NINETY-FIRST ANNUAL REPORT TO THE STOCKHOLDERS i ;iARV4?r ".'I. c.s c; : iB'Krr.!. 1954 St. Joseph Lead Co. 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 9,1955 at 11 A.M. Proxies will be solicited commencing on April 7,1955. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. NINETY-FIRST ANNUAL REPORT 1954 St Joseph Lead Company 250 Park Avenue New York 17, N. Y. Transfer Office St. Joseph Lead Company ..1 . , 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 OF CONTENTS Page Trustees and Officers ................................. ............................... 1 World Markets for Lead and Zinc...................... ....................... 2 Earnings and Taxes........................ , ................................................... 4 Sales............................................................................................... 4 Dividends............ . ............... ................................................... 5 Cash Resources and Receivables.......... 5 Net Working Capital................................. . ...................... ............... 5 Capital Expenditures................................... .... ................... 6 Southeast Missouri.................................................................................... 6 Edwards and Balmat, New York . 6 Josephtown, Pennsylvania ... . ............................................... 6 Employee Relations ................................................................................ 7 Oil Exploration........................... ....... 7 Cia. Minera Aguilar, S.A. and Associated Companies......................... 7 Other Foreign Interests................................ 8 Board of Trustees, ... ..... ............................. 8 Anti-Trust Suit .................... . 8 President's Report to Employees .. . 8 Stockholders .... . ... ......................... 9 Conclusion .............................................................................................. 9 Financial Statements and Accountants' Certificates...................... 10-18 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. S T. JOSEPH LEAH COMPANY INCORPORATED MARCH 25, 1864, UNDER THE LAWS OP THE STATE OP 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. Brigden . . H. DeWitt Smith . . John R. Shepley . . . Francis Cameron . . Bernard F. Desloge . Eli Whitney Debevoise James W. McAfee . . Board of Trustees .............................................. .... Chairman Vice President, Cornell Iron Works, New York, N. Y. ......................................................................President ..............................Chubb & Son, New York, N. Y. .................... ....................................... Vice President . . . . . . Vice Chairman, Board of Directors, J. P. Morgan & Co. Incorporated .............................., Vice President and Treasurer .................... Consulting 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 Company of Missouri, Si. Louis, Missouri 1911 1913 1921 1928 1933 1944 1945 1948 1950 1963 1953 1954 1954 Executive Officers Clinton H. Crane . . Andrew Fletcher . . C. Merrill Chapin, Jr, Francis Cameron . . George I. Brigden . . Charles R. Ince . . R. J. Mechin . . . Robert Bennett . . James G. Colvin . . . . . . ,, . . . . Chairman v . . ......................... President .................................... Vice President . ... . . . . Vice President . . Vice President and Treasurer .................................... Vice President .................................... Vice President ........................................ Secretary Asst. Treasurer and Asst Secretary United States Divi**s'* i-o&n Managers , MINES SMELTERS Elmer A. Jones Southeast Missouri John G. Wehn Josephtown, Pennsylvania Marshall G. Jones Edwards-Balmat, N. Y. William T. Isbell Herculaneum, Missouri Consultant George F. Weaton Cia. Minera Aguilar, S.A. Argentina Donald B. McGilvra Vice President Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. NINETY-FIRST ANNUAL REPORT FOR THE YEAR 1954 ST, JOSEPH LEAD COMPANY To the Stockholders; We are pleased to submit a report of the Company's operations for the year 1954, includ ing Consolidated Balance Sheets as of the end of 1954 and 1953, together with Summaries of Consolidated Net Income and Earned Surplus for the years ended December 31, 1954 and 1953, for St. Joseph Lead Company and sub sidiaries. Similar statements for Compania Minera Aguilar, S.A., are also included. The accounts of these companies were audited by Haskins & Sells, Certified Public Accountants, and their certificates are included in this report. World Markets for Lead and Zinc On May 28,1954 the U. S. Tariff Commission recommended an increase in the import duties on lead and zinc. On August 20,1954 President Eisenhower rejected the Tariff Commission's recommendation and announced as a substitute an expanded program of buying these two metals for the Government stockpile. The Presi dent's message on the subject assured the lead and zinc industries that he recognized that the domestic miners had been unduly injured by excessive imports, and announced that contin ued study would be given to the problem to determine whether the increased stockpile pur chases were the proper solution. The experience with stockpiling over the past six months has proven of limited yalue for the American mining industry. Miners in the United States are grateful for the strength ening of the domestic market prices of both lead and zinc due to the purchase by the Gov ernment of excess stocks, but it must be recog nized that domestic production is still decreas ing. Lead and zinc producers throughout the world have greatly benefited by the U. S. stock piling program, and current quotations on the London Metal Exchange, have reached levels which many observers believe to be higher than required to bring out the necessary production, and probably are adversely affecting consump tion. The stockpile program has the important defect in that it fails to provide any restraint on the large imports of lead and zinc ores and metals which continue to enter our domestic market. President Eisenhower's Cabinet Com mittee on Minerals Policy has recognized "that a strong, vigorous and efficient domestic min eral industry is essential to the long-term eco nomic development of the United States", and Washington has further stated that the market prices of lead and zinc must be at levels <4that are sufficient to maintain an adequate domestic mobilization base". Your Company has advo cated the best solution to be moderate stock piling coupled with a program of assistance in the form of restoration of higher tariff or im port taxes, as having the following advantages: It would have the immediate effect of estab lishing U. S. prices at a higher level than the rest of the world. It would aid the American miner who needs help, but not over-stimulate the produc tion from foreign mines. Due to the higher U. S. prices the foreign producer would continue to market a portion of his production in our country because he could afford to pay the in creased duty and still net the same world market price. The United States would continue to receive sufficient imports to meet the requirements of our manufac turers and consumers. The regular flow of lead and zinc ores and metal among Nations would still be subjeet to conditions of supply and demand and the automatic laws of the market place, which are fundamental to our economy. As a consequence we avoid the serious risks and objections attached to artificial schemes such as international cartels, subsidies, and other forms of governmental experiments. 2 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The following figures show, for the year 1954, the source of supply of lead and zinc in the United States and their consumption by industries, as compared with 1953: LEAD Available Supply: U. S. Mine Production.................... From scrap ..................................... Imports ............................................ 1954 (Eat.) 317,000 472,000 459,000 195S (Final) 342,000 486,000 647,000 Total Supply......................... 1,248,000 Consumption: Batteries .................. . ............ Ethyl gasoline.................................. Cables......................... Construction (pipe, sheets, etc.).... Paint.................................................. Other uses ..................... 337,000 162,000 127,000 102,000 118,000 254,000 Total Consumption . ...... 1,100,000 1,375,000 368,000 162,000 147,000 107,000 130,000 288,000 1,202,000 Surplus......................... .. . . .......... 148,000 173,000 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) ................................. Total....................................... Add-Imports of slab zinc .......... Total zinc metal available .... Consumption: Galvanizing .............................. . Zinc-Base Alloys .... V................... Brass ............. ......... ......................... Rolled Zinc................. ....... Other ......................... ........... . Total Consumption............... Exports ............................................ Total zinc metal consumed and exported ............................. Surplus....................................... . 465,000 70,000 395.000 61,000 378.000 834,000 150,000 984,000 400.000 278.000 105.000 46.500 37.500 867,000 25,000 892,000 92,000 547,000 96,000 451.000 50,000 434.000 935,000 235,000 1,170,000 407.000 307.000 178.000 65.000 89.000 986,000 18,000 1,004,000 166,000 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Earnings and Taxes The net Income for St. Joseph Lead Com pany and subsidiaries for the year 1954, was $7,523,503, a 19%% increase over the $6,300,342 reported for 1953. On the basis of the 2,716,222 shares of capital stock outstand ing, this amounts to $2.77 per share in 1954, as compared with $2.32 per share the previous year. The higher earnings were primarily due to the increase in the prices of lead and zinc during the last half of 1954. These higher prices were the direct result of the Govern ment's stockpiling program, which increased the lead price from a low of 12.5 cents per pound in February, to 15 cents in October, while zinc rose during the same period from 9.25 to 11.5 cents per pound. The year-end prices of lead and zinc were 15 cents and 11.5 cents respectively. The earnings per share in each quarter in 1954, as compared with 1953 were as follows: mu 1st Quarter. ..,,.. $ .40 2nd Quarter. .. ... .61 3rd Quarter...,... .82 4th Quarter...,.. . .94 ms $ .74 .88 .57 .13 Total............. $2.77 $2.32 The provision for Federal and State income taxes in 1954 amounted to $4,628,764, which is equivalent to $1.70 per share, as against $4,344,733, or $1.60 per share the previous year. Settlement of the Company's U. S. Corpora tion Income and Excess Profits Taxes for the year 1952 together with claims for refunds for the years 1944 through 1951 has been reached with the Internal Revenue Service. These set tlements resulted in a net overpayment by the Company of $19,091, exclusive of interest. The table below shows earnings for the tenyear period ended December 31, 1954. This table does not include earnings of Cia. Minera Aguilar, S.A. which are shown separately in this report, except to the extent of dividends on which exchange was granted, in the amount of $294,340 U. S. dollars received in 1947, $69,574 in 1951 and $69,874 in 1952. Permis sion has not been obtained from the Argentine authorities to convert any portion of the re maining peso dividends amounting to 75,385,747 pesos at December 31, 1954. TEN-YEAR EARNINGS 1945-1954 Year Consolidated Net Income After Income Twees of 1945................... 1946................... 1947................... 1948 ......... 1949 ................. 1950................... 1951................... 1952................... 1953................... 1954 ................... $ 4,829,815 5,807,131 12,537,761 9,636,737 8,564,436 12,211,615 13,577,237 9,638,455 6,300,342 7,523,503 $ 1,164,905 1,923,373 4,479,659 3,776,836 2,889,926 7,976,468 13,819,817 5,667,894 4,344,783 4,628,764 Sales Total sales, including purchases by the Gov ernment under the new expanded stockpiling program, amounted to $95,003,072 in 1954, compared with total sales of $88,002,426 in 1953, an increase of 7.96%. Lead sales from the Company's production showed a slight in crease in 1954 and amounted to 97,875 tons as compared with 95,980 tons in 1953, whereas the sales of zinc content in the slab zinc and zinc oxide increased from 103,009 tons to 117,611 tons in 1954. Approximately 56% of the gross earnings of the Company came from zinc and 44% from lead, in comparison with 61% for zinc and 39% for lead in 1953, and 50% for each in 1952. The table below shows the total tonnage of lead sold, together with pig lead stocks for each of the last ten years: TEN-YEAR COMPARATIVE LEAD SALES AND STOCKS IN TONS Year Lead Sales St. Joe Production Purchased Lead Sold ; Total Lead Sales *Pig Lead Equivalent of Stock 1945......... . .. . 1946....... .... 1947......... .... 1948......... .... 1949......... . ... 1960......... . ... 1951......... . ... 1962......... .... 1953......... .... 1954........ . ... 139,934 131,664 108,440 77,011 90,653 127,803 97,308 98,848 96,980 97,875 48,483 33,872 53,438 48,488 63,276 84,347 50,597 61,777 71,212 85,204 188,417 165,536 161,878 125,499 153,929 212,150 147,905 160,625 167,192 183,079 25,824 10,048 11,646 16,483 30,125 11,850 16,031 17,063 23,610 33,361 * Includes purchased lead and estimated recoverable lead in concentrates together with other lead stocks in process of refining at smelters. 4 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Dividends - $2.00 per share for the year. The following is Cash dividends of 50 cents per share were a record of cash dividend payments for the paid quarterly during 1954, making a total of ' ten year period through 1954: DIVIDENDS 1945-1954 Year Outstanding Shares Per Share 1945................. ......... 1946................. ......... 1947................. ........ 1948................. ......... 1949................. .......... 1950................. .......... 1951................. .......... 1952................. .......... 1963................. .......... 1954................. .......... 1,975,456 . ' : 1,975,456 1,975,456 1,975,456 1,975,456 1,975,456 2,468,846 2,592,124 2,715,742 2,716,222 $2.00 2.00 3.00 3.25 3.25 3.25 3.25 3.00 2.75 2.00 Amount $8,950,912 3,950,912 5,926,368 6,420,232 6,420,232 6,420,232 8,023,749 7,776,373 7,468,290 5,432,076 Gash Resources and Receivables The Company's cash and short term invest ments amounted to $14,129,371 at December 31, 1954 and $14,521,292 at December 31,1953. During the .year, accounts receivable in creased from $4,120,238 to $10,109,075. This $5,988,837 increase is made up mainly of amounts due from the U. S. Government for lead and zinc sold for stockpiling. :' . Net Working Capital The consolidated net working capital (cash resources, receivables and inventories, minus current liabilities) was $29,514,554 at Decem ber 31, 1954, as compared with $25,413,178 at December 31, 1963, an increase of $4,101,376 during the year. A summary of the principal items accounting for the changes during 1954 is as follows: Net working capital at January 1,1954.................. Additions: Net income after all charges................................ Charges to income for depreciation, depletion, other reserves and other items which did not affect working capital .................... $25,413,178 7,523,503 3,676,173 Deductions: Dividends paid....................... .... Capital expenditures ........... . Investment in Brunswick Mining and Smeling Corporation Limited 5% Income Bonds due 1968 .... Other Investments and Advances . $5,432,076 I,lz5,743 300,000 240,481 Net working capital at December 31,1954 . $36,612,854 7,098,300 $29^14^54 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Capital Expenditures Expenditures for property, plant and equip ment in 1954, were $1,125,743 compared with $4,788,011 in 1953. It is estimated that for 1955 they will approximate $1,700,000. The three-year expansion program which started in 1951, was completed during 1954. Capital ex penditures since 1945 are shown in the follow ing table; COMPARATIVE CAPITAL EXPENDITURES Year head Belt Josephtown Edwards-Balmat Total 1945.......... .. 1946.......... . . 1947.......... . . 1948......... . . 1949......... . . 1950......... . . 1951.......... . . 1952......... .. 1953,..... . . 1954........ . $ 10,414 66,195 830,993 469,093 774,658 903,776 2,549,327 3,793,396 3,972,871 817,306 $ 3,096 699,645 5,316,460 1,776,183 147,536 177,071 564,768 1,768,048 720,665 208,499 $197,358 54,374 151,968 81,590 160,553 929,617 685,128 90,896 94,475 99,938 $ 210,868 820,214 6,299,421 2,326,866 1,082,747 *2,010,464 *3,799,223 *5,662,340 4,788,011 *1,125,743 * Includes items capitalized by agreement with the Internal Revenue Service applicable to prior years amounting to $635,491 in 1950, $659,920 in 1951, $151,784 in 1962 and $92,938 in 1954. Southeast Missouri The mines and mills in the Lead Belt again operated without interruption during 1954. Ore and chat milled increased to a total of 7,182,035 tons in 1954, from 6,860,627 tons the previous year, with a lead content, 90% basis, of 97,599, a slight decrease from the 98,036 tons for the previous year. New ore developed during the year approximated the tonnage mined. The new Indian Creek property in Washing ton County, operated throughout the year on an average of approximately 600 tons of ore per day. The tonnage is gradually expanding and 1,000 tons per day is at present being treated. It is expected that by the fourth quar ter of 1955, the 2,000-ton per day capacity will have been reached. Because of the economies to be effected, the Hayden Creek mill has been abandoned, and the ore produced from this mine is being trucked to the Leadwood mill. The Hayden Creek mill will be dismantled, and the residual value written off and charged to expenses in equal amounts over the years 1954, 1955 and 1956. With the completion of the increase in the Herculaneum Smelter capacity to 100,000 tons of pig lead annually, the output rose during 1954, from 65,899 tons for 1953 to 91,736 tons. 6 The thirty-year contract with the American Smelting and Refining Company which expired January 14,1954, was superseded by a five-year contract. Under the new contract, all produc tion in excess of 100,000 tons of lead content per year, with a minimum of 3,000 tons of con centrates per month, will continue to be smelted at their East Alton, Illinois plant. The rebuilding of the larger zinc furnace at Herculaneum is progressing satisfactorily and is expected to be completed early in the second quarter of 1955. Edwards and Baimat, New York As a result of a full year's operation of the new mill facilities at Baimat, a production rec ord for crude ore was established in 1954. The combined production at this division increased to 103,479 tons of concentrates from 99,374 tons the previous year. The entire zinc produc tion was shipped to our Josephtown, Pennsyl vania Smelter. Josephtown, Pennsylvania The decrease in the demand for zinc which began in the last quarter of 1953 and culmi nated at the end of the first quarter of 1954, resulted in increased stocks of metal. Because of low prices and continuous accumulation of stocks, zinc metal production at Josephtown was reduced in February to approximately Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 5,500 tons per month. With the improvement in prices and demand, production was increased in May and reached 9,500 tons in December. During the last six months of 1954 stocks at this Division were substantially reduced, and amounted to 10,980 tons at December 31, 1954. Employee Relations : Employee relations at all Divisions continued to be very satisfactory throughout the year. St. Joe's safety record continues to be excellent. The number of U. S. employees at December 31, 1954 was 5,000, approximately the same as in 1953. Of this total 963 employees have over twenty-five years' service. Employee earnings are supplemented by fringe benefits, including retirement and disa bility income, group life insurance and hospi talization. The past service pension liability has been completely funded. Oil Exploration The net amount expended for oil exploration in 1954 was $331,982 as compared to $825,819 in 1953, after deducting income from sales of oil amounting to $113,329 and $20,340 for these years respectively. At the beginning of 1954 there were two producing wells "C" #2 and "D" #1, in the Harris Ranch Block, Crockett County, Texas jointly owned with Continental Oil Company, and one well "C" #3, shut-in until means of disposing of the excess gas can be developed. During the year, three addL tional jointly owned wells were drilled and a fourth authorized on the same lease block-- The Harris "C" ^4, an exploratory test on the Northwest portion of the acreage was a dry hole. The Harris "C" #5 South of the producing wells encountered a showing of both oil and gas but was not completed as a producing well. An attempt to complete this well as a producer will be made at some future date. The Harris "C" #6, 2,250 feet north of the "C" #4, was completed as an excellent commercial well, but has an allowable under the Texas Railroad Commission of only ap proximately 120 barrels per day due to the necessity of flaring the large amount of gas. The drilling of the Harris "D" #2 well located approximately 2,500 feet east of the "C" #6 was commenced January 7, 1955. Production is from the Strawn horizon. On the West Poplar Block, Roosevelt County, Montana, a tract of approximately 6,000 acres, also jointly held with Continental, a third test well known as the Landon #1 well was com pleted as a dry hole at the depth of 6,560 feet. It was plugged and abandoned on November 24, 1954. Gia. Minera Aguilar, S.A. and Associated Companies Net income of Cia. Minera Aguilar, S. A. for the year 1954, the highest in the company's history, was 47,813,405 pesos, 46% greater than the 32,890,744 pesos reported for 1953. These earnings were after the following deductions: 1954 Depreciation and Special Reserves 20,242,001 pesos Income and Excess Profits Taxes.. 45,935,919 " Total ............................. . 66^177,920 pesos 1953 14,123,960 pesos 32,203,096 " 46,327,056 pesos Cash and marketable securities at December 31, 1954, were 175,847,042 pesos, an increase of 111,005,814 pesos over the previous year. St. Joseph Lead and Aguilar have 197,790,791 pesos invested in Argentine securities and in cash deposits. The modernization program to permit of efficient, full production at Aguilar is progressing satisfactorily. During 1954 approximately $300,000 of equipment was purchased in the United States and $530,000 is under order. Foreign exchange is being made available in the Central Bank of Argentina shortly after the equipment arrives in that country. Development work during the past year continues encouraging. Two mining prospects are being drilled by Compania Minera Aguilar, S. A., and a third is being negotiated. Lead and zinc concentrate production for 1954 in metric tons as compared with 1953, is shown below: Lead Concentrates........ ................ Zinc Concentrates.............. . -- 1954 22,581 Tons 36,240 " 1953 19,768 Tons 31,797 " 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Operations of Sulfacid, S. A., continue to be managed in an excellent manner. As the sul phuric add market in Argentina was depressed throughout the year, only a nominal profit was earned by this company. . Cla. Metalurgica Austral, S. A., made excel lent progress in all phases of its operations, and a satisfactory profit was earned through the sale of current production and accumulated zinc inventories. We continue to be optimistic as to the future of our operations in Argentina. Other Foreign Interests Progress on the Brunswick Mining and Smelting Corporation Limited's property at New Brunswick, Canada, 40 fa owned, con tinues to be satisfactory. The pilot mill erected on the property, began operations on February 10, 1955. An auxiliary shaft on the #12 orebody has been completed to a depth of 412 feet, with stations cut at 200 feet and 350 feet. Drifting on the 350-foot level to outline the orebody and to obtain ore for the pilot plant testing, is in progress. The plotting and map ping of the orebodies have resulted in a con siderable increase in the expected grade and ore tonnage. Study of the transportation and harbor facilities is under way. The property of Societe Nord Africaine du Plomb in which your company has approxi mately a liy%fo interest, operated throughout the year 1954 at about 40 fa of capacity. New ore developed at this property kept pace with the tonnage mined. Board of Trustees The following two changes in the Company's Board of Trustees occurred during the year 1954: Mr. Eli Whitney Debevoise, a member of the New York law firm of Debevoise, Plimp ton & McLean, was elected by the Board of Trustees on February 8, 1954, to fill the vacancy caused by the resignation of Mr. Robert Bennett whose normal retirement date was November, 1954. Mr. James W. McAfee, President of the Union Electric Company of Missouri, was elected by the Stockholders on May 10, 1954, in place of Mr. Daniel K. Gatlin who had been a member of the Board of Trustees since 1912. Mr. Catlin had informed the Board he would prefer not to be renominated for a further term. The following resolution was adopted upon Mr. Catlin's retirement: Whebeas Daniel K. Catlin has been a mem ber of the Board of Trustees of the St. Joseph Lead Company continuously since 1912, and during these forty-two years of service he rarely missed a meeting; and Whereas his friendship, loyalty, wise coun sel and progressive outlook have been of in estimable assistance to the Board and benefit to the Company; and Whereas the Board received with deep regret Mr. Catlin's decision to decline re nomination for re-election as a member of the Board; Be It Resolved that the Trustees, on the occasion of Mr. Catlin's retirement from the Board, express to him their sincere apprecia tion for his loyal and effective service to the Company over the past forty-two years, and, with the assurance of their warm and abid ing friendship, extend to him their best wishes for continuing good health, happiness and prosperity. Further Resolved that the Secretary for ward to Mr. Catlin a copy of the foregoing resolution. Anti-Trust Suit In last year's Annual Report, the stock holders were advised that the United States had commenced a civil action against St. Joseph Lead Company and American Smelting and Refining Company in the U. S. District Court for the Southern District of New York, alleg ing violations of the Sherman Anti-Trust Act in the conduct of the lead business. Stock holders were also advised that insofar as the complaint relates to St. Joseph Lead Company, the Company vigorously denies that it has in any way violated the Anti-trust laws. Other than filing an answer stating our position, there have been no changes except that the case has been noticed for trial, which may occur in 1956. President's Report to Employees A copy of the President's Report to Em ployees for the year 1954, will be found under the flap of the rear cover of this report. The photographs and additional operating com-, ments may be of interest to the stockholders. 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Stockholders ,( . The number of St, Joseph Lead Company stockholders of record on December 31, of each year since 1945 and a classification of their holdings, are as follows: A TEN-YEAR RECORD OF STOCKHOLDER CLASSIFICATION Year Total 1945... . . . 1946 .. . . .. 1947 ... . .... 1948.......... .... 1949........ .... 1950.......... . . . 1951.......... .... 1952.......... .... 1953.......... .... 1954.......... . . 7,434 7,581 7,885 7,823 7,993 8,435 9,023 10,182 10,657 10,497 19 or less 1,756 1,778 1,834 1,834 1,847 1,794 1,907 2,146 2,257 2,165 20-99 2,772 2,865 3,021 3,135 3,123 3,443 3,705 4,235 4,424 4,305 100-199 1,639 1,641 1,735 1,611 1,747 1,943 2,076 2,346 2,485 2,511 200-Over 1,267 1,297 1,295 1,243 1,276 1,255 1,335 1,455 1,491 1,516 Conclusion We wish again to express our sincere appreciation to all employees for their loyal and efficient efforts during the past year, and for the continued support of our stockholders. Clinton H. Crane Chairman New York, March 12, 1955 Andrew Fletcher President Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December SI, 1954 and 1953 ASSETS Current Assets; Cash ........................................................................... U. S. Government and other 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 slowmoving items--1964, $21,637; 1963, $92,964) Advances; Compania Minera Aguilar, S. A............................ Sulfacid, S. A. Industrial ...................................... Compania Metalurgica Austral-Argentina, S. A. Commercial ........................................................... Investments; Compania Minera Aguilar, S. A. (at nominal valuation--99.9% owned, not consolidated)-- (Note 2) .............................................................. Mine La Motte Corporation (at nominal valua tion--50% owned)--(Note 3) ............................. The New Jersey Zinc Company (195,000 shares at cost, less non-taxable dividends--9.9% owned) Brunswick Mining and Smelting Corporation Limited (at cost)--(Note 7); 1,600,000 shares--10% owned......................... 5% 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 1,1918 (at cost) Less allowance for depletion ......................... Land, buildings, plant and equipment (at cost) .. Less allowance for depreciation......................... Total capital assets, net....................... Miscellaneous Assets; XJ. S. Treasury, State and Municipal securities on deposit with Federal and 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 6) ............. Deferred exploration expenses....................... . . . Other deferred charges .......................................... Total ..............................................-- December SI, 1954. $ 4,129,371 10,000,000 10,109,075 406,504 226,638 5,712,455 4,016,935 5,267,634 $39,868,612 $ 126,880 357 25,028 152,265 $1 1 11,161,854 2,339,758 300,000 673,718 14,475,332 $13,500,000 13,600,000 $ 3,500,000 3,500,000 $21,726,677 19,216,718 $46,113,811 29,067,078 -- _ 2,509,969 17,046,733 $19,556,692 $ 799,780 194.475 994,255 $ 74,153 846,486 621,838 261,923 1,804,400 $76,851,656 December SI, 1955 $ 4,521,291 10,000,000 4,120,238 441,718 228,208 6,267,705 3,178,316 5,504,829 $ 55,374 644 31,300 $34,262,305 87,318 $1 1 11,161,854 2,342,163 963,825 14,467,844 $13,500,000 13,600,000 $ 3,500,000 3,500,000 $21,610,956 18,968,962 $45,619,701 27,279,318 -- 2,642,004 18,340,383 $20,982,387 $ 826,209 -- 826,209 $ 91,716 1,042,036 699.952 287.953 2,121,667 $72,747,720 The accompanying notes to financial statements are an integral part of the above balance sheets. 10 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIAEIBS Consolidated Balance Sheets, December SI, 195U and 1958 ------------------------------- ---------- ------------ -------------- i-------- --------------- -------- LIABILITIES Current Liabilities: Accounts payable ..................................................... Wages payable..................... .................................. Accrued taxes: Federal income and excess profits (Note 6)----Other................................................................. .. . Deferred Credit--Deferred Federal income taxes-- related to accelerated amortization of emergency facilities .................................................................. Reserves: Injury claims and workmen's liability insurance ,. Employees' life insurance and retirement (Note 5) Fire insurance (see contra) ................................... Stockholders' Equity: Capital Stock: Authorized, 5,000,000 shares of $10.00 each. Shares -------- December SI -- - - 1954. 1958 Issued ........ In Treasury 2,737,636.85 2,737,636.85. 21,414.35 21,413.95. Outstanding.... 2,716,222.50 2,716,222.90.. Surplus: Earned ............................................................... Capital ............................... ............................... Total Stockholders' Equity December SI, 1954 $ 5,158,181 321,017 4,577,711 297,149 $10,354,058 $ 633,271 390,749 194,475 449,953 1,118,495 $27,376,369 214,144 27,162,225 $19,610,334 18,156,491 37,766,825 $64,929,050 December 31,195S $ 4,146,897 291,678 4,126,386 284,166 $ 8,849,127 $ 526,137 396,625 138,204 922,762 $27,376,369 214,140 27,162,229 $17,618,907 18,156,491 35,675,398 $62,837,627 Total $76,851,556 $72,747,720 The accompanying notes to financial statements are an integral part of the above balance sheets. 11 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 SI, 1954 and 195S Not Sales op Metals, Metal Products, Etc. .................... Cost Thereof (exclusive of depreciation and depletion) ..................... Gross Profit prom Operations Before Depreciation and Depletion Deduct; Selling, general and administrative expenses......... Exploration: New mine examination and development expenses Oil and natural gas expenses, net........................ $1,499,717 344,766 331,982 Past service annuities (Note 5) ....................... ........ 195,550 Net Profit from Operations Before Depreciation and Depletion Other Income; Dividends: The New Jersey Zinc Company............................ Mine La Motte Corporation (Note 3) ................. $ 243,750 100,000 Other dividends, interest, etc. less charges............... 337,232 Items previously expensed, capitalized by agreement with the Internal Revenue Service........... ............ 161,548 Deduct: Depreciation of plant and equipment ....................... Depletion of mines ....................................................... $2,218,945 247,766 Provision for Taxes on Income; Federal normal tax and surtax ............. . . ............. Federal excess profits tax (Refund) ........... ............ Federal income taxes--deferred--related to accele rated amortization of emergency facilities ......... State income taxes ...................................................... $4,269,131 (35,690) 311,749 83,674 Not Income for the Year...................................................... Earned Per Share on the 2,716,222 Shares Outstanding 1954 $95,003,072 78,854,619 $16,148,453 2,372,005 $13,776,448 842,630 $14,618,978 2,466,711 $12,152,267 4,628,764 $ 7,523,603 $2.77 $1,324,933 596,352 825,819 195,550 ms $88,002,426 74,036,998 $13,966,428 2,942,654 $11,023,774 $ 536,250 360,000 336,466 204,687 $1,589,237 226,865 $4,199,681 (54,017) 138,204 60,965 1,437,403 $12,461,177 1,816,102 $10,645,075 4,344,733 $ 6,300,342 $2.32 Summaries of Consolidated Earned Surplus For the Years Ended December SI, 1954 and 1958 Earned Surplus at Beginning of the Year .......................................... Not Income for the Year............................................................ --..... Reserve for Contingencies and Reserve for Deferred Prospecting, Development, and Exploration Restored to Earned Surplus .. Cash Dividends Paid During the Year (1954, $2 per share; 1963, $2.75 per share) ......................................... .................. . Earned Surplus at End of the Year.......... ......................... .... -- 1954 $17,618,907 7,623,603 -- $26,042,410 6,432,076 $19,610,334 195S $17,403,866 6,300,842 1,288,000 $24,987497 7,468,290 $17,618,907 The accompanying notes to financial statements are an integral part of the above summaries. 12 Reproduced with permission of the copyright owner. Further, reproduction prohibited without permission. ST. JOSEPH LEAD COMP AW Y 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 depletion. Materials and supplies are valued at average cost. 2. The transfer of funds from Argentina is subject to restriction. It is the practice of the Com pany to record dividends received or receivable from Compania Minera Aguilar, S. A. as they are converted into U. S. dollars (no dividends were so converted in 1954 and 1953). Accord ingly, the financial statements of St, Joseph Lead Company and subsidiaries do not include dividends of Compania Minera Aguilar, S. A. not so converted as follows: ; Argentine paper pesos , December SI tns In bank in Argentina ................................................................... Invested; Compania Metalurgica Austral-Argentina, S. A. Commercial: Capital stock (40.5% owned) ......................... Bonds ....................................................... Sulfacid, S. A. Industrial--Capital stock (28.6% owned)___ Due from Compania Minera Aguilar, S. A.-- Dividends declared not paid, less Argentine income tax withheld--1954, 4,609,093 pesos; 1958, 3,493,885 pesos............................. 2,983,749 9,720,000 1,000,000 8,240,000 48,832,905 1,983,749 9,720,000 2,000,000 8,240,000 31,361,313 Total ............................................................................ 70,776,654 53,305,062 St. Joseph Lead Company together with Compania Minera Aguilar, S. A. own 48.3% of Compania Meta lurgica Austral-Argentina, S. A. Commercial and 60% of Sulfacid, S. A. Industrial. Financial statements of Compania Minera Aguilar, S. A. are included herein on pages 15-17. 3. The Company's equity in the net assets of Mine La Motte Corporation, as shown by audited financial statements, was $307,787 and $296,131 at December 31, 1954 and 1953, respectively. The Company's equity in the net income of Mine La Motte Corporation for the year 1954 ex ceeded dividends received by $11,656; in 1953 dividends received exceeded the Company's equity in net income by $102,746. 4. The net value of the capital assets as shown in the consolidated balance sheets does not indicate 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, partly covered by contract with an insurance company and partly with funds de posited 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. Current annual costs of both plans aggregated approximately $411,000 and $424,000 in 1954 and 1953, respectively. It is the practice of the Company to defer past service annuity cost payments in amounts equivalent to the estimated future tax reductions resulting therefrom. 6. The Federal income and excess profits tax returns of St. Joseph Lead Company and subsidiaries have been examined by the Internal Revenue Service through the year ended December 31, 1952; all assessments and adjustments have been settled. 7. 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 $17,600,000 (Canadian funds) on terms and conditions satisfactory to Leadridge. During the year 1954 Leadridge purchased $300,000 of Brunswick's 5% income bonds under the commitment. 8. Reference is made to the text of this report relative to the companies' capital expenditures and Anti-Trust suit. 18 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 31,1954 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; it was not practicable to confirm receivables from the United States Government but we have satisfied ourselves with respect to such receivables by means of other auditing procedures. 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 subsidiaries at December 31, 1954 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 23, 1955 . ; .v a HASKINS & SELLS Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINER A AGUILAR, S. A. Summaries of Income For the Years Ended December 31, 1954 and 1953 Net Sales op Lead and Zinc Concentrates, Etc.......................... Cost Thereof (exclusive of depreciation and depletion)............... .. Gross Profit from Operations before Depreciation and Deple tion ....................................................................................................... Deduct: Selling, general and administrative expenses... Taxes, other than taxes on income.................. Provision for doubtful accounts receivable.......... 3,000,114 4,172,603 -- Net Profit from Operations before Depreciation and Depletion Income Credits: Interest (including interest from partly-owned companies--1954, 691,920; 1953, 1,650,724)... Other, less charges.................................................. 1,924,738 1,411,219 Depreciation of Plant and Equipment (Note 2)..................... .. Provision for Argentine Income and Excess Profits Taxes___ 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)..................................................... ..... Net Income fob the Year, Less Special Appropriation. ... 1954 Argentine paper pesos (Note 1) 169,445,333 51,617,348 1953 Argentine paper pesos (Note 1) 118,832,414 33,452,562 117,827,985 85,379,862 7,172,617 110,655,368 2,373,248 6,101,555 1,829,600 9,304,403 76,075,459 3,335,957 113,991,325 1,853,149 112,138,176 46,935,919 66,202,257 18,388,852 47,813,405 1,896,828 1,245,513 3,142,341 79,217,800 1,337,278 77,880,522 32,203,096 45,677,426 12,786,682 32,890,744 Summaries of Unappropriated Earned Surplus For the Years Ended December 31, 1954 and 1953 ;<' i Y,; Surplus at Beginning of the Year................................................... Add--Net Income for the Year, Less Special Appropriation. .. Total................................................................................. Deduct? Dividends declared or paid during the year.. . Appropriation to statutory reserve...................... 18,600,000 659,765 1954 Argentine paper pesos (Note 1) 34,714,125 47,813,405 82,527,630 1953 Argentine paper pesos (Note 1) 20,810,646 32,890,744 53,701,390 19,259,765 18,600,000 387,265 18,987,265 Surplus at End op the Year (after charging deficits aggregating pesos 6,895,000 against capital surplus)........................................ 63,267,765 34,714,125 Notes: (1) Reference is made to Note 1 to the accompanying balance sheets. (2) Reference Is made to Note 4 to the accompanying balance sheets. 16 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINER A AGUILAR, S. A. Balance Sheets, December 81, 1954, and 1958 ASSETS Current Assets: Cash........................................................................... Marketable securities: Argentine Government (at cost) ...................... Other (at cost, less reserve--1954, 3,213,8711 1953, 3,300,000) ............... ............................ . Accounts receivable--trade (less reserve, 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): Sulfaeid, S. A. Industrial (at cost--21.4% owned) Compania Metalurgica Austral-Argentina, S. A. Commercial (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 SI, 195& Argentine paper pesos (Note1) 39,617,633 79,121,213 57,108,196 11,288,116 3,380,077 32,509,438 21,882,315 244,906,988 6,155,000 674,000 6,829,000 4,384,038 3,502,941 49,446,736 39,700,779 35,550,293 15,036,169 881,097 9,745,957 10,627,054 20,514,124 31,141,178 3,651,228 December SI, 195S Argentine paper pesos (Note 1) 39,548,816 17,747,948 7,544,464 16,018,850 31,261,907 1,582,493 30,281,739 19,616,451 163,602,668 6,157,000 676,000 6,833,000 4,384,038 3,502,941 49,446,736 39,700,779 29,681,777 13,234,603 881,097 9,745,957 10,627,054 16,447,174 27,074,228 3,661,365 Total ................................................... :" 286,528,394 201,171,261 Notes.* (1) The financial statements have been prepared in Argentine paper pesos instead of U. S. dollars because of current exchange restrictions. At December 81, 1954 and 1953, the quoted free rate of exchange for a peso was approximately 7 cents. ............ (2) The Company together with St. Joseph Lead Company own 50% of Sulfaeid, S. A. Industrial and 43.3% of Compania Metalurglca Austral-Argentina, *S. A. The Company was contingently liable at December 31, 1954 and 1953 for subscriptions to additional shares of capital stocks amounting to pesos 900,000. (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. 16 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. C0MPANIA M-INERA-AGUILAR, S. A. Balance Sheets, December 31, 195b and 1958 LIABILITIES ` Current Liabilities : ' Accounts payable--trade .. Due to St. Joseph Lead Company (including dividends payable --1954, 48,832,905; 1953, 31,361,313) Due to partly-owned company................................ Wages payable ........................................................ Accrued Argentine income and other taxes......... Other accounts payable........................................ December SI, 1954 Argentine paper pesos f (Note 1) 1,586,284 50,582,971 1,457,224 2,319,351 38,213,838 2,204,705 96,364,373 December SI, 195S Argentine paper pesos (Notel) 3,897,494 32,070,796 4,618,054 2,198,647 26,366,331 1,489,620 70,640,942 Deferred Credits--Unearned interest, etc................ Reserves: Replacement and rehabilitation of capital assets (Note 4) .................................................................... Employees' compensation under Argentine social laws .................................................... Accidents .................................................................. Other ............................................................................. 30,578 56,691,863 11,563,445 3,223,225 11,934,622 83,413,155 38,303,011 6,689,638 1,263,683 6,767,104 53,023,436 Stockholders' Equity: Capital Stock: Authorized and issued--500,000 shares of a nominal value of 80 Argentine paper pesos each ............................................... ................ . Less in treasury, 35,000 shares................... 40,000,000 2,800,000 40,000,000 2,800,000 Outstanding 465,000 shares............................ .. 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) ............................ .4 ' ' ' v 2,800,000 2,005,787 63,267,765 37,200,000 1,446,736 68,073,552 37,200,000 1,446,736 2,800,000 1,346,022 34,714,125 38,860,147 Total Stockholders' Equity................ 106,720,288 77,506,883 Total ........................................................ 286,528,394 201,171,261 Notes Continued: (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 1954 and 1953 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 276,000 anti 260,000, respectively, and net income for both years would have been correspondingly less. However, no depletion has been provided since 1950, as the amounts thereof were not considered to be material, A special appropriation of 18,388,862 Argentine paper pesos for replacement and rehabilitation of capital assets has been made out of income for the year 1954. Similar special appropriations amounting to approximately 12,800,000 pesos were made out of income in each of the preceding three years. (5) The net profit since beginning operations, pesos 140,310,052 (earned surplus at December 31, 1954 pesos 68,073,562 plus dividends declared pesos 78,631,500 and less aggregate deficits transferred to capital surplus pesos 6,395,000) represents aggregate net profits of pesos 180,010,831 (after deducting depletion computed on cost and special appropriations for replacement and rehabilitation of capital assets) against which has been charged deple tion computed on appreciation aggregating pesos 39,700,779. 17 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS 8s SELLS CERTIFIED PUBLIC ACCOUNTANTS 67 BROAD STREET NEW YORK ACCOUNTANTS5 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, 1954 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 18,388,852 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 our opinion accepted accounting principles require that charges for maintenance be made against income only In the year of expenditure or other definite deter mination, and that charges for major replacements be capitalized. Similar special appropriations amounting to approximately 12,800,000 Argentine paper pesos were made out of income in each of the preceding three years. 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, 1954 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. HASKINS & SELLS February 23, 1955 18 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Cover: Night time exposure of Federal Mill thickener tanks-. Lead Belt, Missouri Right: Caterpillarmounted extension ladder for underground prospecting. Lead Belt Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The following is a comparison of the St, Joe production and sales in short tons: 1954 Tons head Lead concentrates: ' " ; Produced from Company's mines................... .. Purchased concentrates (for smelting at Herculaneum).. .. Pig lead equivalent of produced and purchased concentrates. .. Pig lead produced................. ............ ............................ .. 164,171 39,373 133,932 Pig lead sales: From smelter production................................ i.................... .. 123,273 Purchased pig lead................. ............................................. .. 59,806 1953 Tons 160,625 38,294 129,281 130,430 122,062 45,130 Zinc , Zinc concentrates: Produced from Company's mines........................................ .. 109,547 Purchased concentrates (for smelting at Josephtown).... .. 61,640 Slab zinc equivalent of: Produced and purchased concentrates; ................................ .. Smelter production (including toll zinc)............................. .. Sales of oxide and metal...................... .............................. 105,610 111,021 117,611 Sulphuric Acid Sales.......................... .................................... .. 147,076 104,744 112,991 126,968 121,592 103,009 174,715 Advertisements . , As it is just as important to sell our products as to produce them, there is again included in this Report, three representative St. Joe advertisements. Earnings As will be noted from the above table, zinc sales greatly increased and lead slightly The average prices received by the Company for both these metals was about the same as in the previous year. Earnings after taxes were equivalent to $2.77 per share, in comparison with $2.32 in 1953 and $3,55 per share in 1952. Taxes amounted to $1.70, $1.60 and $2.09 per share respectively for each of the three years. Stockholders received dividends of $2.00 per share in 1954, $2.75 in 1953 and $3.00 in 1952. Additional financial and other information is given in the 91st Annual Report to Stockholders, and once more you are urged to ask your Division Manager for a copy, if you are interested and are not a stockholder. Operating information Because of the results obtained through the loyalty and efficiency of every member of our organization, St. Joe has again been awarded a "Certificate of Management Excellence" for the year 1954, by the American Institute of Management. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Underground maintenance shop at Lendwood, Missouri. Jumbo drilling in a Lead Belt stope. Grinding section of Indian Creek Mill with flotation units ,in background Missouri Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Lead Belt, Missouri , The average tonnage of ore and chat milled per operating day was 28,665, which is the highest in the Company's history. It is very gratifying to realize that operating costs only slightly increased, that the safety record was the finest in the Company's history, and that exploration and development results were encouraging. Production and exploration at the Indian Creek prop erty continues to expand; the new ventilation shaft and 1900 foot drift mentioned in my last year's report were completed during the latter part of 1954. The new shaft near old Doe Run was the third mining shaft completed without a lost time accident--an outstanding accom plishment. Herculaneum, Missouri -.. During 1954, the new baghouse and sintering units have been completed. Capacity can now approach the desired 100,000 tons per year, which will permit of stabilizing employment, because of operating two blast furnaces for a major portion of the year. The new zinc slag furnace is nearing completion and should be in operation in March of 1955. The development of a one ton pig, as shown in the enclosed advertisement, is a?n interesting development, and for large con sumers should result in lower handling costs. Balniat-Edwards, Northern New Work State Although the production in most zinc mines in the United States was lower in 1954 than in 1953, this last year has been a record one for this Division. The very satisfactory co-operation among the employees enabled costs to be maintained at a relatively satisfactory level. The safety record at this Division did not meet the Company standard. Development on the Company's properties continued to be most encouraging. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Sosephtotvn, Pennsylvania The Josephtown zinc metal production was drastically reduced in February to approximately 5,500 tons per month, in keeping with the low price and the continued accumulation of stocks. Production was increased in May and reached 9,500 tons in December, in line with improved prices and sales because of the Government's stockpiling program, Employees and stockholders alike can obtain great satisfaction in the research work at this Division, which among other accomplishments has resulted in one of ten furnaces produc ing a record of 66 tons per 24 hours--back in the early '30s the production was about 15 tons per furnace. Another research development has been the very satisfactory acceptance by the trade of the Josephtown "tailor-made" zinc for continuous line galvanizing, which resulted in an increase of approximately 1% in St. Joe zinc sales, in comparison with a decrease of 13% for the industry as a whole. The new electrothermic slag furnace for experimental work on Brunswick ores and Josephtown slag is expected to be in operation in April 1955. #11 The fourth producing well was drilled in the 4,542-acre block in Crockett County, Texas, in which St. Joe has a 50^ interest. Although on the customary potential tests this well flowed 190 barrels with no water in seven hours, the 24 hour allowable is only 120 barrels, because it was necessary to flare the gas, which is estimated at 1,958,000 cubic feet per day. Studies are now under way to see whether an economic utilization of the gas in this area can be developed. A fifth * % ^ % Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The President's Report . to mil Si* Joe Employees and their Families: Although our Company's earnings were greater in 1954 than in 1953, it is dis appointing that the available supplies of both lead and zinc continue to be in excess of the consumption, because of unneeded imports, and also that domestic production of both metals continues to decline in comparison with increased foreign production. It will be recalled that late in 1953, the United States Tariff Commission held hearings on the lead and zinc tariff rates at the recommendation of Congress. Following the suggestion of the Administration, an appeal was filed under the Escape Clause of the so-called Reciprocal Trade Agreements Act. The Tariff Commission's report to the President made on May 21, 1954, recommended that the full tariff increases permissible by law be granted. However, the President rejected the increase on the recommendation of the State Department, and pro posed stockpiling as an alternative aid to the domestic mining industry in order "to maintain an adequate mobilization baseThe President promised, however, that if stockpiling did not prove adequate, other means of helping the domestic industry would be reviewed. Purchases for stockpiling by the Government started in mid-year. It is probably too early to say whether the program is accomplishing its purpose, but indications are that it is not. Domestic mine production of both metals has shown little if any improvement, while imports in the latter half of 1954 were greater than in the first six months, and at a rate well in excess of requirements. By absorbing more than the monthly surplus in zinc and a major portion of the over-supply in lead. Government stockpiling was responsible for increasing domestic prices from 9.25 cents for zinc and 12.5 cents for lead, to the yearend levels of 11.5 cents and 15 cents respectively. To this extent U.S. mines have benefited on the metal that they turned out. The difference between the higher average cost of domestic production and the lower foreign, is very much greater than the negligible duty protection now being extended to these metals. COMPARISON OF DOMESTIC LEAD AND ZINC SITUATION IN SHORT TONS, 1953-1954 .. . .. 1954 1953 (Est.) (Final) head From domestic mines,..................... Scrap ................. ....................................... Imports .. .............................................. 317.000 472.000 459.000 342.000 486.000 547.000 Available supply............................... .... 1.248.000 Consumption ........ ...... 1.100.000 1.375.000 1.202.000 Zinc Unneeded metal..................................... From domestic mines............................. Secondary sources................................. Imports ................. ................................... 148,000 395.000 61,000 528.000 173,000 451.000 50,000 669.000 Available supply ......... ................. Consumed and exported...................... 984.000 892.000 1.170.000 1.004.000 Unneeded metal .................................... 92,000 166,000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. .. Build that more stately mansions. Oh my soul. As the suitft seasons roll! Leave thy low-vaulted past! Let each new temple, nobler than the last, Shut thee from heaven with a dome more vast, Till thou at length art free, Leaving thine outgrown shell by life's unresting sea/'1 OUTER HULL LIAO SHIELD REACTOR LEAD CHAMBER encloses the USS Nautilus' heart. Beginning with the USS Holland--the world's first submarine -- all such vessels derived the power needed for sub-surface travel from storage batteries. The chief component of these batteries, about 60% by weight, is lead -- the imperishable metal. In the recently launched USS Nautilus, the deadliest sub marine of all time, lead, besides its conventional func tion in storage batteries, has this additional and very vital job: To shield the cre\v from the dangerous rays emitted by the Nautilus' heart -- the nuclear power plant. Basically, the problem of protection from these +v.= ?!!wUSZ DO-I41W 4*3 required for protection from X-rays and radium. For the latter purposes, the value of lead as a protective shield has long been recognized. The impermeability of the shielding material to pene tration of rays is a function of its density. Lead is the densest of any commonly available metal. At 20C lead's density is 11.35, as against 6 to 9 for ferrous metals. For a given degree of shielding, lead is the least bulky material -- and has the most practical bal ance between ray-stopping power and cost. Hence, where space is at a premium, and utmost radiation protection is paramount, lead is usually specified. No metal is easier to work than lead -- a fact with obvious cost and "on site" fabrication implications. These advantageous properties, together with the metal's availability and relatively low cost, are certain to widen the application of leaf} in the growing field of harnessing atomic energy for industrial use. Accord ing to Dr. Marvin Fox, chairman, reactor department, Brookhaven National Laboratories, one of the major uses of lead, and one that promises to be still greater, is in the manufacture of shipping and handling con tainers for radioisotopes and in laboratories handling these materials. MS 7-y S YC J OSEPH L E A D C O M PA N Y . .. ' -The Largest Producer -61, Lead in,the .United States '/ 250 PARK AVENUE, NEW YORK GiTY 17, NEW YORK; Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. well is being drilled. The Landon #1 in Roosevelt County, Montana, proved to be a dry hole, and the two other wells known as Fast #1 and #2 in the 6,000-acre block, have been shut down as being non-productive under present conditions. Foreign Operations The Aguilar mine and mill, located in northern Argentina, produced 22,581 metric tons of lead concentrates and 36,240 metric tons of zinc concentrates in 1954, in comparison with 19,768 and 31,797 respectively for the previous year. Very good progress was made in the rehabilitation program, and earnings after taxes and special reserves amounted to approximately 48 million pesos, which is equivalent to about 2 million U. S. dollars, at an assumed rate of 4.2 U. S. cents per peso. Comparative earnings in 1953 after taxes were approximately 33 million pesos. No income, however, was received by St. Joe, as economic conditions in Argentina have not yet permitted the lessening of exchange restrictions Prospecting for additional mining properties has been greatly expanded, and Aguilar has ample peso resources to finance any prospect that appears favorable. The 50',; St. Joe-Aguilar owned sulphuric acid and fertilizer plant at Borghi on the River Plate, Argentina, continued to make an excellent operating record. Net profits, however, were low, due to the continued depressed sulphuric acid market. The progress in the reorganization of the Comodoro Rivadavia zinc smelter in southern Argentina was most gratifying. The improved operating procedure and sales of metal resulted in this 43'/; St. Joe-Aguilar owned unit earning a profit of approximately 10 million pesos in 1954. Conditions in general in Argentina give cause for hope that eventually these operations will be substantial earners for St. Joe. 1954 operating results, discoveries of new ore, and earnings were satisfactory at the Nord Africaine mine, situated in Algeria just over the border from Morocco. St. Joe has an approxi mate 17.5'J ownership. Progress on the Brunswick property, in which St. Joe has a 40*;; ownership and the responsi bility of management, continue to be satisfactory. The pilot mill began operations early in February 1955. A shaft on the orebody, known as #12, has been completed to a depth of 412 feet with stations cut at 200 feet and 350 feet. Crosscutting on the 350-foot level to outline the orebody has cut a wide width of very high grade ore. The overburden from the #6 orebody, which will be mined as an open pit, is well under way. The plotting and mapping of the orebodies have resulted in a considerable increase in the expected grade as well as in the ore tonnage, particularly in No. 12. Mill camp at El Af/mlar, Argentina Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. A signal achievement in sheet steel metallurgy Continuous galvanizing line Courtesy: Wean Engineering Company THE greatest advent in the sheet galvanizing industry since its inception is the continuous strip galvanizing line. Although zinc has been used as a protective coating for iron and steel products for more than a century, this change in method of application has established new standards of corrosion resistance, workability and surface quality for galvanized sheet steel. Today's continuous galvanizing process im parts greater ductility to the steel base and results in a lighter, more uniform coating which takes the toughest forming without cracking, flaking, or peeling of the zinc coating. Zinc is used as a protective coating more than any other metal. In fact, galvanizing accounts for the metal's largest use. It is easy to apply, low in cost, is readily available and lends itself especially well to continuous processing. Furthermore, zinc gives double protection. In addition to providing a mechanical barrier of corrosion-resistant metal, zinc protects steel by galvanic action. As a result, rusting of the steel at cpt ends -- or at bare spots caused by mechan ical Injury to the coating --is avoided as long as enough zinc remains nearby to be preferentially attacked. ST. JOSEPH LEAD COMPANY 250 PARK AVENUE, NEW YORK 17, N.Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission 1955 Outlook It is probable that world lead and zinc production will be greater than con sumption, but I am convinced that Congress and the Administration realize the absolute necessity of maintaining a prosperous domestic mining indus try for the defense as well as for the economy of the United States. There fore, if the stockpiling program will not maintain a proper mobilization base, then some other solution will be developed, to offset the higher do mestic production costs. A moderate stockpiling program, and a small increase in tariff still seems to me to be the best method. Activity in general business in 1955 is expected to equal, and probably surpass the 1954 levels. Estimates of 1955 steel activity and automotive production, two of the major zinc-consuming industries, are 10% to 13% higher than 1954. If zinc responds accordingly, it would mean a consump tion of this metal of close to 950,000 tons, an increase of nearly 90,000 tons over last year's 860,000 tons. Similarly, lead consumption, based on 1955 estimates of activity in the construction industry, as well as forecasts of battery manufacture and tetra-ethyl lead production, should rise about 10% to 1,200,000 tons. ; All of us desire a stable and growing economy, which can be obtained by increased production and greater efficiency. There is every reason for us in St. Joe to be confident of the future provided we maintain an imagi native and courageous outlook which will improve even further our com petitive position and enable us to expand our operations. New York, March 12, 1955. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. THE ST. JOSEPH lead COMPANY is now ready to ship Shifting, dislocation or "scrambling" of cargo, due to corroding lead to carload consumers in units of strap breakage is avoided. one-ton ingots. This "new look" in lead has been Since delivery in "neat" package is ensured, handling worked out successfully with a number of our cus costs and injury hazards arc greatly reduced. tomers who have now adopted it as a standard prac Ingots are adapted to easy handling with ordinary fork tice for their shipments. Assuming adequatemelting lift trucks, and can be picked up from cither direction. capacity, the shipping of lead in one-ton Ingots offers The compactness of one-ton units also makes possible consumers these obvious economies: a considerable increase in storage capacity. Strapping charges for the 2000 lb. to 2500 lb. `bundles" For improved materials handling at less cost, specify are eliminated. one-ton lead ingots for your shipments. ^ ST. JOSEPH LEAD COMPANY .. The. Largest Producer of toad inlhe^lfjiited States . '- 250 PARK fVENUE, NEW YORK CITY 17, NEW YORK Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.