Document dYanK92dzp9GVGNmqX31p2ev6

the Glidden company the Glidden company RESEARCH . . . QUALITY CONTROL--THE KEYS TO "'QUALITY PRODUCTS." The Meaning of Quality When we use the words "Quality Products" on the Glidden trademark, we impose a special obligation on ourselves, and we offer ourselves a special challenge. The obligation is to make high quality products, ones which will give the customer a dollar's worth of value for every dollar he spends with us, and satisfaction when he uses the products. This demands quality from start to finish--using good raw mate rials . .. exercising rigid controls in every stage of manufacture ... standing behind every product we make. .^ The challenge is to improve even further the products we now make, and to develop new and different ones to meet changing customer needs. This requires diligent and fruitful research, high manufacturing stand ards, and aggressive marketing to get the new products to customers. Only in these ways can we fulfill the obliga tion and meet the challenge of furnishing "Quality Products." With the rise of inferior products in some competitive lines, it seems timely to re-emphasize that Glidden makes "Quality Products," and will continue to do so. Quality Products GLD0102 5A annual report......... fiscal year ended august 31, financial highlights Net sales....................................................... Income before taxes................................. Net income................................................. Per share Dividends....................................................... Per share................................................. Depreciation and amortization ... Per share................................................. Expenditures for plant and equipment. . Working capital............................................ Current ratio............................................ Shareholders' equity................................. Per share................................................. Number of shareholders........................... Number of employees................................. 1961 I960 Change $206,702,216 $197,490,831 + 4.7% $ 12,737,983 $ 6,416,983 $2.78 $ 4,621,743 $2.00 $ 13,638,356 $ 6,690,356 $2.90 $ 4,620,700 $2.00 : - 6.6% - 4.1% -- $ 7,440,940 $3.22 $ 6,959,971 $3.01 + 6.9% $ 7,823,199 $ 8,764,000 $ 68,061,010 5.43 to 1 $ 59,721,934 ; 4.93 to 1 . $ 94,665,592 : $ 92,846,742 j $40.96 $40.18 -10.7% + 14.0% + 2.0% 20,873 20,969 - 6,372 6,151 + 3.6% contents The President's Report........................................... 2 Financial Review....................................................12 Coatings and Resins Group................................ 4 Consolidated Balance Sheets.............................. 14 Foods Group........................................................... 6 Chemicals Group...................................................... 8 Consolidated Income Statements . . . .16 Source and Application of Funds.........................17 International Group...............................................10 Accountants' Report.............................................. 17 Corporate Officers................................................. 11 A Thn-Year Comparison......................................... 18 Directors and Corporate Data........................... 20 GLD010255 the president's report DWIGHT P. JOYCE the long view For some time now, we have been taking a long look at Glidden's operations, and as we move into fiscal 1962, we have in mind some basic long term objectives. First, we intend to deepen penetration of our present markets by improving present products and developing new products to meet new cus tomer needs. We have been laying the ground work for this by stepping up our research efforts, expanding and modernizing our plant facilities, and enlarging our distribution system. Second, we intend to diversify further into areas allied to ones we are now in ... those which are particularly suited to our research know-how, our manufacturing methods, and our marketing abilities. The most recent example of this is the merger into Glidden of Pemco Corporation, a leading producer of porcelain enamel frits, ceramic frits and inorganic colors. This merger enables Glidden to ofTer a full line of coating materials to meet varying customer needs. It also combines the talents of two excellent research organizations to work in the fields of high tem perature coatings, ceramic-metal combinations and the use of ceramics in electronics. Another example is the acquisition of a plant at Johnstown, Pennsylvania, which manufac tures ferrous and other metal powders. This complements our already successful non-ferrous metal powders operation, and enables us to offer a full line of these powders to industry. Purchase of the assets of a small maker of fiber glass reinforced paneling has given us our first entry into the building products field. We are consider ing further expansion of our grocery products line. Together, these moves--with others we plan in the near future--should take us far down the road toward our long range objectives. sales up; profits down For fiscal 1961, sales were $206,702,216, a 4.7 per cent increase over the previous fiscal year. Be cause of the sluggish economy, sales in the firs'*) half ran behind the first half of the previous year. In the third quarter, we had a slight increase over the same period in 1960. With the gathering steam of the national economy during the spring and summer, fourth quarter sales were 13 per cent higher than the fourth quarter of 1960. Nearly all product lines contributed to this gain. Earnings per share were $2.78, including a non-recurring gain of 31 cents per share from sale of the company's soybean processing and grain storage facilities. Netincomewas$6,416,983, compared with $6,690,356 for fiscal 1960. This decrease was due to two major factors: 1. Current expense budgets for the year were based on higher sales levels than we reached. 2. Expenditures designed to improve our long term profit potential were not reduced, and in most cases were increased. We continued to place greater emphasis on broader research and development programs and expansion of our marketing and production facilities. Capital expenditures for the year were $7.8 million, down slightly from the previous year. The money was used mainly for the new Carroll- > ' , j i [ j i j j j GLD010256 C the Glidden company november 13,1961 ton, Texas, coatings plant; the Lakehurst, New Jersey, ilmenite mine; the Jacksonville, Florida, terpene chemicals plant; expansion of edible oil refineries and coatings and resins production facilities. Capital outlays for fiscal 1962 will run between $7 and $9 million. organizational changes During the year, a fourth major group-- Inter national--was formed in the company, which is responsible for Glidden's interest in foreign markets, including the operation of Glidden International, an unconsolidated subsidiary. Mr. Alexander D. Duncan is vice president in charge. You will note the use of the word "Group." This year, the company's four major divisions were re-named, and are now known as the Foods Group; the Chemicals Group; the Coatings and Resins Group, and the International Group. This change was made for reasons of organizational clarity, and we believe the new designations will better serve our long range organizational needs. The former Paint Division was also re-named the Coatings and Resins Group, to reflect the broader scope of its research, production and marketing activities. Mr. Paul W. Neidhardt was elected vice president of the Coatings and Resins Group, succeeding Mr. Duncan. the years ahead If the nation's economy continues to improve and our long range plans begin to unfold, we expect that the coming year will be better than the last one. Proceeds from the sale of the soybean proc essing and grain storage facilities amounted to $8,550,000, and greatly strengthened the com pany's financial position. No new financing should be necessary to take advantage of growth oppor tunities. We intend to continue, and increase where necessary, our research and development work and other activities connected with long range growth. Though this policy means sacri ficing short term profit, we believe it is in the best interests of the company and its shareholders. We face the future with a strong management team. I have just completed 40 years of service with Glidden, and in recent years, I have con centrated on developing younger men for key management jobs. We now have a number of aggressive young men in their 40's, who have gained several years experience as top corporate officers in the company. These men are bringing in new ideas and fresh approaches. As they continue to develop under the guidance of our present senior executives, I am confident that The Glidden Company will be in good hands in the years to come. GLD010257 3 Coatings and Resins group PAUL W. NEIDHARDT, Vice President REGIONAL VICE PRESIDENTS T. N. Armel R. B. Simpson J. L. Beauchamp H. F. Winger Pl a n t s Atlanta, Georgia New Orleans, Louisiana Carrollton, Texas Portland, Oregon Chicago, Illinois (2) Reading, Pennsylvania Cleveland, Ohio St. Louis, Missouri Los Angelas, California San Francisco, California Marietta, Georgia Tulsa, Oklahoma Minneapolis, Minnesota Montreal, Quebec Toronto, Ontario Total sales for the Coatings and Resins Group reached an all-time high for the seventh year in a row--$91,367,016 for fiscal 1961, compared with $89,914,001 for the previous year. Sales of consumer products increased, while industrial sales, hit by the economic downturn, ended the year slightly below 1960. Profits, however, were down from the previous year. This is mainly because, despite the reces sion, we continued or increased expenditures re lating to long range growth and profit potential. We intensified research efforts and marketing on coatings of various kinds--acrylic, waterreducible, organosol, steel coil, paper, container, mill-applied primers and top coats for the lumber industry, and others. We stepped up research, production and marketing on polyester resins and polyurethane foams and are selling increasing quantities of both for a greater variety of indus trial uses, including insulations, seals and pro tective coatings. Last year, we established a market development group, which is developing new specialty markets, as well as pointing the way to wider and more efficient distribution of industrial coatings and resins. i i i g l 0o ^2^8 JllUiioi Paint.-, anil Lo . Ilmi-i' I'.Olils 1 looi Paints and 1 ii iun I . St,llll > Vanilshe.-, i .aeijin-i s Tinting Basis t u.itnif:.. tin Metal \Y,.,.il ami Ollit i Smlaee. Malnti-naiii e and Anti t eiia .ne t'o.iliug,-. Maitlie.ilid ^ milting tiiitm:: PolVeslei Rc mii , .iliil lulling. Butoxv Ke.sins Polvinelhani- 1 oam, 1 lln I ( ilas . J{< ildelt (<1 Paneling Wo improved and expanded the distribution system. During the past two years. we have added 50 new brandies, and wc are continuing this program. Because it takes time to build volume in a new operation, we have temporarily had an increase in costs without a correspond ing sales increase. We have added personnel to broaden coverage of the maintenance and painting contractor markets. Capital outlays to reduce costs and increase productivity have continued. A major improve ment project on the St. Louis, Missouri, plant was completed last year, and additional work is now being started. A new coatings plant at Carrollton, Texas, near Dallas, is starting pro duction, to Lake advantage of the growing markets in the Southwest. This plant is the latest design and houses the most modern equipment, to manu facture coatings products at the lowest possible cost We have begun major improvement pro grams involving more than $1 million at Chicago, Toronto and Atlanta, and these will be completed in fiscal 19G2. Spied House Paint, the new latex-base ex( -rior coating, gained much wider customer acceptance during the year, and we plan to pro mote this and other consumer paint products extensively during the year. Glidden has made its first entry into the build ing products field with the purchase of the assets of the McPhran Corporation of Marietta, Georgia, a manufacturer of fiber glass reinforced panels. This operation is known as the Architectural Products Division. We are now marketing these panels through our distribution outlets in that part of the country. Though this step is a modest one, it is in line with the company's long range growth and diversification objectives. We are now studying additional opportunities for dis tributing building products and home decorating materials through our marketing channels. There is every reason to believe that the invest ments and programs of the past two years, along with the rising economy, will enable the Coatings and Resins Group to produce increased net profit in 1962--even though such projects as the Carroll ton plant and additional branch expansion will exert temporary downward effect. GL00l0z59 5 o Foods group HARVEY L. SLAUGHTER, Vice President DIVISIONAL VICE PRESIDENTS George F. Atkinson, Edible Oil Products Paul D. Hursh, Grocery Products Pl a n t s Berkeley, California Bethlehem, Pennsylvania Chicago, Illinois (2) Louisville, Kentucky During fiscal 1961, the Durkee Famous Foods' Group made substantial gains, both in sales and profits. Total sales were $88,024,008, compared with $79,433,510 for 1960, an increase of nearly 11 per cent. These gains were accomplished by more inten sive sales effort and the benefits of an expanding line of products, backed by increased advertising and sales promotion. We intensified sales efforts to institutions, hospitals, restaurants and other mass food preparation establishments, and will continue to do so in the future. Also contributing to the higher sales and profits were large capital expenditures to expand and modernize food processing plants, and reduce operating costs. Capacities were increased at all three edible oil refineries--Chicago, Louisville and Berkeley. A new boiler installation at Chicago has reduced fuel costs of refining oils. A new building was completed at Berkeley, to house both bulk and consumer spice processing opera tions. This facility has reduced both handling and processing costs of these products. During 1961, construction was begun on a new filling, packing and warehousing facility adjacent to the Louisville refinery, which will be in use. GL0010260 RETTGR INGREDIENTS MAKE UE'ITKK CASTRIES . . . i I in the second quarter of the current fiscal year. This will improve efficiency of filling and han dling operations, and free space in the present plant for installation of additional production equipment. Construction of a major edible oil refining addition to the Chicago plant is mov ing on schedule, and it should be in production also in the second quarter. This addition will house the latest equipment for processing a variety of edible oils. The Foods Group is placing additional em phasis on research, to develop new and improved food products. We expanded laboratory facilities at all locations, including a major addition to the research center at Chicago. A newer, more modern home economics facility was completed at the grocery products operation at Bethlehem, Pennsylvania. In addition to expanding research laboratories, we added a number of personnel to research and development staffs in all locations. We are working on specialty edible oil products for the bakery trade, and convenience food items for institutional and household use. Last summer, Glidden and Pacific Vegetable Oil Corporation entered into an agreement to develop and market a safflower margarine oil. This oil has been recognized as the most highly poly-unsaturated edible vegetable oil available. It has been receiving attention from the edible oil industry because of recent medical research which indicates that substitution of poly unsaturated oil for saturated fats in the diet is beneficial as a means of controlling serum choles terol. Research and development on safflower oil is high on the priority list of the Foods Group. Effective September 1, 1961, we made major organizational realignments in the Foods Group, to improve efficiency and management control of the entire operation. The group was organized into two major divisions. George F. Atkinson was appointed vice president of the new Edible Oil Products Division, and will be in charge of re finery operations, including marketing of institu tional and retail bakery products. Paul D Hursh was appointed vice president of the Grocery Products Division and will be in charge of all grocery products sales. The food industry is extremely competitive. But with continued efforts to strengthen the organization, expand research activities and in crease operating efficiency, wc feci the prospects are good for continued sales and profit improve ment during the current year. QualityProducts & Hulk SltoiIt iim - > H.tk**i s Mill ;;,ti Hu ) i.u ii I nit h i Sjuilaltv laliM; Oil J'i^hul' i inni i imii ilx i Mill ';,u Iln- ( )lK HWlniul \Ol! , I'.uk i^ci) ciild liulk t \*.niuil ( Oil nlllii I <>111$ 1`utlh S).ji v i >\ IimIi,OlH -n J'lOlhhl 1* I,iv<>i 1' \ti.u ( ] (Kill ( oloi s 1 *lkf Oi l Oi ,lt 1< M I J )iii k< i i aiihm S,iii> . S al al Oik. AMI l.lGHTCK. TASTIKK CAKI1S, TOO. CLD010261 srantaacru' Sales of the Chemicals Group were $27,311,192, 4 compared with sales of $28,143,320 in fiscal 1960. Chemicals group Existing operations showed an increase over the previous year, as sales in 1960 included $1,750,000 from the gum naval stores operation, which was GEORGE M. HALSEY, Vico President disposed of during the third quarter of that year. VICE PRESIDENTS All operations except fine terpene chemicals showed a profit improvement. Continued large George S. Warner development costs at the new ilmenite mine and Richard H. Turk the synthetic menthol plant resulted in lower earnings for the Chemicals Group than those of the previous year. Profits were also affected Pl a n t s by increased research and development work, as Baltimore, Maryland (3) Hammond, Indiana Jacksonville, Florida Johnsonburg, Pennsylvania Johnstown, Pennsylvania Port St. Joe, Florida we are continuing to expand our research efforts in every phase of operation. Sales of titanium dioxide and other pigments improved, and resulted in an increase over 1960. We reorganized the research and sales organizations to place greater emphasis on these efforts and make more efficient use of personnel. Several improved pigments intro duced during the year are already gaining excellent customer acceptance. THOUGHTFUL, PAINSTAKING RESEARCH . . . CAREFUL ANALYSIS Quality Products Titanium Dioxide Pigments Cadmium lied and Yellow Pigments Lithopone Metal Powders Copper, Lead Tin, lion, Nickel, Manganese, Silicon, Alloys Copper Oxides Copper Pigment liia/ing Compound Perfumery and Aromatic Chemicals Laevo Menthol Terpene Chemicals Distilled Tall Oil Tall Oil Resin 'J ail Oil Fatty Adds Pine Oils Solvents Porcelain Enamel Frits Ceramic Frits Inorganic Colors * CLD010262 c Construction has begun on production facilities for the new ilmenite ore mine at Lakehurst, New Jersey, and we expect the mine to be in operation by the summer of 1962. This mine will supply ore required for production of titanium dioxide. On February 1, 1961, Glidden acquired the assets of the Metals Division of Crane Company, consisting of a plant at Johnstown, Pennsylvania, which produces metal powders of various kinds, chiefly iron, nickel, silicon, manganese and ferro alloys. The Johnstown plant has returned an excellent profit to the company--in fact, consider ably better than originally forecast. Because of this, we plan to add productive capacity for new products and increased volume. Glidden also acquired Magnetic Powders, Inc., Johnsonburg, Pennsylvania, a producer of powders for use in cores for radio, television, sonar, radar and other types of electronic equipment. The Hammond, Indiana plant, where non-ferrous metal powders and chemicals are made, had a good year and showed both a sales and profit improvement over fiscal 1960. Total sales of organic chemical products were slightly below 1960, because of a decline in sales of basic terpene chemicals. Sales of tall oil re finery products were about the same as the pre vious year, due to a raw material shortage in the first half of the year. Profit in the tall oil opera tions increased substantially, however, because of improved productive efficiency. We have en countered technical problems in connection with certain phases of terpene synthesis at the Jack sonville, Florida, plant. Some of these were over come in the closing months of the year, when we accomplished commercial scale production of synthetic menthol. This operation still requires large development and research expenditures. During the year, we made progress in strength ening and developing the research, operating and sales organization of the Chemicals Group, and we should have a considerable improvement in operating results during the year. The addition of Pemco will complement and further strengthen our research and sales activities, and make a substantial contribution to the long range objec tives of the Group. c.unnr.N t j u a u t y p r o d u c t s AKK PRODUCED THROUGHOUT t h i: Fui:i: w o r i.u . International group ALEXANDER D DUNCAN, Vice President The International Group was formed in fiscal 1961, to be responsible for all company activities outside the United States and Canada. This includes export sales of our products, licensing agreements, capital invest ments, and all of the operations of our wholly-owned subsidiary, Glidden International, C. A. As economies grow throughout the free world, they oiler excellent outlets for Glidden products, and Inter national is developing long range plans for expansion in these areas. However, we are examining each oppor tunity carefully, as we want to move only into countries which odor political stability, and which we can enter on terms favorable to The Glidden Company. During the year, we made our first direct entry into the European Common Market with the purchase of a one-third interest in Hermann Wulfing WingsLackfabrik, one of the leading paint companies in West Germany. We also own a 25 per cent interest in A/S Fjord-Plast, a Norwegian firm which manufactures polyester boats and other plastic products. We now have financial investments in West Germany, Norway, Mexico, Panama, Ecuador, Guatemala, Japan and Puerto Rico. In addition, companies are licensed to produce Glidden paint and chemical products in Australia, British West Indies, Chile, Columbia, Guatemala, Peru, Denmark, Noway, Sweden, Ecuador, Finland, France, Germany, Iceland, Japan, The Netherlands, Spain and the United Kingdom. Quality Products CLD010264 DWIGHT P. JOYCE Chairman of the Board and President Corporate Officers '4 B. W. MAXEY Vice President Finance 7 G. M. HALSEY Vice President G. S. WAKNF.K Vice President J'AUI. W. NKIDHARDT Vice President RICHARD H. TURK Vice President J. W. POLLARD. JR. Vice President Engineering R. K. DUTTON Assistant Secretary GLD010265 financial review -- the Glidden company sales Net sales for the fiscal year ended August 31, 1961, were $206,702,216 compared with sales of $197,490,831 for the previous year. The source of 1961 sales by Groups was: Coatings and Resins Foods Chemicals Amount (000) $91,367 $88,024 $27,311 Per Cent of Total 44.2% 42.6% 13.2% gross profit Gross profit in 1961 was $56,529,709, and gross profit margin to sales was 27.3 per cent. The comparable figures for the 1960 fiscal year were $54,681,558 and 27.7 per cent. income from operations The gain in gross profit was offset by increases in selling and administrative expenses. As a result, income from operations declined from$14,066,045 in 1960 to $12,679,387. The addition of personnel, required by expan sion of marketing and distribution programs, resulted in an increase in selling and administra tive salaries of $1,100,000. Research and devel opment expenses increased $550,000 and techni cal service expenses increased $300,000. net income Net income after all taxes and charges was $6,416,983, equal to $2.78 per share, compared with $6,690,356 or $2.90 a share in 1960. On a comparative quarterly basis, net income was: Quarter Knded Nov. 30 Feb. 28 May 31 Aug. 31 19G1 Amount Per (OCX)) Share $1,077 686 1,623 3,031 $ .47 .29 .71 1.31 I960 Amount Per (000) Share $1,415 1,011 2,002 2,262 $.61 .44 .87 .98 The fourth quarter of 1961 includes non-recur ring net income of $716,000, equal to 31 cents a share from sale of the company's soybean processing and grain storage facilities. depreciation Depreciation and amortization charges against income increased to $7,440,940 in 1961 from $6,959,971 in 1960. These charges included $5,466,680 taken against properties operated by the company and $1,974,260 taken against the soybean processing and grain storage facilities which were sold on August 31, 1961. dividends Dividends totalled $4,621,743, based upon the regular $2.00 annual rate. In fiscal 1961, 72 per cent of net income was distributed to share holders as dividends. During the 1961 calendar year, the following quarterly dividend payments were made: Record Date December 8 March 10 June 8 September 8 ^J. Date Paid January 3 April 3 July 3 October 2 s-vj-- Amount Per Share $.50 .50 .50 .50 The indenture, under which the company's 4% per cent Sinking Fund Debentures are issued, restricts the payment of dividends after August 31, 1958, to consolidated net income earned sub sequent to that date plus $10,000,000. At August 31, retained earnings of $16,888,632 were free of such restriction. working capital Working capital of $68,061,010 at the year-end represented a new all-time high. The ratio of current assets to current liabilities was 5.4 to 1. inventories Inventories at August 31, totalled $41,602,106, compared with $40,665,766 at the end of thi^^ GLD010266 9 1960 fiscal year. Inventories are valued at the lower of cost or market, using the average cost method on the major portion, and the last-in, first-out method on certain edible oils and other commodities. At August 31, 1961, inventories carried on a LIFO basis amounted to 31,366,956, which was approximately $601,000 less than re placement market. All obsolete stocks have been eliminated or written down to disposable value. property, plant and equipment Capital expenditures for new property, plant and equipment were $7,823,199 in 1961, compared with $8,764,000 in 1960. The percentage of the 1961 total invested in each Group was: Coatings and Resins 35.7% Foods 30.3% Chemicals ................................... 34.0% On August 31, 1961, Central Soya Company ^exercised an option it held to purchase Glidden's soybean processing and grain storage facilities. Sale price was $8,550,000, and payment has been received. stock options At the beginning of the 1961 fiscal year, options were outstanding for 98,300 shares of common stock pursuant to restricted stock option plans for key personnel. During the year, options for 10,000 shares were granted; options for 655 shares were exercised, and options for 4,100 shares were cancelled. At August 31, 1961, options were held by key employees for 103,545 shares under the plans, and 71,300 shares were available for the granting of future options. merger of Pemco Corporation On November 3, Gliddcn shareholders approved the merger of Pemco Corporation into Glidden. The merger agreement provides for the exchange of 199,840 shares of a new $2,125 Cumulative Preferred Stock of Glidden for the 99,920 outy^tanding shares of Pemco common stock. The new preferred stock will be convertible into Glidden common at a conversion ratio of 1.125 shares of common stock for each share of preferred stock. wages and salaries Total wages, salaries and employee benefits amounted to $41,798,041 in 1961 and were 20.2 per cent of sales. The comparable figures for fiscal 1960 were $39,484,429 and 20.0 per cent. The retirement plans for salaried and hourly em ployees are non-contributory, the company pay ing the entire cost. At August 31, 1961, the un funded liability for past service costs under the plans was estimated to be $3,600,000, and the annual current service cost (which does not in clude funding of the past service cost) was estimated to be $1,044,000. taxes Taxes on income were $6,321,000, equal to $2.73 per share. Thxes other than on income amounted to $2,366,469. litigation In 1958, two legal proceedings were brought against the company by approximately 125 former employees, who alleged that they had been denied seniority rights under their union contract when the company closed down its coconut and condiment plant at Elmhurst, Long Island, and established new operations at Bethlehem, Pennsylvania. One of these cases proceeded to trial, and the court held that the employees' seniority rights had expired. The appellate court reversed this decision, ruling that employees have the right to employment with seniority at a new location even though the con tract which created seniority rights has expired and their employment has been terminated. The appellate court's decision has received considerable national publicity because of its potential effects upon future labor-management relations, and an appeal is now pending before the Supreme Court of the United States. Even if the ultimate decision is adverse to the com pany, it is the opinion of counsel that the company's potential financial liability under these cases will not be material. GL DO1026 7 13 Gliddenconsolidated balance sheets the company and CURRENT ASSETS Cash....................................................................... Short-term securities -- at cost........................... Amount receivable from sale of Chemurgy properties............................................................ Trade accounts receivable, less allowances of $419,879 (1960 - $433,521)........................... Inventories -- generally at the lower of accumulated-average cost or replacement market: Raw materials and work in process . . . Finished products...................................... Other current accounts and investments . . Prepaid insurance and other expenses . . . To t a l Cu r r e n t As s e t s 1961 $ 8,076,305 1,991,447 8,500,000 21,836,602 $ 18,982,647 22,619,459 $ 41,602,106 932,380 496,056 $ 83,434,896 PROPERTY, PLANT, AND EQUIPMENT Land and mineral deposits -- at cost .... Buildings -- at cost........................................... Machinery and other equipment -- at cost . . Less accumulated depreciation, depletion, and amortization...................................... ..... Chemurgy properties leased to Central Soya Company -- net...................... To t a l Pr o p e r t y , Pl a n t , a n d Eq u ip me n t -- Ne t $ 5,109,153 26,177,778 57,328,330 $ 88,615,261 33,924,289 $ 54,690,972 -0- $ 54,690,972 DEFERRED CHARGES a n d OTHER ASSETS 1,913,610 $140,039,478 1960 5 7,395,990 6,484,490 -0- 18,859,483 $ 18,433,436 22,232,330 $ 40,665,766 904,054 599,013 $ 74,908,796 $ 4,933,451 24,559,667 52,026,932 $ 81,520,050 29,030,133 $ 52,489,917 9,616,328 $ 62,106,245 1,018,563 $138,033,604 GLDO1O260 '.4 Quality Products Canadian subsidiary august 31, 1961 and august 31, 1960 u' > Mry&w. . w 1- 4 liabilities and shareholders' equity ; CURRENT LIABILITIES Accounts payable................................................. Accrued taxes, interest, and other expenses . . Dividend payable................................................. Income taxes payable -- estimated .... 1961 $ 7,647,668 1,708,550 1,155,633 4,862,035 1960 $ 7,485,283 1,535,204 1,155,295 5,011,080 To t a l Cu r r e n t Lia b il it ie s $ 15,373,886 $ 15,186,862 | | 0 43/4% SINKING FUND DEBENTURES - payable $1,500,000 annually 1964-1983 . . $ 30,000,000 $ 30,000,000 SHAREHOLDERS' EQUITY Common Stock, par value $10 per share: Authorized -- 3,000,000 shares Reserved for options - 174,845 shares (1960- 179,400) Outstanding -- 2,311,245 shares (1960 - 2,310,590)...................................... Additional capital paid in................................. Earnings retained for use in the business, including retained earnings of Canadian subsidiary $5,728,730 (1960 - $5,468,246) To t a l Sh a r e h o l d e r s ' Eq u it y $ 23,112,450 10,204,144 61,348,998 $ 94,665,592 $140,039,478 $ 23,105,900 10,187,084 59,553,758 $ 92,846,742 $138,033,604 See ' Financial Review" in this report for information regarding sale of Chemurgy properties, dividend restrictions, stock options, retirement plans, and merger of Pemco Corporation. GLD010269 consolidated income and earnings retained for use in the business the Glidden company and Canadian subsidiary Years ended August 31, 1961, and August 31, 1960 income Net sales........................................................... Operating costs: Cost of products sold ....... . Selling and administrative expenses . . . In c o me Fr o m Op e r a t io n s Other income and (deductions): Interest on long-term debt........................ Other interest expense............................. Rental income -- Chemurgy properties . . Depreciation - Chemurgy properties . . Gain on sale of Chemurgy properties . . . Other items -- net....................................... In c o me Be f o r e In c o me Ta x e s Provision for income taxes: Federal...................................................... Dominion and state.................................. Ne t In c o me Provision for depreciation and amortization, including Chemurgy properties, was $7,440,940 (1960 - $6,959,971) earnings retained for use in the business Balance at beginning of year........................ Net income............................................................ Cash dividends declared --$2.00 per share . . Balance at end of year...................................... 1961 $206,702,216 1960 $197,490,831 $150,172,507 , $142,809,273 43,850,322 . 40,615,513 $194,022,829 : $183,424,786 $ 12,679,387 * $ 14,066,045 1 : $ (1,425,000) I (47,687) i 2,175,000 ; (1,974,260) : 907,932 ; 422,611 ! $ (1,425,000) -0- 2,175,000 (2,013,837) -0- 836,148 $ 58,596 i $ (427,689) $ 12,737,983 $ 13,638,356 $ 5,920,000 : $ 6,390,000 401,000 ! 558,000 $ 6,321,000 $ 6,948,000 $ 6,416,983 $ 6,690,356 ' 1 : ; $ 59,553,758 i $ 57,484,102 6,416,983 6,690,356 $ 65,970,741 4,621,743 $ 64,174,458 4.620,700 $ 61,348,998 $ 59.553,758 _ GLD010270 summary of source ( and application of funds the Glidden company and Canadian subsidiary Icars ended August 31, 1961, and August 31, 1960 source of funds From operations: Net income...................................... ..... . . Provision for depreciation and amortization, which did not involve current expenditures To t a l Fr o m Op e r a t io n s Sale of Chemurgy properties........................... Less gain on sale (recognized in determination of net income shown above)...................... Sale of Common Stock under option plan (1961 -- 655 shares; 1960 -- 2,740 shares) application of funds Dividends declared............................................ Expenditures for property, plant, and equipment................................................. Loan to unconsolidated subsidiary . . . . Other applications (sources) -- net . . , . Increase in working capital........................... 1961 $ 6,416,983 7,440,940 $13,857,923 $ 8,550,000 907,932 $ 7,642,068 23,610 $21,523,601 1960 $ 6,690,356 6,959,971 $13,650,327 $ -0- -0$ - 0- 98,479 $13,748,806 $ 4,621,743 7,823,199 400,000 339,583 8,339,076 $21,523,601 $ 4,620,700 8,764,000 -0- (1,109,487) 1,473,593 ; $13,748,806 ,v *- . - It:- ., accountants' report Shareholders and Board of Directors The Glidden Company Cleveland, Ohio We have examined the consolidated financial statements of The Glidden Company and its Canadian subsidiary for the year ended August 31, 1961. 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. We made a similar examination of the financial Statements for the preceding year. In our opinion, the accompanying balance sheet, statements of income and earnings retained for use in the business, and summary of source and application of funds present fairly the consolidated financial position of The Glidden Company and Canadian subsidiary at August 31, 1961, and the consolidated 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. Cleveland, Ohio kdober U, 1961 GLD010271 f 4 I a ten year comparison (All dollar amounts are expressed in thousands, except figures given on a per share basis) * fcAlUtT.,:-' .v; a *. , 1961 1960 12 Months 1959 INCOME Not sales .... Cost of products sold............................................. Selling and administrative expenses.............................................. 150,173 43,850 Income from operations....................................................................... Income before taxes............................................................................ Taxes on income . . . . Net income............................................................................................ 12,679 12,738 6,321 6,417 Dividends on common shares............................................................. Earnings reinvested............................................................................ Depreciation, depletion and amortization.................................... 4,622 1,795 7,441 FINANCIAL POSITION Working capital........................................................................................$ 68,061 Property, plant and equipment -- net.............................................. 54,691 Total assets............................................................................................ 140,039 Long-term debt....................................................................................... Shareholders' equity.................................................................. 30,000 94,666 PER COMMON SHARE Net sales.......................................................................................................$ Net income............................................................................................ Depreciation, depletion and amortization.................................... 89.43 2.78 3.22 Dividends....................................................................... Shareholders' equity............................................................................. Price of Glidden common shares* -- High......................................... -- Low......................................... 2.00 40.96 45.75 35.75 OTHER STATISTICS Expenditures for property, plant and equipment............................. % net income to shareholders' equity.............................................. % dividends to net income........................................ Ratio of current assets to current liabilities.................................... $ 7,823 6-8% 72.0% 5.43 Common shares outstanding............................................................. Number of shareholders........................................................................ Number of employees........................................................................ 2,311,245 20,873 6,372 PRO FORMA (excluding operations of Chemurgy Division for the fiscal ytart 1952-`195&) Net sales....................................................................................................... $ Income from operations........................................................................ Income before taxes............................................................................. Net income............................................................................................ 206,702 12,679 12,738 6,417 1$9270,469,7102 142,809 40,616 14,066 13,638 6,948 6,690 4,621 2,069 6,960 $ 59,722 62,106 138,034 30,000 92,847 85.47 2.90 3.01 *-Y--- 2.00 40.18 45.63 34.75 $ 8,764 7.2% 69.1% si , 4.93 2,310,590 20,969 6,151 197,491 14,066 13,638 6,690 Calendar years, except 1961 which is to October 13, 1961 jr- ; nr JK.-jLj,.v*ijo'nv;r.iu3jL!*L'4r 195,764 142,535 36,803 *--aaw4Pige 16,426 15,926 8,292 7.634 $ 58,248 60,907 api ^sfooo 90,679 $ 84.82 3.31 2.85 2.00 39.29 50.25 41.88 7,607 8.4% 60.4% 2,307,850 20,993 6.023 $ 195,764 16,426] 15,926] 7,634j GLD010272 i-J 18 August 31 1958 1957 1956 10 Months August 31 1955 12 Months -- October 31 1954 1953 1952 S 217,353 16S.979 34.149 14,225 12,350 0,287 6,063 4,596 1.467 5,838 S 225.537 176,874 32,995 15.668 15,387 8,123 7,264 4,594' 2,670 5,046 $ 52,572 59,992 ^133,240 V 26.000 87.304 S 53,100 59,517 140,370 27.500 85,837 $ 94.58 2.64 2.54 2.00 37.99 47.00 28.00 S 98.14 3.16 2.20 2.00 37.35 37.50 29.50 o to 6.9% 75.8% 4> 3.64 2,298,170 22,405 6,353 S 12,465 8.5% 63.2% 2.96 2,298,170 21.686 6.455 5 185.380 11,923 10,294 5,076 S 190,424 13,590 13,590 6,402 $ 226,290 177,538 31,974 16,778 16,451 8,304 8,147 4,592 3,555 2,870 $ 35,696 53,414 118,738 7,500 83,091 $ 98.56 3.55 1.25 2.00 36.19 41.12 34.50 S 16.637 9.8% 56.4% 2.27 2,295,990 20,758 6,387 $ 190,483 13,956 14,252 7,091 $ 180,525 142,047 24,047 14,431 14,325 7,212 7,113 4,589 2,524 2,235 $ 209,084 167,845 27,701 13,538 14.235 7,142 7,093 4,582 2,511 2,333 $ 211,758 170,492 26,739 - .rfcCHni 14,527 14,834 7,725 7,109 1 v i **;#**** - < 4,578 2,531 2.185 $ 205,113 164,890 26,238 13,985 14,204 7,255 6,949 ,"i 5,134 1,815 1,965 $ 47,156 39,993 106,762 9,000 79,513 $ 51,226 34,493 102,670 10,500 76,923 $ 46,005 $ 46,475 33,234 31,394 102,760 . i. _ v I'-.st.. 101,958 7,000 8,500 74,324 71,644 $ 78.65 3.10 .97 2.00 34.64 44.50 36.12 $ 91.16 3.09 1.02 2.00 33.54 42.50 28.75 $ 92.44 3.10 .95 2.00 32.44 38.12 27.88 $ 89.78 3.04 .86 2.25 31.36 42.62 32.88 $ 8,155 8.9% 64.5% 3.58 2,295,350 20,019 6,397 S 4,021 9.2% 64.6% 4.36 2,293,455 19,174 6,198 $ 4,150 9.6% 64.4% 3.15 2,290,794 18,726 6,120 $ 3,043 9.7% 73.9% 3.13 - . . 2,284,739 18,310 6,127 $ 151,752 12,706 13,102 6,526 $ 169,823 11,362 12,271 6,150 $ 170,717 12,414 12,907 6,184 $ 164.283 11,779 12,249 6,010 GL0010273 I Board of Directors DWIGHT P. JOYCE ALEXANDER D. DUNCAN B. W. MAXEY JOHN H. WEEKS R. D. HORNER W. G. PHILLIPS HARVEY L. SLAUGHTER G. M. HALSEY G. S. WARNER W. P. SMITH PAUL W. NEIDHARDT RICHARD H TURK Corporate Data Executive Offices 900 Union Commerce Building Cleveland, Ohio Trustee -- Sinking Fund Debentures First National City Bank of New York New York, New York Transfer Agents -- Common Stock Chemical Bank New York TVust Company New York, New York The Cleveland Trust Company Cleveland, Ohio Registrars -- Common Stock The Chase Manhattan Bank New York, New York Central National Bank of Cleveland o 9 NO PRODUCT IS SO GOOD THAT IT CANNOT RE WORK TO MAKE TODAY'S "QUALITY PRODUCTS" EVEN BETTER FO r. - V I GL 0 01027 5 I