Document g2N1NkVDjkBJxB7n575NgXykN

cct Mr. 0. M. Halsey Mr. D. S. Case 1959 FISAL CONSOLIDATED OPERATING STATEMENT 15 October 23, 1959 CHEa-gCALS^PIfflffiSTS-MgTALS The draaatic Increase In profits of $2,841,706 vas a combination of Increased TiOg and povdered aetals tonnage coaled vith gross margin Increase, pins elimination of 1958 heavy unusual expenses vhich vere estimated at approximately $1,800,000 last year. The reorganization vork of 1957 and 1958 payed off in profits in 1959* The most notable achievement during the year vas the Increase of 50*2 in regular TiOg sales In the face of the competitive and oversupply situation existing in the industry. Total Titaaiisft sales, including Paint Division, vere 33,906 'tons compared vith the previous high of 24,189 tons in 1958. Almost the entire increase in tonnage vas in regular sales since sales to the Paint Division Increased only 1,348 tons or 179$` Along vith the sales increase there vas just over a $15 per ton effective drop in cost of sales. This vas accomplished in spite of high costs during the last six months of 1959* In the period March through August total packed average cost vas $375 per ton against the year average packed cost of $351* This vas brought about by several factors; (1) bringing the new add recovery and ciystaUxation unit on stream starting in March, (2) conversion to ore from slag and the attendant operational problems, (3) using up high cost ores, particularly Indian Ore bought at the time of the Suez closure, (4) increased depreciation charges in the last half of the year, and (5) solving the pro duction difficulties encountered in mixing several different grades of ores. This last has been and continues to be necessary since the division must use tip the various grades that have been stored at St. Helena and also must have a systematic cleamq> of ores in anticipation of mining operations vhich vill commence In late 1981. Predominately because of the last tvo factors (depreciation charges vlll again Increase this year) It is estimated costs in i960 vill remain about the same as in 1959, averaging around $350 per ton for the year. Cadmium sales do not as yet reflect the progress that vas made in manufacturing techniques this past year. It is hoped the sales impetus that is being put behind our improved products vill result in favorable increases in i960. Sales the past four years for all cataiiB, both reds and yellow, have been; 1959 1958 1957 1956 Regular Paint Division Total 339 tons 4 3^3 tons 341 tons 7 348 tons 383 tons 10 393 tons 525 tons 29 55h tons Sven at this lov tonnage, cadmium produced a very significant $303,849 gross profit in 1959* This compared to $222,256 gross profit In 1958 on virtually the same tonnage, the improvement almost entirely being due to approximately a 5*5^ decrease in yellov costs and a 15^ decrease In red costs. GLD019091 1959 f in a l c o n s o u d a t ed OPERATING STATEMENT 16 October 23, 1959 Because of price increases Hanaond sales dollars increased sore than tonnage. Sales dollars vere up 53.5^ while the 1,637 tannage Increase vas kZ.fy In volute. The bulk of the Increase vas 1,183 tons in copper powder and 425 tone in lead powder. Vith copper prices increasing, cost of sales of copper powder Increased $37 per ton, but average selling prices increased $67 per ton. Conversely, with a failing lead market cost of sales decreased $40 per ton, but selling prices vere held hack and decreased only $33 per ton. Basically because of this, Hanmond was able to show not only a sharp sales increase but also an increase in gross margin frco XJ.Cgfr to 19*2> IAthopont shoved a slight sales tonnage increase over last year, but hovers around the 10,000 ton mark. The past five year record is: Regular Paint Division Total 1959 1958 1957 1956 1955 9,320 tons 8,650 10,084 7,310 6,619 466 tons 521 1,829 2,656 2,686 9,786 tons 9,171 H,913 9,966 9,305 The fall off in sales to our Paint Division reflects generally what is happening to this product in the paint industry. C-P-M has been Increasing sales to the paper and other industries, but the fall off in sales to the paint Industry offsets. Unit costs in 1959 vere slightly better than in 1958 which reflected in an improvement in gross margin from 15-5J& to 16.7*6. Based strictly on Lithopone operations, with proper adjustment for its true share of selling costs, It vas estimated 1958 produced $101,000 in profits, and ve estimate 1959 at about $125,000. Bale is an approximate 15 profit return on the $846,000 average investment ve have in Collinsville. Mr. Halsey has been and continues to be fully aware of the lack of growth potential ve have in this operation and keeps the entire situation under close scrutiny. As you know the accounting was changed September 1 predominately so you and other Directors could see the results without distortion of TIOg commission transfers that had been made in the past. The C-P-M Division continues to have extremely low operating expenses, averaging only 5.336 to sales. In spite of a $233,382 increase In operating expense, the ratio to sales vas down from 5*7$ in 1958. The bulk of the dollar Increase was in salesmen's salary and expense and cash discount, the latter being non-controllable and Increasing vith sales. Even with the increased sales force the ratio of salesnen's salary ana expense to sales vas only .3$ as against 2.2$ in 1958. GL0019092