Document g2jav4xm4EDVwxG5dMDOxDVj3

An a c o n d a Co p pe r Min in g Co mp a n y ANACONDA COPPER MINING COMPANY $600,000,000 443,954,300 To the Shareholders of ANACONDA COPPER MINING COMPANY THE demand for non-ferrous metals during the year 1936 in the United States continued to increase above that of; the prior year and Wjth the demand that had been established in foreign markets caused a rapid expansion of the industry. The monthly consumption of copper during the year reached its peak in October in both the domestic arid foc'eigtt niht'kets.: Slocks of tefified copper decreased materially and production was substantially increased during fie .latter part of the year. World production of primary blister copper totalled 1,799,940 tons, of which 604.340 tons were domestic dutv-iree, and 1.195,600 tons were foreign. Production of primary copper in the United States showed an increase of approximately 62% over that of the prior year.; Productionabroad was approximately the same. World produc' tion of primary refined copper was 1.760.299 tons, the domestic duty-free copper amounting to 621.371 tons and foreign to 1.138.928 tons. In comparison with 1935 'yorkf consumption of primary copper amounted to 1.593.543 tons, an increase of ,$%>!'.consumption of primary copper in the United StSteslofifiSjlfiSIjilonS:, ah; increase'of and foreign consumption to 1,830,11" tons, approiimalhly-l^eisamei.iaS; InrtShe, pievibus year. The consumption in the domestic market, including secondary copper, totalled 764,560 tons, an increase of 44.7% compared with the previous year. Stocks of duty-free refined copper in the United States were reduced during the year by 70.347 toils and refined stocks abroad by 62,897 tons, a total decrease of 133,244 tons. Stocks ojf, rbfined copper afe the end of the year, as reported by the Copper Insti tute, wjpf'e'iSI.sf^iiitons of duty-free and 192,255 tons of foreign. At these levels stocks are normal and future demand must be supplied by production. Production of zinc in the United States was 521,271 tons, an increase of 21.5% compared with the prior year, and consumption amounted to 563,273 tons, an increase of 23.1%. Stocks of zinc on hand at the close of the year totalled 44,756 tons, the lowest since June 30,1929. The trend of non-ferrous metal prices was definitely upward during the year. The domestic price of copper was 9.025/ per pound f.o.b. refinery at the beginning of the year and was 11.775/ per pound at the end. The price for export copper f.o.b. refinery was 8.375/ per pound at the first of the year and at the close was 11.600/ per pound. Zinc at the end of the year was 5.450/ per pound St. Louis, compared with 4.850c per pound at the beginning. The price for silver mined in the United States remained at 77.57/ per ounce throughout the year and gold at 835.00 per ounce. The price for foreign silver showed slight variation throughout the year and was 45/ per ounce at the close. The prices of the principal metals as reported by the Engineering & Mining Journal were as follows: CoPPEH-Duty Free f.o.b. Refinerv-perlb,.......... CoPPER-Export f o b. Refinerv-perlb............ .. Lead -New: York-per lb................................. Zin c ->t. Louis-per lb................................... Sil v er --New York* ;Not covered by President's Proclamatiofisj-per oz............... . Jan. 3 9.025c 8.375 4.500 4.850 49.750* Sigh 11.775c 11.600 6.000 5.450 49.750 Lots 9.025c 8.250 4.500 4.750 44.750 Dee. 31 11.600 6.000 5.450 45.000 9.474c 9.230 4.710 4.901 45.087 CORPORATE CHANGES The Chile Copper Company Twenty-Year 5% Debentures due January 1, 1947, of which 326.574.000 were outstanding at the beginning of the year, were called on Januarv 1, 1937, at the redemption, price of 101. Funds to the amount of $25,000,000 for the retirement of these Debentures were obtained through serial notes of Chile Copper Company, guaranteed by Anaconda Copper Mining Company, payable to banks. $2,000,000 annually from December 10, 1937, to December 10, 1940, and $17,000,000 December 10, 1941. Subsequently and before, the close of the year notes of Chile Exploration Company in like amounts similarly guaranteed were issued to the banks in lieu of notes of Chile Copper Company. The remainder of the funds required was provided from the treasury of Chile Copper Company. Through this financing sub stantial savings were effected in yearly interest charges. . The Anaconda Lead Products Company was organized in 1919, and produced at its plant at East Chicago^ Indiana, dry white lead by an electrolytic process under patents acquired from the late Elmer A. Sperry. The total stock of the Company was 13,650 shares of which 10.99% had been issued to the, Sperry interests in exchange for the above patents. This stock was purchased for the sum of $80,000, in June, 1936. Thereafter the Company was dissolved and its assets transferred to the International Smelting and Refining Company. I)n conformity with the steps being taken to simplify and integrate the holdings of the Company, Andes Exploration Company (Delaware), Butte Electric Railway Company, Mountain Trading Company, and New York and Hastings Steamboat Company, all 100% owned subsidiaries, were dissolved during the year and their assets transferred to the parent Company or its consolidated subsidiaries. The assets of the New York and Hastings Steamboat Company were acquired by Chile Steamship Company Incorporated, a wholly'-owned subsidiary of Chile Copper Company. The substitution of natural; gas and oil developed in the State of Montana for other fuels, so Impaired the market for coal that it became advisable to discontinue operations at the plant of the Company at Washoe, Montana. The Milltown plant, no longer needed in the operation of the Lumber Department, was discarded during the year. These items, together with some mining prospects, carried on the books at $637,081.32, were written off and charged to surplus. 3 FINANCIAL Gross sales and earnings of the Company upon a consolidated basts totalled $ 160,882,734.15, compared with SJ27,678,576,68 for the prior year, an increase of 333.204,157.47, or -26f"c- This increase was accounted for both by larger sales volume and higher prices received for the products. The cost of sales, including all operating expenses, development and maintenance charges, repairs, administrative selling and genera! expenses, and all, taxes except income and undisfribute*!:' pronts taxes, amounted to $1:29,811,064.67, compared with 3100,206.618.82 for the previous year. The resulting operating income was........................................... 331,071,869.48 Other Income, including Dividends from unconsolidated sub sidiaries. Was...................................................................... 2,385.648.91 Total Income was............................ .......................................... 833,437.318.39 Deductions frpm Income for Interest on Bonds and Current ObligatioiQSi'.iS.SjS,412.48, Expenses pertaining to Non operating Cr.its 82.420,080.51. United States and Foreign InppMe Taxes 82,975.917.76, and Discount, etc,, on Bonds and Debentures retired through sinking fund operations 8286.970.73, amounted to....................................................... 9,501,381.48 Leaving balance of.................:................................................ 823,955.936.91 Provision1 fW Depreciation and Obsolescence and for Depletion of Coal Mines, Timber Lands, Phosphate Deposits and Clay Lands was 37,608.862.31. and Discount and Expenses on Bonds and Debentures was 3388,210.02, a total of................. 7,997,072.93 Consolidated Net Income, without deduction for depletion of metal Hii!bBs>iWa3..................................................................... $15,958,864.28 Of which Minority Share amounted to.......................... 77,034.69 Leaving Consolidated Netlncoine of......................................... $15.881.829.59 The Consolidated Net Income of $15,881,829.59 compares with $11,180,087.45 for the year 1935. Sales of metals and manufactured products are included in the income account as they are invoiced and delivered to customers. Forward sales contracts are not included nor does the income account reflect the profit that may be derived from such sales. The dividends declared and paid during the year on the capital stock of your Company amounted to $10i842,922.50, or $1.25 per share. Charges to surplus for the year totalled $2,248,761.06, consisting of write-offs on account of discarded plants and properties $637,081.32; adjustment through write-down of assets of subsidiary dissolved $73,311,49; and discount and premium applicable to 5% Debentures of Chile Copper Company redeemed up to and including December 31, 1936, $1,538,388.25. 4 The principal subsidiaries included in the consolidated statements are Andes Copper Alining Company and its wholly-owned subsidiary; Chile Copper Company and its wholly-owned subsidiaries; Greene Cananea Copper Company and its Mexican subsidiary i, International fitaniel'tmg and Refining Company, The American Brass Com pany, Anaconda riaies Cdmpfnv, Butte, Anaconda & Pacific Railway Companv, Tooele Valley Railway Company, Diamond Coal & Coke Company, and.Butte Mater Companr. The a.--ets and liabilities oi subsidiaries in watch'a majority but less than ToTM of the issued stock as held are not distributed under the various headings in, the consolidated balance sheet, but the:cost of the holdings in such subsidiaries is show n as a separate itditti. dnddr.^'Inyelfe^htSlb ''''^he/cbhsolidated.ijiebihej'accipunhishbw'S'as a.Separate item thb^i^idendbir^itfd'vfiiijm^Bd^lilbsidiarie^," Theipriiiacjpthldncbnsplidlted subsidiaries are Ariaconda: Mire.andi Cable Company, Mountain City Copper Company and Walker Mihinlg Company. Current assets at the close of the year, including cash on hand of Sl6.282.190.T6, amounted to 882,268,579.03, compared ddlth 876.588.629.97 for the prior year,, and currefifldishilitihs, including 82.000.000 of notes payable of Chile Exploration Company due10, 1937, were 815,442,097.08, compared with 810,016,210.18. There were purchased and retired during the year 83.129.000 par value of 4?-f>% Sinking .E'irhii'.DebeptureS. of' your Company ajicys^OilO1 par value of, First Mortgage Sinking'EbriSlppiids of Butte, Anaconda & Pacific Railway Company. The sum of 83,196.129, an amount equivalent Stb-Webfy' per^ntip^th^iesti^stediyonsolidated net income of the year 1936, was set aside and deposited with the Trustee for the purchase of 4%i^''"ii!)'4b^a:|ures of tihe 'Comilahy!!:for;,;!4ii8 iMpdilglifu^' apii to the extent not so used, to be paid into the sinking {find on August 15, J937; and $7,913.21 remained in the sowing'iWhd of Butte, ^nae|fi4^',:^:|l^cifip'iiwM!y4'7:,i*-'Sf?iPW7''^''^':^ortgage Bonds. The Twenty-Year 5% Debentures of Chile Copper Company outstanding at the 'begKi^ihg'iibt'th^1 vskfym.'thS'taft^Whtlbf redemption. These items total 832,912,042.21. Of this sum 825,000,000 was, as previously explained, obtained by banSfe,ibi4f1^iW^'I?e*l;l^S4i|^i|fha|iil|ih^|tltitStkSdihigtn<|h|tedfiess of your Company was reduced, or its reduction provided for, to the extent of $7;912,042.21 from current cash. The Inspiration Consolidated Copper Company paid in 1988 the current interest payments on its notes, and in addition paid 3336,868.08 of interest accrued prior . to January 1, 1936, reducing its indebtedness to your Company to, $7,864,005.00. Capital expenditures during the year amounted to $8,426,386.19, summarized as follows: Mines, Mining Claims, and Lands dess sales)............................ Buildings, Machinery and Equipment at the Alines, Smelting, Refining and Manufacturing Plants of the Company and its subsidiaries (less sales)................................ :.......... .......... Aliscellaaeous-Inciuding acquisition of shares of stock of sub sidiary companies.,.......................... ..................................... $ 288,566.60 2,999,797.76 138,021.83 o I OPERATIONS. The operations at the mines and the reduction, refining, fabricating and other plants of your Company and its consolidated subsidiaries were conducted continuously during the year, with the exception of the properties of the Mexican subsidiary of Greene Curianea Copper Company which were closed down by a strike for two and erne-hail mppttis in the early part of thd year., During the latter half of the year the increasing demand for metals necessitated a: rapid Increase in operations, particularly of the copper1 producing units, and by the ecid of the year the consumptive demands were such that all metal producing and fabricating properties were operation, or were being prepared for operation, on a normal basis, with the exception of the zinc'.plants in llbnltaha which were obliged by fdpr. tpnippratuiie'. and ^shortage of water for power to curtail output.1 (Note--Such conditions caused suspension of operations of zinc plants for pne. month at the begirmilhg: of1 iMt). 11 Copper: The production of metals from the mines of vour Company and its consolidated subsidiary mining companies through copper plant operations was 552,807,952 pounds of copper, 6,508,847 ounces of silver, and 30,579 ounces of gold. The metal production thrdugh custom smelting and refining operations is not included in the foregoing figures. Including copper production from purchased custom ores and concentrates and secondary medals the output was 651,365,607 pounds. Deliveries of copper for the year in both the domestic and foreign markets amounted to 849,321,306 pounds. Deliveries of copper include not only the copper production from the mines of your Company and its subsidiaries but also the custom, secondary and purchased intake. Zinc: Production of electrolytic zinc during the year amounted to 211,969,707 pounds, of which 43,448,219 pounds were from Company mines, and the remainder from custom oreS and concentrates and leased mines. Deliveries of zinc amounted to 227,307,370 poubds, including the zinc delivered to the fabricating plants of subsidiaries of your Cornpang and zinc used in the manufacture of zinc oxide at the zinc oxide plants. The metals paid for in zinc residues and dross sold to other companies amounted to 6,985,433 pounds of zinc, 27,227,017 pounds of lead, 330,321 pounds of copper, 2,899,867 ounces of silver, and 6,405 ounces of gold. Custom Smelting mid Refining: The custom smelting and refining plants, both copper and lead, of International Smelting and Refining Company were operating at satisfactory levels at the close of the year. The custom smelting and refining operations, other than zinc, produced from the treatment of custom ores and concentrates and secondary metals 98.557,655 pounds of copper,; 67,629,153 pounds of lead '<including 1.759.577 pounds of lead from own minest, 4.620.201 ounces of silver, 78.170 ounces of gold, and certain byproduct metals and materials. The foregoing ihcludes production from ores and concentrates received froht the W alker'arid Mountain City companies. Ih addition, production from materials treated on foil Was. 132,,193,8,38 pounds of copper, 861.25! pounds of lead, 1,513.666 ounces,of silver, and 15.099 ounces of gold. Deliveries of lead during the year., including that used in the manufa'cture of white lead at East Chicago, Indiana, plant, were 100.383.367 pounds. ' '' Ores and Concentrates from Subsidiary Mining Companies: The concentrator at the mine of the Mountain City Copper Company for the treatment of the lower grade ores was completed; and put into operation in August, 1936. The mine Was operating at normal capacity by the close of the year, its ores and con centrates being shipped mainly to the Too^lp Copper Plant of international Smelting and Refining Company for treatment. Recoverable copper production during the year amounted lip 25,054,996 pounds. . The Walker Mining Company operated its mine throughout the year, the concen trates; being shipped to the Tooele Copper Plant for treatment. Recoverable copper production' amounted to 9,614,277 pounds. Fabricating, Plants: The shipments of manufactured products from the plants of The American Brass Company (including Toronto Plant), and Anaconda Wire and Cable Company, amounted to 682.287.179 pounds, an increase of approximately 28% over those of the prior year. The demand for fabricated products increased steadily throughout the year. The American Brass Company and Anaconda Wire and Cable Company, through their respective sales and research organizations, are constantly at work to widen the field for the use of copper and brass products and to meet the more exacting requirements of the trade. Miscellaneous Products: Miscellaneous products consisted of 97,541,356 feet lumber; 22,589 tons treble superphosphate and phosphoric acid; 7,442 tons arsenic; 853,018 pounds cadmium; 130,098 pounds nickel sulphate; and 359,286 pounds copper sulphate. GROUP INSURANCE The Board of Directors of your Company authorized the placement of group life insurance with The Prudential Insurance Company of America for employees of your 7 Company and those, of its subsidiary companies operating in the United States and Canada, under which joint Contributions are made bv the Company and each insured employee- The plan provides insurance for alt eligible employees, including officers, without physical examination. More than 73-7- of the eligible employees made appli cation, and the contributory insurance became elective July 31, 1936. During the period when individual1 applications were being made by; the employees from July 6th to and including July 31st. 1936, the entire cost of the insurance! was paid by the Company. The amount of insurance to which eath eligible employee is entitled :s apprpyitna.tely''.phe-i"eafs w^ge.pr^hiapy,'the1 Kmitgtjoigybsing ai'-mlHimam of $1,230. and a,nlaxi;milfp:.pf:'djOi.dCiO.-' Thbphat^eitodheiferhpiidyedk edit,per'mphth per thousand of insurance, the Company paying the cost above that amount. Employees covered at December 31st. 1936. totalled -27.067. or approximate!y96% of the eligible employees. The total insHfgnheTn forbe wgs glSpjWiajt).. '" EMPLOYEES During the year 1936 the average number of employees of the Company and its consolidated subsidiary companies was 36,377, of which 25,362 were within the United States. The number of employees, on the payrolls at the end of the year totalled 40,996 compared with 34,976 at the close of the prior year, of which 28,283 were within the United States, compared with 24,650 at the end of 1935. NUMBER OF SHAREHOLDERS The number of registered shareholders appearing on the transfer books of the Company at December 31st, 1936, was 106,745, as compared with 110,229 at the same date of the prior year. SILESIAN-AMERICAN CORPORATION Principal production for the year of the subsidiaries of Silesian-American Corpora tion operating in Poland was 94,669,593 pounds of zinc, 22,298,980 pounds of lead, 1,750,909 metric tons of coal, 47,148 metric tons of sulphuric acid, and 18,703 metric tons of superphosphate. Of the above 1,169,311 pounds of zinc and 4,774,652 pounds of lead were produced from custom materials. Although the currency of Poland has continued on a Gold basis, the products of the subsidiaries of Silesian-American Corporation are sold in the World markets on the basis of the Pound Sterling, which adversely affects such subsidiaries. Difficulties were further increased during the year by governmental restrictions on the transfer of funds, which still continue in effect. At current exchange rates the average price of zinc for the year on the London market was equivalent to 3.34g per pound, and at December 31st, 1936, was equivalent to 4.38*f per pound. PNYC 00010084 The principal amount of bonds of Silesian-American Corporation outstanding at the end of the year was 35,345,000, a reduction of 3885,000 during the year. FINANCIAL STATEMENTS There is attached hereto as a part of this report a Consolidated Balance Sheet showing1 the financial;condition.of the Company and consolidated subsidiary companies at the close of business December 31. 1936. together with a Consolidated Income Account and a Consolidated Surplus Account for the year, certified to by Messrs. Pogson, Peloubet & Co.. Certified Public Accountants. By Order of the Board of Directors. CORNELIUS F. KELLEY, President. New York, X. Y,, March 27, 1937. 9 PNYC 00010085 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--December 31st, 1936 FIXED ASSETS: ASSETS Mines and mininr claims, water rights and lands for metal producing and manu facturing plants---eenbteG........................................................... 0>ai mine*, timber lands. phosphate deposits and clay lands--sefe noteG............. .... * 9.587,299.87 Le-ss reserve tpf depletion............................................ ...............................................` 2.05-UOQ.S5 0.S32,622.07 7,512499 42 Buildings apd machinery at mines, reduction, works, refineries, manufacturing plants; isawTntll^jfoundries, waterworks, steamships and. railroads (including railroad concessions to the extent of 3973,833:48}--see note .......................... S2S4.687.354.i8 Less rpSeri-e for depreciation.................................................. i................ ... ......................... I40.84i.533.87 143,844.Si0.41 Patents.--........................................................................................................................................... Investments: Securities of subsidiaries not consolidated--see notes C and F......................... 3 I5.470.l7i.59 Other security investments--see note F._......................... ............................................. 13.767.103.91 Indebtedness of subsidiaries not consolidated--not current...................................... 75i.404.78 8.105.00 i9.993.68l.08 $472,192,128.08 CASH: DEPOSITED WITH TRUSTEES--see note J; Amount i deposited, December 30th, 1936. equivalent to 20% of estimated con solidated' pet income for ,1936, payable as part of sinking fund for discharge of Anacddda Copper Mining Company 4^% Sinking Fuad Debentures due 1950.. Amount deposited December lOtb, 1938 for holders of Chile Copper Company Twenty Year ,3% Debentures due 1947 called on December 1st, 1936 for re demption January 1st, V937, including amount required for payment of pre mium and interest--per contra...................................... ....................................................... Amount held in sinking fund for Butte, Anaconda it Pacific Railway Company first Mortgage 5% Sinking Fund Gold Bonds due 1944................................................ $ 3,196,129.00 9,524,950.00 7.913.21 12,728.994.21 DEFERRED CHARGES: Stripping ;apd development--.................................................................................................. Prepaid Expenses........................................................................................................................... .. Deferred expenses.... ........... ............................................................................................................ Discojiint; ^reismim and expense on bonds and debentures--sec note J.................. ..... $ 7,378,550.13 261.022.99 323,738.05 3.204,387.21 11,187,696.38 CURRENT AND OTHER ASSETS: Current assets: Supplies on hand - -see note E page 13................................................................. ........... Metals and manufactured products: la process-r-see note D page 13._..................................................................................... Finished--see note D page 13--................................................................................... Accounts and notes receivable--trade, leu reserve........................... ........................... . Indebtedness of subsidiaries not consolidated--current..................... .......................... Marketable securities--at cost (market value $1,406,259.35)...... ............................ Cash........................................................ ., , ..................... ............ ....... .................................. 33,773,538.81 10457,903.57 865,024.26 1,337,495.69 16.282490.76 82,268,379.93 Ocher tmts: Iostjkliibedt house and land sates and other accounts receivable, leu reserve..- $ Advances to sundry gcmg companies, including advances on ores, leu reserve- Ores produced during development period not being currently treated during period of curtailed operations--see note H-...... .................................. ............... - Cupriferous material held for future treatment--see note L___________ Notes receivable of Inspiration Consolidated Copper Company and interest scented thereon secured by First Mortgage Bonds of that company in the principal amountof $7,643,000 (being total amount of said bonds issued)------- 932,959.99 305,598.25 1490,647.99 3.151,282.25 7.864,005.00 13,664.493.41 95,933.07344 $592,021,890:01 See explanatory notes, pages 13 and 14. 10 PNYC 00010086 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--December 31st, 1936 LIABILITIES CAPITAL STOCK of Anaconda Copper Mining Company: Authorized -- I2.ouo.ooo shares or the par value of 850.00 each Helil ;n treasury or through subsidiaries ... Outstanding......... ........................................... , ................................... S.,919.086 shares 244.748 shares ->.674.3113 shares CAPITAL STOCK AND SURPLUS of subsidiary companies owned by minority interest.......... 3443.9W..!o ,]I5 ii.iTMM'X) 7433,716.3. BONDS AND NOTES OUTSTANDING: Anaconda Copper Mining Company 41-'2C^ Sinking Fund Debentures due 1930--seenoteJ............... Chile Exploration Company--Serial Notes--payable to banks, due December 10th. 1938 to De cember loth. 1941. interest to 31 (guaranteed as to both principal and interest by Ana conda Copper Mining Company)............................................. ............................................................................. Butte. Anaconda & Pacific.Railway Company First Mortgage 5^ Sinking Fund Gold Bonds, due 1944 'guaranteed as to both principal and interest by Anaconda Copper Mining Company) see note J......................................................................................... .......................................................................... ;............ iil.3Tl.000.00 J3.000.000.00 1.498.000,00 76.389.000 00 CHILE COPPER COMPANY 5% GOLD DEBENTURES due 1947--called for redemp tion January 1st. 1937--see note J--per contra: Not presented for redemption at December 31st, 1938................................................................................. Premium and interest thereon................... ..................... . ............................................................ 8 9.077.500.00 447.450.00 9.524.950.00 RESERVES: For repairs, renewals and replacements.................................................................................................................... i 338.802.78 For workmen's compensation insurance, etc....... ................................................................................................... 638.818.1S For contingencies............................................................................................................................................................... 275.000.00 1.252.613.94 CURRENT LIABILITIES: Chile Exploration Company--Serial Note--payable to banks, due December 10th, 1937 (guar anteed as to both principal and interest by Anaconda Copper Mining Company)..........-.................... Accounts payable--trade............................................................................................................................................... Wages payable........... Accrued taxes...... ...... Accrued interest------Other accrued liabUitses--........................... -............ ................................................................................................ Other accounts payable--------------------------- -............................................................................................................... .. 3 2,000,000.00 6.523,827.43 1,302,040.23 4.584.1X5.49 671.435.41 192,707.04 163.951.46 13,442,097.08 DEFERRED CREDITS TO INCOME--.................................................................. .......... SURPLUS. See explanatory notes, pages 13 and 14. 11 2is.820.74 50.953,796.87 8592,021.890.01 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Income Account--Year Ended December 31st, 1936 Gross aules aod Earnings..--................................................................................ ....................... ........................ Cost of Saies--operating expenses, development, maintenance and repairs, administrative, selling and general expenses.and taxes except income taxes--sales to the extent of current production being applied at current cost ................................................. ...... ........... ........................................................... SI60 SSi "34 1 5 Ii3 Stl 064 67 Income from, operations of mining, smelting, refining and manufacturing plants........................... Other Income--Dividends from subsidiaries not consolidated--see note D page 14...................... ' --Other dividends and interest--see note E page U ..................................................... --Miscellaneous Income......... ................................................ ................................... --Prpfit' on'sale of capital assets............................................................................................... i i31.U71.669.48' i 1,562. 197.14 558.-151.i6 196,739.52 73.540.69 2.3S5.643.91 Total Income____ $ 33,457.j 13 39 Expenses pertaining.to non-operating units, including expenses at Cananea during strike period........... I'aited states and Foreign Income Taxes--estimated (including 36,56.71 estimated surtax on undistributed income)......................... ... ...... ...... .................... .......... ......... -................................... Discount, premiupi and expense on bonds and debentures retired through sinking fund operations....... $ 3,818.41-2.48 2,420,080.51 2.975.917.76 236.970.73 9.501.331.48 Provision for depletion of coal mines, timber lands, phosphate deposits and clay lands (without deduction' for depletion of metal mines).................................. ........................................................................... Discount and expedite ;bp bonds and debentures....................................................................................................... Net, Income, without detection for depletion of metal mines.................. ........................................................... Minority share of income...... .................................................................................................................... .............. .......... i 23,955,936.91 $ 7,525,374.16 83,488.45 388.210.02 7.997.072.63 8 15,958.864.28 77.034.69 Consolidated Met Income, without deduction for depletion of metal mines.................................. ,,.............. * 15.881.829 59 See explanatory notes, page 14. Minority Interest. Consolidated Net Income, without deduction for depletion of metal mines-- ser 31st, 1936 648,235,924.09 72.273.25 48,163,630.84 15.881.829 59 * 84,045.480. *3 10.942.922 Jo \flmx and mining-claims, plant, development and other expenses on coal mining properties and sawmill written off, the projects being abandoned or discontinued....... .................... .............. .......... Adjustment through dissolution of subsi-- y ng write-down of assets transferred to a wholly owned subsidiary------------------------------------------ --------- -............... -.......... ............. ............ ............ Discount and premium on 5% Gold Debentures of Chile Copper Company called on December 1st, 1936 for redemption January 1st, 1937, applicable to such debentures as were redeemed up to and December 31st, 1936 in accordance with offer to holders of debentures--.. S 53,202.537 0 ? 637,081.32 73,311,49 1,538,368.25 2.219.701 Surplus, December 31st, 1966--.... .................................... -........................... ..................................... ........... .............. *51,315,365.88 Minority Interest...................... ........... ....... ............................................................................................ ................... 361,569.01 NOTES TO CONSOLIDATED BALANCE SHEET-DECEMBER 31st, 1936 NOTE A-i-PRINCIPI.e s APPLYING- IN CONSOLIDATION' fa -rfer to present the statu* of the Ci>'pavr,* interest, ip ,ub*rdiaries -t- k. 'the uxets and bSbiliUe, of jsid siiosidiiriM. u Huey sppcar ujopoofftt tJte bw;M af ia,d .ubsidiariMwadutriouted uoder appropriate i.eadmgs on the . m.*.,,. iht. eteept that ;f..ur: mail, subsidiaries more t.isdna*nii'iwf^Tl/ 2Z.r'\*V {**:ra 3'* *b iftMmfptft..! the operations ! '.re ren- - -latr.! <r'-uD. wo nwriid aionv.umfriu.in'ifse-Consblidsted Baulaanncre >r-hnemet. iTnhre..inintteerrnrejt >[f aminiBofntn?iv Mito-rv*shhoh,Hirl... .,f a __._._. .__._.__.________...... ij , __ .^OTB-Air !** C`CwS.fiejd Balance Sheet.' Afoountof suOsidiarits m wfiwii tw C-mpiny .ntemc'n ieai ^ Vj^of and the darn '>-n*d .n these nkbitriiwiejare famed. u investments so the C-nviiietated Balance sj,-, t k .V -- . 7 aeao. -rp^st-ns ,a a a*,only of Um|! votiB* itpcjt is o*'oed -lifted By tie Company or tirtojb, ocher curporauoM>abic& the *t)<k t'ote-M n NOTE 8-r BALANCE? IN FOREIGN.CURRENCIES oocverteC ''ip'io L,. uiva.eot tnr>A:.3SJ38i8..--IM0f)lf.l.9999 m.n CLnnrtoed Smtates <o-,,urrreeaarryvi are converted into dollar, at -ate, not -now. f.vnmi and liabilities at to* Toronto pianC of Anacondk-Amencae Brass. U'4. we carried' -a t'anaorab , at rate* aot'1 io excess...o..f...r..a..t.e...*...currreont at December list. 1939. ,/ 1: nw"fl - ('-j asiiriiifff.n,t|^iai'brlitre-s^xulttna:;k't:.p':^;tB;b' r ;33 Vliit.t-: 1S9p3i8ff 'ak:-, ffoorjiwiceceepuiices'irovejri n? fareien ,*je*.of copper disc-urnted-in the o.rdin .',od|:Uie|greteri;p*rti'Of';^;tiilcb:l^}'iBenti;;gtjbaa'vvee"a irea<iy'beedreceived.aad' ; b/' forcicbaaffeootnoiufeeati;moat.bf Watca have NOTE' C-feGLlTY OF COMPANY IN' CNCONSOLpATED SCBSIDLAJUES ' '' , The equity'*f;ihe CopPTM? '0 M* assets of the principal unconsolidated subsidiaries f.Attarooda ^r. and Cable Company. Mountain.Gt* Copper C moanv Ua`iker MSotR^? C.iimmppaaacvy:i.aanndd tthiee.ffootuifriuunnccoonnSsoohliddate-dd--sSuubbsiadiidairaiense*r.erefeferrrekddtlo ima 'Notfe AA had.ddeeccrreeaasseed at DWee*emmi-JLe.r-'inil. mi? ... -, jiace- tb^'date* of anuistuon aa the fiesuft of,,proSti. losses. distribution* and surplus sdjustmrcti as bo ' ' "' : ' b:iit!,tl|i|i|Wt|!'t^eitep[f M:.aWjij^ttii|jii'jii,1 <jioaaobdated Balilaoe, ibdat ha* oot bees #o;^ated for such decreue. ' " ''' 'l!il "Y' ''!'':i' OF METALS AND 'MANXTACTTRED PRODUCTS |er .'c^Riaiijr'itieai]pkii cyprtffieerroouxu'.*tataaatetenfajaia^..aaooddzrbtbc<e and lead nrea and rooreatrafej. while in tr^atmeotlat reduction piaou . .......................... ...... Ber.i'jmjrieettailifftie x*tteaec;-a#sdo lead builboen. .irt riaurfied aa. taeUi* i0 proceaa. Bliater and rlertroiyttc dipper a-. prodvded ia' ooaaecuoa. tberewtth UjertfrdBs. loeiudiBf nock ja work* at fabtlcatia*-plaati, *re'r;a. y ia prooea*, u: calculated at "aormal .cort" which ia beiow the equivaieat of current tnar;iSet for aetallio cooteot of lueh inventoriM. "'^.^ofrtbernve'nto^Vbcb-.-^ 'siSa^u1j;iirt^r^i.l iloti; i.................I.....!.9...3.....ie...z....w...p...t...h..-er and> oi>d whic h are earned at .m- arket quotation* or lei. b*-e been - a-`ud .,,.. . quantity ion Njapd |t. December S.Wtf!|i9Wi: at tie laveotciry price of December dtt. 1033 tun =mn- ^ijawred itb'eii-1 !:proid iWitij fciriypar nr'.fpryekr* foliowm'g accordion to period m bicb accuttblated and 'b> at to tht part ' / >.-e n.-n ^|]ie!^d;'':!i.!iiiua:n;ttty mveatory 0a baid *i tmier 3Ut. i333 at production coeu duno* the year ended December dUt., 1919. Inv.at^ry a- were bek> market price* for tie ranoii* metate aad product* at December 31st. 1939, VOTE -.OT>FUS OX B.C.T) Supplies oa hand, inc.'uciaf repIaceiseBt parts "U *ef} ae current supply items, are carried at cost. ' N "-1 |d v i aw* -.n .i .an1! ndiaree and other wrurity iavejtnjeata are earned at cert or lew. *uci *t beiaf caah wet. nr in the 'tie of ^<-ur i, ujed a exrbacpe f r property transferred by. the Company or a consolidated subaidiary. tie cost of such property to tie consolidated group aftr- . iienrer'.aitnn '.n .tte if [.-anjfrr. and in not todicat* current vafuaa. Otbar aacur,ty inveatoMBta lodude 333.000 aiarwa of Inapirattos Consolidates Cupper -o a y V e*i at I 4 w" - NOTE G--PROPERTY,-PIANT AND EQCIPMENT-r-BASIS OF VALCATIDN . j Property. >P!aot and Equipmeot of toe .Company are camhd1 at caah coet or in tig ease of physical properties acquired for stock of tie Company at par -- a. k ii i (b) Proper*y Plant aod Equipment of subsidtanea Itbe accounts of Which ark included ia this Cooaolidated Balance Sheet) are carried at the difference t'ip nivejtmein. ->ai:i :nr d mrwf.jve lubaidiary^ia act forth bebW. and lit)' ali net assets 'other than property, plant and equipment) of turn r-. : H; its ar~-.'jnU Dr^t iociUded in tie Cqunhdated Balance Sheet o/ tbe Company and subsidiaries, to which is added the r-.-t .."jf-ii. :4rMu:*it>'Us. rucn m - ritsiea: 'iasisitslbe cash cost,to. tbe cobsoiidated group of tip stock of tie respective subsidiary owned by such cr :p < - ! r wir.e *ai ai - .rm' h-- un* gr-iup ipr cash, or where tbe same was sequired by the consolidated froup foe stock of tie Company, tie par -a..- < Mode of tne ( ompany so issued eacept as to properties of Andes Copper Mieinv Company and Santiago Mioiog Company acquired by said company. - iive< <-.`cr meref / t.'rir -iu i-.i i I'm. wbico:bripectie*;are! locitidM is the Consolidated Balance sheet at tie original par value of the share, n caRies nsurM t.'iereinr . r . IM ; seafe). amoununir Mm cam of Andes Copper Mining Company to 1.000.000 sham and in tie case .*f Santi.-ig. M - - i. iLi'.ar.s'.c'. rs'n > *f iai<J it'Aof Andes Copper Mining Company issued for property 909.039sham were acquired by the Company sn.i -ii.- : at r-1 t-ar t.-.e rgiuo par ' aiue :.leieot and of said stock bf Santiago Mining Company 93.931 sham were acquired iia 1930) by tbe Company *< ... - the original-par value thereof. The 99,431 sham bf Santiago Mining Coauny pnor tn their araututmo by tbe Company were earned m ;n* -' m-. t;:ar.c.ii ,la e-eeis u j s-acL&i t. nonty interest at par from tie date when Santiago Mioiog Company *u first iDeluded in such statements. ! > -. acquisition of-suchi'inam by tie Company.m 1930 the oiffennee of f1.319.593.99 between the par value thereof and the cost of such shares to ihe * i w m 'if, e`,-n:s v stei-aet to. consolidated surplus. The "total amount, credited to consolidated surplus on account of the oiffereore b-1 -> --> - par vruu* 'jf.ihb staive mentwned aiiaiWs df Abdes Coppec Miaing Company and Santiago Mining Company and cost thereof to tie Company ar.-i u. ., i ,vss was 9'3 i i 39 ;; : (cl it has ven'ipe prutirw if fjie wineuf. cooauitaStly applied tp its qvs peonrtiee ami those of sub*diaria the stacks of which hs*w bees acquired and ' covnts>'of.wb"ich aheirncluded B tie Consolidated Bmasc* Sheet, to carry ftoperty. Plant.end Equipment as described above. Pursuant to the r*.|ii,r-n--. o` I ci a jt -*m ry Depar* ant. rglaattou as of March ikt. )9l3qf mining properties then owned have, been recorded on the boots f--<- - - -. - nte'.bf cbmpOi'bne ithe amdiaht alkswahia as adedactmn for "depledwa" in arming at Utable incaoM uadar Uu Fedaral laeoo* tu law*, but the* . e the published accounts of the Company. Tbe CbBi'panyihiui''>bsuUatly 'followed tbs praties off aot deducting in thy of its published accounts, any amount for depletion on account of meuli m<^ and.nb]mcb'dsductjea Ur mdsded IB my of tbs fihaocuti ststooenu sobaitted harewtdL. L<pt'cn baaed oa has :n 'JM c m of tiaba. eoaL clay bed pbo^iaate lands, bees deducted from income is tbe financial statements' submitted herewti * s u lw-ia ii eng sassa snows a (be Consolidated Balance sheet. (di liit E^iupawat an abonm on tie basa above set forth and do not'indicate eurrsot values which could be established --n:v 13 NOTE a--ORES PRODUCED DURING DEVELOPMENT PERIOD Ore* produced; during development period not being currently treated m carried it cost of extraction *bici i* lea* than conservatively estimated realisable rilue NOTE I--CUPRIFEROUS MATERIAL Cupriferous material held forfuture treatment is valued at United States Treasury Departmeat valuation for income tax purposes, which is less than the viu* >f the .recoverable metairf cdnUiaed thereic it,current met* prices after deducting treatment costs, .both as esumated by metallurgists of the Company. NOTE J-rINXING FUND REQUIREMENTS ' Under the amain* fund pi-nylons of the.jhaentureproviding for the issue of the Sinking Fund Debentures of Aaacond* Copper Minin* Company due IBiO the;,i..>fmP4oy is obuaated .n August !3th, 1.939 and will be obligated o.o August 13th of each year thereafter, to and including August 15th 19*9 to oav to the Trustee, for tne purposes of .the .sinking fund for the retirement of debentures.' an amount equal to 11.000.000 pius iO^ of the consolidated net income of the . Company .as lefio'eu in the indenture.- for the period of twelve months ended do the nett preceding December Slit or id lieu, of such payment "he t'ompany .mky .'ietiYff t-> tfi,e! Trustee.,drtw;urf9 to. be received by the Trustee .a lieu of an amount of cash equal to the purchase'price of such debentures paid by '-e Company iijjfs the acquisition thereof, l-ader these provmons there were deposited with the Trustee on August 13th. 1939 debentures of tae par value of <3 |-) .xio in f.uil satisfaction oi the.sicJuog Tund payment due on that date. There was also on December 30th. S939 set.aside out of:the profits of. Ehevear.iMfl aodde- posited .atrust with Guaranty Trust Company of New tor* 3.I99,li. being an amount equivalent to iO'T- of the estimated consolidated net income of the 'W 15th' [93^^*^ Wta" '3 U* Pu^k-se of debenture^/or cancellation id the stoking fund dr ts the ettest not so used to 'be paid into the sinking fund an August On December 1st. 1939 the outstanding Chile Copper .Company 3t> Debenture* were caiiec for redemption.' Ob December 10th. 193* Chile Copper Company otfrred to-make full payment of principal, premium and1 interest due January 1st. 193Too debentures presented at any time after December 10th. Of the'total samunt of|debe'Bttlret.;covered.:by|:tbeiicali,ifor:|redemption.::*19.989,3O0,iface 'value s*ere preseoted for redemption before January ,ui,'.'liM7. 'The' remaining debentures #.0TT.500^priBcipaf>aouBt/erereured in accordance with the proyinoaiof the cailfor redemption a* of January 1st, 1937. The amoliatof: tSei.WL.O'S included randiacouotiiprto^um.end triienseiiott' bonds and debentures lniireS'pect'of said'WiOTT.iOO princtpaJ aiBbuatiof debenture# will be written od as of January tit. [sar. Und'ethreth4ehaniun4iili;nlcfaf fihulti]u>lpdrkoin'.aflf3uioonldlo''ffetqbdeilr|ei'Bmdennimtiir.efo.rp,.,'r1o9v3idTi'B*^g:?4pibr.tohueJii:iM't;u'teh;olldf 3F,0ir<kXMi. o, rtgage jrd .S'iaking'FuDdil&'Biis 6t: Butte. .Anaconda : APactfic ' Railway ' Company : NOTE E-SURPLUS .' ; ; ' .: '" Lndudeddn Consolidated Surplus are^jYVa crfditiof lil^OfliJ- "i .arising;from inclusion in Consolidated Balance sheet of aasets.aod .liabilities of .Andes Copper ' Mining!'C^mpkny'4t:'th4.;azzipwhtji!!sbde:on:;iu:<bboka^.Mie^poi>:iG'lijiibi'':'c'miitlof 91.319,393.99 arising frqm acquisition m I9S0 of minority shares in iaotugo Mining Company i.ssued.-.for. property and earned at ::cieir pah'yalbe.;kiid amount representing the excess Of 'ipar value over acoisUiUon cost. -c;:a cretin of M'aYa'tiiB.kA' -jjdf ;|pr|acegdii|'.of the issue of '^,109.208.34 .shares of .stock of Company aver the par value thereof and id) aricfiarge -of 3 expense'on istuaock. and premium on redemption of bonds, redeemed through funds obtained by issuance of Stock 'above rt- ' ` # a* to practi:re*nrding depletion. : ' ......... ..... . .. NOTES TO CONSOLIDATED INCOME ACCOUNT--YEAR ENDED DECEMBER 31s t , 1936 NOTE A--BASIS - Principles ap&iying to the Conaoiidated Income Account are the same as. set forth in Note A to the Consolidated Balance sheet. The equity of the Company in the income of fouriismali''uncbnaolidaitejd subsidiaries more than ~3% owned, the operations of which are not an integral 'part of-the operations of the consolidated group, amounted for the year ended .December 31sL 1939 to 918.939.lT. ' Sake of metals and'manufactured products an included in income as btiied and delivered to customer*. Undelivered sake contracts and purchase commitment* are not given effect to u* the incocc -ccounL : " " NOTE B-INTEi-COMPANY SALES AND PROFITS .' Sake'to conaeiidatejdjubaidiariasihave been eliminated and the.sake shown in the Consolidated Income Account inciude only sake to otkva than the Company ami consolidated subsidiaries. { ' ' "' ' '. Inter-company profits.' where these are material, have been eliminated in the Consolidated Income Account. The priadpai inter-company transactions are sales of copper and otbar metals to mab'uiieturihgisubeidiarie*.. The iaventonss of manufacturing subetdiarke inciude. ao far as it ascarutoahk. no intercompany profit. Aay intercompany .profit! resulting from transactions is connection with purchaaes asd sake of suppik* and furnishing of jervicat and in connection with refining and sffielUagVoJbere^bQi irr abt;m*iarikl in..amount 'aad|ibe sot been eliminated. '' NOTE,C--COST OF SALES .' The general practice of inventory valuation followed in the year ended December 3.1st, 1939 * In ascertaining eboaolidated income during the year 19^9. the Consolidated Income Account vu stated on the basis of last-ia first-out, that is. applying current ' cost'of metal 1brodbetion to -lak* iseeNote At-to the attest of current production and sake in excess of current production were earned in the Conaouaated ' Income Account at the inventory cost, such cost being the same as the inventory cost used for Balance Sheet purposes. (See Note D ts Consolidated Bal ance Sheeti)" 1: v 'I .' : ^ . ' ' '1 NOTE D--DIVIDENDS AND EARNINGS OP PRINCIPAL UNCONSOLIDATED SUBSIDIARIES la the-year 1836 tlie'jbqwfyi'of ;ih*'(^mpahyl|ia the combiaed act enrreat rerainp of the priaeiMi nacoBeofrieted mhmdianae (Anaconda Wire and Cable Company. Mountain City^Copper Company and W'aiker Mining Company) and the four unconeodoated eubkcUalhaa referted to in Nota A amountad to 9l.999,4l9.*3. Out of that equity.tnara was paid to the Company the amount of SI.5M.197.14 in diridcads by said uaeoaeolidated safaesdiarke. .cOpmEit, c o mpan v There is included tin Incdak ;Aecount uadw'tha item "Other IXvidaads and Interest" interest oa notes of Inspiration Consolidated Copper Company, in the amount otbfi.*J3i8kSnu.3a1q9r.:1lsJtlifioiiIri3lU9M.'l'i|iy'.:ta' r'le:ad"e; d D' eos.m..n.e.r 31''st, 1939. ' 'Such intareet has baas pasd duneg the year as well as $339,999,08 on account of interest accrued prior POGSON, PELOUBET & CO, PERCY W. POCSOJf . tfWMACSZC& E. PELOL-BET LEWIS M- N'ORTQST SIDNEY, w. PELOCBET aOWAR.D L. GL'YETT | NEW YORK - 25 B*Oa Dw s Y . EL PASO, TEXAS MILLS BLBr | uo> } I .VCENI5 Lo n d o n k f ..mp . c h a t t e r rs. v t c h o l s . s u n -d e l l * co. . i6 vv.U-SflOOt, E. C. i. PARTS - TVRQ'-'AND. Y'M.'Nr,?. KEMP fc CO. : ' & RCE OL HELD 2 BERLIN b n.-RQt.-AND. YOT.'NGS. KEMp'k CO. t'NTER DEN LINDEN 56 EGYPT,- HEW*T,.|**rDSON k-.NE.WBV ALEXANDRIA ,_ND CAiRO CV*L* AD01E&S ' .*nff0 ' NEW VOK To the Board of Directors, Anaconda Copper Alining Company, 23 Broadway, New York, S'. A'. We have made an examination of the Consolidated Balance Sheet as of December 31st 1936, of Anaconda Copper Mining Company and of the other corporations whose accounts are consolidated with its1 accounts as stated in Note A to the Consolidated Balance Sheet (which other corporations are hereinafter referred to as consolidated subsidiaries) and of their Consolidated Income and Surplus Accounts for the calendar year 1936. In connection with, our audit we examined or tested the accounting records of Anaconda Copper Alining Company and its consolidated subsidiaries together with other supporting evidence and made a general review of the accounting methods and of the operating and income accounts for the calendar year 1936, but we did not make a detailed audit of the trans actions. The practice of the Company and its subsidiaries with respect to the computation of their net income or net loss without deduction for depletion of metal mines is, in our opinion, in accordance with accepted principles of accounting in industries engaged in the mining of copper, gold, lead, silver and zinc. - In our opinion, based on our examination, such Balance Sheet, Income and Surplus Accounts, together with the notes attached thereto or appearing thereon, fairly present, in accordance with accepted principles of accounting in the industries in which the Company and its subsidiaries operate, consistently maintained by the Company and its subsidiaries, the consolidated position of the Company and its consolidated subsidiaries as of December 31st, 1930 and the Combined results of their operations for the calendar year 1936. POGSON, PELOUBET & CO., Certified Public Accountants. New York, March 15th, 1937. 15 PNYC 00010092 *