Document gDBpBpXn1q0QZ8a65E8qqdw3a

Saint Joseph Lead Company Annual Report -- 1937 America's Corporate Foundation; 1937; ProQuest Historical Annual Reports Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY Incorporated March 25, 1864, under the Laws of the State of New York BOARD OF TRUSTEES Frederic E. Camp, Chestnut Hill, Pa. Daniel K, Catlin, St. Louis, Missouri C. Merrill Chapin, Jr. Vice-President Hendon Chubb, of Chubb & Son Irwin H. Cornell, Vice-President Firmin V. Desloge, St. Louis, Missouri Clinton H. Crank Chairman Stanly A. Easton Pres., Bunker Hill & Sullivan Mining & Concentrating Co. Andrew Fletcher, Vice-President and Treasurer James H. Grover, Pres., St. Louis Union Trust Co. J. Howard Holmes, St. Louis, Missouri Edward V. Peters, Vice-President Fred W. Shibley, Vice-Pres., Bankers Trust Co. EXECUTIVE OFFICERS Clinton H. Crane, President Irwin H. Cornell, Vice-Pres., and Sales Manager Andrew Fletcher, Vice-Pres., and Treasurer C. Merrill Chapin, Jr., Vice-President Edward V. Peters, Vice-President H. B. McGown, Secretary Robert Bennett, Assistant Secretary George L Brio den, Assistant Secretary STOCK TRANSFER OFFICE 250 Park Avenue, New York REGISTRAR City Bank Farmers Trust Company, New York Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY 250 Park Avenue, New York City PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The lead and zinc industries were more prosperous during 1937 than in any year since 1929. Your Com pany's earnings reflected the increased consumption of the two metals, and particularly the higher prices received. In 1936 business conditions became more favorable in the last quarter of the year, while in 1937 the conditions were reversed and the year ended with a severe decline in industrial activity. Total production of lead in the United States in 1937 averaged 8,000 tons per month more than in 1936; the average monthly increase in production from your Company's mines was 3,700 tons. In spite of the increase in production. United States pig lead stocks were reduced from 171,856 tons on January 1,1937 to 90,000 tons on October 1, 1937. However, during the last three months of the year, 40,000 tons were added to stocks, so that the year ended with 129,131 tons on hand. The Company's lead sales for the year accounted for its production plus approximately 11,000tons from stocks. Your mines ran at normal capacity until January of 1938, when in order to avoid accumulating excessive stocks, mine production was curtailed to approximately the rate of 1935, with the belief that business should be able to absorb this volume of output. Consolidated Earnings The Consolidated Income of $8,980,309.75 for the year ended December 31,1937 before depletion, obsolescence of the Doe Run Mill, Federal income taxes and abandoned leases shows an increase of $5,570,677.69 over the previous year. The Consolidated Net Income of $7,127,945.15 after all deductions compares with $2,511,001.57 for 1936. The Comparative Consolidated Earnings for the ten years ended December 31, 1937 are shown below: Year Income after Interest but Before Other Deductions ---------------- Provision for---------------- Depreciation Income Taxes Net Income before Depletion, Etc. 1937................ .......... $10,035,885.12 $1,055,575.37 $1,329,491.03 $7,650,818.72 1936................ 1,063,605.02 307,944.03 3,101,688.03 1935................ 1934................ 1,072,013.14 1,121,960.66 35,502.59 78,862.23 898,265.86 736,086.06 1933................ .......... 1,316,485.60 1,022,922.73 293,562.87 1932................ .......... *287,881.11 1,011,845.62 *1,299,726.73 1931................ .......... 1930................ .......... 1,622,220.01 5,809,486.42 1,149,702.39 1,319,064.38 390,314.61 472,517.62 4,100,107.43 1929.............. 1928................ .......... 7,815,038.98 1,268,935.08 1,050,348.88 , 883,938.98 455,623.88 9,801,895.76 6,309,066.22 *Loss. Includes abandoned leases for the years 1933 to 1937 inclusive and provision for obsolescence of the Doc Run Mill for the years 1935 to 1937 inclusive; Provision** for Depletion, Etc. $522,873.57 590,686.46 412,043.61 1,548,604-47 1,461,310.72 1,606,310.78 1,886,589.04 2,566,469.67 2,264,740.04 1,775,803.27 Dividends A dividend of fifty cents per share was paid on March 20th, one dollar on June 21st, and fifty cents on Sep tember 20th and on December 20,1937, making a total of two dollars and fifty cents per share for the year. These dividend distributions aggregating $4,889,198.5.0 were paid entirely out of the surplus earnings of the Company, accumulated after February 28, 1913, and are therefore subject to Federal income tax. The following is a record of dividends for the years 1928 to 1937 inclusive: Year 1937.... . 1936.... . 1935.... . 1934.... . 1933.... Sc Joseph Lead Company $4,889,198.50 1,955,676.90 782,269.30 586,701.30 Dividends Paid to Stockholders Per Share $2.50 1.00 .40 .30 .... Minority Interest in Subsidiaries Year 1932.... . 1931.... . 1930.... . 1929...; . 1928.... . Sc. Joseph Lead Company $ 292,369.75 2,438,079.75 5,851,386.00 5,851,374.75 5,851,335.00 Per Share $ .15 1.25 3.00 3.00 3.00 Minority Interest in Subsidiaries $ 14,618.75 128,865.00 70,305.00 76,253.00 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Financial The Consolidated Balance Sheets as of December 31,1937 and December 31, 1936 of St. Joseph Lead Company and Subsidiaries, and the related Summaries of Consolidated Net Income and Surplus for the years ended on the above dates, are submitted herewith as a part of this report. Beginning with January 1, 1937 the "last-in, first-out" method of determining the cost of sales of finished lead, zinc, etc., was adopted, as it was felt that this method more accurately reflected current profits than the former practice ofaveraging inventories with current costs each month. Therefore, in Divisionswhere sales exceeded production for the year, inventories of finished lead, zinc, etc., arc valued at the unit cost at which they were carried on January 1,1937. In Divisions where the situation was reversed (current production exceeded sales) the current cost of the excess tonnage produced over tonnage sold during the year was added to the January 1, 1937 inventory. If the method used in prior years had been continued during the year 1937 the inventories at December 31,1937 would have been $269,212.28 greater than shown in the accompanying balance sheet, and the net income for the year would have been increased by a like amount. There has been no change in the method of computing the cost of lead, zinc, etc., in process as the monthly average cost basis has been continued. The inventories of purchased lead and zinc are carried in the accompanying balance sheets at the lower of cost or market. Where the market value of purchased lead and zinc at December 31, 1937 was less than cost, the difference has been charged against current income. No future commitments have been made for the purchase and sale of commodities which would have a material effect on the financial position of the Company. During the year, the remaining $3,000,000 of St, Joseph Lead Company Ten-year 4% Debenture Notes due June 1, 1945 were paid, and the Company now has no outstanding long-term indebtedness. At December 31,1937, the Company owned $986,000 par value United States Government and State Securities due in 1938; and, in addition, $122,000 par value United States Government, New York State and New York City Bonds, none of which, however, are available for sale, being on deposit with New York, Pennsylvania and Missouri State Industrial Compensation Commissions and the United States Department of the Interior. On March 29, 1937 the St. Joseph Lead Company of Pennsylvania was incorporated under the laws of the State of Pennsylvania. On April 1,1937 this wholly-owned subsidiary took over theJosephtown, Pennsylvania, Division of the Parent Company. Beginning April 1,1937 depreciation of the Josephtown plant and equipment was reduced from 8% to 5% to conform with the rate agreed upon for Federal income tax purposes. The Doe Run Mill has now been completely written off as obsolete and any remaining equipment or buildings arc carried on the books at scrap values. The three remaining Missouri occupational disease suits referred to in the 1936 annual report have been concluded. Lead Operations Due to the increased demand for lead. Southeast Missouri operations were increased on March 1 to five days per week which basis was effective through the remainder of the year. A satisfactory ten-year power contract was executed with the Union Electric Company during the year covering power requirements of our Southeast Missouri operations. The property of Mine La Motte Corporation (50% owned) located in Missouri, was placed in production on October 4, 1937. This property had been idle since March 1931. Zinc Operations The Balmat and Edwards properties located in northern New York were operated on a full-time schedule until October 16,1937, when the daily tonnage delivered to the Balmat Mill was reduced from 1,250 to 1,000 tons. Until the last quarter of the year, there existed a satisfactory demand for zinc metal and oxide, and operations at the Josephtown, Pennsylvania, smelter were expanded to five and then to six furnaces; however, with the reduction in demand, operations were reduced to four furnaces by the end of the year. A third roaster was placed in the circuit in March, and the construction of a leaching plant, for the recovery of lead and cadmium, was completed during the last quarter. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Miscellaneous Operations The Aguilar Mine, located in the Province of Jujuy, Argentina, operated throughout the year. The zinc circuit was resumed in April, but owing to the drop in zinc prices, shipments of zinc concentrates were dis continued in October. The mine is now producing about 2,000 tons of lead concentrates a month and is gradually reducing the debt incurred for the construction of the plant. With the return of normal world conditions this property should be a substantial earner. The dewatering of the Block "P" mine, located at Hughesville, Montana was again postponed, as a satis factory contract for the sale of zinc concentrates produced from this property could not be obtained due to lack of power for electrolytic smelting which was caused by low water. The Ritz and Robinson Mines in the Joplin area were operated throughout the year on a full time basis. The new shaft at theJarrett mine, also in the Tri-State district, developed sufficient ore to justify the rehabilitation of the mill, but operations were postponed due to the drop in demand during December. A suit regarding the Snapp area was satisfactorily settled for a nominal amount. The dewatering and equipping of the Sheep Ranch Mine, a small gold property in California, was completed in December, and operations were started in January 1938. Although a number of properties were submitted to the Exploration Department, only four were considered worthy of examination. After inspection, these four were not acceptable. Stockholders The comparative share holdings for December 31st of each year since 1931 are as follows: Year 1937.................. ............ 1936.................. ....... 1935.................. ............ 1934.................. ............ 1933.................. ............ 1932.................. ............ 1931.................. ............ Number 5,992 5,560 5,304 5,300 5,145 5,360 5,063 19 or Less 1,571 1,483 1,491 1,549 1,511 1,584 1,784 20-99 2,038 1,851 1,748 1,712 1,684 1,796 1,349 100-199 1,139 1,000 911 873 835 875 831 2G0-Over 1,244 1,226 1,154 1,166 1,115 1,105 1,099 General The number of Trustees was increased from eleven to thirteen on March 11, 1937. The attention of Stockholders is called to the following two paragraphs from the President's Annual Report for the year 1936: ` 'TheStockholders are again reminded that the net value of the capital assets set forth on the accom panying Consolidated Balance Sheets are depleted and depreciated figures based on appraised values of March 1, 1913 as to properties owned at that date, and on cost as to subsequent additions; they do not necessarily indicate the present day values or prospective future values of the Company's property, plant and equipment, as such values could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rate of production, cost of labor and other factors. Although the appraised value of areas owned on March 1,1913 have been entirely written off the Com pany's books by depletion deductions, ore is still being mined from these areas at a profit, and probably will be for years to come. Due to the additional ore which has been developed through prospecting, or made available by reason of the improvement in mining practices, the basis of determining depletion was changed as of January 1,1935, by dividing the undepleted book value by the estimated tonnage of ore in the mines and applying the unit value thus determined to the tonnage sold. This change results in a considerably lower provision for depletion than in years prior to that date." New York, February 23, 1938. Clinton H. Crane, President. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. U. S. REFINED HAD STOCKS, LEAD AND ZINC PRICES Comparative Annual Statistics Year Tons of U. S. Refined Lead Stocks At End of Year 1937.................... 1936............................ .. 171,856 1935....................................... 222,306 2934....................................... 235,457 1933...................................... 203,061 1932.................... 1931......... . .................. 151,653 1930...................................... 103,247 1929...................................... 54,900 1928....................................... 33,618 Average Lead and Zinc Prices in Cents Per Lb. Lead Lead Zinc F.O.B.St.Louis F.O.B.St.Louis F.O.B.St.Louis E.&M.J. St. Joe E.&M.J. Average Average Average 5.859 4.560 6.015 4.534 6.519 4.901 3.915 3.878 4.328 3.724 3.700 4.158 3.735 3.652 4.029 3.042 3.055 2,876 4.049 4.007 3.640 5.384 5.456 4.556 6.660 6.646 6.512 6.131 6.133 6.027 ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Production in Tons Year 1937................. .... 1936................. .... 1935................. .... 1934................. .... 1933................. .... 1932................. .... 1931................. .... 1930................. .... 1929................. .... 1928......................... Ore Mined 5,536,952 3,804,451 3,382,403 3,269,864 2,652,944 3,233,172 4,465,794 5,999,813 5,750,412 4,833,194 'Lead Concentrates 212,827 147,160 133,044 124,240 114,651 147,242 196,481 243,614 245,958 204,181 Pig Lead Equivalent 146,274 101,999 92,611 86,060 78,248 99,242 131,586 164,886 165,114 137,673 Zinc Concentrates 71,031 54,590 47,214 46,353 34,741 34,677 63,348 86,795 60,475 45,928 Slab Zinc Equivalent 34,519 26,400 22,857 22,389 16,898 17,017 31,498 42,554 29,848 23,257 Lead Sales and Stocks at End of Year in Tons Year Lead Sales St. Joe Production Purchased 1 -ad Sold Total Lead Sales *Pig Lead Equivalent of Stocks 1937......... 1936......... 38 930 47,776 199,021 174,622 72,969 83,575 1935......... 1934.......... 1933.......... ....................................... 1932......... ....................................... 1931......... 1930......... 72,462 81,467 41,714 39,566 47,988 53,473 69,085 82,221 128,791 124,530 120,450 134,940 174,347 219,723 108,849 103,918 100,453 96,484 78,390 51,536 1929......... ................................. . 1928.......... 160,490 61,399 52,342 221,889 188,982 22,163 16,397 ^Includes Purchased Lead and estimated recoverable lead in concentrates together with other lead stocks in process of refining at smelters. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Summaries of Consolidated Net Income For the Years Ended December 31, 1937 and 1936 Net Sales (including royalty earnings--1937, $86,908.30; 1936, $41,088.32)............................................ ............. ........ Cost of Sales (exclusive of depreciation and depletion)........ ...;____ Year ended December 31, 1937 532,776,804.95 22,118,672.09 1936 $22,646,210.86 17,526,818.66 Gross Profit from Operations before Depreciation and Depletion. $10,658,132.86 $ 5,119,392.20 Deduct: ! Selling, general and administrative expenses........................................ $ 595,906.92 Capital stock and miscellaneous other taxes................................... .. 78,830.28 $ 509,033.95 674,737.20 55,960.59 564,994.54 Net Profit from Operations before Depreciation and Depletion... Other Income: Interest................... ............................................................ ........................... $ Dividends.................................................................................................. .... Profit on sale of investments, net...................................................... .. Miscellaneous................................................................ ............................. $ 9,983,395-66 33,026.98 19,107.00 41,645.28 1,154.99 $ 94,934.25 $ 4,554,397.66 34,839.88 16,425.00 8,454.80 19,833 82 79,553.50 Gross Income before Depredation and Depletion.......................... ............................ $10,078,329.91 Interest on Notes.............................................................................................. .................................. 42,444.79 $ 4,633,951.16 160,714.08 Income before Depreciation, Depletion and Other Deductions.......................... $10,035,885.12 Provision for Depreciation................................................................................................................. 1,055,575.37 $ 4,473,237.08 1,063,605.02 Income before Depletion and Other Deductions............................................................ Depletion and other Deductions: Provision for: Depletion..................................................................................... .. $ 426,041.38 Obsolescence of the Doc Run mill.................. ................. .....;. 75,000.00 Federal income taxes (including surtax on undistributed profits --1937, $32,856.61)............................................................... .. 1,329,491.03 Abandoned leases writtcn-ofF........................ ................................... 21,832.19 $ 8,980,309.75 $ 490,686.46 100,000.00 1,852,364.60 307,944.03 ----- - $ 3,409,632.06 898,630.49 Net Income for the Year $ 7,127,945-15 $ 2,511,001.57 Notes: '. .. Beginning January 1, 1937, the companies discontinued the use of average monthly costs and adopted the "last-in, first-out" method of aetermining the cost of sales of finished lead, zinc, etc. If the method used prior to January 1, 1937, bad been continued during the year 1937, the net income for that year would have been $269,212.28 greater than shown in the above summary of consolidated net income. Effective April 1,1937, the rate of depreciation for the Josephtown Division was reduced from 8% to 5% to conform with the rate agreed upon for Federal income tax purposes. This resulted in a reduction of $72,463.80 in the 1937 provision for depreciation. .... . All subsidiaries of the parent company, with the exception pf Aguilar Corporation and its foreign subsidiary, arc included in the above summaries of consolidated net income. The equity of St. Joseph Lead Company in the net profits or losses (exclusive of any provision for loss on foreign exchange and of depletion of ore reserve values in excess of cost) of Aguilar Corporation and its foreign subsidiary, not included in the above summaries of consolidated net income, was $626,495-69 net profit for 1937 and $133,499.71 net loss for 1936. No inter-company profits or losses arc included in the above summaries of consolidated net income. Summaries of Consolidated Surplus For the Years Ended December 31, 1937 and 1936 Year ended December 3L Surplus at Beginning of the Year (including surplus from revaluation of ore reserves--1937, $373,853.44; 1936, $384,963.21)............................................................... .. Additions: Net income for the year..................................................................... ........ Transfer from reserve for contingencies................................................. 1937 ......................... $ 6,814,341.39 ........................... 7,127,945 15 1936 $ 5,659,016.72 2,511,001.57 600,000.00 Total........................................................................................ Deductions: Redemption premium on St. Joseph Lead Company Ten-year 4% debenture notes due June 1, 1943 called for payment during 1937............................................................................... .. Cash dividends paid during the year......................... .. . . ........... .> ........................... $ 60,000.00 4,889,198.50 $13,942,286.54 4,949,198.50 $ 1,955,676.90 $ 8,770,018.29 1,955,676.90 Surplus at End of the Year (including surplus from revaluation of ore reserves--1937, $357,749.49; 1936, $373,853.44) ......................... $ 8,993,088.04 $ 6,814,341.39 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1937 and 1936 ASSETS Capital Assets: Ore reserves and mineral rights: Appraised value as of March 1, 1913........................................... Less reserve for depletion........................................................... December 31,1937 $13,500,000.00 13,500,000.00 December 31,1936 $13,500,000.00 13,500.000.00 Additions subsequent to March 1, 1913 (at cost)...................... Less reserve for depletion........................................................... $21,177,245-30 $21,010,438.18 14,517,967.49 $ 6,659,277.81 14,108,030.06 $ 6,902,408.12 Appreciation arising from revaluation subsequent to March 1,1913.............................. ....................................... Less reserve for depiction....................................................... $ 4,315,000.00 3,957,250.51 $ 4,315,000.00 357,749.49 3,941,146.56 373,853.44 Total ore reserves and mineral rights, net......... ........... Shafts and underground equipment (at cost).......................... ...... .. Less reserve for depreciation............................................................... $ 5,215,020.69 3,893,127.37 $ 7,017,027.30 1,321,893.32 $ 5,118,991.70 3,783,253.07 $ 7,276,261.56 1,335,738.63 Land, buildings, plant and equipment (at cost)................................ $18,859,162.95 Less reserve for depreciation................................. ............... ............ 11,284,338.81 $19,368,359.28 7,574,824.14 11,499,771.75 7,868,587.53 Railway construction--Cost being refunded............ . 89,305.00 126,975-00 Total capital assets, net................... ............... . Investments and Advances: Aguilar Corporation (at cost--86% owned)........................... ........... Mine La Motte Corporation (at cost--50% owned).................... Kadco Corporation (at cost--50% owned)............................. . Stocks of other mining companies (1937, at cost--market quotation value, $147,200.00; 1936, at lower of cost or market--market quotation value, $494,575-00).................. ..____ ________ _..... Sundry securities and loans (at cost, less reserve, $200,000 00)..... ,$ 1,627,500.00 935,484.63 100 000.00 318,002.00 246,489.92 $16,003,049.76 3,227,476.55 $ 1,890,000.00 824,653.66 100,000.00 488,377.00 225,530.24 $16,607,562.72 3,528,560.90 Current and Working Assets: Cash on hand and in banks........... .................... ......................... Federal and State securities, other than on deposit with Federal and State departments (at cost; market quotation value--1937, $995,985-00)...................................................................................... Motes and accounts receivable -- Trade (less reserve -- 1937, $20,785.22; 1936, $21,426.63)........................................................ Due from subsidiaries not consolidated.......... ............................... ... Other notes and accounts receivable.................................................... Inventories (valuation not in excess of market): Finished lead, zinc, etc. (at cost, exclusive of depletion and depreciation; sec footnote)........................................... ......... Lead, zinc, etc., in process (at average costs, exclusive of depletion and depreciation).................................. .. Purchased lead and zme (at lower of cost or market).. ,..... Materials and supplies (at cost, less reserve for slow-moving items, $200,000.00).................................................................. $ 3,862,460.32 992,344.67 807,389.26 37.68 40,920.16 4,076,225.15 729,390.56 334,962.86 2,050,098.09 $ 1,835,606.70 3,182,756.89 55,555.26 60,744.00 12,892,828.75 4,890,212.01 520,575.17 11,343-00 1,571,012.60 12,127,805.63 Miscellaneous Assets: Federal, State and Municipal securities on deposit with Federal and State departments (at cost; market quotation value--1937, $130,628.76; 1936, $126,263.75)..................................................... $ 120,913.93 Special deposit (for bonds called but not presented for payment, including premium and interest--see contra)........ i. ..... Cash in closed hanks................... ............... ............................................ 24,913.08 $ 106,395.76 145,827.01 649.40 28,193.10 135,238.26 Deferred Charges: Prepaid insurance, taxes, etc............................................... .. 147,002.23 110,084.31 Total................................................................................ $32,416,184.30 $32,509,251.82 Notes: The net value of the capital assets shown in the above consolidated balance sheets should be considered in the light of the comments included in the text of this report. __ __ All subsidiaries of the parent company, with the exception of Aguilar Corporation and its foreign subsidiary, are included in the above consolidated balance sheets. The equity of St. Joseph Lead Company in the net profits or losses of Aguilar Corporation and its foreign subsidiary not included in the .bove coi.soisdi.ted balance sheets, since acquisition (exclusive of any provision for loss on foreign exchange and of depletion of ore reserve values in excess of cost) was $478,798.78 profit at December 31, 1937, and $147,696.91 loss at December 3L 1936. Aguilar Corporation was in arrears in dividends on its 7% cumu lative preferred stock (75% owned by St, Joseph Lead Company) at December 31, 1937 and 1936, in the amounts of $1,063,650.00 and $922,250.00, respectively. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1937 and 1936 ''LIABILITIES Capital Stock: Authorized, 2,500,000 shares of $10.00 each...................................... December 31,1937 $25,000,000.00 December 31,1936 $25,000,000.00 Issued, 1937,1,996,807 shares; 1936, 1,996,806shares..................... $19,968,070.00 Less in treasury--41,127 shares............ ............................................ 411,270.00 $19,968,060.00 411,270.00 ' Outstanding, 1937, 1,955,680 shares; 1936,1,955,679 shares........... $19,556,800.00 $19,556,790.00 Scrip outstanding.................... ........................................................... ... 338.50 $19,557,138.50 348.50 $19,557,138.50 Long-Term Indebtedness of St. Joseph Lead Company: Ten-year 4% debenture notes due June 1, 1945...................... ... Current Liabilities: Accounts payable (trade)....................................................................... Wages payable......................................................................................... Accrued interest on notes............................ .......................................... Accrued taxes (including income taxes).................... ..................... $ 1,130,396.97 80,015.19 1,586,554.59 -...... 2,796,966.75 $ 1,300,614.77 58,479.63 9,999.65 498,126.11 3,000,000.00 1,867,220.16 Miscellaneous Liabilities: Redemption account--St. Joseph Lead Company, ten-year convcrtiblc 5M% debenture bonds called June id, 1935, including premium and interest (sec contra).,................. ............................ Deferred Credits: Unrealized profit from sale of houses, etc......................................... .... Reserves: For injury claims and workmen's liability insurance.................. ... For employees' life insurance and retirements................................ For contingencies........................................................... ...................... $ 164,580.76 612,313.07 224,929.04 Surplus: Earned............................. ......................................................................... Revaluation of ore reserves.................................................................... $ 8,635,338.55 357,749.49 67,168.14 $ 146,157.77 848,983.75 1,001,822.87 189,846.12 $ 6,440,487.95 8,993,088.04 373,853.44 649.40 84,914.73 1,184,987.64 6,814,341.39 Total.................................................. ................................. . $32,416,184.30 $32,509,251.82 Notes'Continued: . Beginning January 1, 1937, the companies discontinued the use of average monthly costs and adopted the "last-in, first-out" method of determining the cost of sales of finished lead, zinc, etc. If the method used prior to January 1, 1937, had been continued during the year 1937, the inventories at December 31, 1937, would have been $269,212.28 greater than shown in the above consolidated balance sheets. _ The parent company is contingently liable as a guarantor on bank loans of the foreign subsidiary of Aguilar Corporation, not consolidated, which guaranty amounted to $650,000.00 at December 31, 1937 and 1936. No intcr-company profits or losses are included in the above consolidated balance sheets. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS a SELLS CERTIFIED PUBLIC ACCOUNTANTS J 22 EAST 40TH STREET NEW YORK ACCOUNTANTS' CERTIFICATE St. Joseph Lead Company: We have made an examination of the consolidated balance sheets of St. Joseph Lead Company (incorporated in New York) and its subsidiary companies as of December 31, 1937 and 1936, and of the related summaries of consolidated net income and surplus for the years 1937 and 1936. In connection therewith, we made a review of the accounting methods and examined or tested accounting records of the companies and other supporting evidence in a manner and to the extent which we considered appropriate in view of the system of internal accounting control. All subsidiary companies controlled by your company were examined by us with the exception of the foreign subsidiary of Aguilar Corporation (not consolidated), which subsidiary has been audited by another firm of independent public accountants. Physical inventories were taken by employees of the companies at varying dates during each year. The quantities and condition of the inventories as of December 31, 1937 and 1936, were certified to us by officials of the companies. Beginning January 1, 1937, the companies discontinued the use of average monthly costs and adopted the * `last-in, first-out' ' method of determining the cost of sales of finished lead, zinc, etc. The effect thereof is shown in footnotes appended to the accompanying consolidated balance sheets and summaries of consolidated net income In our opinion, based upon our examination and subject to the realizable value of investments and advances the accompanying consolidated balance sheets and related summaries of consolidated net income and surplus, with the footnotes thereon, fairly present, in accordance with accepted principles of accounting consistently followed by the companies except as stated in the preceding paragraph, their financial condition at December 31, 1937 and 1936, and the results of their operations for the years ended those dates. HASKINS & SELLS New York, February 23, 1938. ... Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR 1937 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.