Document k65e4x54B3mv2XEj6eprGBX5D

FILE NAME: Kennecott (KENN) DATE: 1960 Dec 31 DOC#: KENN006 DOCUMENT DESCRIPTION: Kennecott Copper Corp Annual Report 1960 Kennecott ANNUAL REPORT P r e s i d e n t 's L e t t e r To the Stockholders: Net income of Kennecott and whollyowned subsidiaries in 1960 was $7.00 a share, as compared with $5.19 in 1959, when our business was adversely affected by strikes. The amount distributed to stockholders was $5.00 a share, as against $6.00 the year pre vious. The reduction in the amount distrib uted to stockholders from $6.00 to $5.00 a share in 1960 was made principally with a more realistic view of the company's opera tions, bearing in mind that in 1959 we dis tributed more than we earned. Copper Demand 1960 opened with a strong demand for copper following termination of the strikes of the previous year. However, as customers' stocks were replenished and the U. S. general business recession developed, the demand fell off. Throughout the year, we operated our properties at full capacity. The demand for copper from Europe, where we sell the output of our Chilean division, remained strong and we were able to sell a portion of our domestic production there as well. However, by the year's end it was evident that a reduction in the operating schedules at our domestic min ing divisions from 7 days a week to 6 days 2 would be necessary. This change was made effective February 1, 1961. Shipments and Prices Total shipments to U. S. and foreign cus tomers in 1960 were 540,600 tons, as com pared with 434,600 tons in 1959. The average price received for our copper (from domestic and foreign customers) was 31.0 cents a pound, which compares with 30.0 cents in the previous year. Today our domestic price is 29 cents and the foreign price 28.8 cents. Labor Once the strikes at our western mining divisions had been settled there was no sig nificant work stoppage in 1960. In addition to the agreements at our western properties, new agreements were reached during the year at other divisions, all without work in terruption. Cost Reduction and Improved Operating Efficiency Our cost control programs, inaugurated in 1958, were designed to provide continuing improvement in operations to offset declines in the grade of ore and rising costs of labor, COPPER CORPORATION ANNUAL REPORT Jl j D K ennecott COPPER COR POR ATIO N General Offices: 161 East 42nd Street, New York 17, N. Y. F O R T Y -S IX T H A N N U A L REPORT for the year ended December 37, 1960 c u n tp n lK PAGE PRESIDENT'S L E T T E R ........................................................2 RESULTS AT A G L A N C E .................................................. 4 REVIEW OF O P E R A T IO N S .............................................5 Mining D ivisions...................................................................5 DOMESTIC D IV IS IO N S ........................................................6 C H ILEA N D I V IS IO N ...................................................................................... 7 Exploration and D evelopm ent.............................................8 R e s e a r c h ............................................................................. 9 Fabricating Subsidiaries......................................................10 CHASE BRASS & C O PPER CO ., INCORPORATED . . . 1 0 TH E OKONITE C O M P A N Y ................................................ 10 Antitrust S u i t ...................................................................... 11 I n v e s t m e n t s ...................................................................... 11 Q U EB EC IRON AND TIT A N IU M CORPORATION . . . 11 TIN AND ASSOCIATED M INERALS LIM ITED . . . . 1 3 Industrial R e la tio n s ........................................................... 13 LABOR R E L A T I O N S ....................................................................................13 SPECIAL P R O G R A M S ...................................................... 14 S A F E T Y ............................................................................14 E M P L O Y E E S ...................................................................... 14 Public R e la tio n s .................................................................15 Organization C h a n g e s ......................................................15 FINANCIAL R E V I E W ......................................................16 Equity in Operations of Unconsolidated Subsidiaries 19 Working C a p ita l................................................................ 20 Schedule of Investm ents..................................................... 21 Financial Statem ents........................................................... 22 BOARD OF D IR E C T O R S ................................................ 25 HISTORICAL T A B L E ........................................................... 26 OFFICERS AND E X E C U T IV E S .....................................28 P r e s i d e n t 's L e t t e r To the Stockholders: Net income of Kennecott and whollyowned subsidiaries in 1960 was $7.00 a share, as compared with $5.19 in 1959, when our business was adversely affected by strikes. The amount distributed to stockholders was $5.00 a share, as against $6.00 the year pre vious. The reduction in the amount distrib uted to stockholders from $6.00 to $5.00 a share in 1960 was made principally with a more realistic view of the company's opera tions, bearing in mind that in 1959 we dis tributed more than we earned. Copper Demand 1960 opened with a strong demand for copper following termination of the strikes of the previous year. However, as customers' stocks were replenished and the U. S. general business recession developed, the demand fell off. Throughout the year, we operated our properties at full capacity. The demand for copper from Europe, where we sell the output of our Chilean division, remained strong and we were able to sell a portion of our domestic production there as well. However, by the year's end it was evident that a reduction in the operating schedules at our domestic min ing divisions from 7 days a week to 6 days 2 would be necessary. This change was made effective February 1, 1961. Shipments and Prices Total shipments to U. S. and foreign cus tomers in 1960 were 540,600 tons, as com pared with 434,600 tons in 1959. The average price received for our copper (from domestic and foreign customers) was 31.0 cents a pound, which compares with 30.0 cents in the previous year. Today our domestic price is 29 cents and the foreign price 28.8 cents. Labor Once the strikes at our western mining divisions had been settled there was no sig nificant work stoppage in 1960. In addition to the agreements at our western properties, new agreements were reached during the year at other divisions, all without work in terruption. Cost Reduction and Improved Operating Efficiency Our cost control programs, inaugurated in 1958, were designed to provide continuing improvement in operations to offset declines in the grade of ore and rising costs of labor, materials and services. All divisions focused their attention on securing the most effective return from each unit of time, labor, mate rials and facilities used. New plant invest ments and purchases of additional capital equipment also contributed toward produc tion cost savings. Quebec Iron and Titanium Corporation A development of importance to stock holders was the record made by our twothirds owned subsidiary, Quebec Iron and Titanium Corporation. Markets for the com pany's products, titanium slag and iron, were expanded and productive capacity is being increased to meet the new demand. All time high marks were established in tons of ore treated, and slag and iron produced. * * * As the domestic demand for copper im proves, Kennecott will be in a better position to take advantage of the situation because of the completion of our integration program. By order of the Board of Directors, February 27, 1961 President The annual meeting of stockholders of Kennecott Copper Corporation will be held at 11:00 a. m. (E ast ern Daylight T im e), Tuesday, May 2, 1961 in the Terrace Ballroom of The Statler Hilton Hotel, 7th Avenue and 33rd Street, New York City. A formal notice of the meeting and proxy statement, together with a form of proxy, will be mailed to stockholders on or about April 3, 1961, at which time proxies will be solicited by the management. 3 R esu lts at a G lance I960 1959 Sales and Other Income Costs and Expenses (except Taxes) Taxes of All T y p e s ................ Dollars per Share . . . . Net In c o m e ........................ Dollars per Share . . . . Distributions to Stockholders . . Dollars per Share . . . . Depreciation and Retirements Capital Expenditures . . . Net Worth-- Book Value Dollars per Share . Average Number of Employees Number of Stockholders . . $503,341,000 $319,052,000 $106,927,000 $9.67 $444,903,000 $302,090,000 $ 85,473,000 $7.73 $ 77,362,000 $7.00 $ 55,265,000 $5.00 $ 57,340,000 $5.19 $ 66,318,000 $6.00 $ 17,177,000 $ 25,342,000 $ 12,429,000 $ 85,254,000 $741,821,000 $67.11 27,205 91,675 $755,931,000 $68.39 27,231 88,723 4 Review of Ope r a t io n s M IN IN G DIVISIONS Operations at the domestic divisions were resumed early in 1960 following termination of the long strikes of 1959. The strikes at three divisions had been settled by the first of January and at the Utah division by the beginning of February. Full production at all divisions was not reached until March. The table below shows the amounts of ore mined and milled, and copper produced at all divisions in 1960 and in 1959. The increases in 1960 resulted from full operation seven days per week following ter mination of the strikes. An additional factor in the case of Ray was the completion in July of the expansion program begun in 1958. Production of the important by-products molybdenite, gold and silver was as follows: Molybdenite (000 Pounds) Gold (Fine Ounces) Silver (Fine Ounces) 1960. . 27,426 1959 . . 20,967 396,839 240,179 3,700,784 2,167,469 Divisions Chino M i n e s ...................... Nevada Mines ...................... Ray Mines ............................ Utah C o p p e r ...................... Total Domestic . . . . C h ile a n ................................. Grand T otal............................ Total Copper Produced From All Sources (Net Tons) 1960 1959 62,725 47,439 58,799 215,125 37,535 26,257 29,084 142,352 384,088 187,221 235,228 182,017 571,309 417,245 Ore Mined and Milled (Net Tons) 1960 1959 7,274,700 7,354,606 6,526,814 28,060,300 4,453,520 4,399,042 2,998,888 19,673,217 49,216,420 11,518,005 31,524,667 11,052,428 60,734,425 42,577,095 5 Domestic Divisions The copper content of the ore mined in 1960 declined slightly from that of 1959. The grade at each of the domestic divisions was as follows. Division Pounds o f Copper Per Ton o f Ore Mined I960 1959 Chino Mines . . . 14.8 16.0 Nevada Mines . . . 15.8 15.3 Ray Mines . . . . 18.0 18.6 Utah Copper . . . 16.2 16.3 Average . . . 16.2 16.3 Because of the rising costs of labor, goods, and services, the quest for improved operat ing methods and procedures was continued at an accelerated pace. Numerous cost re duction improvements were made during the year at all divisions. Specific examples of some of the more important steps taken, either to reduce production costs or to in crease metal recovery, are given below. At the Chino division work was begun on the installation of a skip hoist, similar to that at the Nevada division, which will permit removal of ore from the lower levels of the pit with the aid of trucks more economically than by rail; the skip is expected to be in operation by October 1961. The precipita tion system by which copper is recovered from the waste material on the mine dumps is being enlarged and improved, and in 1960 nearly 19,000 tons of this low cost copper were produced; this was 20 per cent more than was produced in the previous 12 months when, as in 1960, the system was operated continuously. An important stripping oper ation was carried on during the year to ex tend the mining area of the pit. At the Nevada division all ore require ments were supplied from the Liberty Pit. This concentration of operations (previous ly operations had been carried on simultane 6 ously at this and two other pits), together with the successful use of the new skip hoist, permitted greater flexibility in mining and better utilization of manpower. Automatic equipment was introduced for various ap plications, including operation of the car dumper with closed circuit television. Expansion of productive capacity at the Ray division was completed by the middle of the year. The $35,000,000 program in volved ( 1) enlarging the pit, which necessi tated the relocation of certain surface facili ties, to permit the mining of additional ore reserves, and (2) increasing mine equipment and mill capacity to make possible the min ing and milling of 22,500 tons of ore a day as compared with 15,000 tons formerly. The expansion enables the division to produce 20,000 additional tons of copper a year, an increase of nearly 40 per cent. At the Utah division modification of the smelter, acquired in 1959 as a step in our integration program, to adapt it to our re quirements has been started. This was for merly a custom smelter and treated the ores of other western mines, in addition to those of the Utah division. Modification plans pro vide for improvement of methods and facili ties, the most important being the installa tion of a new materials handling system which will convey incoming products direct ly to the reverberatory furnaces, eliminating the present roasting process and reducing the time required to process concentrates into copper anodes. The 75,000 kilowatt addi tion to the power plant came on line success fully during the year, increasing capacity from 100,000 to 175,000 kilowatts, sufficient for all present and foreseeable future needs. At the adjoining plant which produces sul phuric acid from smelter gas, jointly owned by Kennecott and the American Smelting and Refining Company, a scrubber system has been installed to recover previously lost sulphur dioxide, thereby increasing sulphuric acid production by 50 tons a day. At all divisions emphasis is being placed on the development of automatic process control. Because the concept is so new, the work is being done in close cooperation with the company's Research Department. Operation of Kennecott's new electrolytic refinery in Maryland was begun in Septem ber 1959. Each month during 1960 difficul ties normal to the commissioning of a new refinery were overcome, and the ability to produce the rated capacity of 16,500 tons a month was demonstrated. The plant's input was made up of blister copper cakes and anodes from all of Kennecott's domestic and Chilean smelters, which had previously been electrolyzed by custom refiners. Total pro duction of refined shapes, most of which was in the form of wire bars, was 116,000 tons. The method of producing billets by continu ous casting announced last year was further developed, and billets of superior surface quality and internal structure were being pro duced at the end of the year. We are continuing to have a small amount of copper refined at the Baltimore refinery of American Smelting and Refining Co., under the terms of a contract running until 1965. Chilean Division (Braden Copper Company) The European market absorbed virtually the entire output of Braden's copper for the year 1960. Fire refined (3-Star) orders ac counted for 41 % , electrolytic 40 % , and the remaining 19% was sold as blister. Atmospheric precipitation, a major factor in Braden's production, was lower in 1960 than in any year during the last fourteen. However, improved utilization of equipment and electric power, and carefully applied maintenance and production schedules made possible the attainment of a mine-mill ton nage in excess of that of any previous year. The copper content per ton of ore mined increased from 38.8 pounds in 1959 to 39.9 pounds in 1960, a trend opposite to the aver age of Kennecott's U.S. mines. In May a series of devastating earthquakes How a Skip Hoist Works. The hoist being installed at Chino consists of two 40-ton cars, or "skips," working in counterbalance, traveling up and down the sides of the pit on a 1400-foot track. The bins at the bottom are loaded by trucks, and the skips, in turn, are loaded from the bins. As a loaded skip is hoisted to the unloading station at the top of the pit, an empty skip rolls down for loading. Ore from the unloading stations is carried to the mill by electric trains as in the past. As pits become deeper the combination of handling ore by truck, skip and train is the most economical method. wrought havoc to southern Chile, affecting at least a third of the area and nearly that much of the nation's population. Thousands of lives were lost, hundreds of thousands were left homeless, and property damage was esti mated at more than $200,000,000. Braden's properties are located some 200 miles north of the afflicted area and were not damaged. A special reconstruction bill to provide for financing and other needs resulting from the earthquakes was adopted by the legislature. Under the new law the Braden Copper Com pany, along with the other large copper min ing companies, is required for 5 years begin ning in 1961 to purchase obligations issued 7 by the Government of Chile, in an amount equivalent to 20 per cent of the net profits of the company for each such year. These pur chases are in addition to the regular taxes imposed on the copper companies. The ob ligations will not bear interest, and in addi tion, no repayment is scheduled until 1966, to be completed by 1971. The amount of any new investment which Braden actually makes in Chile each year from 1961 through 1965 to increase capacity for the production or re fining of copper will represent a deduction from the amount of obligations required to be subscribed for that year by Braden. The present Administration's fight to curb the inflation which has long plagued Chile has produced impressive results. The annual increase in the cost of living, which was 32 per cent in 1958 and 33 per cent in 1959, was held to 5 per cent in 1960. During the year negotiations were carried on with the Chilean Government regarding the protection of a proposed $200,000,000 investment for expanding Braden's produc tive capacity from 180,000 tons to 280,000 tons of copper annually. However, no final action in the matter has been taken by the Government. The project is of such nature that it would be six years after construction was started before the new facilities would be in operation. EXPLORATION AND DEVELOPMENT During 1960 the silver, lead and zinc property at Tintic, Utah entered the develop ment stage, and development work was con tinued at the copper property located at Safford, Arizona. Both of these properties have been mentioned in previous Annual Reports. The discovery of mineralization in the East Tintic district was first discussed in the 1958 Annual Report, which was written after the completion of an exploration shaft. This shaft opened up a previously uninvestigated area which, from geologic and other evi 8 dence, appeared to be of potential impor tance. During 1960, underground work dis closed new ore possibilities that were en couraging enough to warrant development. During this last year a 400-foot incline-shaft was started with the object of opening up lower levels of the ore body to development and sampling. This incline will be completed in 1961 along with accompanying sub-level development, the installation of a pumping plant, and the conducting of beneficiation tests at our Salt Lake City Research Center. The year marked completion of surface development drilling at Safford, Arizona. A development shaft adjacent to the ore body was started in September and by year's end a headframe had been constructed, hoisting machinery had been installed, and the sink ing of a shaft had begun. It should be com pleted to the scheduled depth of 800 feet in the spring of 1961. Horizontal development work will then be started from the bottom of the shaft. This will permit opening the ore body to bulk sampling for pilot plant tests. The ore extracted will be crushed and passed through a small sampling plant constructed for this purpose on the property adjacent to the shaft. The increased use of geochemical along with geophysical prospecting by the com pany's geologists in Canada and throughout the western states, continues to disclose areas that would probably be missed by use of or dinary geological prospecting techniques. Many thousands of samples of rock, soils, water, and stream sediments are tested, some directly in the field and some in geochemical laboratories established by the Exploration Department for detecting minute traces of copper or other metals. The Exploration Department during 1960 stepped up its work of applying statistical methods to ore finding. Within the last few years electronic computers have made it pos sible to analyze in a few hours a tremendous mass of geologic and other data pertaining to mineral deposits that formerly required 1 many weeks, or even months, to evaluate with any degree of confidence. Also, it is anticipated that statistical analysis proce dures will become an important control for drilling operations as well as a guide to Kennecott's exploration ventures. RESEARCH In order to test information developed in the laboratory on the leaching of mine waste, an experimental dump containing 168,000 tons was made available at the Utah mine site. During the leaching of this experimental dump it was noted that by controlling the acidity of the leaching water the pipeline and the pond on the dump were freed of the iron and aluminum salts that currently constrict the pipelines and seal the ponds. When the acidity was controlled on a test run on the regular operating dumps at the Utah divi sion. it was found that the amount of water that could be circulated could be increased which resulted in a material improvement in the quantity of copper leached. This proce dure is now in full scale operation on a trial basis. Research and development work at the Research Center in the field of automation and instrumentation is progressing. Close liaison between the Center and personnel at the operating properties has been maintained in planning, specifying, and installing con trol equipment. Sections of the plants have been set aside for automation studies. Rod mills are being automated by the use of special controls and sensing devices that uti lize various levels and intensity of sound within the mill. Also, to control pulp density within these mills, the use of radioactive iso topes is an effective new procedure. Grind ing and flotation processes, that formerly were controlled by the density of the pulp, are now being subjected to pilot plant investi gation involving control through pulp vis cosity. It is important to obtain instantane- E xpansion of P roductive C apacity of Ray M ines D ivision The pit was enlarged to permit expansion of mining. Additional ore storage capacity, new 00-ton ore cars, and greater belt-conveyor capacity were added. New ore crushing plants, and shops were built. The ca pacity of the mill was increased 50 per cent to permit handling the larger amount of ore that can be mined. 9 Some of the new twin-engined diesel trucks, which haul 60 tons of ore up grades as steep as 7 per cent. These trucks operate 24 hours a day. Note relative size of men. ous and continuous assays of mill products and we are experimenting with instrumenta tion, especially of the X-ray fluorescent type, for this purpose. FABRICATING SUBSIDIARIES Chase Brass & Copper Co. Incorporated Business of this Kennecott subsidiary in 1960. in terms of pounds of brass mill prod ucts shipped, was 17 per cent less than in the previous year. The anticipated recovery in general business did not materialize in the majority of industries using Chase products. Housing starts dropped sharply and there was a steady reduction of metal inventories by Chase customers. The competition for the reduced volume of business available, and the continued importation of foreign brass mill products, resulted in price reductions which naturally affected profits. 10 Continued emphasis has been placed on reducing manufacturing costs and improving product quality. New equipment of unusual design was installed, including high-speed twin-tube reducing mills for the production of copper and brass tubing under 2 inches in diameter. The Product Development Department has introduced a brass with improved tensile and fatigue properties, particularly suited for components of automobile radiators. Also, an improved method has been found for join ing copper to copper, and to copper alloys. Joints made by this method retain virtually all of the high electrical and thermal conduc tivity of copper, which is especially advanta geous for many electrical and electronic ap plications. Cost savings, easier production methods, and improved products are among the many advantages expected to result from the new technique. The development of protective coatings that will preserve the natural color and beauty of copper and brass when used for architec tural purposes outdoors shows great promise. Test panels and actual service applications of the new coatings have shown marked im provement over those heretofore used. The work is being carried on in cooperation with the Copper Products Development Associ ation. The production and fabrication of the rare metal rhenium has progressed so far that a separate division has been established to handle it. This unique high temperature metal, both in pure form and alloyed with molybdenum and tungsten, is being fabri cated into rod. wire and strip. The Okonite Company In 1960 the volume of business of this sub sidiary. as measured by pounds of products shipped, was 3 per cent below that of 1959. There was less demand for cable and prices were lower because of keen domestic com petition and aggressive invasion of U. S. mar- kets by low-cost foreign-built cable. Okonite received the order for cable for all of the 115,000 and 230,000-volt under ground power circuits for the Niagara Power Project of the New York State Power Author ity. The first of these has been installed and placed in operation. The company's 345,000volt underground power cable is undergoing the cooperative testing program at Cornell University sponsored by a group of public utilities and three other cable manufacturers. Based on supplying the cable design used at Cornell, Okonite has furnished engineering data and price quotations to one of the coun try's largest utilities for a 17-mile under ground circuit, the first of this voltage pro posed in the U. S. New products that gained acceptance in 1960 included high voltage plastic-insulated power cables for off-shore oil-drilling equip ment, heavy duty portable mine cables of in creased flexibility and greater durability, and a complete line of low-cost, all-plastic insu lated and jacketed control cables. New production equipment was added for impregnating with heavy oil the long lengths of super-tension power cables required by utilities. Other additions include pressure chambers for vulcanizing rubber-insulated cables and machines for producing unit-type telephone cable which will increase sales op portunities in several profitable markets. Among the research developments of 1960 was a machine for making non-destructive cable tests which has much greater sensitivity than earlier models pioneered by Okonite. The new electronic Micro-Scanner probes the cable inch by inch and makes a complete record of its degree of perfection. The device assures the shipment of cable free of hidden flaws and has been instrumental in securing orders for many cables destined for critical uses. ANTITRUST SUIT Stockholders were advised in the 1959 An nual Report that the Department of Justice had brought suit against Kennecott charging that the company in acquiring the assets of The Okonite Company, had violated Section 7 of the Clayton Act. During 1960 prepara tion for trial has proceeded. Kennecott has filed answers to lengthy interrogatories and produced a large number of documents for inspection by Government attorneys. A trial date has not yet been set. INVESTMENTS Quebec Iron and Titanium Corporation Throughout 1960 this two-thirds owned Kennecott subsidiary operated at capacity. Production of titanium slag and iron in creased 56 per cent and 52 per cent, respec tively, over the previous year. Ore Haulage from Mine to Mill. At the Utah divi sion cars carry about 90 tons of ore each. A pproximately / ,000 carloads are hauled to the mill daily. 11 Treatment Plant of Quebec Iron and Titanium Corporation at Sorel, Que bec. In the left foreground is the pre-treatment plant, where the ore is prepared for charging into the electric furnaces contained in the building in the background. Before the end of 1961 this plant will be treating ore at a rate of 1,000,000 tons annually. The production figures in gross tons for the last five years are as follow s; Year Titanium Slag Produced Iron Produced Ore Treated 1960 . . 345,213 1959 . . 217,589 1958 . . 144,029 1957 . . 231,179 1956 . . 195,156 221,945 145,990 105,248 167,437 142,745 863,726 559.205 375,832 560,049 464.651 Dollar sales were 56 per cent higher than in the year previous. The market for slag in Europe, opened in 1959, improved substan tially. This was due to the growing demand for titanium pigments in the European econ omy, coupled with manufacturers' interest in a more concentrated raw material that pro- 12 vides operating benefits over other titanium compounds. Demand for the various types of Sorelmetal. the company's iron, also increased. Sales of high carbon Sorelmetal were particu larly encouraging; most of this material was consumed in the production of ductile iron. Ductile iron, developed about ten years ago, combines the best properties of iron and steel, and can be easily cast and shaped. It has nearly twice the tensile strength of gray cast iron which permits corresponding weight re duction in finished products. Its use is show ing considerable growth in world markets in cluding its adoption for automobile parts. To meet the growing demand for both slag and iron, the production facilities are being expanded. Construction of a new kiln and a coal dryer, and the rebuilding of one of the original furnaces was undertaken. The ex pansion will be completed in 1961 and will mean that total capacity will be raised from 863,000 tons of ore a year to 1,050,000 tons. British Titan Products (Canada) Limited, subsidiary of the major pigment manufac turer in England, has begun construction at Sorel of a 15 to 20 million dollar plant which will use Q. I. T. slag. The parent company became a customer in 1960. While in 1959 Q. I. T. operations resulted in a minor loss, in 1960 the company made a profit. Tin and Associated Minerals Limited A record amount of 840,000 pounds of columbite concentrate, this Nigerian com pany 's principal revenue p roducer, was shipped during 1960. Additions to the concentrating and power plants were built to permit more efficient and economic concentration of the ore. The new facilities, which were placed in service early in 1961 will permit a more uniform monthly production rate and minimize the company's dependence upon the rainy season to meet production requirements. INDUSTRIAL Labor Relations RELATIONS Effects of the 1959 strike at the western mining divisions carried over into the new year, inasmuch as settlements with unions at the Utah division were not completed until late in January and full operations were not resumed until March. Otherwise, there were no significant interruptions in production in 1960 at any of the company's mining or fabri cating properties. In June, agreement was reached with the union representing employees at the new Eastern Refinery in Maryland; this contract expires December 31,1961. During the year FURNACE LADLE WATER-COOLEDMOLD WATER SPRAY TING :m e n t PINCH ROLLS CIRCULAR SAW CASTING TILTING BASKET Continuous Casting oj Copper Billets. Molten cop per is poured from the furnace into the ladle and thence into the water-cooled mold at a controlled rate. After partial solidification, the billet is further cooled by a water spray. It is then passed through rolls which control the speed. The circular saw automatically cuts it to the pre-determined length, moving downward with the billet. The cut length drops into the tilting basket from where it is con veyed to the inspection line. 13 a number of new labor agreements at our fabricating subsidiaries were also concluded. Among these were contracts covering em ployees at the Cleveland division of Chase Brass and Copper Company and the four op erating divisions of The Okonite Company. Labor agreements at our Chilean division, Braden Copper Company, expired on De cember 31. New agreements, which run until March 31, 1962, provide for a 15 per cent increase in wages and salaries, certain fringe benefits, and a single bonus payment. In 1961 the company faces major con tract negotiations. Contracts at the four west ern mining divisions expire in June and July. Contracts covering employees at Chase's Cleveland division expire in the summer, and at the Waterbury division in the late fall. As stockholders are aware, Kennecott has worked diligently throughout the last decade to build sound labor-management relation ships. During the past year we have been heartened to note that these efforts are begin ning to result in a better understanding of company objectives. Special Programs Our special programs designed to improve individual and company performance have been maintained vigorously. The Tuition Aid Program, and the Sug gestion System and Patent Plan have operated successfully. During the year over 700 em ployees participated in the Tuition Aid Pro gram completing a total of 1,100 courses. This program reimburses the employee for two-thirds the cost of successfully completed courses of study taken in any approved edu cational institution provided such study is directly related to his present or possible fu ture work. Under the Suggestion System and Patent Plan there were 1,400 suggestions adopted and a total of $55,500 was distributed in awards. The highest award was paid to Lee Bateman, a bulldozer operator at the 14 Blasting at One of Kennecott's Open Pit Mines. Large electric shovels will scoop up the loosened material into railroad cars for hauling to the mill. Chino division. He suggested the installation of a hydraulic lift on the rear of his tractordozer for moving sections of railroad track in the pit which permits doing the job with one dozer instead of two. He received $8,579, representing 25 per cent of the saving to the company during the first year resulting from the adoption of his idea. Safety Our continuing accident prevention pro gram has produced effective results during the year. Two of the western mining divi sions attained the best safety records in their histories. Several of the plants will receive National Safety Council awards for their out standing records. Safety is emphasized not only on the job, but off the job as well. All possible means are used to promote this objective and the unions have cooperated with the company in this effort. Employees During 1960 the average number of em ployees at Kennecott and its wholly-owned subsidiaries was 27,205. This compares with 27,231 in 1959. These figures do not in clude employees of partially-owned subsidi aries. PUBLIC RELATIONS Public awareness of Kennecott's economic contribution to the areas where its mining op erations are located and public acceptance of the company's efforts to improve its competi tive position in the world's copper markets, are prime objectives of Kennecott's public relations programs in the United States and Chile. All available media-- press, radio, televi sion, plant publications, plant tours, motion pictures, exhibits, donations-- are utilized. The public relations departments endeavor to keep the plant communities informed of the company's active interest in civic affairs, its constant attention to improvement of plant operations and its dedication to the economic, social and cultural progress of the areas in volved. During the year efforts were expanded to acquaint company personnel and the respec tive communities with developments in the world's copper markets. This was done in order to point up the possible effects of such developments on Kennecott's operations as a means of improving understanding of the company's policies and actions. ORGANIZATION CHANGES On April 25, 1960, C. Harry Burgess was elected Vice President (Exploration) ofKennecott Copper Corporation, vice James Boyd, resigned. Mr. Burgess was formerly Presi dent of Kennecott's exploration subsidiary, Bear Creek Mining Company. Appointment of Robert H. Lounsbury as General Counsel of Kennecott was an nounced April 26th. Previously Mr. Louns bury had been associated with International Business Machines Corporation, and the law firm of Cravath, Swaine & Moore. Effective May 26th Seymour S. Jackson, a long time member of the legal staffs of Ken necott and subsidiaries, was promoted to the newly created position of Vice President (A dm inistration). On August 1st after long and valued serv ice Ellsworth S. Hann, Treasurer, retired. Mr. Hann had been associated with Kenne cott and predecessor companies for more than 50 years. James R. Simpson, previously Assistant Treasurer, was appointed in his stead. In view of the importance of industrial re lations in the company's affairs, Arthur S. Cherouny has been appointed Industrial Re lations Counsel and is now devoting his full time to such matters. He was formerly Di rector of Industrial and Public Relations. In January 1961, Lester Ziffren was made Director of Public Relations of Kennecott. He formerly served in that same capacity with Braden Copper Company. Mr. Ziffren be gan his career as a newspaperman with United Press International and has had wide experience in the U. S., South America and Europe. Robert L. Ward, formerly Manager, Tax Division, Comptroller's Department, has been named Assistant Comptroller. John P. O'Keefe, formerly Division Comp troller of Utah Copper Division, was named General Manager, vice F. C. Green. Mr. Green was made Assistant to the General Manager, Western Mining Divisions. At Chase Brass and Copper Company Herman H. Kremer was promoted to Vice President (Sales) in place of George B. Mose ley, resigned. Mr. Kremer had previously held various sales executive positions with Chase. 15 V F inancial Review Income and Dividends Consolidated net income for the year 1960 was $77,362,412 or $7.00 per share of stock, with cash distributions to stockholders amounting to $5.00 per share. This com pares with the consolidated net income for 1959 of $57,340,111 or $5.19 per share, and the cash distribution of $6.00 per share. Of the net income, the proportion derived from Chilean operations dropped to 30.5% in 1960 from 36.5% in 1959. This latter percentage was abnormally high because 1959 production at Kennecott's mines in the United States was severely reduced by pro longed strikes, while production in Chile was reasonably constant. Sales and Inventories Sales and other income in 1960 rose to $503,340,658, representing an increase of 13% over the $444.903,374 for the prior year. The copper industry benefited in 1960 from relatively stable copper prices, with Kennecott receiving an average of 31^ per pound-- up one cent over the prior year's av erage price. With the resumption of full scale produc tion in the United States early in 1960, Ken- 16 necott again was able to meet the require ments of its customers, both in this country and abroad. Tonnage of copper delivered in 1960 increased to 540,598 tons from the 434,566 tons delivered during the strike lim ited year of 1959. The greater portion of this increase was due to the continued strong de mand in Europe. In anticipation of possible Chilean produc tion losses and to meet the pent-up demand created by the 1959 strikes, production was maintained at near capacity during most of 1960. Copper inventories toward the year end, however, were rising throughout the in dustry above the levels needed for current delivery requirements, with a resulting weak ness in price. During the year, the industry began to curtail output so as to establish a better relationship between supply and de mand. Effective February 1, 1961, there fore, the production schedules at Kennecott's domestic mining properties were reduced from seven to six days a week. Earned Surplus Adjustment Stockholders were advised by letter on January 13, 1961, that Kennecott had sold its South African gold mining interests to a company formed by a syndicate of five com panies in the South African mining industry. Under the terms of the sales agreement, Kennecott will receive 3,500,000 South Afri can pounds (U.S. $9,813,125) for its inter est in Virginia Orange Free State Gold Min ing Company, Limited and Merriespruit (Orange Free State) Gold Mining Company, Limited. This amount is to be paid in five equal annual installments, starting Decem ber 1, 1961. In addition, Kennecott has a 20% interest in the future income of the pur chasing company, not to exceed 2,500,000 South African pounds (approximately U.S. $7,000,000). Under the agreement with the members of the syndicate, Kennecott will have the right, after receiving the 3,500,000 South African pounds, to acquire, if then deemed advisable, 20% of the outstanding stock of the purchasing company upon can cellation of the above interest in its future profits. Kennecott's total investment in the two gold mining companies amounted to $46,020,706. The excess of this amount over the fixed payment of $9,813,125 referred to above, namely $36,207,581, has been charged to Earned Surplus. Taxes United States and foreign taxes on income rose in proportion to the increase in taxable income. Total taxes per share increased to $9.67 in 1960 from $7.73 in 1959. In both instances, the amounts are significantly in ex cess of net income per share. The provision for all taxes for the year 1960, and the comparable figures for 1959, are summarized as follows: 1960 United States and foreign taxes on income . . . $ 85,632,636 Other taxes in cluded in oper ating costs and other accounts. 21,294,843 Total . . . . $106,927,479 Taxes-- Per Share $9.67 1959 $63,262,977 22,210.489 $85,473,466 $7.73 During the period covered by the chart 74 per cent of net in come was distributed to stock holders, and the other 26 per cent was retained in the business to cover increased costs of re placing machinery and equip ment, and of finding new ore deposits. NET INCOME AND AMOUNT DISTRIBUTED TO STOCKHOLDERS - PER SHARE OF STOCK 14 UcnJ 12 10 KENNECOTT COPPER CORPORATION NET INCOM E I I Reinvested Distributed in to Business Stockholders 1949 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '51 '52 '53 '54 '55 '56 '57 '58 '59 1969 17 The United States Internal Revenue Serv ice has completed review of Kennecott's do mestic tax returns through 1955 and is now in the process of auditing 1956. It is believed that amounts previously provided for taxes will prove adequate to cover any additional assessments for the years yet to be examined. Property, Plant, and Equipment Capital expenditures for 1960 totalled $25,341,799 as compared with the record high of $85,254,047 in 1959. Principal items in the 1960 total included: At Chino Mines Division, expansion of the precipitation facilities and completion of the additional power facilities. At Ray Mines Division, completion of the expansion program and construction of a lime burning and slaking plant. At Utah Copper Division, commence ment of smelter modifications and comple tion of the additional power facilities. Capital expenditures authorized but unex pended at the year end totalled $43,176,400. This covers smelter modifications at the Utah Copper Division, replacement of the molyb denite plant and construction of a skip hoist system at the Chino Mines Division, and other items consistent with Kennecott's gen eral program of replacement and improve ment. Depreciation and retirements increased to $17,176,787 in 1960 from $12,429,182 in 1959. This increase reflects the depreciation on new facilities and improvements. Government and Other Short-Term Securities At December 31, 1960, the company's holdings in government and other short-term securities amounted to $86,717,267. Of this amount, $60,070,663 represented obliga tions of the United States Government, with the balance comprising securities of various municipal governments and commercial pa per. Approximate market value of the total portfolio at the year end was $86,907,000 with an average maturity of slightly less than one year. Investments The investments of the company are shown in the schedule on page 21 in which the per centage of ownership in unconsolidated sub sidiaries is shown. Where applicable, mar ket values at December 31, 1960 also are shown. Investments totalled $83,866,003 at De cember 31, 1960, representing a net decrease Lee Bateman points out to his daughter, Gloria, the device that he suggested for attaching to a bulldozer which earned him $8,579 under the Kennecott Sug gestion System. Bateman will use the money to send Gloria and her two brothers to college. 18 E quity in O p eration s o f U n co n so lid a ted S u b sid ia ries Percentage of O w nership K ennecott's E q u ity in Profits or (Losses) 1960 1959 Quebec Iron and Titanium Corporation Tin and Associated Minerals Limited . Quebec Columbium Limited . . . . Garfield Chemical and Manufacturing C o rp o ra tio n ........................................ Kenranda Pesquisas Minerals . The Superior Wire Cloth Company . Kenbestos Mining Company Limited . 66% % 76 45.9 50 60 68.1 95 $2,071,600 ($ 53,735) 181,000 170,801 In Development Stage 663,300 514,513 (46,600) (19,1 19) 56,200 51,897 In Development Stage $2,925,500 $664,357 of $44,599,329 during the year. This de crease was due to the disposition of the com pany's investment in the two South African gold mining companies referred to previously in this report. The only significant increase represents the investment of $1,189,949 in the Kenbestos Mining Company Limited. This company was formed to hold the Greek asbestos properties referred to in previous Annual Reports. All Kennecott's rights in the project were transferred to Kenbestos (95% owned by Kennecott) when the company was formed in 1960. Equity in Unconsolidated Subsidiaries The financial statements presented in this report include the accounts of Kennecott Copper Corporation and wholly-owned sub sidiaries. The securities of controlled corpo rations, less than 100% owned, are included in the balance sheet with certain other securi ties as "Investments". The amount so in cluded at December 31,1960 is $50,528,854 and compares with Kennecott's equity of $55,706,800 in the net worth of these subsid iaries at the same date. Dividends of $564,384 from these subsidi aries are included in the statement of in come. The accompanying tabulation, based on unaudited reports, summarizes Kenne cott's $2,925,500 equity in the net profit of these subsidiaries in 1960, which amount compares with $664,357 for the prior year. Executive Incentive-Compensation Awards Awards were granted to thirty-two execu tive employees for noteworthy contributions to the success of the Kennecott enterprise. These awards aggregated $310,000. The amount of 1960 earnings available 19 for this purpose was $323,166 based on the provisions of the plan. The remainder of $ 13,166 cannot be used for further awards. Pension Programs The company and its consolidated subsid iaries in the United States and Canada main tain several pension programs to afford fu ture retirement benefits for employees. Dur ing 1960, $6,764,744 was provided for the maintenance of pension programs. At year end, there were 20,751 employees for whom funding of retirement or annuity benefits was being accomplished. In addition, there were 397 employees who were covered by other retirement arrangements, in the United States and Chile, for whom no funding of benefits is being provided. Benefits of $2,807,683 were disbursed during the year, with $2,469,371 paid from trust funds and $338,312 paid by the Com pany. At year end, there were 2,469 retired employees receiving pensions through these programs. Stockholders The 11,053,051 outstanding shares of Kennecott were held by 91,675 stockholders on November 30, 1960, as compared with 88,723 stockholders a year earlier. W orking Capital Summary of changes which accounted for the increase in working capital Working Capital-- December 31,1959 . Additions: Net income for the y e a r...................... Depreciation of plant and equipment Deductions: Distributions to stockholders........................................ Expenditures for plant and e q u ip m e n t...................... Net change in investments affecting working capital . Net change in other accounts....................................... Net increase in working c a p i t a l ........................................ Working Capital-- December 31, 1960. $228,517,303 $77,362,412 17,176.787 $94,539,199 $55,265,255 25,341,799 1,421,377 (6.734.468) $75,293,963 19.245.236 $247,762,539 20 S c h e d u l e o f I n v e s t m e n t s (Excluding Securities Carried as Current Asset Unconsolidated Subsidiaries: Quebec Iron and Titanium Corporation-- stock and advances (66% % ) Tin and Associated Minerals Limited-- stock and advances (76% ) . Quebec Columbium Limited-- stock and advances (45.9% ) . (controlled through voting arrangement) Garfield Chemical and Manufacturing Corporation-- stock (50% ) . . (controlled through operating arrangement) Kenranda Pesquisas Minerais-- stock ( 6 0 % ) ............................................ The Superior Wire Cloth Company-- stock ( 6 8 . 1 % ) ........................... Kenbestos Mining Company Limited-- stock and advances (95% ) . Other Investments: (having market quotations) Kaiser Aluminum & Chemical Corporation-- 1,925,000 shares of common s t o c k ...................... Molybdenum Corporation of America-- 117,748 shares of common stock; 14,285 stock warrants . Compania de Acero del Pacifico-- 973,635 shares of Series "B" common stock; 40,000 shares of Series "D" preferred s to c k .................................................. Other Investments: (no market quotations) J. W. Galbreath & Company-- notes receivable Western Phosphates, Inc.-- stock and advances Allied-Kennecott Titanium Corporation-- stock Miscellaneous investments................................. Market Value $78,203,125 4,694,159 407,301 $83,304,585 Balance-- December 31, 1960 $46,000,000 1,652,562 1,214,472 240,000 139,771 92,100 1,189,949 $50,528,854 $18,800,000 3,134,812 350,000 $22,284,812 $ 6,928,518 1.655.000 1.350.000 1,118,819 $11,052,337 $83,866,003 21 KENNECOTT COPPER CORPORATION AND WHOLLY-OWNED SUBSIDIARIES C O N S O L I D AT ED S T A T E M E N T S OF Incom e and Earned Surplus For the years ended December 31, 1960 and 1959 CO NSO LIDATED ST A T E M E N T S O F INCOME Sales and other income: Sales of metals and metal p r o d u c ts .................................................. Dividends, interest and m iscellan eo u s............................................ Costs and expenses: Cost of goods s o l d ............................................................................. Depreciation and retirem en ts............................................................. Selling and general administrative expenses...................................... Shut-down expenses during s t r i k e s .................................................. Research, general exploration and prospecting, and miscellaneous charges .............................................................................................. Exploration expenses previously written off now capitalized . . . Provision for U. S. and foreign taxes on in c o m e ................................. Net i n c o m e ............................................................. 1960 $496,483,102 6,857,556 $503,340,658 $294,949,995 17,176,787 20,278,209 1,883,850 7,158,298 (1,101,529) $340,345,610 $162,995,048 85,632,636 $ 77,362,412 1959 $437,239,893 7,663,481 $444,903,374 $269,285,824 12,429,182 20,149,341 19,047,757 5,455,953 (2,067,771) $324,300,286 $120,603,088 63,262,977 $ 57,340,111 CONSOLIDATED E A R N E D SU R PLU S Balance at beginning of y e a r .................................................................. Net income for y e a r.................................................................................. Deduct: Loss on disposal of South African investments................................. Distributions to stockholders (1960, $5; 1959, $6 per share) . . Balance at end of y e a r ............................................ See Notes to Financial Statements. $490,008,393 77,362,412 $567,370,805 $ 36,207,581 55,265,255 $ 91,472,836 $475,897,969 $498,986,588 57,340,111 $556,326,699 $ -- 66,318,306 $ 66,318,306 $490,008,393 22 KENNECOTT COPPER CORPORATION AND WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED Balance Sheets December 31, 1960 and 1959 ASSETS Current assets: C a s h ................................................................................................... U. S. Government and other short-term securities, at cost . . . Accounts receivable, less r e s e r v e s .................................................. Metals and metal pro d u cts.................................................................. Ores and concentrates, at c o s t............................................................. Materials and supplies, at or below c o st............................................ Accounts receivable, noncurrent............................................................. Investments, at or below c o s t.................................................................. Deferred charges, prepayments, etc......................................................... Mining p r o p e r tie s ................................................................................... Plants, equipment and other properties.................................................. Reserves for d epreciation........................................................................ L IA B IL IT IE S Current liabilities: Accounts p a y a b l e ............................................................................. Taxes a c c r u e d ................................................................................... A V i% promissory note of The Okonite Company due 1962 to 1976 . Sundry reserves and deferred c r e d i t s .................................................. C A P IT A L Capital stock, no par value: Authorized 12,000,000, outstanding 11,053,051 shares Stated cap ita l........................................................................................ Capital s u r p l u s ........................................................................................ Earned s u r p l u s ........................................................................................ See Notes to Financial Statements. 1960 $ 29,584,667 86,717,267 34,759,666 101,810,791 8,264,925 39,899,400 $301,036,716 7,850,500 83,866,003 10,026,728 156,157,475 486,414,471 (237,797,797) $807,554,096 $ 25,776,016 27,498,161 $ 53,274,177 7,000,000 5,459,398 74,806,424 191,116,128 475,897,969 $807,554,096 1959 $ 22,222,190 88,934,457 27,952,900 76,878,587 8,415,519 37,546,881 $261,950,534 -- 128,465,332 11,811,841 154,824,839 469,054,409 (226,675,255) $799,431,700 $ 20,138,365 13,294,866 $ 33,433,231 7,000,000 3,067,524 74,806,424 191,116,128 490,008,393 $799,431,700 23 Notes to F in a n cia l S tatem en ts INVENTORIES: Inventories of metals and metal products are car ried at the lower of cost or market. In general, cost is computed on a "first-in, first-out" method, but a ``last-in, first-out" method is used for certain inven tories of the fabricating divisions. M IN IN G PROPERTIES: Over the years the ore reserves have increased as a result of development work and improvements in methods of recovery of metals which make possible the treatment of lower grades of ore. Accordingly, no provisions for depletion have been considered necessary. EQUITY IN UNCONSOLIDATED SUBSIDIARIES: Refer to comments and tabulation on page 19. EARNED SURPLUS ADJUSTMENT: Refer to comments on pages 16-17. FOREIGN CURRENCY AMOUNTS: Foreign currency amounts have been included in the balance sheets at the U. S. dollar equivalents appropriate to the accounts translated: current as sets and current liabilities at year-end exchange rates; property accounts and investments, etc., at the rates of exchange in effect at date of acquisition; related depreciation reserves are based on U. S. dol lar costs. Foreign currency amounts have been in cluded in the statements of income at the U. S. dol lar equivalents determined at the exchange rates in effect at the time of the related transactions. RECLASSIFICATIONS: Certain of the 1959 amounts shown in the ac companying financial statements have been reclas sified for purposes of comparison. Auditors' Certificate Lybrand, Ross Bros. & Montgomery Certified Public Accountants To the Directors and Stockholders of KENNECOTT COPPER CORPORATION: We have examined the consolidated balance sheet of Kennecott Copper Corporation and Wholly-Owned Subsidiaries as of December 31, 1960 and the related statements of income and earned surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We previously made a similar examination for the year 1959. In our opinion, the accompanying consolidated balance sheets and statements of income and earned surplus present fairly the consolidated financial position of Kennecott Copper Corporation and Wholly-Owned Subsidiaries at December 31, 1960 and 1959 and the results of their opera tions for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. New York, February 7, 1961. 24 L ybrand, Ross Bros. & Montgomery Board of Directors *` C harles R. Cox, President, Kennecott Copper Corporation " C harles D. D ickey, Chairman, Committee on Trust Matters, Morgan Guaranty Trust Company of New York Leland B. F lint, President and General Manager, Flint Distributing Company J. Peter G race, President, W. R. Grace & Co. " Edmond A. G uggenheim, President, The Murry and Leonie Guggenheim Foundation M. M. H ardin, President, American Gypsum Company R. Stuart K eefer, President, The Okonite Company Carl K. L enz, President, Kennecott Sales Corporation W illiam F. Macklaier, Lawyer; M ember o f the Firm, Macklaier, Chisholm, Smith, Davis, Anglin & Laing " F rank R. Milliken, Executive Vice President, Kennecott Copper Corporation Walter H. Page, Vice President, Morgan Guaranty Trust Company of New York Clifton W. Phalen, President, New York Telephone Company C harles Sawyer, Partner, Taft, Stettinius & Hollister Robert G. Stone, Trustee; Special Partner, Hayden, Stone & Co. A lbert E. T hiele, Partner, Guggenheim Brothers W m . T hayer T utt, President, Broadmoor Hotel, Inc. " M edley G. B. Whelpley, Business Consultant **Member of Executive Committee. TRANSFER AGENTS Morgan G uaranty T rust Co. of N. Y., New York, N. Y. Boston Safe Deposit and Trust Company, Boston, Mass. REGISTRARS Bankers T rust Company, New York, N. Y. F irst N ational Bank of Boston, Boston, Mass. 25 H i s t o r i c a l T a b l e 1941- 1960 Operating In form ation Year 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 Copper ure mmeu and Milled (000 Net Tons) maieiiai nciuuieu to Dum ps (000 Net Tons) 52,025 56,458 59,515 51,023 42,421 27,502 48,154 46,971 39,816 55,018 56,168 59,015 56,147 44,611 51,589 61,203 58,292 50,628 42,577 60,734 51,181 49,261 48,902 40,865 41,858 30,137 48,468 58,467 56,158 78,612 87,318 81,673 79,746 66,715 74,641 98,955 100,859 72,419 75,506 107,340 In the U. S. (Net Tons) Copper Produced In Chile (Net Tons) Total (Net Tons) 409,825 470,581 472,913 406,107 329,239 203,489 369,256 350,330 296,649 418,123 430,187 444,582 429,052 338,749 370,487 402,309 387,291 318,732 235,228 384,088 145,179 161,800 164,276 174,688 164,899 93,725 138,472 164,252 139,592 157,910 171,247 184,813 140,347 108,330 156,228 179,896 172,707 191,578 182,017 187,221 555,004 632,381 637,189 580,795 494,138 297,214 507,728 514,582 436,241 576,033 601,434 629,395 569,399 447,079 526,715 582,205 559,998 510,310 417,245 571,309 Total Copper Sold (Net Tons) 583,290 649,475 640,810 601,721 485,226 280,330 509,829 538,345 407,999 589,694 605,473 634,360 524,322 509,754 533,820 495,219 552,944 543,845 434,566 540,598 Financial In form ation 26 Year Total Revenue (000 Dollars) Cost of Goods Sold Excl. Taxes (000 Dollars) Depreciation and Re tire m ents (000 Dollars) U. S. and Foreign Income Taxes (000 Dollars) Taxes Other Than U. S. and Foreign Inc. (000 Dollars) Other Costs (000 Dollars) Net In c om e (000 Dollars) 1941 1942 1943 1944 1945 1946 1947 1948 1949 1 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 $239,708 261,043 266,589 253,651 211,217 157,025 318,820 351,100 249,438 400,153 455,485 476,740 482,808 429,131 555,939 578,067 480,200 404,998 444,903 503,341 $135,855 151,591 158,039 157,569 143,567 104,503 159,804 185,181 157,798 231,206 254,708 287,957 269,416 261,429 252,392 250,435 275,653 250,961 263,909 273,655 $ 7,449 6,680 8,774 8,513 14,685 4,132 4,958 5,230 5,234 6,815 7,268 8,509 9,244 8,734 8,905 8,120 10,610 10,351 12,429 17,177 $ 34,268 43,071 41,312 35,481 13,512 11,163 49,723 52,344 24,247 58,726 83,036 73,580 90,069 54,323 122,429 138,072 80,368 55,286 63,263 85,633 $ 7,757 7,669 8,051 7,712 6,507 5,586 8,719 10,346 10,591 12,825 15,144 14,716 18,798 16,976 20,785 22,900 22,813 21,073 22,210 21,294 $ 5,127 3,211 5,447 5,512 2,692 8,594 3,734 4,192 3,458 2,420 3,982 5,827 6,527 9,763 25,912 15,386 11,504 7,206 25,752 28,220 $ 49,252 48,821 44,966 38,864 30,254 23,047 91,882 93,807 48,110 88,161 91,347 86,151 88,754 77,906 125,516 143,154 79,252 60,121 57,340 77,362 Net Income figures are as reported annually to stockholders, without adjustment for surplus charges and credits. KENNECOTT COPPER CORPORATION AND WHOLLY-OWNED SU BSIDIARIES Molybdenite Produced (000 Pounds) 19,285 23,818 24,572 25,071 21,437 12,335 25,777 22,253 19,895 29,407 30,837 34,480 35,224 28,200 31,960 32,538 28,756 23,626 20,967 27,426 Gold Produced (Fine Ounces) 284,089 333,158 344,357 313,386 258,556 155,749 391,497 338,228 296,818 450,174 430,515 430,139 487,335 387,039 414,444 403,381 377,367 313,380 240,179 396,839 Silver Produced (Fine Ounces) 2,335,819 2,650,206 3,059,286 2,693,558 2,183,964 1,305,283 3,128,766 2,823,068 2,384,043 3,586,763 3,441,549 3,679,035 3,911,928 2,852,744 3,445,762 3,213,559 3,295,170 2,821,364 2,167,469 3,700,784 Average Number of Employees 31,175 28,797 29,005 27,143 24,526 23,483 25,887 26,210 24,807 26,152 26,594 26,898 28,024 25,474 27,158 27,886 26,752 23,041 27,231 27,205 Grade of Copper Ore Mined In the U. S. (Per Cent) In Chile (Per Cent) 1.044 1.042 .996 1.005 .995 .965 .960 .946 .955 .958 .987 .952 .942 .943 .914 .843 .839 .851 .816 .809 2.105 2.179 2.079 2.269 2.203 2.133 2.110 2.220 2.140 2.090 2.110 2.151 2.106 2.110 2.046 2.014 1.963 1.948 1.938 1.993 Capital Expenditures (000 Dollars) 6,559 8,164 9,768 6,370 2,990 9,900 12,037 10,329 18,023 13,960 13,126 14,908 16,170 8,748 16,006 21,244 27,332 39,667 85,254 25,342 Year 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 Total Net Income Per Share --------------------------------------------------------- By Quarters 1st 2nd 3rd 4th Distributed to Stockholders (000 Dollars) Per Share Total Assets (000 Dollars) Capital and Surplus (000 Dollars) Book Value Per Share $ 4.55 4.51 4.15 3.59 2.79 2.13 8.49 8.67 4.45 8.15 8.44 7.96 8.20 7.20 11.60 13.23 7.32 5.44 5.19 7.00 $1.37 .94 1.16 1.02 .78 .26 1.90 2.14 1.51 1.55 2.33 2.03 2.15 1.70 2.68 4.08 2.57 1.05 2.03 1.65 $ .83 1.09 .90 .97 .73 .16 2.36 2.32 .64 1.94 2.32 1.73 2.03 2.19 3.37 4.16 1.99 1.02 2.29 2.21 $1.07 1.14 .98 .90 .47 .59 2.20 2.33 .83 2.20 1.90 2.03 1.87 1.47 1.53 2.48 1.45 1.34 .99 1.82 $1.28 1.34 1.11 .70 .81 1.12 2.03 1.88 1.47 2.46 1.89 2.17 2.15 1.84 4.02 2.51 1.31 2.03 ( .12) 1.32 $ 35,170 32,465 32,465 27,054 27,054 27,054 43,287 54,108 43,287 59,519 64,930 64,930 64,930 64,930 83,868 100,100 64,930 54,340 66,318 55,265 $3.25 3.00 3.00 2.50 2.50 2.50 4.00 5.00 4.00 5.50 6.00 6.00 6.00 6.00 7.75 9.25 6.00 5.00 6.00 5.00 $436,083 469,550 489,774 490,270 464,800 459,670 540,612 575,420 560,283 631,487 687,473 703,532 747,630 730,867 793,221 833,998 807,452 825,678 802,839 807,554 $369,288 385,644 398,145 409,955 412,875 408,868 457,463 497,683 502,507 551,667 578,084 600,567 620,593 637,893 679,542 723,200 737,521 764,909 755,931 741,821 34.12 35.64 36.79 37.88 38.15 37.78 42.27 45.99 46.44 50.98 53.42 55.50 57.35 58.95 62.79 66.83 68.15 69.20 68.39 67.11 Net Income per Share and Book Value per Share are based on number of shares outstanding at December 31st of each year. Year 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 27 O fficers and E xecutives PARENT COMPANY C harles R. Cox, President John D. East, Assistant to the President F rank R. Milliken, Executive Vice President M. D. Ayers, Director o f Engineering C. H arry Burgess, Vice President (Exploration) S. S. J ackson, Vice President (Administration) Leslie G. J enness, Vice President (Research) Paul B. J essup, Secretary Robert H. Lounsbury, General Counsel E. M. H arris, Jr., Associate Counsel G ordon B. Russell, Comptroller W. R. Kimsey, Assistant Comptroller Robert L. Ward, Assistant Comptroller L. W. Shelton, General Purchasing Agent J ames R. Simpson, Treasurer R. E. T aylor, General Traffic Manager Lester Ziffren, Director of Public Relations A rthur S. Cherouny, Industrial Relations Counsel C. D. Michaelson, General Manager, Western Mining Divisions E. A. Slover, General Manager Chino Mines Division A. P. Morris, General Manager Ray Mines Division J. C. K innear, Jr., General Manager Nevada Mines Division J. P. O'K eefe, General Manager Utah Copper Division I. G. Pickering, Manager, Eastern Refinery PRINCIPAL SUBSIDIARIES - KENNECOTT SALES CORPORATION C. K. Lenz, President J. H. Boyd, Vice President J. M. K eene, Jr., Vice President F. B. McKown, Vice President C. N. Whitaker, Vice President BRADEN COPPER COMPANY C harles R. Cox, President Frank R. M illiken, Vice President R. M. H aldeman, Vice President (In Chile) B. E. G rant, General Manager (In Chile) Carlos Tolosa, Business Manager (In Chile) Paul B. J essup, Secretary G ordon B. Russell, Comptroller James R. Simpson, Treasurer QUEBEC IRON AND TITANIUM CORP. (Two-thirds owned by Kennecott Copper Corp. and one-third by The New Jersey Zinc Co.) W illiam L. Walsh, President Lindsay F. Johnson, Vice President J. M. H erndon, General Manager 28 CHASE BRASS & COPPER CO., INCORPORATED G lenn P. Bakken, President William H. Preston, Executive Vice President G ilbert R. Boutin, Vice President (Operations) H erman H. Kremer, Vice President (Sales) Peter S. Barno, Vice President ( Public and Industrial Relations) Robert C. Smith, Treasurer Richard R. Q uay, Secretary THE OKONITE COMPANY R. Stuart Keefer, President Charles M. Kirkland, Vice President (M arketing) David W. N urse, Vice President (M anufacturing) Rhea P. Lapsley, Vice President (Research) Stephen A. W ilson, Vice President, Secretary and General Counsel Herbert Hornby, Comptroller Charles P. Knight, Treasurer NEVADA NORTHERN RAILWAY COMPANY S. S. J ackson, President H. M. Peterson, Vice President and General Superintendent P R I N T E D IN U . S . A .