Document k6xZrMqaydvzR26xG9JN44q5D

Saint Joseph Lead Company Annual Report -- 1944 America's Corporate Foundation; 1944; ProQuest Historical Annual Reports Pg- 0_1 Harvard us'tv. o. ?. or b. a. BM(ER U3RARY CORROr 'TION PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS OF THE ST. JOSEPH LEAD COMPANY FOR THE YEAR 1944 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 Executive Offices, 250 Park Avenue, New York 17 BOARD OF TRUSTEES Clinton H. Crane, Chairman Daniel IC Catlin, St. Louis, Missouri Irwin H. Cornell, Vice-Pres., and Sales Manager Andrew Fletcher, Vice-Pres., and Treasurer James H. Grover, Pres., St Louis Union Trust Co. Hendon Chubb, of Chubb & Son Firmin V. Desloge, St. Louis, Missouri C. Merrill Chapin, Jr., Vice-President J. Howard Holmes, St. Louis, Missouri Stanly A. Easton, Pres., Bunker Hill & Sullivan Mining & Concentrating Co. Frederic E. Camp, Hoboken, New Jersey Edward V. Peters, Vice-President Arthur M. Anderson, J. P. Morgan & Co., Incorporated EXECUTIVE OFFICERS Clin|to^ 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 George 1. Brigden, Secretary and Comptroller Robert Bennett, Asst. Secretary and Asst. Treasurer Charles Fleig, Assistant Secretary James G. Colvin, Assistant Comptroller STOCK TRANSFER OFFICE 250 Park Avenue, New York 17 j- ' j REGISTRAR City Bank Farmers Trust Company, New York 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. . ST. JOSEPH LEAD COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The year 1944 which brought such successes to the Allied Military and Naval services that victory is assured, developed a serious situation in the lead industry of our country. The demand for lead has been so great, and the supply so inadequate, that the U. S. Government-owned stockpile, which amounted to 273,000 tons in 1943, was reduced to 90,000 tons at the end of 1944, at which time the total stocks of privately-owned lead at the smelters amounted to only 19,536 tons. By November 1944 consumption of pig lead had in creased to 96,000 tons a month and more could be used if available. The largest single source of lead is the domestic mining industry which in the last quarter of 1944 pro duced at the rate of 32,000 tons per month, against 41,000 in 1943. Shortage of skilled labor, due to the requirements of the armed forces and other war industries, was the principal cause of this drop in produc tion. The second largest source is scrap, and under present conditions the lead recovered from this source will probably not exceed 30,000 tons a month. Imports of foreign pig lead are reported by the War Production Board as averaging 17,500 tons monthly in 1944. Transportation difficulties and manpower shortage in Mexico, Canada and Australia will probably prevent any increase in imports in 1945. There are ample smelting facili ties in the U. S. for treating additional imported lead ore and concentrates, which in 1944 yielded 7,000 tons monthly. This makes a total from the above four sources of 86,500 tons, showing an apparent deficit of about 10,000 tons a month. On December 26, 1944 War Production Board's General Preference Order M-3S was amended, limit ing the use of pig lead for civilian purposes; all pig lead imported by the Government is being allocated; consumers' inventories are being restricted; the manufacture of lead products is being limited or prohibited. The Government is asking mining companies to increase output, and the St. Joseph Lead Company, the largest American producer of lead from domestic ores, has agreed to curtail development w'ork and to continue to operate its mines beyond their economic limits. Consolidated Earnings The consolidated net income for the year 1944 was 5,153,355.40 after deducting Federal and State taxes on income in the amount of 2,265,047.44, as compared with a net income for the previous year of 4,033,973.90 and taxes of 1,690,262.17. The increase in the consolidated net income of 1,119,381.50 is principally due to the elimination of the 1,123,733.62 non-recurring loss, before taxes, sustained in 1943 in connection with the abandonment of the Block P Mine, together with the premium payments reecived in 1944 on the Company's Southeast Missouri lead operations which offset the increased operating costs. Premium Price Plan In connection with the premium payments received in 1944, and as the prices received for your Com pany's products have been controlled by the Federal Government since late March 1941, I feel that the Stock holders should be informed of the workings of the present price control plan as compared to the establishment of metal prices in a free market, and the working of price control in World War I. In a free market, the costs of the so-called marginal producers set the selling price. A rise in price brings increased production to satisfy the increased demand, and a drop in price tends to reduce _ production to the amount required to fill the reduced demand. It so happens that the large numbers of small independent mines in this country have made the working of this law peculiarly applicable to lead and zinc. In the free market, which existed before the United States' entry into World War I, and under the stimulus of war demand, lead sold at over 11 cents a pound, and zinc at over 23 cents. After the United States' entry into World War I, a lead price was stabilized by Government regulation at 8.05 cents per pound New York, and high grade zinc at 12.00 cents. The thought at that time was that if these prices did not produce sufficient metal, they would be raised. Fortunately the war was over before any increase was needed. The present Governmental control plan for World War II is based on a somewhat different principle and was for the purpose of increasing production with the minimum amount of inflation. Ceiling prices for both lead and zinc were set by the Office of Price Administration at levels approximating the free market prices, when the control began. At the time that the ceiling prices were announced, each producing mine, or in some cases groups of mines, were assigned a production quota, which was based on prior production figures. The quotas were set by a Committee of the War Production Board and the Office of Price Administration. In the case of the St Joseph Lead Company, the monthly quota for the Edwards and Balmat zinc mines was 125% of the average monthly production for the last quarter of 1941, and a similar 125% quota was set for the Southeast Missouri lead operations. Mines not in production were given quotas that would encourage their operation, and as operating costs increased because of higher wages or lower efficiencies, or due to a lowering of grade in the ore, the quotas have been changed. 1 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Lead or zinc produced in excess of the quota was entitled to premium payments, which amounted to as much as 5.5 cents per pound for lead above the ceiling price of 6.50 New York, and 8,25 cents per pound for zinc above the ceiling price of 8.25 ol Louis. The effect of this procedure has been to stimulate production and to keep the high cost mines in operation without raising the basic ceiling prices. The profits of the low cost producers have been maintained at relatively normal levels, and as metal has flowed into commerce at the ceiling prices, the cost of finished products has been maintained with a resultant lessening of wartime inflation. , Although in 1944 certain of the high cost marginal mines received, due to the premium payments, as much as 12 cents for their lead production and 16.50 cerits per pound for zinc, it is believed that the average price including premium payments, for all mines in the United States, will approximate 8.15 cents per pound for lead and 11.18 cents for zinc. In 1944, premium payments received by the high cost mines of Kansas Ex plorations, a 100% owned subsidiary, were somewhat less than in 1943, and no premiums were received on the Company's zinc production from its Edwards and Balmat Mines in northern New York, which was there fore sold at the basis zinc ceiling price of 8.25 cents per pound, St. Louis. The 125% quota which was set for your Southeast Missouri lead operations could never be reached, and in the spring of 1944, it became evident that a request for a quota revision was justified due to increased wages, higher cost of supplies, and lower efficiency due to men having been called for military service. Quota adjustments were granted with the result that your Company received 7.04 cents per pound, St, Louis, for its Southeast Missouri lead production during the year 1944. Comparative Consolidated Earnings The comparative consolidated earnings, which do not include earnings of the Argentine subsidiary, for the ten years ended December 31, 1944 are shown below: Year Income after Interest but before Other Deductions --------------Provision for--------------- Federal Depreciation Income Taxes Net Income before Depletion, Etc. Provision* for Depletion, Etc. 1935........................... 1936........................... 1937........................... 1938........................... 1939........................... 1940........................... 1941........................... 1942........................... 1943........................... 1944........................... $2,005,781.59 4,473,237.08 10,035,885.12 2,873,815.43 7,586,972.10 8,287,597.10 9,070,705.65 12,633,212.55 7,940,997.33 9,020,627.47 $1,072,013.14 1,063,605.02 1,055,575.37 1,059,034.49 1,058,924.04 1,064,639.12 , 994,436.94 939,993.43 1,269,271.24 1,150,143.72 $35,502.59 307,944.03 1,329,491.03 173,922.80 672,485.97 1,305,670.04 2,740,699.45 5,499,604.80 1,643,240.12 2,221,526.42 $898,265.86 3,101,688.03 7,650,818.72 1,640,858.14 5,855,562.09 5,917,287.94 5,335,569.26 6,193,614.32 5,028,485.97 5,648,957.38 $412,043.61 590,686.46 522,873.57 309,601.68 562,654.53 805,346.24 442,114,08 537,988.71 994,512.07 495,601.93 * Includes abandoned leases for the years 1935 to 1937, i inclusive, and provision for obsolescence of the Doe Run Mill for the years 1935 to 1937, inclusive; also the abandonment of Block "P" property in 1943. Dividends Quarterly dividends of fifty cents per share were paid on the tenth day of March and June, and the ninth day of September and December 1944, making a total of two dollars per share for the year. These divi dend distributions aggregating $3,950,912.00, were paid entirely out of the surplus earnings of the Company accumulated after February 28, 1913 and are, therefore, subject to Federal income taxes. The following is a record of dividends for the years 1935 through 1944; Year 1935................ .......... 1936................ .......... 1937................ .......... 1938................ .......... 1939................ .......... Amount $ 782,269.30 1,955,676.90 4,889,198.50 1,955,680.00 3,911,360.00 Per Share $ .40 1.00 2.50 1.00 2.00 Year 1940................ .......... 1941............... .......... 1942................ .......... 1943........... . .......... 1944................ .......... Amount $4,400,280.00 3,911,360.00 3,911,360.00 3,911,360.00 3,950,912.00 Per Share $2.25 2.00 2.00 2.00 2.00 Financial Information The consolidated Balance Sheets as of December 31, 1944 and December 31, 1943 of St. Joseph Lead Company and Subsidiaries, and the Summaries of Consolidated Net Income and Earned Surplus for the years ended on those dates, are submitted herewith as a part of this report. All subsidiaries of the St. Joseph Lead Company are included in these statements with the exception of Compania Minera Aguilar, S. A., a wholly owned Argentine corporation, which statements are shown separately. In February, St. Joseph Lead Company acquired the remaining outstanding 10% of the capital stock of Aguilar Corporation of Delaware, which owned all of the capital stock of Compania Minera Aguilar, S. A. of Argentina, through the exchange of 19,776 shares of St. Joseph Lead Company treasury stock plus $168.00 for fractional shares. With St Joseph Lead Company stock selling at 29/$, which was the price on the date 2 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. the transaction was concluded, the total cost of the minority interest was $576,144.00. In November the Aguilar Corporation, which was organized to finance the initial development of the Aguilar Mine, was liquidated and the stock of the Compania Minera Aguilar, S. A. transferred to the St. Joseph Lead Company. Capital expenditures by St. Joseph Lead Company and consolidated subsidiaries for improvements and additions to plant and equipment amounted to $82,807.05 in 1944, in comparison with $1,033,676.39 in 1943. At the Aguilar Mine, expenditures amounting to $72,881.38 were capitalized in 1944, in comparison with $22,244.14 for the previous year. No major capital expenditures in the United States or at Aguilar are con templated for 1945. 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. ' In the audit of the books by Messrs. Haskins & Sells, verification of inventories was again made by physical tests of the quantities shown by the records as being on hand. This firm also audits the books of the Argentine subsidiary. The Accountants' Certificates are set forth on Pages 12 and 13 of this report. United States Operating Information Although all of the lead and zinc properties of the Company were operating on a full time basis through out the year 1944, due to lower efficiency caused by the withdrawal of skilled men for military service and other war industries, coupled with a slight lowering in, the grades of the ore mined, the production of South east Missouri lead concentrates was approximately 11% less than in the previous year, and at the EdwardsBalmat Mines the zinc concentrate production was 23% less than in 1943. The production of sulphuric acid and zinc oxide at your Josephtown plant showed a small increase over the previous year, and the output of slab zinc was only slightly less. The increasing manpower shortage, has, and will continue to adversely affect future production and operating costs. The Herculaneum electrothermic furnace was operated during 1944. The quality of the zinc and lead metals recovered from the smelter slag was quite satisfactory and the process has been proven to be an effi cient, and a low cost one. Certain mechanical difficulties, however, remain to be solved before constant opera tion can be assured. During the past year a supplementary "star" was added to the original Army-Navy "E" award at the Josephtown zinc smelter of the wholly owned subsidiary/the St. Joseph Lead Company of Pennsylvania. With the exception of the mines of the wholly owned subsidiary, Kansas Explorations, Inc., the 1944 de velopment work at all Divisions has been most satisfactory, and the "proven" ore reserves of the Company are the greatest in its history. Although a number of properties were submitted to the Company during the past year, none were considered worthy of purchasing and none are now under option. South American Operating Information Due to the lack of fuel oil and as there was no demand for export lead, operations at the Aguilar Mine were continued throughout 1944 on a curtailed basis. The following statement shows the comparative produc tion, sales and unsold stocks since this mine was placed in operation. Year 1936 ........... ....................... 1937 .................................. 1938 .................................. 1939 .......... 1940 ........... ....................... 1941........... ....................... 1942 ........... ....................... 1943 ........... ....................... 1944 ........... ...................... -Lead Concentrates(in metric torts) Production Sales Stocks at End of Year 10,467 19,709 29,704 36,866 27,867 33,832 $21,584 $23,237 9,409 19,782 28,816 33,307 *35,778 31,193 23,093 23,309 18,156 1,058 985 1,873 5,294 6,382 3,056 13,795 12,070 17,151 -Zinc Concentrates(in metric tons) Production Sales Stocks at End of Year 7,548 12,116 29,478 42,250 65,112 65,939 55,121 $38,283 $38,512 5,276 6,250 4,467 26,179 36,182 116,021 17,922 83,420 38,556 2,272 8,138 33,149 49,220 78,150 28,068 65,267 20,130 $20,086 $ Production curtailed to the amount of Ico<I estimated to be required for Argentine consumption, as there was no export demand for lead and also because of fuel oil shortage. * Does not include 5,000 metric tons of lead concentrates sold for post war delivery. ' tin addition, 58,807 metric tons of zinc concentrates which were sold for post-war delivery are stored for purchasers. '\ 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The Balance Sheets of Compania Minera Aguilar, S. A., a wholly owned subsidiary of the St. Joseph Lead Company, at December 31, 1944 and December 31, 1943, together with Summaries of Net Income and Earned Surplus for the years ended on those dates, are submitted as a part of this report and will be found on Pages 9 to 11. The comparative earnings since the property was placed in operation are as follows: Year Income After Interest but ---------Provision for--------- Net Income before Other fArgentine before ---------- Provision for Depletion- , Deductions Depreciation Income Taxes Depletion, Etc. On Cost On Appreciation 1936 ............*........... $ 192.78 $115,340.41 ------ *$ 115,147.63 $ 35,143.18 $ 322,584.30 1937 ......................... 998,294.21 130,214.52 $ 25,458.01 842,621.68 63,407.60 579,914.66 1938 ......................... 807,923.50 149,105.03 21,954.42 636,864.05 73,447.08 671,733.70 1939 ........................ 930,981.17 175,793.81 39,642.36 715,545.00 100,082.61 915,337.33 1940........................... 867,790.12 193,667.52 35,125.21 638,997.39 121.1S8.16 1,108,320.38 1941 ......................... 938,733.60 207,305.29 33,181.40 698,246.91 127,786.09 1,168,708.13 1942 ............. 809,173.70 216,780.14 28,225.49 564,168.07 80,718.97 738,240.88 1943 ........................ 1,615,227.31 208,628.83 271,233.57 1,135,364.91 76,739.33 697,442.49 1944............................ 1,189,937.85 202,825.17 113,043.48 874,069.20 82,025.88 745,489.12 * Loss. f Paid under protest and a claim for refund filed wherein depletion is based on the 1935 appreciated value of the proven ore reserves instead of on cost thereof. Stockholders The number of stockholders of record on December 31st of each year since 1935 and a classification of their holdings are as follows: Year 1935................... ........... 1936................... ........... 1937................... ........... 1938................... ........... 1939............ ...... ........... 1940.... .......................... 1941................... ........... 1942................... ..... ..... 1943................... ........... 1944................. . ........... Total 5,304 5,560 5,992 6,463 6,586 6,697 6,858 7,065 7,530 7,432 19 or Less 1,491 1,483 1,571 1,719 1,695 1,772 1,751 1,697 1,848 1,812 20-99 1,748 1,851 2,038 2,213 2,260 2,263 2,393 2,547 2,758 2,797 100-199 911 1,000 1,139 1,227 1,337 1,371 1,417 1,528 1,634 1,586 200-Over 1,154 1,226 1,244 1,304 1,294 1,291 1,297 1,293 1,290 1,237 General The Stockholders are again reminded that the net value of the capital assets set forth on the accompanying Consolidated Balance Sheets of St. Joseph Lead Gcinpaj <y and subsidiaries are depleted and depreciated figures based on appraised values as of and after March 1, 1913 or on cost as stated. They do not indicate the present day values or prospective future values of the Company's property, plant and equipment in the United States, 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 in Southeast Missouri on March 1, 1913 have been entirely written off the Company's books by depletion deductions, ore is still being mined from thqse areas at a profit, and probably will be for years to come. Due to the additional ore which had been developed in Southeast Missouri and Northern New York through prospecting, or made available by reason of the improvement in mining practices, the basis of deter mining depletion was changed as of January 1, 1935, by dividing the then undepleted book value by the esti mated tonnage of ore in the mines at that date and applying the unit value thus determined to the tonnage sold. This change resulted in a considerably lower provision for depletion than in years prior to that date, and the basis adopted in 1935 has, with minor exceptions, been consistently used for subsequent depletion computations. Clinton H. Crane, President. New York, March 10, 1945. 4 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST* JOSEPH LEAD COMPANY AND DOMESTIC SUBSIDIARIES Summaries of Consolidated Net Income For the Years Ended December 31, 1944 and 1943 Net Sales ...... ...................................................................... ....................... Cost of Sales (exclusive of depreciation and depiction)................. Gross Profit from Operations before Depreciation and Depletion. Year ended December 31, 1944 1943 $49,369,908.06 $47,099,749.12 40,067,936.50 38,870,395.70 $ 9,301,971.56 $ 8,229,353.42 Deduct: Selling, general and administrative expenses..... ............... $ 736,851.84 Capital stock and miscellaneous taxes................................. 126,011.12 $ 725,796.41 862,862.96 66,945.13 792,741.54 Net Profit from Operations before Depreciation and Depletion................... $ 8,439,108.60 $ 7,436,611.88 Other Income: Dividends on The New Jersey Zinc Company stock........ $ 585,000.00 Other dividends, interest, etc................................................. 40,039.89 $ 487,500.00 625,039.89 63,907.50 551,407.50 Income before Depreciation, Depletion, and Taxes on Income $ 9,064,148.49 $ 7,988,019.38 Deduct Provisions for: Depreciation (including amortization of war facilities, $392,938.00 in 1944 and $257,576.14 in 1943)--see Note Depeltion--see Note ............................................................ . $1,150,143,72 495,601.93 $1,269,271.24 1,645,745.65 994,512.07 2,263,783.31 Provision for Taxes on Income: Federal excess profits taxes (less post-war refunds)....... Federal normal income and surtaxes................................... State income taxes .................................................................. $ 476,565.54 1,744,960.88 43,521.02 $ 7,418,402.84 2,265,047.44 $ 242,828.19 1,400,411.93 47,022.05 $ 5,724,236.07 1,690,262.17 Net Income for the Year............................................ ............................... ............... $ 5,153,355.40 $ 4,033,973.90 Add--Restoration of over accrual for federal taxes on income in prior years .......................................................................... . $ 508,126.98 Deduct--Transferred to Reserve for Contingencies..... . 490,061.45 18,065.53 Total Transferred to Surplus. $ 5,171,420.93 $ 4,033,973.90 Summaries of Consolidated Earned Surplus For the Years Ended December 31, 1944 and 1943 Earned Surplus at Beginning of the Year (including surplus from revalua tion of ore reserves--1944, $36,948.17; 1943, $56,098.98)........................... Year ended December 31 1944 1943 $13,455,108.68 $13,332,494.78 Add~Transferred from income--see above............ .................. ......................... 5,171,420.93 Total .................................................. ............................. $18,626,529.61 Deduct cash dividends paid during the year............. ........................................... 3,950,912.00 Earned Surplus at End of the Year (including surplus from revaluation of ore reserves--1943, $36,948.17) .......................... .............................................. $14,675,617.61 4,033,973.90 $17,366,468.68 3,911,360.00 $13,455,108.68 Note: The provisions for depreciation and depletion were increased in 1943 to reduce to salvage value the Block "P" property which was dosed in October 1943, The provisions made for depreciation and depletion, respec tively, of the Block "F" property were $230,113.74 and $532,538.69 in 1943. 5. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND DOMESTIC SUBSIDIARIES Consolidated Balance Sheets, December 31, 1944 and 1943 ASSETS Current and Working Assets; Cash on hand and in banks............................... .................... U, S. tax anticipation notes (at cost)................. .......... . U. S. Treasury certificates (at cost)............. ......... ........ ... Accounts receivable -- trade (less reserve -- 1944, $16,892.06; 1943, $16,102.82)........... ............................. . Due from foreign subsidiary not consolidated................ . Other notes and accounts receivable...................... ............ Inventories (valuation not in excess of market): Finished lead, zinc, etc (at cost, exclusive of de preciation and depletion) .................. ....... .......... Lead, zinc, etc., in process (at cost, exclusive of depreciation and depletion) ......... ......................... Purchased lead and zinc concentrates, etc. (at cost) Materials and supplies (at cost, less reserve for slow-moving items --1944, $74,125.33; 1943, $80,294.29) ................................................................. December 31, 1944 $ 6,755,029.78 1,1~0~0,000.00 2,700,000.00 3,436,931.34 34,505.60 109,015.72 December 31, 1943 $ 4,126,287.08 2,660,000.00 4,087,909.06 1*19^713.97 622,506.99 1,605,872,.77 205,529.63 1,379,031.65 1,660,904.89 542,131.23 2,534,136.98 $19,103,528.81 2,736,299.93 $17,312,277.81 Investments and Advances; Compania Minera Aguilar, S. A. (wholly-owned foreign subsidiary---not consolidated)--Note 2....................... Aguilar Corporation (at cost--90% owned)..................... Mine La Motte Corporation (at cost--50% owned)........ The New Jersey Zinc Company (at cost--9.9% owned) Sundry securities, loans, etc. (at cost, less reserve, $200,000.00) .............. ........................................................ $ 698,466.62 550^000.00 11,651,250.00 131,522.87 $ 137,759.72 550,000.00 11,651,250.00 13,031,239.49 216,995.61 12,556,005.33 Capital Assets (Note 1); Ore reserves and mineral rights: Appraised value as of March 1, 1913.... ............. $13,500,$01030,.50000,000.00 Less reserve for depletion............................. . 13,500,000.00 $13,500,000.00 13,500,000.00 Appreciation arising from revaluation subsequent to March 1, 1913........... ............................................ $ 3,500.000.00 Less reserve for depletion.................................. . 3,500,000.00 $ 3,500,000.00 3,463,051.83 36,948.17 Additions subsequent to March 1, 1913 (at cost)..,. $, 19,994,415.40 $19,984,127.97 Less reserve for depletion.................. ........... ....... 16,881,396.40 3,113.019.00 16,443,394.20 3,540,733.77 Shafts and underground equipment (at cost)............... . $ 5,721,503.44 Less reserve for depreciation.................................. 4`,7` 38,210.89 $ 5,721,677.69 983,292.55 4,531,655.38 1,190,022.31 Land, buildings, plant and equipment (at cost).............. . $18,713,758.77 $18,683,283.42 Less reserve for depreciation................................... . 14,095,524.70 4,618,234.07 13,171,703.39 5,511,580.03 Total capital assets, net................................... Miscellaneous Assets: U. S. Treasury, State and Municipal securities on de posit with Federal and State departments (at amortized cost; market quotation value --1944, $204,250.00; 1943, $200,870.00) .............. ........ ......... . Post-war refund of excess profits taxes...................... Cash in closed banks........................... .............................. $ $ 8,714,545.62 175,634.94 416,872.10 4,110.13 $ 596,617.17 $10,279,284.28 175,985.28 425,389.14 4,110.13 605,484.55 Deferred Charges; Deferred operating costs............. ........................................... $ 2,723.61 Prepaid insurance, taxes, royalties, etc......................... 135,542.54 $ 31,361.26 138,266.15 146,387.78 177,749.04 Total .............................................................. $41,584,197.24 $40,930,801.01 Notes; (1) The net value of the capital assets as shown in the above consolidated balance sheets does not indicate the present value of the companies' property, plant and equipment, as such value 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. (2) All domestic subsidiaries of the parent company are included in the above consolidated balance sheet at December 31, 1944. In previous annual reports consolidated financial statements have been furnished for Aguilar Corporation, a majority-owned domestic holding c-.itnpnnv, and its wholly-owned foreign subsidiary, Compania Minera Aguilar, S. A., Incorporated in Argentina. In February 1944, St. Joseph Lead Company acquired the minority interest in Aguilar Corporation which was dissolved in November 1944. As a part of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAH COMPANY AND DOMESTIC SUBSIDIARIES Consolidated Balance Sheets, December 31, 1944 and 1943 Current Liabilities: Accounts payable .............. ..................... Due to subsidiary not consolidated...... Wages payable ......................................... Estimated retroactive wage increases,. Accrued taxes: Federal income and excess profits, Other .................................. .............. LIABILITIES December 31, 1944 December 31, 1943 $ 2,601,857.24 177,747.93 $ 2,525,509.82 316,480.64 173,120.03 1,362,589,11 2,351,294.27 2,385,802.40 289,752.86 $ 5,420,652.30 298,534.18 $ 7,062,036.1S Reserves: For injury claims and workmen's liability insurance...... $ 244,985.02 For employees' life insurance and retirement.................. 310,161.31 For contingencies ................................................................. . 800,000.00 $ 231,852.87 315,059,73 1,355,146.33 309,938,55 856,851.15 Capital Stock and Surplus: Capital Stock: Authorized, 2,500,000 shares of $10,00 each...................... $25,000,000.00 Issued, 1,996,840.85 shares .............................................. . $19,968,408.50 Less in treasury, 1944, 21,384.35 shares; 1943, 41,160.35 shares .................................... ......:.........:.V 213,843.50 Outstanding, 1944, 1,975,456.5 shares; 1943, 1,955,680.5 shares ...................................................................................... $25,000,000.00 $19,968,408.50 411,603.50 19,754,565.00 19,556,805.00 Surplus: Earned (including revaluation of ore reserves---1943, $36,948.17) ......................................................... ............... Capital--Excess of market value over par value of treasury capital stock issued for minority interest in Aguilar Corporation.................................................. $14,675,617,61 ; 378,216,00 $13,455,108.68 15,053,833,61 ------ 13,455,108.68 Total Capital Stock and Surplus................ $34,808,398.61 $33,011,913,68 i Total ...................................................................... $41,584,197.24 $40,930,801.01 Notes Continued: the plan of liquidation of Aguilar Corporation, ownership of the Argentine Company was transferred to St. Joseph Lead Company. Financial statements of Compania Minera Aguilar, S. A., appear on pages 9, 10 and 11. ! ' ,, (3) St. Joseph Lead Company and its foreign subsidiary were contingently liable at December 31, 1944 to refund to customers the sales price, $676,323.79, of concentrates paid for by the customers and stored in Argentina, in the event any future Argentine law should prevent shipment thereof, and were similarly con tingently liable at December 31, 1943 in the amount of $357,485.05. St, Joseph Lead Company was also contingently liable with respect to the liability of $233,900.00 appearing on the accompanying balance sheet of Compania Minera Aguilar, S. A. 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission U. S. REFINED LEAD STOCKS, LEAD AND ZINC PRICES Comparative Annual Statistics Year Tons of U. S. Refined Lead Stocks At End of Year 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 1935 .......................... 1936 ......................... 1937........................... 1938.......................... 1939........................... 1940........................... 1941........................... 1942........................... 1943.... ...................... 1944.......................... 222,306 171,856 129,131 115,902 58,777 40,926 t20,185 f34,937 1-33,090 fl9,536 3.915 4.560 5.859 4.589 4.903 5.029 *5.643 *6.331 , *6.350 - *6.350 J- 3.878 4.534 6.015 4.598 4.942 4.986 5.617 6.346 6,320 6.350 4.328 4.901 6.519 4.610 5.110 6.335 *7.474 *8.250 *8.250 *8.250 Base price. See Page No. 1 "Premium Price Plan". fDoes not include stocks held by governmental agencies. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Year Ore Mined 1935......... ..... 1936......... ..... 1937......... ..... 1938......... ..... 1939......... .... 1940......... ..... 1941......... ..... 1942......... ..... 1943............... 1944......... ..... 3,382,403 3,804,451 5,536,952 3,816,637 5,255,960 6,209,863 6,192,805 7,674,941 7,476,873 6,794,093 Production in Tons Lead Pig Lead Concentrates Equivalent 133,044 147,160 212,827 157,188 202,003 225,041 219,819 269,854 253,736 226,104 92,611 101,999 146,274 107,600 138,307 154,281 149,035 179,602 165,584 149,070 Zinc Slab Zinc Concentrates Equivalent 47,214 54,590 71,031 60,797 74,681 85,571 88,236 105,502 104,986 80,659 22,857 26,400 34,519 29,606 38,188 44,406 45,907 53,606 54,172 43,653 Lead Sales and Stocks at End of Year in Tons Year Lead Sales St. Joe Production Purchased Lead Sold Total Lead Sales *Pig Lead Equivalent of Stocks 1935.................. ............ 1936.................. ............ 1937.................. ............ 1938.................. ........ . 1939.................. ............ 1940.................. ............ 1941.................. ........... 1942................. ............ 1943.................. ............ 1944.................. ............ 87,077 126,846 160,091 97,865 172,481 178,111 155,475 178,561 157,659 155,806 41,714 47,7/6 38,930 50,782 39,347 60,199 60,241 67,152 45,242 46,799 128,791 174,622 199,021 148,647 211,828 238,310 215,716 245,713 202,901 202,605 108,849 83,575 72,969 79,775 46,173 30,737 20,767 15,896 23,716 16,683 * Includes purchased lead and estimated recoverable lead in concentrates together with other lead stocks in process of refining at smelters. 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. C0MPAWA MINERA AGUILAR, S. A. Summaries of Net Income For the Years Ended December 31, 1944 and 1943 Net Sales ............................................................................................. Cost of Sales (exclusive of depreciation and depletion).,,... Gross Profit from Operations before Depreciation and Depletion................ Deduct: Selling,t general and administrative expenses..................... Taxes, other than taxes on income......................... ...... . $121,909.31 31,037.72 Net Profit from Operations before Depreciation and Depletion.................. Other Income ........................................................... ................ .. Total ............................................ .................... i.... Interest on indebtedness.................................................................... Income before Depreciation, Depletion and Taxes on Income, Provision for: Depreciation ..................................................... ........................ Depletion computed on cost.................................................. Depletion computed on appreciation of ore reserves......... $202,825.17 82,025.88 745,489.12 Provision for Argentine income and excess profits taxes--see Note 4,........ Net Income for the year............................................................. .... Year ended December 31, 1944 1943 $2,397,329.87 $3,475,353.46 1,133,398.47 1,728,004.26 $1,263,931.40 $1,747,349.20 152,947.03 $1,110,984.37 78,953.48 $1,189,937.85 ------$1,189,937.85 $131,207.80 30,421.29 161,629.09 $1,585,720.11 30,984.23 $1,616,704.34 1,477.03 $1,615,227.31 1,030,340.17 $ 159.597.68 113,043.48 $ 46,554.20 $208,628.83 76,739.33 697,442.49 982,810.65 $ 632,416.66 271,233.57 $ 361,183.09 Summaries of Earned Surplus For the Years Ended December 31, 1944 and 1943 Surplus (^deficit) at beginning of the year. Add Net Income for the Year....................... Surplus at end of the year (after charging deficits aggregating $1,987,450.83 against capital surplus)..................................................... ........... .................... Year ended December 31, 1944 1943 $ 164,479.68 $* 196,703.41 46,554.20 361,183.09 $ 211,033.88 $ 164,479.68 Notes: (1) The results of operations are stated in the above summaries in U. S. dollars at^ the approximate average free rate of exchange for the year, except as to provisions for depreciation and depletion, which have been converted on the basis of the rates of exchange at which the balances in the related asset accounts are stated. , t# . (2) In the summary of consolidated net income of Aguilar Corporation and subsidiary shown in the previous annual report to stockholders for the year ended December 31, 1943 depletion had been based on tons of lead concentrates sold but in the above summary for Campania Minera Aguilar, S. A. alone, which is presented for 1943 for purposes of comparison only, depletion has been based upon tons of ore mined as recorded in that Company's books resulting in a charge against net income for 1943 which is $55,584.50 ($50,336.36 on appreciation and $5,248.14 on cost) less than that shown in the previous annual report. (3) See footnote 1 to accompanying balance sheet for reconcilement of surplus with that shown in pre ceding annual report. %, (4) Paid under protest and a claim for refund filed wherein depletion is based on the 1935 appreciated value of proven ore reserves instead of on cost thereof. 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINERA AGUILAR, S. A. Balance Sheets, December 31, 1944 and 1943 ASSETS Current and Working Assets; Cash on hand and in banks...................................... ............ December 31, 1944 $ 1,136,298.17 December 31, 1943 $ 477,360.78 Argentine Government securities--at cost (market quo tation value--1944, $1,528,800.00; 1943, $1,057,000.00) 1,520,116.25 1,045,523.58 Accounts receivable--trade ................................................. 104,200.30 18,412.89 549,696.94 15,002.47 Inventories: Lead and zinc concentrates (at cost exclusive of depreciation and depletion--valuation not in ex cess of market) and silver, at estimated value..... Materials and supplies (at cost)............................... . 833,892.43 961,804.28 $ 4,574,724.32 672,805.01 1,014,600.40 $ 3,774,989.18 Capital Assets: Ore reserves and mineral rights: Cost, including exploration and development prior to the commencement of operations...................... , Less reserve for depletion............................... ........ $ 1,517,391.03 786,016.89 $ 1,517,391.03 731,374.14 * 703,991.01 813,400.02 Appreciation arising from valuation in 1935... : $13*790,750,50 Less reserve for depletion................................ ...... 7,180,788.00 $13,790,750.50 6,609,962.50 6,435,298.88 7,355,451.62 Total ore reserves and mineral rights, net $ 7,341,336.64 $ 8,168,851.64 Land, buildings, plant and equipment (at cost)................ $ 2,690,130.25 Less reserve for depreciation.... ..................... ............. 1,594,202.77 $ 2,631,188.76 1,095,927.48 1,391,377.60 1,239,811.16 Total capital assets, net..... ........... $ 8,437,264.12 $ 9,408,662.80 Deferred Charges ...................................................................... 17,132.16 80,896.33 Total ................................................................... $13,029,120.60 $13,264,548.31 Notes: (I) Compania Minera Aguilar, S. A., incorporated in Argentina, became a wholly-owned subsidiary of St, Joseph Lead Company in 1944, having previously been a wholly-owned subsidiary of Aguilar Corporation which was dissolved in 1944 (see Note 2 to accompanying balance sheet of St Joseph Lead Company). The capital and earned surplus accounts at December 31, 1943, as shown in the above balance sheet, differ from the consolidated capital surplus and earned surplus (deficit) accounts of Aguilar Corporation and its then subsidiary, as shown in the previous annual report to stockholders for the year then ended, for the reasons that (1) the capital surplus and deficit from operations of Aguilar Corporation, $86,202.69 and $83,511.32, respectively, had been included in the consolidated balances; (2) the portion, $11,399,803.33--net, of the capital surplus of Compania Minera Aguilar, S. A., which had been transferred to its capital stock account ($13(387,254.16 originally transferred to capital less $1,987,450.83 transferred from capital to surplus) had been eliminated in consolidation; (3) the amount of the deficit from operations to December 31, 1942 of Compania Minera Aguilar, S. A., $1,987,450,83, which had been charged against its capital surplus account had been restated as deficit in consolidation; (4) the depletion applicable to unsold concentrates at December 31, 1943, $411,211.70 (of which $40,760.60 was based on cost) which had been charged by Compania Minera Aguilar, S. A., against its net income on the basis of tons of ore mined had been restored to consolidated earned surplus (deficit) in consolidation; and (5) retroactive effect has been given to provision for additional 1943 Argentine excess profits taxes amounting to $84,233.57. 10 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINERA AGUILAR, S. A. Balance Sheets, December 31, 1944 and 1943 .'LIABILITIES Current Liabilities: Accounts payable--trade ....................................................... Due to St, Joseph Lead Company,..,...... ........................ . Wages payable ......................................................................... Accrued taxes ...................................... ................................... Proceeds from sales of concentrates for future export.... Estimated expenses on concentrates held for future delivery ............................................................................... .. Other accounts payable........................................................... $ December 31, 1944 103,048.41 34,505.60 16,226.14 18,258.17 233,900.00 $ 468,196.64 5,242.25 $ 879,377.21 December 31, 1943 119,248.99 -- 16,786.46 288,028.54 233,900.00 539,045.90 6,880.82 $ 1,203,890.71 Deferred Credits: Unrealized profit on foreign exchange, etc..... Reserves: For compensation and accidents..... ......................... . For other expenses................................................................. $ 48,464.01 38,818.07 98,127.76 64,482.88 $ 87,282.08 45,217.63 33,177.74 78,395.37 Capital Stock and Surplus: Capital Stock: Authorized, issued, and outstanding--500,000 shares of a nominal value of $80 Argentine paperJeach... 11,349,803.33 Surplus: Capital surplus arising from 1935 valuation of ore reserves (remainder, after transfer of $13,387,254.16 to stated value of capital stock).... $ 403,496.34 Earned surplus (after charging deficits aggre gating $1,987,450.83 against capital surplus arising from reduction in stated value of capital stock) --Note 5 ; 211,033.88 $ 403,496.34 614,530.22 164,479.68 11,349,803.33 567,976.02 Total Capital Stock and Surplus................. $11,964,333.55 $11,917,779.35 Total $13,029,120.60 $13,264,548.31 Notes Continued: (2) Current assets, current liabilities, deferred charges and reserves are stated in the above balance sheets in U. S. dollars at the closing cjuoted rate of exchange at December 31, 1944 and 1943, respectively (except in a few instances where original dollar values applicable to foreign transactions are used). Capital assets and related reserves and capital stock and capital surplus accounts reflect the approximate dollar equivalents at the rates prevailing at the dates of the transactions of which the balances in these accounts consist. (3) Compania Minera Aguilar, S. A. and St. Joseph Lead Company were contingently liable at December 31, 1944, to refund to customers the sales price, $676,323.79, of concentrates paid for by the customers and stored in Argentina, in the event any future Argentine law should prevent shipment thereof, and were simi larly contingently liable at December 31, 1943, in the amount of $357,485.05. (4) Contingent liabilities also existed in respect of customs duties on materials and supplies imported into Argentina duty free, not yet officially exempted from duties. Compania Minera Aguilar, S. A, does not anticipate that any loss will result from this source. (5) The net deficit since beginning operations, $1,776,416.95 (aggregate deficits transferred to capital sur plus, $1,987,450.83, less surplus at December 31, 1944, $211,033.88) represents aggregate net profits of $5,404,371.05 (after deducting depletion computed on cost) against which has been charged depletion computed on appre ciation, aggregating $7,180,788,00. 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 1 EAST 44TH STREET NEW YORK ACCOUNTANTS' CERTIFICATE To the Stockholders of St. Joseph Lead Company: We have examined the consolidated balance sheets of St. Joseph Lead Company (incorporated in New York) and its wholly-owned domestic subsidiary companies, as of December 31, 1944 and the related sum maries of consolidated net income and earned surplus for the year ended that date, have reviewed the accounting procedures of the companies, and have examined their accounting records and other evidence in support of such financial statements. Our examination was made in accordance with generally accepted audit ing standards applicable in the circumstances and included all auditing procedures we considered necessary, which procedures were applied by tests to the extent we deemed appropriate in view of the systems of internal control; it was not practicable to confirm receivables from the United States Government but we have satisfied ourselves with respect to such receivables by means of other auditing procedures. In our opinion, the accompanying consolidated balance sheets and summaries of consolidated net income and earned surplus, with the footnotes thereon, fairly present the financial condition of St Joseph Lead Company and its wholly-owned domestic subsidiary companies, at December 31, 1944 and the results of their operations for the year ended that date, in conformity with generally accepted accounting principles and practices applied on a basis consistent with that of the preceding year. HASKINS & SELLS New York, February 27, 1945. 12 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 1 EAST 44th STREET NEW YORK ACCOUNTANTS' CERTIFICATE St, Joseph Lead Company: We have examined the balance sheet of Compania Minera Aguilar, S. A, (incorporated and doing business in Argentina) as of December 31, 1944 and the related summary of net income and earned surplus for the year ended that date, have reviewed the accounting procedures of the Company, and have examined its accounting records and other evidence in support of such financial statements. Our examination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all auditing procedures we considered necessary, which procedures were applied by tests to the extent we deemed appro priate in view of the system of internal control. It has been the consistent practice of the Company to record depletion of ore reserves and mineral rights on the basis of tons of ore mined as used in the Company's reports for tax and other purposes to the Argentine Government rather than on the more generally accepted basis of tons of products sold. In our opinion, the accompanying balance sheet and summary of net income and earned surplus, with the footnotes thereon, fairly present the financial condition of Compania Minera Aguilar, S, A. at December 31, 1944 and the results of its operations for the year ended that date, in conformity with generally accepted accounting principles and practices (except as described in the preceding paragraph) applied on a basis consistent with that of the preceding year. HASKINS & SELLS New York, February 27, 1945. 13 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 1944 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.