Document mBXZB4J4an6YLZm1ojvOyEb8Z

PLAINTIFF'S EXHIBIT CT-2S0 ^Annual Report CERTAIN-TEED PRODUCTS CORPORATION .'\ For the Year Ended December 31, 1941 CTD035736 11 1 . " , /-'-. X "' ' v i.5~-* . ' > 'v v. '.V' ' > . ,ixr *>,. . \ \--A l ^'V -i .. . . : V'V /.,V(' -V ; ;/ -v ;; ; \. . . '' .. - \- ' DIRECTORS ' BROR DAHLBER&, Chairman ' H. J. DOWD HENRY J. HARTLEY HOULDER HUDGINS. GEORGE R. KENT HARRY R. LEWIS r ' ' V, . . FREDERICK H. PAYNE ' " HORACE G. ROBERTS ' - L. J. SHERIDAN \. HENRY J. HARTLEY . HORACE G. ROBERTS . ARTHUR J. MOHAN . H.' J. DOWD . . . ARTHUR O. GRAVES . MELLOR HARGREAVES LEON R. GROSS . . V. OFFICERS " ...- ' ' r.` Vresident Vice President Vice President j Vice President (s Comptroller Secretary (/ Treasurer Assistant Secretary-Treasurer Assistant Secretary ........... ` 1 --, ' , " TRANSFER AGENTS \ : ; BANKERS' TRUST COMPAjNTY--NEW YOkK 'V ' - *Nv.- ' REGISTRAR V:.- ' THE NEW YORK TRUST, COMPANY-- NEW YORK\ . AUDITORS s. D. LEIDESDORF & CO.--.NEW YORK This report and the financial statements contained herein are submitted for the < '. ' general intended itnofoirnmduactieo,noroftothbee.' stockholders of the Corporation used in connection with, any offer as of such/ and are. not/ sale or purchase of ' . '. . any stock .or other securitiea -of the 'Corporation. - . . ; ./. ; ; "-A':- " - '^ V f>. '; ./ V'- ' ' 1 , "v, l' ` ' J1 '> ~>. ' -/.'i `: /- /- / k'-. r?(, 'l*'' ^ 1 '' .`'/t'/ . J ' - CTD035737 ^Annual `Report CERTAIN-TEED PRODUCTS CORPORATION For the Year ended December 31, 1941 CTD035738 CERTAIN-TEED PRODUCTS CORPORATION 100 EAST 42nd STREET, NEW YORK To the Stockholders of Certain-teed Products Corporation: t Herewith is submitted the consolidated balance sheet and related statement of income and deficit of Certain-teed Products Corporation and wholly-owned subsidiary companies for the year ended December 31, 1941. Consolidated net income for the year, after all charges and provision for taxes on income was $1,362,063.58. The net sales for 1941 were $23,239,635.74, the largest for any year since 1929. Comparisons with previous years are as follows: 1937 Net sales ............................... $16,490,156. Operating profit .................. Provision for U. S. and Can adian taxes on income .. 541,431. ------ 1938 $14,625,882. 1939 1940 1941 $15,516,550. $18,554,013. $23,239,635. 598,197. 1,042,354. 1,198,061. 3,025,292. 18,101. 14,223. 301,634. 904,661. Net income ..!.................... 102,654. 171,010. 348,099. 610,383. 1,362,063. Of the net sales of $23,239,635. for the year 1941, the Canadian subsidiaries con tributed $2,352,398. in contrast with net sales of $18,554,013. for the year 1940, of which $2,611,093. were by the Canadian subsidiaries. Net current assets at December 31, 1941 were $4,879,125.05 as compared with $3,909,349.62 in the previous year. More than $1,300,000. in capital additions were completed during the year to further increase production and to facilitate operations. Debentures sufficient to meet the fixed sinking fund requirements of $400,000. principal amount annually were purchased during the year. Comparisons of working capital and funded debt positions and investment in new plant facilities with previous years are as follows: 1937 1938 1939 1940 1941 Working Capital ............................. ! $4,136,750. $3,954,200. $3,860,503. $3,909,349. $4,879,125. Funded Debt..................................... 9,500,000. 9,100,000. 8,700,000. 8,300,000. 7,900,000. New Facilities ................................... 372,145. 514,540. 750,711. 981,117. 1,338,350. 2 CTD035739 Included in this report is the annual report for the year 1941 of Sloane-BIabon Corporation, of which Certain-teed owns 24.37% of Class "A" 6% cumulative preferred stock, 63.85% of Class "B" 5% cumulative preferred stock and 50.79% of the common stock. The Sloane-BIabon report shows a net profit of $721,808 after all charges and provision for federal income taxes as compared with a net profit of $383,387 in the previous year. Sloane-BIabon Corporation paid, in 1941, dividends of $12 pen share on its outstanding Class "A" preferred stock of which Certain-teed received $70,788. Other than these dividends, no part of the earnings reported by Sloane-BIabon for the year 1941 is reflected in the Income Statement of Certain-teed Products Corporation for the same period. Certain-teed products were used extensively in the war effort and in common with most important manufacturers the corporation's facilities are more and more being devoted to requirements in connection with the war situation. The War Department on March 18, 1942 announced the award of a contract to Certain-teed Products Corporation for consultant service, equipment procurement, installation inspection, training of personnel and operation at an important new government manufacturing plant. FOR THE BOARD OF DIRECTORS: CHAIRMAN. PRESIDENT. March 21, 1942 3 CTD035740 CERTAIN-TEED PRODU WHOLLY-OWNED SUB CONSOLIDATED BALANCE SH ASSETS CURRENT ASSETS: Cash on hand and in banks............................................................................ t Notes and Accounts Receivable: Notes receivable--trade .............................................................................. Accounts receivable--trade ......................................................................... The Celotex Corporation--amounts receivable for current transactions under contracts.......................................................................................... Miscellaneous accounts and notes receivable............... $ 164,576.15 2,745,889.66 464,357.63 161,580.08 $3,536,403.52 Less: Reserves for bad debts, discounts and allowances........................ 315,527.17 Merchandise Inventories--at the lower of cost or market--Note A: Raw materials and supplies..................................................................... Goods in process ...................................................................................... Finished goods.......................................................................................... $1,557,425.90 208,800.55 573,068.44 TOTAL CURRENT ASSETS INVESTMENT IN CAPITAL STOCK OF SLOANE-BLABON COR PORATION, at cost (equity based on balance sheet at December 31, 1941 --$3,607,290.98) .............................................................................................. OTHER INVESTMENTS, RECEIVABLES, DEPOSITS AND RE STRICTED BANK DEPOSITS (less reserve of $21,790.85).................. DEFERRED CHARGES.................................................................................. PROPERTY, PLANT AND EQUIPMENT (Adjusted at December 31, 1939 to the lower of cost or appraised values, plus subsequent additions at cost) : Operating Plants and Facilities: Land ......................................................................................................... Buildings, machinery and equipment (less reserve for depreciation of $8,902,280.84) ...................................................................................... Non-Operating Plants and Departments: Land ......................................................................................................... Buildings, machinery and equipment (less reserve for depreciation of $39,471.49) ............................................................................................ Gypsum and gypsite deposits (less reserve for depletion of $30,062.88).. Oil development (less reserve for depletion of $171,099.44).................... Timber concessions and water power rights (at nominal values)............ $ 474,919.37 6,846,927.49 201,752.84 130,855.26 414,320.48 25,754.04 2.00 GOODWILL, TRADEMARKS, ETC. $1,473,432.04 3,220,876.35 2,339,294.89 $7,033,603.28 2,635,025.39 153,611.76 214,487.00 8,094,531.48 1.00 $18,131,259.91 The Notes to Financial Statements appended hereto are an integral 4 CTD035741 CTS CORPORATION AND SIDIARY COMPANIES EET AS AT DECEMBER 31, 1941 LIABILITIES CURRENT LIABILITIES: Notes payable--bank........................................................................................ Accounts payable and accrued expenses......................................................... Interest accrued on funded debt .................................................................. Accrued taxes ................................................................ '............................... Reserve for United States and Canadian taxes on income............................. Less: United States Treasury Tax Notes................................................. $1,006,167.17 701,120.00 Debentures redeemable within one year......................................................... Less: Amount in treasury.................................................. ......................... 400,000.00 152,000.00 TOTAL CURRENT LIABILITIES ................................. NOTES PAYABLE--BANK (due subsequent to 1942) ................................ RESERVE FOR CONTINGENCIES (including merchandise guarantees) TWENTY-YEAR 5y2% SINKING FUND GOLD DEBENTURES-- due March 1, 1948 ($200,000.00 principal amount to be retired semi annually) : Originally issued .......................................................................................... $13,500,000.00 Less: Debentures retired ........................................................................ 5,200,000.00 $8,300,000.00 Less: Debentures redeemable within one year--shown above.............. 400,000.00 CAPITAL STOCK AND DEFICIT: Capital Stock: *6% Cumulative Prior Preference Stock--Par Value $100.00 Per Share: Authorized--186,996 shares Issued and outstanding--73,069.3 shares (of which 12.3 shares are held for conversion against scrip cer tificates which expired July 1, 1941)--Redeemable at call upon not less than 60 days' notice, or in event of voluntary liquidation, at $110.00 per share and unpaid cumulative dividends................. Common Stock--Par Value $1.00 Per Share: Authorized--1,000,000 shares Issued and outstanding--625,340 shares ............................................... $7,306,930.00 625,340.00 Capital surplus (no changes during year) ....................................... .......... $2,477,406.98 Deficiency in earned surplus (from June 30, 1936) per accompanying statement of consolidated income and deficit............................................. 2,625,845.45 Dividends in arrears on the 6% Cumulative Prior Preference Stock aggregated $2,082,475.25, or $28.50 per share. art of this statement and should be read in conjunction herewith. 5 i $ 100,000.00 1,133,201.23 149,380.00 218,849.83 305,047.17 248.000.00 $2,154,478.23 150.000.00 142,950.15 7,900,000.00 7,932,270.00 148,438.47 $18,131,259.91 CTD035742 CERTAIN-TEED PRODUCTS CORPORATION AND WHOLLY-OWNED SUBSIDIARY COMPANIES STATEMENT OF CONSOLIDATED INCOME AND DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1941 Sales (less discounts and allowances) Cost of sales, selling, administrative and general expenses (exclusive of depreciation and depletion) ............................................................... $19,620,517.21 Depreciation (buildings, machinery and equipment) .............................. 576,867.47 Depletion (gypsum and gypsite deposits) ................................................ 16,958.13 $23,239,635.74 20,214,342.81 Operating profit........................................................................................... Other Income: Oil and gas production (less depletion of $37,887.74).......................... $ Dividends received on Qass A 6% Preferred Stock of Sloane-Blabon Corporation ......................................................................................... Miscellaneous ........................................................................................... 34,814.39 70,788.00 162,351.94 $ 3,025,292.93 267,954.33 Other Deductions: Loss from sale of 4,500 shares of Sloane-Blabon Corporation common stock (cost, $396,900.00) ................................................................... $ Miscellaneous ........................................................................................... 392,715.00 173,093.14 $ 3,293,247.26 565,808.14 Interest on 5)4% Sinking Fund Gold Debentures.................................... $ 2,727,439.12 460,713.71 Provision for United States and Canadian Taxes on Income: Normal tax............................................................................................... Excess profits tax ................................................................................... $ 501,385.08 403,276.75 $ 2,266,725.41 904,661.83 Net income for the year............................................................................... Deficiency in earned surplus (from June 30, 1936) as at December 31, 1940 ..................................................................................................... Deduct: Excess of principal amount over cost of debentures pur chased during year ......................................................................... $ 1,362,063.58 4,041,409.03 53,500.00 3,987,909.03 DEFICIENCY IN EARNED SURPLUS (FROM JUNE 30, 1936) AS AT DECEMBER 31, 1941 ............................................................. $2,625,845.45 The consolidated net income of $1,362,063.53 includes net income of $4,073.97 of the Canadian subsidiary companies. The income and expenses of the Canadian subsidiary companies have been converted into United States currency at the official rate of exchange, except as to depreciation which has been converted at the exchange rates at which the related fixed assets were capitalized. The Notes to Financial Statements appended hereto are an integral part of this statement and should be read in conjunction herewith. 6 CTD035743 Notes to Financial Statements AS AT DECEMBER 31, 1941 Note A--Merchandise inventories are valued by groups or classes of merchandise at the lowest of (1) average cost on a basis of first-in first-out, (2) replacement cost after allowances for any decline in current market prices of basic commodities, or (3) current selling prices of finished goods, less allowances for selling expenses and reasonable margin of profit. 1 Cost of goods sold for the period under review has been determined on the basis of inventories established as hereinbefore outlined. The examination of merchandise inventories by S. D. Leidesdorf & Co. included a general review of inventory records and procedure, test-checks of quantities and tests of pricing and mathematical accuracy. Contingent Liabilities and Other Comments: Net assets of Canadian subsidiary companies included in the consolidated balance sheet aggregate $1,463,450.67, of which $1,001,656.00 are fixed and other miscellaneous assets, and $461,794.67 represents net current assets including cash of $314,884.11. Current assets are carried at the official rate of exchange, and fixed assets are carried at the rates of exchange prevailing at the time of acquisition. Pursuant to regulations promulgated by the Canadian Foreign Exchange Control Board, the amount which may legally be withdrawn from the Canadian subsidiaries is substantially less than the net current assets of $461,794.67 stated above. On March 11, 1940, the United States Government filed a civil suit in New York against Masonite Corporation and its del credere agents charging that the Masonite Corporation and its various del credere agents were engaged in a conspiracy to create a monopoly in certain patented hard board products in violation of the Anti-Trust Laws. On June 28, 1940, a Grand Jury for the District Court of the United States for the District of Columbia, returned two indictments against United States Gypsum Company and its licensees under its gypsum board and lath patents, charging that United States Gypsum Company and its licensees had violated the Anti-Trust Laws. On August 15, 1940, the United States Government filed a civil suit against United States Gypsum Company and its licensees under its gypsum board and lath patents charging that the defendants are engaged in a combination and are parties to contracts in restraint of trade in- gypsum board and other gypsum products in violation of the AntiTrust Laws and seeking to perpetually enjoin said alleged violations. Certain-teed Products Corpora tion, as one of the agents and licensees, was included as a defendant in the above matters. The Masonite suit was decided in favor of the defendants and is now on appeal. One Gypsum indictment was tried and resulted in a directed verdict of acquittal for all defendants. The other Gypsum indictment and the Gypsum civil suit are still pending and are being defended. On February 11, 1942 a summons was served in a suit, brought by a holder of 100 shares of common stock, naming as defendants Asphalt Process Corporation, Certain-teed Products Corporation, Phoenix Securities Corporation, The Celotex Corporation, The Flintkote Company, The Patent and Licensing Corporation and certain former and present officers and directors of those corporations. The suit requests among other things accountings and the payment of alleged damages from the defendants, except Asphalt Process Corporation and Certain-teed Products Corporation, for matters going back as far as 1932; also seeks cancellation of the joint facilities contract with The Celotex Corporation of which the stockholders were advised in detail in the June 30, 1938 semi-annual report to stockholders, the April 25, 1941 contract of modification thereof; and the August 1, 1939 agency agreement with Celotex; also cancellation of that certain employment contract with Mr. Bror Dahlberg which was set forth in detail in the proxy statement sent to stockholders for the special stockholders meeting held December 6, 1939. These contracts or modifications thereof were in effect in 1941. The accompanying consolidated statements are subject to the final determination of United States, state, local and Canadian taxes. 7 CTD035744 S. D. LEIDESDORF 8c CO. CERTIFIED PUBLIC ACCOUNTANTS New York. n. Y. Board of Directors, Certain-teed Products Corporation, New York, N. Y. We have examined the consolidated balance sheet of Certain-teed Products Cor poration and wholly-owned subsidiary companies as at December 31, 1941 and the related statement of consolidated income and deficit for the year then ended; have reviewed the system of internal control and the accounting procedures of the companies and, without making a detailed audit of the transactions, have examined or tested accounting records of the companies and other supporting evidence by methods and to the extent we deemed appropriate. Our examination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all procedures which we considered necessary. In our opinion, the accompanying consolidated balance sheet and related statement of consolidated income and deficit, together with the Notes to Financial Statements, present fairly the consolidated position of Certain-teed Products Corporation and its subsidiary companies as at December 31, 1941 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding period. S. D. Leidesdorf & Co. New York, N. Y., March 21, 1942. 8 CTD035745 SLOANE-BLABON CORPORATION 295 Fifth Avenue NEW YORK March 19, 1942. To the Stockholders of Sloane-Blabon Corporation : There is submitted herewith Sloane-Blabon Corporation balance sheet as at December 31, 1941 and statement of income and surplus for the year then ended, as certified by Messrs. Eisner & Lubin. Your President, Mr. Houlder Hudgins, is under leave of absence in Washington, where he is serving the Government in connection with the war emergency. Gross operating income for the year, before depreciation, was $2,929,414.82, com pared with $2,065,654.30 for the year 1940. The net income for 1941, after all charges and reserve for Federal income taxes, was $721,808.11, compared with $381,549.42 for the prior year. The reserve for Federal income taxes was $395,000.00 for 1941, compared with $123,375.02 for 1940. During the year, dividends of $12.00 per share (totaling $290,496.00) were paid on the Class A preferred stock of the Corporation, reducing the arrearages on this issue to $34.50 per share. The Corporation's operations continue at a favorable rate, but, in common with most concerns in the country, our efforts are being increasingly diverted to material for direct war work. Chairman oj the Board. 9 CTD035746 SLOANE-BLABON BALANCE SHEET AS ASSETS Current Assets: Cash................................................................................................................... Accounts receivable (trade) ........................................................................... Less reserves for discounts and bad debts.................................................. $1,814,253.92 116,822.19 Notes receivable................................................................................................. Miscellaneous trade accounts and claims receivable Inventories--at the lower of cost or market: Raw materials and supplies ............................................. ...................... . Work in process ........................................................................................... Finished goods at plants and warehouses .................................................. $ 961,938.77 608,942.14 942,055.19 Total Current Assets ................................................................... Land, buildings, machinery and equipment (at cost in 1931 in common stock, plus net additions at cost and less reserves for depreciation) : Land, including $156,311.00 not in current use........................................ $ 727,397.92 Buildings, machinery and equipment ................................ $5,726,913.39 Less reserves for depreciation........................................ 2,425,569.00 3,301,344.39 Improvements--less amortization ............................................................... Items under construction ............................................................................. 46,268.44 335,718.63 Blocks and moulds ............................................................................................... Factory stores, parts and supplies........................................................................ Deferred charges--engravings, advertising supplies, unexpired insurance, etc. Organization expense, goodwill, trademarks, etc................................................. TOTAL ASSETS $ 342,309.20 1,697,431.73 5,877.79 30,879.85 2,512,936.10 $4,589,434.67 4,410,729.38 83,578.67 129.270.28 145,182.16 1.00 $9,358,196.16 10 CTD035747 :ORPORATION \T DECEMBER 31, 1941 LIABILITIES AND CAPITAL Current Liabilities: Accounts payable........................................................................................................................... Accrued taxes, payroll and expenses........................................................................................... Reserve for Federal income taxes................................................................... $ 408,259.37 Less United States Treasury Notes--Tax Series...................................... 300,485.76 Reserve for sales allowances....................................................................................................... Total Liabilities ......................................................................................................... Deferred income ............................................................................................. .'............................... Capital Stock and Surplus) Class A, 6% preferred, cumulative from July 1, 1933, authorized 40,000 shares, par value $100.00 each, issued 24,208 shares................................ Class B, 5% preferred, cumulative from July 1, 1933, authorized 20,000 shares, par value $100.00 each, issued 15,027 shares................................ Common stock, authorized 120,000 shares, no par value, issued 75,633 shares $2,420,800.00 1,502,700.00 1,890,825.00 Capital surplus (as annexed) ......................................................................... $5,814,325.00 2,431,453.92 $ 490,435.14 338,757.41 107,773.61 172,301.08 $1,109,267.24 3,150.00 8,245,778.92 TOTAL LIABILITIES AND CAPITAL $9,358,196.16 Unpaid cumulative dividends to December 31, 1941 total $34.50 per share or $835,176.00 on the Class and $42.50 per share or $638,647.50 on the Class B preferred stock. preferred stock 11 CTD035748 SLOANE-BLABON CORPORATION CONDENSED STATEMENT OF INCOME AND SURPLUS FOR THE YEAR ENDED DECEMBER 31, 1941 Gross operating income, before depreciation Provision for depreciation ......................................................................... Selling, general and administrative expenses ........................................... $ 292,408.73 1,524,591.18 Operating profit ........................................................................................... Other income .............................................................................................. $ 10,311.00 Less other deductions .,......................................................................... 5,917.80 Net profit before provision for Federal income tax................................. Provision for Federal income tax--(no excess profits tax payable).... Net profit for the year................................................................................. Deficiency in earned surplus from May 1, 1932 to January 1, 1941........ Capital surplus at January 1, 1941 ........................................................... Total ..................................................................................... Deduct: Dividends of $12.00 per share paid on 24,208 shares of Class A preferred stock ................................................................................... CAPITAL SURPLUS at December 31, 1941--per balance sheet........ $2,929,414.82 1,816,999.91 $1,112,414.91 4,393.20 $1,116,808.11 395,000.00 $ 721,808.11 512,82233 2,512,964.14 $2,721,949.92 290,496.00 $2,431,453.92 EISNER & LUBIN CERTIFIED PUBLIC ACCOUNTANTS NEW YORK WASHINGTON To the Board of Directors, Sloane-Blabon Corporation : February 25, 1942. We have examined the balance sheet of SLOANE-BLABON CORPORATION as at December 31, 1941, and the related statements of income and surplus for the year then ended; we have reviewed the system of internal con trol and the Company's accounting procedures, and, without making a detailed audit of the transactions, have examined or tested the accounting records and other supporting evidence, by methods and to the extent we deemed appropriate. Our examination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all procedures which we considered necessary. The cash in banks was confirmed by direct correspondence with the depositories. The accounts receivable were checked to the subsidiary records and substantially confirmed by direct correspondence. Physical inventories were taken by the Company's employees as at December 31, 1941. We reviewed the procedures outlined for determining quantities, and supervised and tested the counts at the plants. We have also made comprehensive test checks of the valuation and mathematical accuracy of the inventories. Property, plant and equipment are stated at cost in common stock in 1931, plus additions at cost. Additions during 1941 were reviewed by us and represent proper capital items. The deferred charges were reviewed as to composition and applicability to future operations. Accounts payable were substantially confirmed by direct correspondence with the creditors, and the computations of the accrued liabilities were checked. The United States Treasury Tax Notes were examined. The outstanding capital stock was confirmed by inspection of the stock certificate books. In our opinion, based upon such examination, the accompanying balance sheet and related statements of income and surplus, fairly present the financial position of SLOANE-BLABON CORPORATION at December 31, 1941, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Eisner & Lubin, Certified Public Accountants. 12 CTD035749 . -------