Document mmY8GV0n5eJNVM5N02Xe85dOg

ANNUAL REPORT FISCAL YEAR ENDED OCTOBER 31st, 1946 1 THE GLIDDEN COMPANY GLDOO 2833 THE GLIDDEN COMPANY CLEVELAND, OHIO To the Shareholders of The Glidden Company: Cleveland, Ohio, December 20,1946. The Annual Report of vour Company for the fiscal year ended October 31, 1946 is submitted herewith. This report marks the twenty-ninth anniversary of the founding of The Glidden Company and shows that some remarkable records have been established. SALES. The net sales for the year amounted to 3122,439,118.69 as compared with sales of $111,616,438.39 for the previous year. For the first month of our present fiscal year our sales show an increase over the same period last year of 57,626,898.87. EARNINGS, DIVIDENDS AND TAXES. The net profit for the year after taxes and all charges amounted to 55,715,015.43 as compared with 52,347,643.89 for the pre ceding year. This net profit after preferred dividends, is equivalent to 35.90 per share on the common stock as compaied with the previous year's earnings of $2.13 per share. Dividends of 52.00 per share were declared and paid during the fiscal year on the com mon stock, as were dividends of 32.25 per share on the preferred stock. These dividends amounted to 32,230,906.00 and after their payment there remained a balance of $3,484,109.43 which was carried to Earned Surplus. Taxes on income, including non-recur ring excess profits taxes for the months of November and December 1945 of31,080,000.00, amounted to 34,715,500.00, as compared with 34,402,000.00 for last year. INVENTORIES. The inventories were priced at the lower of cost or market. The company's policy of using the Last-in, First-Out method of inventory pricing continues in effect with result that inventories are carried on the books of the Company as of October 31, 1946, at a valuation of 36,697,761.68 less than replacement cost at that date. RENEGOTIATION. The final renegotiation of business done with the United States Government resulted in no assessment. FINANCIAL CONDITION. Our balance sheet indicates a very sound financial situation. During the year the Company made payments on our long term indebtedness amounting to 32,000,000.00. The Company has organized a company called Growth Products Company, in which the company holds a majority interest. This company is to manufacture and recover from fisheries certain growth factors and vitamins necessary in the manufacture of various stock and poultry feeds. The new plant will be located at Pascagoula, Mississippi and it is anticipated that it will provide The Glidden Feed Mill Division's entire re quirements of these essential products. DURKEE FAMOUS FOOD PRODUCTS DIVISION. The world-wide shortage of fats and edible oils has kept our plants that are refining vegetable oils operating at capacity, and our sales of such products as Durkee's margarine, shortening, and salad dressing have had a tremendous increase in volume. Durkee's package products such as pepper, spices, shred cocoanut and other package goods are keeping pace in produc tion with the increased importation of the necessary raw materials. VEGETABLE OIL DIVISION. Your Company operates four processing plants for the extraction of vegetable oils from soybeans, copra, flaxseed, palm kernels, and other vegetable seeds. Three of these plants are located on the Pacific Coast and one in Chicago. The world-wide demand for vegetable oils, and the requirements of our refin eries and food plants, insure continuous operations at these plants for the ensuing year. SOYBEAN DIVISION. The variety of products produced from soybeans is being constantly increased through the good work of our Research and Development Labor- 0L000Z83* atories. These produces now include, in addition to soybean oil, soybean meal and soy bean flour, such products as Alpha Protein, Prosein, Lecithin, Synthetic Albumen, Sterols and Sex Hormones. The plant at Chicago has been in capacity production dur ing the past year and a new sterol plant has been added and will be in production by January first. CHEMICAL AND PIGMENT DIVISION. In our previous reports we have re ferred to the difficulty of securing sufficient raw materials for our Chemical and Pigment Division. I am pleased to report that our mining operations have been developed to such an extent that we are assured of a good supply of raw materials for full operations during the next twelve months. Government restrictions have been removed on dis tribution and it is apparent I hat there will be considerable expansion of the business of this Division. METALS REFINING DIVISION. The Government has recently placed with this Division some substantial orders for materials for the Navy. With the improved labor conditions existing in the Middle West area, we anticipate an increased volume of production from our Metals Refining Plant at Hammond, Indiana. The prospects for increased production of Iron Powder, Copper Powder, Type Metal and other important products are most encouraging. NAVAL STORES DIVISION. During the year the Company has completely re stored the plant of the Nelio Resin Processing Division at Jacksonville, which was damaged by fire, and our plants at Jacksonville, Florida and Valdosta, Georgia are operating fully and the results are satisfactory. The Company has absorbed into its corporate structure the Nelic Resin Processing Corporation, which heretofore has been carried as a separate corporation. PAINT AND VARNISH DIVISION. In our last report we predicted that the pentup demand for Paints and Varnishes would insure capacity operations during 1946. This prediction has proved to be correct and the back-log of orders in all of our Paint and Varnish plants is larger than at any previous time in our history. Our sales of SPRED LUSTER, which was developed by our Research Laboratories last year, have been very large and arc constantly increasing. This remarkable soybean base, watermix, enamel has revolutionized the decorating of all interiors and is the only product of its kind on the market. With the reconversion of general-industry from war work, there has developed a very great demand for Industrial Paints, Varnishes, and Lacquers and we believe all our plants will be fully employed throughout 1947. GLIDDEN FEED MILL DIVISION. This mill more than doubled its production last year and the high quality of our products commanded a splendid market. This plant utilizes certain important materials produced in some of our vegetable oil proces sing plants and has proven to be a fine addition to our organization. In our 1945 report we sttted that the Company had no reconversion problems and that when our country returned to peacetime pursuits, our volume of business would be much greater. Our sales indicate that this prediction was borne out and we believe there will be an equally large increase in sales during the current year. Our diversified industry is so well coordinated that profitable operations are indicated. On behalf of the Board of Directors, I desire to express our appreciation of the fine cooperative efforts of the whole organization in the year just closed. Yours very truly, ADRIAN D. JOYCE, President. GtOOOZ835 CONSOLIDATED The Glidden Company October ASSETS CURRENT ASSETS. Cash.......................................................... .... Dominion of Canada Victoiy Loan Bondi Trade notes receivable........................................................................................... Trade accounts receivable.................................................................................... 18,546.43 9,670,848.93 6,038,069.11 200,000.00 9,689,395.36 Less reserves .................................................. .......................................................... 247,482.67 9,441,912.69 Inventories--raw materials, in-process, and finished goods--Note A . . . Other current notes and accounts receivable and advances, less reserve of 23,228.83 ............................................................................................................ To t al Cu r r en t As s et s . . . 1........................................................... 25,503,273.42 367,709.31 41,550,964.53 OTHER ASSETS Cash surrender value oflife insurance............................................................... Claims for refund of federal taxes on income of prior, years......................... Miscellaneous notes and accounts receivable and advances, less reserve of 11,392.62 ........................................................................................................ Estimated Canadian p ostwar refund of excess profits tax............................. Other investments.................................................................................................... 673.029.25 244,284.83 ^ 115.035.26 56,000.00 33,540.47 1,121,889.81 PROPERTY, PLANT, AND EQUIPMENT Land-Note B........................................................................................................ 2,463,534.08 Buildings, machinery, and equipment--Note B.............................................. 27,563,723.97 30,027,258.05 Less reserves for depreciation, depletion, and amortization......................... 14,227,231.48 15,800,026.57 DEFERRED CHARGES Prepaid insurance and expemes........................................................................... 640,258.52 59,113,139.43 GL0002836 BALANCE SHEET ind Canadian Subsidiary 31,1946 LIABILITIES, CAPITAL STOCK, AND SURPLUS CURRENT LIABILITIES Accounts payable (including notes payable of $102,300.00)...................................... Accrued taxes, royalties, interest, and insurance........................................................... Federal, state, and dominion taxes on income--estimated.......................................... To t al Cu r r en t Lia b il it ie s .................................... $ 6,095,986.13 510,227.70 4,658,123.85 $11,264,337.68 LONG-TERM DEBT Serial notes payable, maturing $1,000,000.00 annually July 1, 1948 to 1951, inclusive, and $4,000,000.00 on July 1, 1952, interest \\i% to 2%............................................................... 8,000,000.00 RESERVE For contingencies 1,340,000.00 CAPITAL STOCK AND SURPLUS Capital stock: Convertible preferred cumulative, par value $50.00 a share redeem able at $52.50 a share, each share convertible into approximately .73 share of common stock: Authorized 200.0CO shares Issued and outstanding 191*,540 shares.................................................. $ 9,977,000.00 Common, without par value: Authorized 1,200,003 shares Outstanding, including treasury shares, 892,000 shares Reserved for conversion 145,505 shares Stated capital................................................................................................... 4,460,000.00 Surplus--Note C: $14,437,000.00 Capital surplus..................................................'................... $12,581,438.41 Earned surplus (includes $1,9)8,446.24 of surplus of v i Canadian subsidiary) ...................................................... 11,668,968.63 --- $24,250,407.04 Less common stock in treasury--4,300 shares at cost . . 178,605.29 24,071,801.75- 38,508,801.75 $59,113,139.43 CONTINGENT LIABILITIES Letters of credit outstanding..................................................$ 791,877.15 See nates to financial statements. GLD002837 CONSOLIDATED PROFIT AND LOSS AND SURPLUS The Glidden Company and Canadian Subsidiary Fiscal year ended October 31,1946 PROFIT AND LOSS STATEMENT Net sales......................................................................................................................................................122,439,118.69 Cost of goods sold, selling, administrative and general expenses, including provision of 1,075,888.76 for depreciation and depletion . ....................................................... 112,181,838.17 10,257,280.52 Other income............................. ................................................................................................................ 586,162.97 Other deductions:' Interest on lone-term debt Other interest ...... Provision for contingencies Miscellaneous ...... 10,843,443.49 168,152.79 34,596.92 140,000.00 70,178.35 412,928.06 Pttom Be f o r e Ta x e s o n In c o me ........................................................................................10,430,515.43 Estimated taxes on income: Federal normal income tax and surtax............................................................... 3,452,500.00 Federal excess profits tax....................................................................................... 1,080,000.00 Dominion and state taxes....................................................................................... 183,000.00 4,715,500.00 Co n s o l id a t e!) Ne t Pme iv 5,715,015.43 CAPITAL SURPLUS SURPLUS Balance at November 1, 1945 ....................................................................................... Transfer to earned surplus account of certain charges to capital surplus in 1932 9,961,116.97 2,620,321.44 Balance at October 31, 1946 12,581,438.41 EARNED SURPLUS Balance at November 1, 1945 ............................................................................... 10,717,437.36 Add: Net profit for the year . ............................. ........................ 5,715,015.43 Recovery on investment in California mining company charged off" to earned surplus in 1943 . . . , , . . . 87,743.28 5,802,758.71 Deduct: Cash dividends paid: Convertible preferred--2.25 per share......................... Common--2.00 per share .......................................... 16,520,196.07 448,986.00 1,781,920.00 2,230,906.00 ertain items of note and bond discount and expense, provision for Contingencies, losses on dismantlements, and revaluation of properties charged to capital surplus in 1932 ................................................................................... 2,620,321.44 4,851,227.44 Balance at October 31, 1946................................................................................................................ 11,668,968.63 To t a l Su r pl u s a t Oc t o ber 51,1946 ................................................................................... 24,250,407,04 See notei to financial staUmr i;. GLD002838 NOTES TO FINANCIAL STATEMENTS The Glidden Company and Canadian Subsidiary October 31,1946 Note A--Inventories of principal taw materia !c are stated at coat flast-ln, first-out method) which did not exceed replacement market other inventories are anted at the hwer of colt (accumulated average) or replacement market. Note B-- Property, plant, and equipment ate stated at coat or leas, reduction having keen nude In 1932 to eliminate appreciation and to provide for further write-down*. Property, plant, and equipment include emergency facilities acquired at n cost of {875,614.48, which cost has beet) fully amortized in prior years. Mote C--The agreement relating to long-term debt contains certain restrictions in respect of payment of dividends, ftock acquisitions, tc. At October Jl, 1946, earnings available under such agreement for dividend payments on common stock and stock acquisitions amount to $6,014,535.77. ERNST & ERNST CLEVELAND Board of Directors, The Glidden Company, Cleveland, Ohio. UNION COMMERCE EUtUMNa We have examined the consolidated balance sheet of The Glidden Company and its Canadian subsidiary ms of October 31, 1946, and the consolidated state menu of profit and loss and surplus for the fiscal year then ended, have reviewed the system of internal control and the accounting procedures of the tom panes and, without making a detailed audit of the transactions, have examined or tested accounting records of the companiei and other supporting evidence, by methods and to the extent we deemed appropriate. Our exam ination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all procedures which we considered necessary. Such procedure! included test confirmation of trade receivables and observation of procedures employed by the companies in ascertaining inventory quantities at locations selected by us. In our opinion, the accompanying balance sheet and related statements of profit and toss and surplus present fairly the consolidated position of The Glidden Company and its Canadian subsidiary at October 31,1946, and the consolidated results of their Operations for the fiscal year, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Cleveland, Ohio December 14, 1945 ERNST fit ERNST CertiJUd PiMi* JevunUnU _ DIVERSIFIED PRODUCTS BY GLIDDEN FOODS Durkee's Famous Dressing Durkee's Margarine Durkee's Shortening Durkee's Salad Dressing Dunham's Shred Cocoanut Durkee's Spices and Worcestershire Sauce Special ingredients for Bakeries and Confectioned SOYBEAN PRODUCTS "Alpha" Protein* Gamma Protein Fine Chemicals Lecithin Soya Meal Sterols Hormone* Soya Flour Soya Flakes LIVE STOCK AND POULTRY FOODS Glidden Cattle and Hog Feed Glidden Pojtcry Feed Vitimin and Growth Products PAINTS. VARNISHES AND LACQUERS SPEED SPEED LUSTER Jjp-A-Lac R.ipJin En unel Spray-Day* Lite GLciii Aviation Finishes Endurance House Paine Glit'denspar Varnish NuUlite Industrial Paints Industrial Lacquers, Enamels and Vanishes C4L1D-N Specialties VEGETABLE OILS Soybean Oil* Cocoanut Oils Cottonseed Oils Peanut Oils Com Oils Palm Oil* Linseed Oil CHEMICALS AND PIGMENTS Titanium Dioxide Lithopone Cadmium Colon Litharge Red Lead Easton White Lead Cuprous Oxide Dry Colors METALS AND MINERALS Powdered Iron and Copper Powdered Lead and Tin Wilkea Type Metal Barytes Barium Products NAVAL STORES Pigmentar and Rosins Turpentine Nelio Resin Charcoal Solvents Synthetic Rubber Compounds Compounds for Plastics *7>ed/mar* Jbfiftmd GLD002839 BOARD OF DIRECTORS ADRIAN D. JOYCE ROBERT H. HORSBURGH RICHARD W. LEVENHAGEN WILLIAM .1. O'BRIEN DWIGHT P. JOYCE PAUL E. SPRAGUE CLIFTON M. KOLB JOHN A PETERS OFFICERS ADRIAN D. JOYCE, Preiidcnt ROBERT H. HORSBURGH. Eiecuiivc VWPtaldcoc R ICHARD W. LEVENHAGEN. Senior Vice-Pmident WILLIAM J. O'BRIEN. Vice-President DWIGHT P. JOYCE, Vice-Prerident FAUL IL SPRAGUE, Vice-Preiidtnt JOHN A. PETERS. Treiiurer CLIFTON M. KOLB. Secretary WILLIAM W. CONANT, Assistant Secretary CLARENCE L. COLE, Controller Trac sfcr ARent THE NEW YORK TRUST COMPANY Near York City Registrar THE CHASE NATIONAL BANK New York City GLIDDEN DIVISIONS The Glidden Company Cleveland, Ohio The A. Wilhelm Company Reading, Pennsylvania The American Paint Works New Orleans, Louisiana PAINT *n>e Campbell Paint & Varnish Co. St. Louis, Missouri The Glidden Company Minneapolis, Minnesota Nubian Paint it Varnish Company Chicago, Illinois The Glidden Company, Ltd. Toronto, Ontario, Canada The Glidden Company San Francisco, California Adams It Elting Company Chicago, Illinois Durkee Famous Foods Elston Avenue, Chicago, Illinois Durkee Famous Foods Iron Street, Chicago, Illinois FOOD Durkee Famous Foods Portland, Oregon Durkee Famous Foods Louisville, Kentucky Durkee Famous Foods Norwalk, Ohio Durkee Famous Foods Berkeley, California Durkee Famous Foods Elmhurst, Long Island, New York CHEMICALS, PIGMENTS AND METALS The Chemical & Pigment Comp.my St. Helena (Baltimore), Marylani The Chemical k Pigment Company Oakland, California The Chemical k Pigment Company Collinsville, Illinois Me tali Refining Company Hammond, Indiana Euston Lead Company Scranton, Pennsylvania SOYA PRODUCTS The Glidden Company Chicago, Illinois NAVAL STORES The Glidden Company Jacksonville, Florida The Glidden Company Valdosta, Georgia FEED MILL The Glidden Company Indianapolis .Indiana The Glidden Company Buena Park, California VEGETABLE OILS The Glidden Company Berkeley, California The Glidden Company Portland, Oregon The Chemical f< Pigmi nt Company Barytes Mines Battle Maintain, Nivada MINES Yadkin Valley Ilmenite Company Lenoir, North Carolina Retail Store.* and Warehouse* in the Principal cities GLD00Z840