Document mq06pJYN8Rdmw5MLj2LGOYVgQ

,i.d N11060 PNYC00005924 Anaconda Copper Mining Company n CAPITAL STOCK December 31, 1931 Authorized, 12,000,000 shares, $50 each........................$600,000,000 Issued, 8,914,932 shares, $50 each....................... 445,746,600 OFFICERS Chairman oj the Board , . JOHN D. RYAN President................................... CORNELIUS F. KELLEY Vice-President........................BENJAMIN B. THAYER Vice-President ..... JAMES R. HOBBINS Vice-President....................... ROBERT E. DWYER Secretary and Treasurer . . ALBERT H. MELIN- Gcneral Auditor....................... JAMES DICKSON' Assistant Secretary .... KENNETH B. FRAZER Assistant Treasurer .... DAVID B. HENNESSY DIRECTORS Percy A. Rockefeller John D. Ryan Benjamin B. Thayer Cornelius F. Kelley Charles E. Mitchell Charles T. Fisher James R. Hobbins Andrew J. Miller John A. Coe C OFFICES An a c o n d a , Mo n t a n a 25 Br o a d w a y , Ne w Yo r k PHYC000059Z5 To the Shareholders of Anaconda Copper Mining Company: The year 1931 witnessed a further decline in all non-ferrous metals and their products from the low prices that had been reached in the previous year. Efforts which had been made to bring production into line with declining consumption were only partially successful, resulting in a further accumulation of stocks. Owing to the discontinuance of the publication of monthly statistics by the American Bureau of Metal Statistics, complete data on produc tion, consumption and stocks are not yet available, awaiting the publication of the American Bureau Year Book. World production of copper for the first nine months of the year totalled 1,144,966 tons, as compared with 1,341,257 tons for the corresponding period of 1930, a decrease of 196,291 tons, or 14.63 percent. Monthly production declined from a high for the year in March of 136,958 tons to 120,689 tons in September. Present production is considerably below that of September. World consumption of copper for the nine months as indicated by American Bureau statistics was 1,042,011 tons, as compared with 1,192,331 tons for the nine months of the year prior, a decrease of 150,320 tons, or 12.61 percent. Consumption of copper, after slight fluctuations for the first few months, reflected the prevailing world-wide conditions, and declined steadily to the end of the year. For the second consecutive year, the price trend of all metals was downward, copper and silver selling at the lowest pries in recorded history, lead since 1914, and zinc since 1895. The price of copper, as reported by the Engineering & Mining Journal was 10.275)1 on January 2nd, declined to a low of 6.150)1 on November 21st, and closed the year at 7.025)1, with average for the year 8.116)1, or 4.866)1 below 1930 average. The price of lead 3 pN*C00005926 was 5.100* on January 2nd, declined to a low of 3.75*. with year average of 4.243*. Zinc declined steadily from 4.125* on January 2nd to 3.200*, advanced for a period, then declined to a low of 3.125* on November 25th, and closed the year at 3.138*, with, year average of 3.640*. The price of silver declined to a low of 25.750* on February 16th, advanced steadily to a high of 37.250* on November 10th, and again declined to 30.25* on December 31st. with year average 28.700*, or 9.454* per ounce less than 1930. Unfilled Orders The rapid decline in the volume of business, accompanied by continued price-cutting of metals, resulted in a backing up of orders placed with the fabricating plants of The American Brass Company and the Anaconda Wire and Cable Company. The decreasing demand, accompanied by falling prices, resulted in customers delaying specifications of the products contracted for, increased the inventory of metals reserved to cover such orders, and is the principal reason for the excess inventory the Company is carrying. With but few exceptions, specifications are being received against these contracts and it is expected that practically all products covered by them will ultimately be delivered. The total unfilled contracts upon the books of The American Brass Company and the Anaconda Wire and Cable Company at the end of the year amounted to 199,871,316 pounds of copper and 28,625,652 pounds of zinc. Inventory Adjustment* The practice was established in 1926 of carrying the fixed normal inventory at fixed prices, which were lower than metal prices that prevailed under ordinary business conditions. Inventories in excess of normal requirements were carried at cost. The fixed prices, although considered conservative when established, are higher than recent market levels. It is deemed inadvisable, in view of the extremely low metal prices now prevailing, to continue the former method of pricing inventories, and therefore, all inventories in the consolidated balance sheet at the close of the year, including the normal fixed inventory heretofore carried at fixed prices, are carried at market prices, allowance being made for metals sold 4 PNYC0Q005927 under firm contracts. This change in pricing inventories necessitated: an adjustment charged to surplus in the amount of $7,449,459.88. Financial The gross income of the Company upon a consolidated basis totalled $96,387,705.50. The cost of sales, including all operating expenses, development, maintenance, repairs, selling and general expenses and taxes, and carrying directly against operating income all expenses incurred by curtailed and non-operating units, amounted to $89,978,278.14, leaving a net operating income of $6,409,427.36. Other income added resulted in a total of $7,208,838.38. Charges for depreciation and obsolescence, interest on current obligations, and interest and discount on bonds amount to $10,360,565.27, resulting in a net loss tor the year, after all charge-offs on operating account, of $3,151,726.89. Capital Expenditures Construction expenditures made by all companies during the year totalled $2,969,226.65. Copper Operations The production of metals by the Anaconda Company and its subsidiary companies from copper operations tor the year 1931 was as follows: Copper lb*. Anaconda Copper Mining Company....... ... Andes Copper Mining Company- --...... .... .... Greene Cananea Copper Company_____ .... International Smelting Company .......... .... 173,440,855 83,710,880 171,627:952 41,872,903 90,518,883 Total.................................................... .... 561,171,473 Silver oza. 3,640,066.11 79,651.56 278,231.01 927,329.30 4,925,277.98 Gold' 023. 19,486.201 4,790.809 8,446.596 32,164.248 64,887.854 Of the above, 92,715,747 pounds copper, 1,028,960.76 ounces silver, and 42,342.915 ounces gold were produced from custom ores and ores treated on toll. 5 PNYC000Q5928 Zinc Operations The production of electrolytic zinc at the Anaconda and Great Falls plants during 1931 amounted to 125,983,883 pounds. In addition, metals in residue produced amounted to 4,391,680 pounds lead, 1,216,108 pounds copper, 451,344.57 ounces silver, aqrd 5,210.621 ounces gold. Of this amount 948,260 pounds copper, 25,138.75 ounces silver and 73.700 ounces gold were treated through operations of the Copper Plant. Lead Operations The Lead Plant of the International Smelting Company, Tooele, Utah, produced from custom ores 52,190,356 pounds lead, 2,027,790.58 ounces silver, and 10,808.662 ounces gold. Miscellaneous Products Miscellaneous production consisted of: 50,934,116 feet 26,289 ton3 10,485 " 50,114,585 pounds 9,566,789 281,320 636,650 2,274,925 lumber. treble superphosphate and phosphoric add. arsenic. zinc oxide. white lead. cadmium. nickel sulphate. copper sulphate. Fabricating Plants The output of manufactured products of the plants of The American Brass Company amounted to 315,869,932 pounds, and of the Anaconda Wire and Cable Company to 199,340,251 pounds, or a combined output of 515,210,183 pounds. 6 ) PNYC00005929 Silesian-American Corporation The principal amount of outstanding bonds was reduced to $9,363,500 at December 31, 1931. The London Price of zinc was lower than in the previous year, declining to 2.52(1 per pound, as compared with 1930 average of 3.65)1. At December 31, 1931, average price for spot and future had declined to equivalent of 2.19(1 per pound, Principal production for the year was as follows: Zinc.......................... 118,772,527 pounds Lead....................................................................... 20,590,103 Coal.,............................... 2,816,436 metric tons ' Sulphuric Acid.............................. 44,947 " " Superphosphate........................ ..,............. ........... 8,348 " " During the year $157,885.44 was expended for construction. There is attached hereto a Consolidated Balance Sheet showing the financial condition of the Company and its subsidiary companies at the close of business December 31, 1931, together with an Income Statement for the year, certified to by Messrs. Pogson, Peloubet & Company, Certified Public Accountants. JOHN D. RYAN, Chairman of the Board. CORNELIUS F. KELLEY, President. New York, N, Y., April 14, 1932. 7 PHYC00005930 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--31st December, 1931 Fin e d : ASSETS Mines and Mining Claims, Coal Mines, Timber Lands, -Phosphate Deposits, Water Rights and Lands for Metal Producing and Manufacturing Plants......................... ........................................... $297,783,089.30 Buildings and Machinery at Mines, Reduction Works, Refineries, Manufacturing Plants, Saw mills, Foundries, Waterworks, Steamships and Railroads-..'.................. ....... '.................. '........... 264,721,972.68 Investments in Sundry Companies............................. 26,376,923.22 $588,881,985.20 De f e r r e d Ch a r g es : Stripping and Development...................................... Discount on bonds....................................................... $7,580,780.19 4,290.042.28 11,870,822.47 Cu r r e n t : Supplies on hand, advances on Ores and Expenses prepaid.................................................................. $28,318,883.52 Metals and Manufactured Products in process and onhand--Sold at Sales Price; Unsoldat Market 64,797,633.84 Accounts Receivable.-................................................. 11,161,858.78 Marketable Securities.-............................................... 2,708,829.91 Cash............................................................................... 6,362,551.04 113,349,757.09 $714,102,564.76 We have examined into the affairs of Anaconda Copper Mining Company and of its Subsidiary Companies and have verified the Assets and Liabilities shown above and the relative Surplus and Income Accounts. The Net Low is after deducting all Development expenditure of the year, Depletion of Coal and Timber Lands and Depreciation of Plants and Equipment. We hereby certify that this Balance Sheet shows the financial condition at31stDecember,1931,of the companies as an aggregate whole and that the accompanying Surplus and Income Accounts for the year ended that date are correct as stated. POGSON, PELOUBET & CO., N.ew York and Butte, Sth April, 1932. Certified Public Accountants. 8 N11060.01 PNYC00005931 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--31st December, 1931 LIABILITIES Ca p it a l St o c k of Anaconda Copper Mining Company: Authorized, Issued, f 2,000,000 shares of $50-00 each 8,914,952 shares................ Held through Subsidiaries, 238,016 shares.,............... s Ca p it a l St o c k a n d Su r p l u s of Subsidiary Companies owned by Minority Interest....................................... 3445.746.600.00 11,900,800.00 5433.845.800.00 5,177,270.71 Bo n d s Ou t s t a n d in g : Chile Copper Co. Twenty Year 5% Gold Deben tures, due 1947..................................................... Butte, Anaconda & Pacific Railway Co., First Mort gage 5% Sinking Fund Gold Bonds, due 1944.... $35,000,000.00 2,034,000.00 37,034,000.00 Re s e r v e s : For Depreciation.......................................................... 395,116,048.70 For Insurance, Renewals and Contingencies............ 1,976,893.92 97,092,942.62 Cu r r e n t : Notes Payable........................................... Taxes and Interest Accrued..... .................................. Accounts and Wages Payable.................................... $61,500,000.00 2,097,803.94 7,741,185.11 71,338,989.05 Su r pl u s ................................................................................ 69,613,562.38 $714,102,564.76 No t e--In order to comply with the Government Income Tax requirement* for the purpoae of computing depletion, additional valuations of the mining properties have been recorded upon the book* of the companies; but, for the sake of uniformity, the result of those entries has been omitted from the current statements. 9 PNTC00005932 ANACONDA c o p p e r MINING COMPANY and Subsidiary Companies Consolidated Surplus Account--Year Ended 31st December, 1931 Surplus 31st December, 1930................................. Add, Minority Interest: Balance list December, 1930..................... Less acquired during year.............................. *87,442,900.95 $257,843.44 2,294.57 255.S50.87 Net Loss of the year 1931, per Income Account: Anaconda Copper Mining Company loss___ Minority Interest profit................................. *87,698,451.82. *3,168,523-35 16,796.46 3,151,726.89 Deduct, Dividends: By Subsidiary Companies on stock owned by Minority Interest at 31st December, 1931 By Subsidiary Companies on stock acquired by Anaconda Copper Mining Company in 1931-- Amount paid prior to acquisition By Anaconda Copper Mining Company--Dividends Nos. Ill and 112.................................................. *84,546,724.93 *84,637.25 362.51 6,680,656.66 6,765,656.42 Inventory adjustment to reduce all unsold metals to market Sundry adjustments applicable to prior years................. . *7,449,459.88 538,928.54 *77,781,068.51 7,988,388.42 Deduct, Minority Interest__ *69,792,680.09 179,117.71 Surplus 31st December, 1931, per Balance Sheet. *69,613,562.38 J 10 ooo,1 0* P ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Income Account--Year Ended 31st December, 1931 Gross Sales and Earnings.__.......................... .......... ............. ......................... Cost of Sales--operating expenses, development, maintenance and repairs, administrative, sailing and general expenses and all taxes, including all expenses incurred'by non-operating units........................................ $96,387,705.50 89,978,278.14 Operating Income............................................................................................ Other Income--interest, dividends and miscellaneous income...................... $6,409,427.3(1 799,411.02 Deductions from Income: Amount charged off this year for depreciation and obsolescence.......... ............................................... Interest, including discount on bonds....................... $5,891,902.80 4,468,662.47 $7,208,838.38 10,360,565.27 Net Loss, carried to Surplus Account. $3,151,726.89 11 PNVC00005934