Document npoZ4QYaVjLprgr7798pNbZxa

ESI* -<3 r--v .! aS^asa^W!i:fWTOray^irailKW61g^i0ii^g^ f^OR THIS" FISCAL ' y.f^k F , HKDEsb r-ro ve mser . s c , fu TO OUR SHAREHOLDERS: This 110th annual report, of The Eagle-Picher .Company records', a year of further progress in your management's program of expanding and diversifying the Company's business and assuring and increasing its earning power. Net sales for the year ended November 30, 1953 were the largest in the Company's history and neD profit before'' taxes increased materially in comparison with 191)2. However, a substantially larger provision for income taxes resulted in a lower net profit for 1953 than for 1952. Dividends aggregating $1.50 per share were paid in both years, . . , As at November 30, 1953, net working capital as well as cash and U. S. Government obligations were greater than at any (previous year-end. Net worth continued its steady uptrend and was at. a peak level at the close of the 1953 fiscal year. a: The Eagle-Picher Company's business in 1953 conformed closely with the over-all industrial pattern. Operating under varying conditions, each of our three manufacturing divisions showed better profits than in the preceding year. On the other hand, earnings of the Mining and Smelting Division, like those of other important, producers of zinc and lead, fell drastically from the 1952 level. . Sales Net sales of $85,033,403 for the year ended November 30, 1953 were the largest in the Com pany's history and compared with $81,893,007 for the preceding year, an increase of 3.8'T. This .. NET SALES Million. ; : , , : . a - Million '(ion oral .......... The past year established a new high for post war business activity while gross national product represented a record-breaking total approximately five per cent above 1952. Despite this favorable climate, many industries and individual com panies encountered difficult problems and oper ating; conditions which reduced their earnings. This pattern of readjustment within specific in dustries during periods of general prosperity has been a characteristic of recent years. increase* was achieved during a period of low metal prices which reduced dollar sales of the Mining and Smelling and 'Pigment,' Divisions. Average .prices of zinc and lead in the 1953 fiscal year declined 114.1',' and 19.8',', respectively, from those for the 'previous year. ICtirninus Net. profit for the year ended November .SO, 1953 was $3,242,966, etpiivalenL to $8.28 per share, compared with $'1,020,(548, or $4.08 per share, for the 1952 fiscal year. . Million NET PROFIT . / , - . . M- . ; ^ Million" Net profit before taxes for the year ended November 80, 1958 amounted to $5,952,966 as compared with $4,823,643 for the year ended November 30, 1952, a gain of $1,629,323. How ever, this increase was more than offset bv the higher provision for Federal and State taxes on income amounting to $2,710,000 in 1953 as com pared with $288,000 in 1952. Operations of the Mining and Smelting Division were adversely affected by lower metal prices and by a strike in the Tri-State District lasting from June 20 to December 22. In addition, losses were incurred from-liquidation of the Metallic Products and Paint and Varnish Divisions. Liquidation of both divisions was completed during 1953. Bala net* Shovt Current assets at November 30, 1953 wen-* $31,815,017, including $17,278,857 of cash and gov ernments, and current liabilities were $6,006,268, a ratio of 5.3 to 1. Working capital of $25,808,749 was the largest for any year-end in the Company's history and .represented'an increase of $631,774 over that.of"a year ago. Total inventories at November 30, 1953 were $8,776,454 compared with $13,716,435 a year earlier, a decrease of $4,939,981. The metal con tent of inventories at November 30, 1953 was lower than at any time in the past thirty years due to the Company's policy of operating with minimum inventories, to the discontinuance of the Metallic Products Division, and to the strike in our Tri-State mines. 'Property; plant and equipment at November 30, 1953 was carried at a net figure of $17,583,985. With capital expenditures of almost $5,000,000 during 1.953, the net plant account increased only $1,090,967 over a year ago because of charges for depreciation, and depletion and sales of fixed assets. The Eagle-Picher Company lias had operations both in Mexico and Canada for a number of years. The Mexican operations are similar to, and con stitute an integral part of, those of the Mining and Smelting Division. The Company's Mexican investment reached a peak of approximately Million NET WORKING CAPITAL (At Year Knd) ...... ; NN : / Million .f.'i.zuu.uwu -during j :d u . a ? the close ol the fiscal year, this investment had been reduced to $607,152, a figure substantially less than the present value of the properties. The Company's investment in Canada had been of smaller magnitude and the Canadian operations were not adapted to any of our operating divisions. Because of the favorable economic future of Canada, serious consideration and study was given to expanding activities thereto an extent sufficient to warrant a separate operating division of the Company. It was concluded, however, that the capital investment and managerial time and effort could be more profitably employed , elsewhere. After a period of negotiation, sale of the Canadian investment was consummated at its book value which we believe closely approximated its real worth. . . Capitalization was rearranged and simplified during the first half of 1953 by sale of an addi tional $3,800,000 of 3:V; notes anil 'retirement of an approximate like amount of indebtedness and preferred stock of a subsidiary. In June. 1953, the Company prepaid $650,000 notes due. Septem ber 1,1953 and an additional $500,000 maturing a year later. .Yet Worth Net worth of your Company at November 30, 1953 was at an all-time high of $30,646,045, equivalent to $30.98 per share. This represented an increase of $1.77 per share for the year and was almost double the comparable figure of $15.60 per share ten years earlier. v The composition of net worth on a per share basis at the close of the 1953 fiscal year was as follows: .V ;. , , Net Current Assets., ............ > . ....... . . . . $26.09 Less: Long-Term Indebtedness:.;../.,.. 15.16 ./ Current Assets, Less.All Liabilities;/ /N;,; $10.93 Fixed Assets, Less Reserves..:. . . / 17.78 Investment and Other Assets..., . ... . . 3.15 Capita! Stock,- Surplus and Reserves , , . $31.86 /Less: Reserves for Self-Insurance:/;-:.- . ; 0,88 .NET WORTH 830 98 ' ' . Million . ALT ttUKlii ; ' (At Year Mrs,It ' . '. .Mub..r; Ou t look It is generally forecast, and anticipated that industrial activity and corporate earnings in 1954 will show some decline from the peak year 1953. Most authoritative sources believe that the reces sion, which has now been evident, for several months, will be of minor proportions and will not develop into a full-fledged depression. Declines of five to ten per cent in volume are expected for many industries although others undoubtedly will be outside this range. We believe that The Eagle-richer Company's earnings in 1954 will compare favorably with those for 1953. However, a decline in dollar sales in 1954 is indicated at this time. Last year's volume included $10,000,000 of sales derived principally from defense orders now completed and partly from sales of discontinued divisions. Since the margin of profit on the defense work was unusually low, 1954 results should not be ma terially affected by this reduction in sales. Our Company appears to have good future growth possibilities and our strong financial posi tion will enable us to expand further as favorable opportunities may arise. However, your man agement will continue to place emphasis upon improvement of earning power and obtaining the best possible return upon shareholders' invest ment. Jo e l M. Bo w l iiy Chairman / Cincinnati, Ohio February 5, 1954 T- SPENCER SHORE President I Cash. . U. S. Government obligations at cost (market, value $8,123,434 at November 30, 1953). .. ......................................... Accounts and notes receivable, less allowance for doubtful receivables, .$249,425 ard $350,897. . Inventories of raw materials, work in process, finished products and supplies (note 1): , Ores, metals and metal bearing products........ .. ............; . . ....... Y; Y' r; Othgixi .'A Yy Ay Y'.'. Y: Yv. : . . ; YY .. . . . . . : Y; Y $ 9,154,389 8,118,968 5,765,206 3,061,404 5,715,050 8,776,454 To t a l Cu r r k n t As s is t s . . . .,.................. :... 31,815,017 OTHER ASSRTS: Repair parts-and maintenance -supplies.... .... >................ .................... Investment in and advances to associated company and sundry se- eurities ;...at or below cost............ . ......... ..................... . . . . ................. Miscellaneous accounts and advances. ....................... .. ..................... .. :y*. 1,026,668 316,927 438,133 1,781,728 INVESTMENT JN AND ADVANCES TO FOREIGN SUBSIDI ARIES NOT CONSOLIDATED (note 2): Mexican subsidiaries......... . . ;n.. -,...... .............. .. . Canadian subsidiaries,. . . . . . . ........... ............ ................ ............. . 607,152 607,152 PROPERTY, PLANT AND EQUIPMENT: Mining lands and leases; mills, smelters and manufacturing plants; railroad and other properties, at cost. ;............. . ............ Lpn h: Allowance for depletion, depreciation, etc. .......... .. .. . . . ; 47,648,494 30,064,509 17,583,985 PREPAID AND DEFERRED CHARGES: Prepaid freight, insurance, etc... . ... . .... . .. . ........ ... . ....... ... Miscellaneous deferred charges..................................................................... 296,678 436,885 733,563 $52,521,445 $ 8,425,408 2,312,372 8,276,260 6,140,779 7,575,656 13,716,435 32,730,475 1,118,987 317,327 273,129 1,709,443 625,763 692,392 1,318,155 49,615,357 33,122,339 16,493,018 223,744 489,813 713,557 $52,964,648 The accompanying nolex A XI) DOMESTIC STHSIDI A R I K S a s vr \<>v i;,\h ;i:k .'in. iA\ii>; ly.v: LIABILITIES . 1953 C URRENT LI A BI LilTI ES: Accounts payable............................................................................................ Dividend payable............................................................................................ Accrued liabilities............................................................................................ Federal taxes on income, less U. S. Government obligations, $3,443,325 and $2,028,349........................................ . Long-term debt current portion: ....... .. . ... ... : . : . . . . . . : . . . . To t a l Cu r r e n t Lia b il it ie s ................................................................ $ .`1,136,202 593,.606 2,126,560 -- AlaO.OOO 6,006,268 1952 $ 4,401,931 619,321 1,857,248 675,000 7,553,500 LONG-TERM DEBT: 3;V notes, maturing serially to September 1,1972. (note 3)..... . ...... .41 mortgage note of subsidiary company................... .................... Ltm: Payments due within one year ;. . . . . '. ... . ;........ .................. : L. . . ., 15,150,000 ..... 15,150,000 150,000 15,000,000 12.500.000 1,750,000 14.250.000 675,000 13.575.000 RESERVES FOR SELF-INSURANCE: Workmen's compensation:. . . . . . .... . . ... ... . . . . Fire and tornado.. . ........ .. ... !! ...................... .. .......... .. 719,286 149,846 869,132 736,291 148,841 885,132 CAPITAL STOCKS OF SUBSIDIARY COMPANY. . . . ..................... - 2,052,573 STOCKHOLDERS' EQUITY: Capital stock -i par value $10 per share; authorized 1,500,000 shares; issued and outstanding 989,177 shares. . . . . . .. .... . . . ..... ... . Surplus: , , Capital surplus..................................._........................................................ Earned surplus (note 3j............................................................................. 9,891,770. 2,769,116 17,985,159 30,646,045 $52,521,445 ' 9,891,770 2,763,648 16,243,025 28,898,443 52,964,648 .iile.ijntt pari of-this balance sheet. I- TIIK KACLlv-IMCIIKK COMPANY AND DOMESTIC SIT.SI Di AlliKS s'i \ i i:m i :n i s i >! i i i\st u.ii i \! i:n ei.-oiii i\n i.h s s wn j i!;\i YEARS ENDED NOVEMBER :i(), !!>':{ AND 1S).'.C i> 1953 1952 .NET MLES;. Ap.''., vAs .A A :A.A.A A NAY .. . A V.. .. PRODUCTION AN I) MANUFAC T U RIN G COSTS. GROSS PROFIT heron- depletion and depreciation. ............... .. ; SELLING. GEN F R A L, AI) MIN1 ST RA TI \' F, EXPLORATION EXPENSES, etc.......................................................................... OPERATING PROFIT... before depletion and depreciation. . . . . OTHER DEDUCTIONS, NET: Interest. . , ........... . . ... . .... .. . . : ....................... ..fe. ...... .. ........ Net provision for loss on futuredisposal of certain plant properties Other income...................................................... .. PROVISION FOR DEPLETION AND DEPRECIATION . . ..... NET PROFIT- before Federal and State taxes on income. ............. FEDERAL AND STATE TAXES ON INCOME: Federal normal tax and surtax and State taxes......... .... . ............. Credit resulting from carryback of unused excess profits credit and over-provision of taxes on income, prior years. . ................... NET PROFIT FOR YEAR........................................... EARNED SURPLUS.AT BEGINNING OF YEAR CHARGES TO EARNED SURPLUS: Cash dividends paid and accrued . . . Stock dividend..................................... EARNED SURPLUS AT END OF YEAR (note 3) $35,033,403 70,245,380 14,788,023 $81,893,067 68,670,295 13,222,772 7,076,984 7,711,039 6,537,682 6,685,090 644,899 (444,198) 200,701 7,510,338 1,557,372 5,952,966 388,723 600,000 (250,399) 738,324 5,910,700 1,623,123 4,323,643 2,710,000 2,710,000 3,242,966 16,243,025 19,485,991 1,608,000 (1,320,000) 288,000 4,035,643 15,347,963 19,383^606 1,500,832 1~500,832 1,535,395 1,605,186 ' 3,140,581 $17,985,159 $16,243,025 The. accompanying votes arc an integral part of this statement. ( 1 Denotes deduction. -8- TIIK 11 A< ILK-I'K 'I I HR COMPANY AND DOMESTIC SUDSD h ARIHS n u h :>: io i;n \\( i \i \ 11 ! n ) NOVKMIiHR Hi), 19:,S 1. (>os, metals and metal bearing products have been valued at the lower of cost or market which has been reduced to state basic quantities of lead and zinc (12.500 tons of each metal) at fixed prices, based on 6.5 cents per.pound for lead (New York) and 5 cents per pound for zinc (East St. Louis),under the base stock method of inventory valuation adopted at November 30,1049. Other inventories have been valued at average and standard costs, or lower, which approximate replacement market. 2. The equity at November 30, 1952 in the Mexican subsidiaries not eonsolidated is approximately $1,200,000 in excess of the investment in and advances to those companies. .3. Under the provisions of the loan agreements pertaining to the 3*:j % notes due September 1, 1972, .the company is required to prepay on each of the years 1954 to 1957, inclusive, the amount!.of $650,000 and varying amounts thereafter to maturity. At November 30,1953,' payments due September 1, 1954 have been anticipated in the amount of $500,000. .-.The 3?:i% notes contain a covenant which, so long as any of the notes remain outstanding, restricts the amount which may be declared as dividends (other than those payable in capital stock of the company) or applied to the purchase, redemption or retirement of the company's capita! stock. At November 30, 1953 the amount not so restricted was $5,399,852. 4. A portion of the company's sales for the year ended November 30, 1953 is subject to renegotiation under the Renegotiation Act of 1951. Manage ment is of the opinion that adjustment, if any, for the year then ended will not be significant. -9- (' () M I* A U A T I V K FI K; H LK; IfTS FOR Til K YKAKS 1CN1JKD NOV KM UK R :ii) 1958 1952 1951 1950 SALES EARNINGS TAXES DIVIDENDS Nob Sales.................................... $85,033,403 Net Profit before Income Taxe.1 5,952,966 Fed. and State Income Taxes . . 2,710,000 Net Profit for Year.. . . ... 3,242,966 Net Profit Per Share*.. ....... 3.28 Dividends Per Share .. 1.50 $81,893,067 $82,086,318 $69,123,903 4,323,643 9,503,807 6,399,296 288,0004: 5,800,000 3,470,000 4,035,643 3,703,807 2,929,296 4.08 3.74 2.96 1.50 1.50] 1 .50 FROM THE YEAR-END BALANCE SHEET Current Assets. ... .: . . ... . . . $31,815,017 $32,730,475 Current Liabilities. . . . . . . 6,006,268 7,553,500 Working Capital..... . . ; . . . . 25,808,749 25,176,975 Fixed Assets, Net........ . a 17,583,985 .16,493,018 Other Tangible Assets,.. . .;. . Long-Term Debt........... . . . . . 3,122,443 3,741,155 15,000,000 ! 13,575,000 Net Worth .....;........ .. ... 30,646,045 28,898,443 $24,328,172 5,702,417 18,625,755 11,102,406 4,863,046 7,500,000 26,398,195 $21,634,705 6,148,485 15,486,220 11,325,613 5,719,549 7,531,015 24,441,894 f OTHER SALIENT FACTS Ratio of Current Assets to Current Liabilities................ 5.30 Net Worth Per Share*'........ : $ 30.98 Dividends Paid and Accrued.. $1,500,832 Earnings Retained in Business. $1,742,134 4.33 $ 29.21 $1,535,395 $2,500,248 4.26 $ 26.68 $1,370,657 $2,333,150 3.52 $ 24.71 $1,339,917 $1,589,379 'Bused on 989,177 shares presently outstanding. fAfter deduction of $1,409,883 of intangible assets. JPlus 10% in stork paid December 10, 1952. jiAfter credit of $1,320,000 resulting from carryback of unused excess profits credit and over-pro vision of taxes on income, prior years. - 11 - PRINCIPAL PROPERTIES AND PRODUCTS INSULATION DIVISION [ MANUFACTURING PLANTS: CLARK,Ne v a d a ; Do v e r , n k w JKRSBY; JOPLIN', MISSOURI; WABASH, INDIANA PRINCIPAL Pr o d u c t s -Mineral wool insulations: i-emerits, Blocks, blankets, felts; aluminum storm windows and screens; aluminum storm and screen doors; diatomaceous earth products MINING AND SMULTING DIVISION M INKS: 'TRI-STATE DISTRICT (Missouri, Kansas, Oklahoma : TUCSON, ARIZONA; GALENA, ILLINOIS; CHIHUAHUA, MEXICO ZINC SMELTER: HENRYETTA, OKLAHOMA (CONCENTRATING MILLS: c o mme r c e , Ok l a h o ma : t u u s o n , ARIZONA: CALENA, ILLINOIS; PARRAL. MEXICO GERMANIUM PLANT: MIAMI, OKLAHOMA CONSOLIDATED SUPPLY COMPANY: t r e e c e, Ka n s a s NORTHEAST OKLAHOMA RAILROAD COMPANY: Mia mi, OKLAHOMA ,- PRINCIPAL Pr o d u c t s -Slab zinc: chat; cadmium: germanium; gallium PI CM KNT DIVISION KUHKUR PRODUCTS DIVISION RKSKARCH MANUFACTURING PLANTS: g a l e n a, Ka n s a s ; Hil l s b o r o , ILLINOIS: JOPLIN, MISSOURI: NEWARK, NEW JERSEY PRINCIPAL PRODUCTS - Lead free zinc oxides; leaded zinc oxides: 1 white lead carbonate: super sublimed white lead; sublimed blue lead: basic: silicate white lead: lead silicates: red lead; lead peroxide; orange mineral: litharge: sublimed litharge; lithnpone; germanium metal and dioxide MANUFACTURING PLANTS: w il l o u g h k y , o h .io ; c o n n b a u t - VILLE, PENNSYLVANIA; LONG HEACH, CALIFORNIA Pr in c ip a l Pr o d u c t s -Molded'rubber goods; bonded rubber'goods;, extruded rubber goods; synthetic rubber products; silicone rubber .' products; flexible vinyl molding; electrical laminates: decorative laminates \ ' . . . - . LABORATORIES: j o p l in , Mis s o u r i