Document pmaE4n01Q76dqpnNvodDo9j9a

Saint Joseph Lead Company Annual Report -- 1945 America's Corporate Foundation; 1945; ProQuest Historical Annual Reports Pg. 0_1 C F. Cj BAKI;! U jf.-V.Y cc-r '" - t.Cjh divi: PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS OF THE ST. JOSEPH LEAD COMPANY FOR THE YEAR 1945 Proxies For The Annual Meeting A Proxy Statement and form of proxy, with notice of the Annual Meeting of Stockholders to be held May 13, 1946, will be mailed on or about April 3, 1946, at which time proxies for use at the meeting will be requested. 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, N. Y. BOARD OF TRUSTEES Clinton H. Crane, Chairman Daniel K. Catlin, St. Louis, Missouri Irwin H. Cornell, Vice-Pres., and Sales Manager Andrew Fletcher, Vice-Pres., and Treasurer James H. Grover, Chairman of the Board, 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 Frederic E. Camp, Dean, Stevens Institute of Technology, Hoboken, New Jersey Edward V. Peters, Vice-President , Arthur M. Anderson, Vice-President, J. P. Morgan & Co. Incorporatec George I. Brigden, Secretary and Comptroller EXECUTIVE OFFICERS Clinton 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 I. 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, N. Y. REGISTRAR City Bank Farmers Trust Company, New York 5, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH IEAI) COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The year 1945, which saw the unconditional surrender of Germany and Japan, further accentuated the seriousness of the situation in the lead industry of the United States. Rigid governmental control of distribu tion which has reduced consumption to 82,000 tons per month, has left a large unsatisfied demand. The "premium price plan" described in my last annual report was a necessary war measure. When governments are directly or indirectly the sole consumers, the ordinary laws of supply and demand no longer function. Now that this condition no longer exists, return to a free market should be made with all possible dispatch. At present, the world market price is higher than the domestic ceiling price on lead. It would seem that the logical first step toward the removal of all controls is the raising of the domestic ceiling to at least the world price plus duty. In 1945, as in the previous war years, the mines of your Company were operated beyond their economic limits. The curtailment of development work, in accordance with the request of the War Production Board, to place all available men on production, will for some time adversely affect the interest of stockholders and consumers of lead, as the lead output of Southeast Missouri cannot be increased, and may slightly decrease. The average hourly rate of pay, not including production bonus and overtime, in January 1946, was approximately 49% higher than in the last pre-war month, August 1939, but the average weekly "take-home" earnings for the hourly employees has increased by about 75.2% in this war period. In order to better the salaried employees' comparative increase of approximately 47.2%, the Company assumed the employees' con tribution to the Retirement Plan, with the result that the average salary increase for all operating divisions is around 50.5%. The retirement age for women employees was decreased from age 65 to 60, and with no reduction in the amount of the annuity. By December 31, 1945, we had already been able to welcome back to our operations 312 of the 1,029 former employees who left us for military service, and we hope many more will return. We hold in grateful remembrance the names of the 23 men who have given their lives in the service of their country. Consolidated Earnings The consolidated net income for the year 1945 was $4,829,814.71 after deducting Federal and State Income taxes in the amount of $1,164,905.10, which compares with a net income for the previous year of $5,153,355.40 and taxes of $2,265,047.44. The 1945 earnings reflect a deduction of $837,901.11 for amortiza tion of emergency facilities in addition to the amount that would have been charged had the Company not exercised its election to terminate the period of amortization as of September 30, 1945, instead of continuing it over a period of five years. This deduction is in part offset in a comparison of earnings by a Federal Income Tax credit of $695,179.69, brought about primarily by carrying-back the 1943 and 1944 unused excess profit credits to the years 1941 and 1942. A reserve of $483,000 has been set up out of earnings to cover the esti mated future cost of the prospecting, development add exploration that had to be postponed during this last year by reason of the war emergency. In 1945 the Company received for its Southeast Missouri lead production 7.72 cents per pound by reason of premium payments, in comparison with 7.04 cents in the previous year, and a ceiling price of 6.50 cents per pound New York. The higher premiums were due to increased cost of production and a slight lowering in the grade of ore. As your Company's lead rnines are one of the lower cost properties of the major producers in the United States, these figures of 7.72 and 7.04 are considerably less than the average price paid for lead in the United States, which was approximately 8.64 and 8.15 for the same two years. No premiums were received for the Company's zinc production from its Edwards and Balmat Mines in Northern New York, which was therefore sold on the basis of the ceiling price of 8.25 cents per pound St Louis. Due to the low grade of ore, Kansas Explorations, Inc., a 100% owned subsidiary, received for its production from the Joplin area very high premiums, and therefore these mines niust be considered as of no value with the return of normal conditions and the elimination of the premium price plan; however, in 1945, the gross profit from these properties before depreciation, depletion and income taxes was only $195,623.16. I ` Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The comparative consolidated earnings, which do not include the separately shown earnings of Compania Minera Aguilar, S. A., for the ten years ended December 31, 1945, are listed below: Year Income after Interest but before Other Deductions ---------------- Provision for----------------- Federal fDepreciation Income Taxes 1936 ......................... $ 4,473,237.08 $1,063,605.02 1937 ......................... 10,035,885.12 1,055,575.37 1938 ............................. 2.873,815.43 1,059,034.49 1939 ................. 7,586,972.10 1,058,924.04 1940 .................. 8,287,597.10 1,064,639.12 1941 ............................ 9,070,705.65 994,436.94 1942 ......................... 12,633,212.55 939,993.43 1943 ................... 7,940,997.33 1,269,271.24 1944 ........................... 9,020,627.47 1,150,143.72 $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 1945 ........................ 8,218,851.51 1,871,209.83 1,127,522.52 Net Income before Depletion, Etc. $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 5,648,957.33 5,220,119.16 Provision* for Depletion, Etc. $590,686.46 522,873.57 309,601.68 562,654.53 805,346.24 442,114.08 537,988.71 994,512.07 495,601.93 390,304.45 * Includes abandoned leases and provision for obsolescence of the Doe Run Mill for the years 1936 and 1937; also the abandonment of Block "P" property in 1943. t Includes amortization of war facilities, $257,576.14 in 1943; $392,938.00 in 1944 and $1,225,915.61 in 1945. Dividends ! Quarterly dividends of fifty cents per share were paid on the tenth day of March, September and Decem ber, and the ninth day of June 1945, making a total of two dollars per share for the year. These dividend 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 1936 through 1945-: Year 1936..................... ..... 1937..................... ..... 1938..................... ...... 1939............. ....... ..... 1940..................... ..... Amount $1,955,676.90 4,889,198.50 1,955,680.00 3,911,360.00 4^400^280.00 Per Share $1.00 2.50 1.00 2.00 2.25 Year 1941................ ........... 1942................ ........... 1943................ ........... 1944................ ........... 1945................ .......... Amount $3,911,360.00 3,911,360.00 3,911,360.00 3,950,912.00 3^950^912.00 Per Share $2.00 2.00 2.00 200 2.00 Financial Information The Consolidated Balance Sheet as of December 31, 1945 and December 31, 1944, 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 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 whollyowned Argentine corporation, which statements are shown separately. . As it was felt that carrying the Company's investment in Compania Minera Aguilar, S. A., at a figure of $698,466.62 could be misleading since it was a book net investment figure, and was not representative of the Company's equity, actual or potential, in the valuable ore reserves, earnings possibilities and security hold ings of this Argentine corporation, it was decided to carry this foreign investment at a nominal amount of $1.00. Compania Minera Aguilar, S. A. purchased from the St. Joseph Lead Company 35,000 shares of the outstanding 500,000 shares of no par capital stock at its stated value of 80 pesos per share. The net proceeds from the sale, when converted into U. S. Dollars, amounted to $687,175.00, and were credited against the book value of $698,466.62; the difference of $11,290.62 was charged against current earnings. Having obtained substantially a recovery of the investment in this foreign subsidiary, the Company can hereafter show "re alized" earnings from any income which the subsidiary may find it possible to transfer in the future. The capital gains tax payable on the 35,000 shares is included in the Company's 1945 tax provisions. While for the immediate future, the Company will still own 100% of the outstanding Aguilar stock, consideration is being given by the foreign subsidiary to selling the 35,000 shares to representative Argentine individuals or com panies, and thereby obtain at least some Argentine ownership in the Aguilar Mine. On December 31, 1945 Mine La Motte Corporation reduced its outstanding capital stock from 11,000 shares with a stated value of $1,100,000 to 4,000 shares with a stated value of $400,000, cancelling 7,000 shares which had been held, 3,500 shares each by the National Lead Company and the St. Joseph Lead Company; the resulting paid-in surplus of $700,000 was distributed as a liquidating dividend, this Cuuipauv receiving $350,000 which was credited against its $550,000 investment in the Mine La Motte Corporation. Capital expenditures by St. Joseph Lead Company and consolidated subsidiaries for improvements and additions to plant and equipment amounted to $159,268.56 in 1945, in comparison with $82,807.05 in 1944. At the Aguilar Mine, expenditures amounting to $165,330.84 were capitalized in 1945, in comparison with $72,881.38 in the previous year. 2 * .. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 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 physi cal tests of the quantities shown by the records as being oh 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 All lead and zinc properties of the Company were operated on a full time basis throughout the year 1945, and the present demands will necessitate a continuation, even though the mines are being operated beyond their economic limits. The lead production from the Southeast Missouri Company's mines increased from 144,336 tons to 146,395 in 1945--this is the only district in the United States that increased its output. The severe manpower shortage resulted in the zinc concentrate production from the Edwards and Balmat Mines falling from 67,327 tons to only 45,741 in 1945; however, with the termination of the war, the operating force has been brought back to normal. The outstanding wartime production record at Josephtown was only slightly reduced by the shortage of available skilled men, as is evidenced by the comparison of 21,515 tons of zinc oxide, 35,749 tons of slab zinc and 84,224 tons of sulphuric acid for 1945 with 23,512, 34,439 and 88,365 re spectively for the previous year. The employment of additional men at Herculaneum will now permit the com pletion of the alteration to die slag furnace, which was last operated in 1944, when the process was proven to be an efficient one and the quality of the zinc and lead metals recovered from the smelter slag was found to be satisfactory. Due to the lack of development work, the "proven" ore reserves of the Southeast Missouri Mines were less than at the beginning of the year, but with the return of our former employees from military service, considerable additional exploration work can now be undertaken. Although prospecting at Edwards and Balmat was held to a minimum, the results were most satisfactory, as were those at the Aguilar property. Only with the abnormal premium payments can it be said that Kansas Explorations has any ore reserves. Although a number of properties were submitted to the Company, during the past year, none were considered worthy of purchasing. The mineral rights, excepting talc, on the Loomis Tract, adjoining the Balmat Mine, were for merly held under a royalty lease; these rights have now been purchased for $100,000 and future royalties have thereby been eliminated. South American Operating Information After giving effect to writing off a loss in inventory of 4,261 metric tons of lead concentrates having a book value equivalent to about $125,000, which was found when the bins were cleared after four years of stock piling, together with 13,595 metric tons of zinc concentrates valued at about $35,000, which loss is estimated from a recent survey of the large zinc stockpiles, the earnings after depreciation, but before depletion and Argentine income taxes for 1945 amounted to $919,512.80 in comparison with $987,112.68 for the previous year. The comparative earnings, since the property was placed in operation are as follows: Year Income After Interest but before Other Deductions 1936................. .. 1937................. .... 1938................. .... 1939................. .... 1940................ .... 1941................. .... 1942................. .... 1943................. .... 1944................. .... 1945................. .... $ 192.78 998,294.21 807,923.50 930,981.17 867,790.12 938,733.60 809,173.70 1,615,227.31 1,189,937.85 1,119,110.98 * Loss. ------ >--Provision for-----:-- Net Income fArgentine before Depreciation Income Taxes Depletion, Etc. $115,340.41 ........ *$ 115,147.63 130,214.52 , $ 25,458.01 842,621.68 149,105.03 21,954.42 636,864.05 175,793.81 39,642.36 715,545.00 193,667.52 35,125.21 638,997.39 207,305.29 33,181.40 698,246.91 216,780.14 28,225.49 564,168.07 208,628.83 271,233.57 1,135,364.91 202,825.17 113,043.48 874,069.20 199,598.18 : 164,052.6' \6. > 755,460.14 ----- ---Provision for Depletion-- On Cost On Appreciation $ 35,143.18 63,407.60 73,447.08 100,082.61 121,188.16 127,786.09 80,718.97 76,739.33 82,025.88 71,997.80 $ 322,584.30 579,914.66 671,733.70 915,337.33 1,108,320.38 1,168,708.13 738,240.88 697,442.49 745,489.12 654,349.27 t Paid under protest and a claim for refund filed wherein depletion is based on the 1935 appreciated value of the proven ore reserves instead ot on cost thereof, During 1945, the lead concentrate production amounted to 22,022 metric tons in comparison with 23,237 for the previous year, and the zinc concentrates produced totaled 25,862 in comparison with 38,512. Production was adversely affected by a further 20% reduction in the fuel oil quota, and a severe shortage of mine timber. The tonnage moved by the railroad from Tres Cruces was very unsatisfactory, being only 37,075 tons in comparison with 71,788 in 1944. If the mine is operated to the full extent of its present facilities, the railroad must handle over 100,000 tons; until the railroad is able to secure sufficient rolling stock, it is probable that the mine will continue to be operated on a curtailed basis, as there is no advantage in producing more concentrates than can be shipped from Tres Cruces. 3-' Reproduced with permission of the copyright owner.' Further reproduction prohibited without permission. The following statement shows the production, sales and unsold stocks since the mine was placed in operation: Year ----------------Lead Concentrates-------------- ---------- ------ Zinc Concentrates---------------- (in metric tons) (in metric tons) Stocks at Stocks at Production Sales End of Year Production Sales End of Year 1936 ........................................ 1937 ........................................ 1938 ................................. 1939 ............................. 1940 ............................... 1941 ......................................... 1942 ................................ 1943 ......................................... 1944 ......................................... 1945 ......................................... 10,467 9,409 19,709 19,782 29,704 28,816, 36,72833,307 36,866*35,778 27,867 31,193 33,83223,093 21,584 23,309 23,237 18,156 22,022 29,062 1,058 985 1,873 5,294 6,382 3,056 13,795 12,070 17,151 **5,850 7,548 12,116 29,478 42,250 65,112 65,939 55,121 38,283 38,512 25,862 5,276 6,250 4,467 26,179 36,182 116,021 17,922 83,420 38,556 4,090 2,272 8,138 33,149 49,220 78,150 28,068 65,267 20,130 20,086 **28,263 * Does not include 5,000 metric tons of lead concentrates sold for post war delivery. ** After inventory adjustment. A satisfactory arrangement has been reached with a prominent Argentine Company for the construction of a 40,000 ton sulphuric arid plant on the River Plate above Rosario. The acid will be produced from the sul phur in the Aguilar zinc concentrates. Aguilar will have a 50% ownership, and the investment for its share in the plant and operating capital will be a round one million U. S. Dollars. A favorable basis has also been developed for the construction of a 10,000 ton per year zinc smelter at Comodoro Rivadavia, the design of which will be similar to the Josephtown electrothermic system. Aguilar will have a three-eighths interest in the smelter, a mining prospect and a vessel which will operate between the acid plant and Comodora Rivadavia. The cost to Aguilar for this investment will also be about one million dollars. The cash and short term securi ties of Compania Aguilar, S. A., are sufficient to finance both these investments. Stockholders The number of stockholders of record on December 31st of each year since 1936 and a classification of their holdings are as follows: Year 1936................... .......... 1937.................... .......... 1938.................... .......... 1939.................... .......... 1940.................... .......... 1941.................... .......... 1942.................... .......... 1943.................... .......... 1944.................... .......... 1945.................... .......... Total 5,560 5,992 6,463 6,586 6,697 6,858 7,065 7,530 7,432 7,434 19 or Less 1,483 1,571 1,719 1,695 1,772 " 1,751 1,697 1,848 1,812 1,756 20-99 1,851 2,038 2,213 2,260 2,263 2,393 2,547 2,758 2,797 2,772 100-199 1,000 1,139 1,227 1,337 1,371 1,417 1,528 1,634 1,586 1,639 200-Over 1,226 1,244 1,304 1,294 1,291 1,297 1,293 1,290 1,237 1,267 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 Company and domestic subsidiaries are depleted and depreciated figures based on appraised values as oi 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 these 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. Proxies For the Annual Meeting A Proxy Statement and form of proxy, with notice of the Annual Meeting of Stockholders to be held May 13, 1946, will be mailed on or about April 3, 1946, at which time proxies for use at the meeting will be requested, Clinton H. Crane, President. New York, March 15, 1946. 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, 1945 and 1944 : Net Sales ...................... ............................... ........................ ...................................... Cost of Sales (exclusive of depreciation and depletion)...... ....... ........................ Year ended December 31, 194S 1944 47,679,228.51 49,369,908.06 38,718,788.90 40,067,936.50 Gross Profit from Operations before Depreciation and Depletion.............. . 8,960,439.61 9,301,971.56 Deduct: Selling, general and administrative expenses..................... $ 789,81672 Capital stock and miscellaneous taxes................................ 51,630.56 $ 736,851.84 841,447.28 126,011.12 862,862,96 Net Profit from Operations before Depreciation and Depletion...................... $ 8,118,992.33 $ 8,439,108.60 Other Income: L Dividends on The New Jersey Zinc Company stock....... Other dividends, interest, etc., less charges, including reduction in carrying value of Argentine subsidiary $11,290.62--see Note 1 ........................................................ 585,000.00 35,24176 $ 585,000.00 620,241.76 40,039 89 625,039.89 Income before Depreciation, Depletion, and Taxes on Income....... ................ $ 8,739,234.09 $ 9,064,148.49 Deduct Provisions for: Depreciation (including amortization of war facilities, $1,225,915.61 in 1945 and $392,938.00 in 1944)............... Depletion .................................................................................... Deferred prospecting, development and exploration--see Note 2........................... ............. ................................ . $1,871,209.83 390,304.45 483,000.00 $1,150,14372 495,601.93 2,744,514.28 1,645,745.65 Provision for Taxes on Income: Federal excess profits taxes (less post-war refunds)...... . Federal normal income and surtaxes........... .... .......... . State income taxes .................................................................. $ 45,447,31 1,777,254.90 37,382.58 $ 5,994,719.81 $ 7,418,402.84 $ 476,565.54 1,744,960.88 43,521.02 Total Taxes on Income.............................................. ...... $1,860,08479 Less claims for Federal tax refunds...................................... 695,179.69 $2,265,047.44 1,164,905.10 2,265,047.44 Net Income for the Year..................................................................... Add--Restoration of over accrual for federal taxes on income in prior years ........................................................................ Deduct--Transferred to Reserve for Contingencies......... $ 4,829,81471 $ 5,153,355.40 -- $ 508,126.98 490,061.45 18,065.53 Total Transferred to Surplus................................... ... ..... ....... $ 4,829,81471 $ 5,171,420.93 Summaries of Consolidated Earned Surplus For the Years Ended December 31, 1945 and 1944 Earned Surplus at Beginning of the Year (including surplus from revalua tion of ore reserves--1944, $36,948.17)......... Year ended December 31, 1945 1944 $14,675,617.61 $13,455,108.68 Add--Transferred from income--see above......................................... 4,829,814.71 5,171,420.93 Total ............................................................. Deduct cash dividends paid during the year......................... $19,505,43232 3,950,912.00 18,626,529.61 3,950,912.00 Earned Surplus at End of the Year............................... $15,554,520.32 $14,675,617.61 Notes: ' '; j (1) See Note 2 to accompanying balance sheet. (2) This provision has been set up to cover the management's estimate of the future cost of the prospect ing, development and exploration that had to be postponed during the year 1945 by reason of the war emergency. 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, 1945 and 1944 ASSETS Current and Working Assets; Cash on hand and in banks..................................................... U. S. tax anticipation notes (at cost)............ ...................... U. S. Treasury certificates (at cost)....... ........................... . U. S. excess profits tax refund bonds........... ....................... Accounts receivable -- trade (less reserve --- 1945, $16,234.02; 1944, $16,892.06)............................................ Due from foreign subsidiary not consolidated........... ...... U. S. Government--claims for income tax refunds....... . 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 -- 1945, $84,869.92; 1944, $74,125.33) ........................................ ........................ December 31,1945 $ 5,407,254.91 1.230.000.00 6.000. 000.00 352,735.38 4,292,748.98 32,850.19 695,179.69 112,256.43 1,711,683.77 1,484,341.60 307,590.85 2,515,298.85 $24,141,940.65 December 31,1944 $ 6,755,029.78 1,100,000.00 2,700,000.00 3,436,931.34 34,505.60 I09jl5.72 622,506.99 1,605,872.77 205,529.63 2,534,136.98 $19,103,528.81 Investments and Advances; Compania Minera Aguilar, S. A. (wholly-owned foreign subsidiary--not consolidated)--Note 2....................... 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) ...... .............................................. ................. $ 1.00 200,000.00 11,651,250.00- 118,085.04 $ 698,466.62 550,000.00 11,651,250.00 11,969,336.04 131,522.87 13,031,239.49 Capital Assets (Note 1): Ore reserves and mineral rights: Appraised value as of March 1, 1913........................... Less reserve for depletion....................................... $13,500,000.00 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 3,500,000.00 -r-m-un-uu. Additions subsequent to March 1, 1913 (at cost)..... $20,140,543.91 $19,994,415.40 Less reserve for depletion................................... . 17,271,700.85 2,868,843.06 16,881,396.40 :j 13,019.00 Shafts and underground equipment (at cost)................ . $ 5,721,153.44 Less reserve for depreciation........ ................................. 5,157,151.06 $ 5,721,503.44 564,002.38 4,738,210.89 983,292.55 Land, buildings, plant and equipment (at cost) Less reserve for depreciation......................... $18,492,897.79 15,325,665.41 $18,713,758.77 3,167,232.38 14,095,524.70 4,618,234.07 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 -- 1945, $213,025.00; 1944, $204,250.00)..................................... . Post-war refund of excess profits taxes............................... Cash in closed banks.............................................................. $ ; $ 6,600,077.82 $ 8,714,545.62 178,784.64 *2j60.13 $ 175,634.94 416,872.10 181,244.77 4,110.13 596,617.17 Deferred Charges--Prepaid insurance, taxes, royalties, etc. 72,899.62 138,266.15 Total ................................................................ .......... $42,965,498.90 $41,584,197.24 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) In December 1945 the Company sold to Compania Minera Aguilar, S. A. a wholly-owned Argentine subsidiary, a part of the stock of that company (35,000 shares out of 500,000 shares outstanding) and credited net proceeds of sale, $687,175.00 to investment account. No profit was recorded and the subsidiary continued to be wholly-owned. The transaction showed a taxable profit, however, and provision for approximately $147,000.00 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND DOMESTIC SUBSIDIARIES Consolidated Balance Sheets, December 31, 1945 and 1944 LIABILITIES ' ; Current Liabilities; December 31,1945 December 31,1944 Accounts payable............................,...................................... Wages payable .......................................... ........................ Accrued taxes; Federal income and excess profits.......................... . Other ................. .......................................... ........ ...... 3,097,211.79 $ 2,601,857.24 253,283.82 1,929,347.79 177,747.93 2,351,294.27 222,773.67 5,502,617.07 289,752.86 $ 5,420,652.30 Reserves: Injury claims and workmen's liability insurance............. Employees' life insurance and retirement........................... Deferred prospecting, development and exploration....... Contingencies ..................................... .................................... 236,976.85 255,603.66 483.000.00 800.000.00 1,775,580.51 244,985.02 310,161.31 800,000.00 1,355,146.33 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, 21,384.35 shares......................... 213,843.50 Outstanding, 1,975,456.5 shares................................. . 25,000,000.00 19,968,408.50 213,843.50 19,754,565.00 19,754,565.00 Surplus: Earned................................................................................ 15,554,520.32 14,675,617.61 Capital--Excess of market value over par value of treasury capital Stock issued for minority in terest in a dissolved subsidiary............................. Total Capital Stock and Surplus.................. 378,216.00 15,932,736.32 35,687^301,32 378,216.00 15,053,833.61 34,808,398.61 Total .................................................................. 42,965,498.90 41,584,197.24 Notes Continued: of income tax thereon has been made. After crediting the proceeds of sale the then book value was reduced 11,290.62 to carry the investment at 1.00. 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, 1945 and 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. St. Joseph Lead Company was also contingently liable with respect to the liability of 233,900.00 appearing on the accompany ing 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 1936.... ............ .......... 1937................. .......... 1938................. ......... 1939................ ......... 1940................. ......... 1941................. ......... 1942................. ......... 1943................. ......... 1944................. .... . 1945................. ......... 171,856 129,131 115,902 58,777 40,926 +20,185 +34,937 f33,090 +19,536 1-43,746 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 4.560 5.859 4.589 4.903 5.029 5.643 6.331 6.350 *6.350 6.350 4.534 6.015 4.598 4.942 4.986 5.617 *6.346 6.320 6.350 6.368 4.901 6.519 4.610 5.110 6.335 7.474 8.250 8.250 *8.250 *8 250 Base price. See last paragraph Page No. 1 for prices including premium. fDoes not include stocks held by governmental agencies. ST. JOSEPH LEAD COMPANY AND DOMESTIC SUBSIDIARIES Year 1936.......... .... 1937........... .... 1938........... ... 1939........... .... 1940.......... .... 1941.......... .... 1942........... .... 1943........... .... 1944........... .... 1945.......... .... Ore Mined 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 6,601,456 Production in Tons Lead Concentrates 147,160 212,827 157,188 202,003 225,041 219,819 269,854 253,736 226,104 223,932 Pig Lead Equivalent 101,999 146,274 107,600 138,307 154,281 ;; 149,035 179,602 165,584 149,070 148,780 Zinc Concentrates 54,590 71,031 60,797 74,681 85,571 88,236 105,502 104,986 80,659 53,809 Slab Zinc Equivalent 26,400 34,519 29,606 38,188 44,406 45,907 53,606 54,172 43,653 31,367 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 1936.............. ................. 1937.............. ................. 1938.............. ................ 1939.............. ................ 1940.............. ................. 1941.............. ................ 1942.............. ................. 1943.............. ................. 1944............... ................ 1945.............. ................ 126,846 160,091 97,865 172,481 178,111 155,475 178,561 157,659 155,806 139,934 47,776 38,930 50,782 39,347 60,199 60,241 67,152 45,242 46,799 48,483 174,622 199,021 148,647 211,828 238,310 215,716 245,713 202,901 202,605 188,417 83,575 72,969 79,775 46,173 30,737 20,767 15,896 23,716 16,683 25,824 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. COMPAMA MEVERA AUILAR? S. A. Summaries of Net Income For the Years Ended December 31, 1945 and 1944 Net Sales ....................... .............................................. ............................. Year ended December 31, 1945 1944 $ 2,467,510.80 $ 2,397,329.87 Cost of Sales (exclusive of depreciation and depletion)................ 1,236,884.79 1,133,398.47 Gross Profit from Operations before Depreciation and Depletion. $ 1,230,626.01 ? 1,263,931.40 Deduct: "V V Selling, general and administrative expenses...................... $ 138,684.26 Taxes, other than taxes on income.................. ................ . 34,776.04 $ 121,909.31 173,460.30 31,037.72 152,947.03 Net Profit from Operations before Depreciation and Depletion.................... 1,057,165.71 $ 1,110,984.37 Other Income (1945, net of charges, $32,855.91).................................................... 61,945.27 78,953.48 Income before Depreciation, Depletion and Taxes on Income......................... $ 1,119,110.98 $ 1,189,937.85 Provision for: Depreciation ................................................................................ Depletion computed on cost.................................................... Depletion computed on appreciation of ore reserves....... $ 199,598,18 71,997,80 654,349.27 $ 202,825.17 82,025.88 925,945.25 745,489.12 1,030,340.17 $ Provision for Argentine income and excess profits taxes--see Note 2, in cluding in 1945 $51,359.16 applicable to prior years............................. ....... 193,165.73 164,052.66 $ 159,597.68 113,043.48 Net Income for the year..................................................... ........................................ $ 29,113.07 $ 46,554.20 Summaries of Earned Surplus For the Years Ended December 31, 1945 and 1944 Year ended December 31, 1945 1944 Surplus at beginning of the year......... ...................................... ........ ...................... I 211,033.88 $ 164,479.68 Add--Net income for the year.................................................. ................................ 29,113.07 46,554.20 Total ......................................................................... ...................... * 240,146.95 $ 211,033.88 Deduct: Earned surplus appropriated: For acquisition of capital stock held in treasury................................... $ 690,931.52 To statutory reserve..................................................................................... 15,625.74 -- Total ............................................................ ............... .................. 706,557.26 ---- Surplus (^deficit) at end of year (after charging deficits aggregating $1,987,450.83 against capital surplus)................................ ............................... 466,410.31 $ 211,033.88 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. (2) Argentine income taxes are being paid under protest and claims 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. COMFAMA MINERA AGUILAR, S. A. Balance Sheets, December 31, 1945 and 1944 ' ' ASSETS Current and Working: Assets: December 31,1945 December 31, 1944 Cash on hand and in banks................................................... $ 1,072,906.97 $ 1,136,298.17 Argentine Government securities--at lower of cost or market quotation value.......................................................... 1,784,966.07 1,520,116.25 Accounts receivable--trade .................................................... 178,877.88 104,200.30 Other accounts receivable, etc.......................................... Inventories: 18,360.92 18,412.89 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).................................... 497 945,22 969,708,67 $ 4,522,765.73 833,892.43 961,804.28 $ 4,574,724.32 Capital Assets: Ore reserves and mineral rights: Cost, including exploration and development prior to the commencement of operations.......................... Less reserve for depletion..... .................................. $ 1,517,391.03 858,014.69 $ 1,517,391.03 659,376.34 786,016.89 731,374.14 Appreciation arising from valuation in 1935..... Less reserve for depletion.............. ..................... $13,790,750.50 7,835,137.27 $13,790,750.50 5,955,613.23 7,180,788.00 6,609,962.50 Total ore reserves and mineral rights, net $ 6,614,989.57 7,341,336.64 Land, buildings, plant and equipment (at cost).......... . $ 2,839,584.75 $ 2,690,130.25 Less reserve for depreciation.......................................... 1,782,029.86 1,057,554.89 1,594,202.77 1,095,927.48 Total capital assets, net.................................... $ 7,672,544.46 $ 8,437,264.12 Deferred Charges ........................................................... ................. 40,903.16 17,132.16 Total $12,236,213.35 $13,029,120.60 Notes: (1) Current assets, current liabilities, deferred charges and reserves are stated in the above balance sheets in U. S. dollars at the closing; quoted rate of exchange at December 31, 1945 and 1944, 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. (2) Compania Minera Aguilar, S. A, and St. Joseph Lead Company were contingently liable at December 31, 1945 and 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. io Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMFANIA MWEKA AGUILAR, S. A. Balance Sheets, December 31, 1945 and 1944 ... .LIABILITIES Current Liabilities; December 31,1945 " December 31,1944 Accounts payable--trade .............................................. . $ 93,360.52 $ 103,048.41 Due to St, Joseph Lead Company.......................................... 32,850.19 34,505.60 Wages payable ...................... .................................................... 47,890.16 16,226.14 Accrued Argentine income and other taxes....................... 50,940.87 18,258.17 Proceeds from sales of concentrates for future export..... 233,900.00 233,900.00 Estimated expenses on concentrates held for future delivery .............. ............................................ ........................ Other accounts payable............................................................ 371,951.57 10,110.27 $ 841,003.58 468,196.64 5,242.25 $ 879,377.21 Deferred Credits--Unrealized profit on foreign exchange, etc. 6,459.70 98,127.76 Reserves; Compensation and accidents............................................. ...... $ Other expenses .......................................................................... 52,774.69 33,460.28 $ 48,464.01 86,234.97 38,818.07 87,282.08 Capital Stock and Surplus; Capital Stock: Authorized and issued--500,000 shares of a nominal value of $80 Argentine paper each....... .................... Less in treasury, 1945, 35,000 shares.......... . $11,349,803.33 690,931.52 $11,349,803.33 ------ Outstanding, 1945, 465,000 shares; 1944, 500,000 shares .......................................... ................................. . Surplus; 10,658,871.81 11,349,803.33 Capital surplus arising from 1935 valuation of ore reserves (remainder after transfer of $13,387,254.16 to stated value of capital stock)............ .................... Appropriated earned surplus: For acquisition of capital stock held in treasury To statutory reserve............................. ................... Earned surplus (deficit) (after charging deficits aggregating $1,987,450.83 against capital surplus arising from reduction in stated value of capital stock--Note 4) ............................................................ . Total Capital Stock and Surplus. Total ................................................. . 690,931.52 15,625.74 403,496.34 403,496.34 *466,410.31 240,146.95 $11,302,515.10 $12,236,213.35 $211,033.88 211,033.88 $11,964,333.55 $13,029,120.60 Notes Continued: ^ (3) 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. (4) The net deficit since beginning operations, $1,747,303.88 (aggregate deficits transferred to capital sur plus, $1,987,450,83, less surplus at December 31, 1945, $240,140.95) represents aggregate net profits of $6,087,833,39 (after deducting depletion computed on cost) against which has been charged depletion computed on appre ciation, aggregating $7,835,137.27. 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS I EAST 44TH STREET NEW YORK ACCOUNTANTS' CERTIFICATE To the Stockholders of St. Joseph Lead Company: We have examined the consolidated balance sheet of St, Joseph Lead Company (incorporated in New York) and its wholly-owned domestic subsidiary companies, as of December 31, 1945 and the related sum mary 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 sheet and summary 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, 1945 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, 1946. L\ ' 12 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS 8s 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, 1945 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, 1945 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, 1946. 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 1945 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.