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1911 Factories The Glidden Company Cleveland. Ohio The Glidden Company, Ltd Toronto, Ontario, Canada fVarehoustj The Olidden Company Chicago, Illinois The Glidden Company . New York, N. Y. ANNUAL REPORT THE GLIDDEN COMPANY Fiscal Year Ended October 31,1945 ^ ms FACTORIES ------- The Glidden Company Cleveland, Ohio The A. Wilhelm Company Reading, Pennsylvania The American Paint Works New Orleans, Louisiana Ourkee Famous Foods KUtoo Avenue, Chicago, Illinois Durkee Famous Foods ' Iren 8trect, Chicago, Illinois PAINT The Campbell Paint (a Varniih Co. St. Lcuil, Miuourt The Glidden Company Minneapolis, Minnesota Nubian Paint At Varnish Company Chicago, Illinoii rooo Durkee Famous Foods Portland Oregon Durkee Famous Foods Louisville, Kentucky Durkee Famous Foods Norwatk, Ohio The Olidden Company, Ltd. Toronto, Ontario, Canada The Glidden Company an Francisco, California Adams & Citing Company Chicago, Illinois Durkee Famous Foods Berkeley, California Durkee Famous Foods Elmhurst, Long Island, New York CHEMICALS, PIGMENTS & METALS The Chemical 8. Pigment Company The Chemical As Pigment Company The Chemical As Pigment Company St. Helena, (Baltimore), Maryland Oakland, California Collinsville, Illinois Metal, Refning Company Euston Lead Company Hammond Indian 8crantott, Pennsylvania NAVAL STORES The Glidden Company Jacksonville. Florida Southern Pine Chemical Company Jacksonville, Florida Nelio Resin Processing Corporation Jacksonville, Florida Nelio Resin Processing Corporation Valdosta, Georgia SOYA PRODUCTS The Glidclcn Comjany Chicago, Illinois FEED KELL 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 As Pigment Company Barytes Mines Battle Mountain, Nevada MINES Afterthought Zinc Mining Company Yadkin Valley Ilmeaite Company Ingot, California Lanoir, North Carolina r FOOD Durkee FamoutFoods Cleveland, Ohio *x. Durkee Famous Foods Pittsburgh, Pennsylvania v OFFICES ic WAREHOUSES PAINT The Glidden Company Cleveland, Ohio The Glidden Company Boston, Massachusetts The Glidden Company North Bergen. New Jenay The Glidden Company New York, N. Y. r Atlanta, Georgia Bifniin|ham, Alabama Evansville. Indiana Scranton, Pennsylvania Miami. Florida West Palm Beach. Florida Oklahoma City, Oklahoma K. Dallas. Texts -- RETAIL PAINT STORES El Paso. Texas Houston, Texas San Antonio. Texas St. Petersburg. Florid* iacksoavlle, Florida i/ashingtoo, D. C. Frt Woith, Texas Knoxnlk. Tennessee Cleveland, Ohio Columbus, Ohio Honolulu. Hawaii Baltimore, Maryland Richmond. Virginia Tampa, Florida Buffalo, New York Telado, Okie Detroit, Michigan Orlando* Florida Chariotto. North Carolina Mobile, Alabama Montreal. Quebec Koatiagtou Park, California Boston. Masaaehuactta J GL000289I THE GLIDDEN COMPANY CLEVELAND. OHIO To the Shareholders of The Glidden Company: Cleveland, Ohio, December 28, 1945. The Annual Report of your Company for the fiscal year ended October 31, 1945, is submitted herewith. The net sales for the year amounted to $1 11,616,438.39. The net profit before taxes on income was $6,749,643.89. The taxes on income amounted to $4,402,000.00. The net profit after taxes amounted to $2,347,643.89, which, after pre ferred dividends, is equivalent to $2.13 on the common stock as compared to $2.02 per share for the previous year. Attention is directed to the fact that this year there are 66,557 more shares outstanding than last year. 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, 1945, at a valuation of $3,425,275.26 less than replacement cost at that date. Dividends of $1.20 per share were declared and paid during the fiscal year on the common stock, as were dividends of $2.25 per share on the preferred stock. These divi dends amounted to $1,492,763.57, and after their payment there remained a balance of $854,880.32 for earned surplus. Renegotiation for the period ended October 31, 1944, resulted in no assessment, and inasmuch as the general policy of the Company did not change during 1945, we do not anticipate any assessment against 1945 profits when and as renegotiation is completed. It is the basic policy of the Company in its Annual Reports and other messages to shareholders, to provide information which will give the fullest possible understanding of our business. Following this policy during this year, copies of our institutional adver tising have been mailed to our stockholders. This institutional advertising is done for the purpose of explaining to the public and our customers, the scope of our enterprise and information concerning our products. Our regular product advertising to the con suming trade was continued throughout the year. We are outlining below the outlook for the various divisions of our business for the new fiscal year as follows: Food Products Division: This division of our business has been operated at capacity all during the war period, and from present prospects, will continue to operate at capacity throughout the current fiscal year. Vegetable Oil Division: All over the world there is a demand for more vegetable oils than it is possible to produce. Our Vegetable Oil Division produces linseed oil, and such edible oils as soybean cil, cocoanut oil, palm kernel oil, etc. A large portion of these oils is used in other divisions of cur Company in further manufacturing. Chemical and Pigment Division: This division hat suffered throughout the year be cause of shortage of raw materials and because of Government restrictions. Inasmuch as GL0002842 ores and raw materials for the manufacture of these products are now being released from Government quotas, it is anticipated that full volume production can be main tained from this time forward. Metals Refining Division: During the war years this division was extremely busy pro ducing necessary materials for the Navy, with the result that at the present time there is a large backlog of orders for future delivery from domestic sources. Prospects for production of iron powder, copper powder, lead powder and various lead products are very encouraging. Naval Stores Division: During the year the Company acquired the minority interest in Nelio Resin Processing Corporation and is now engaged not only in the production of tielio resin, but a number of its chemical derivatives. In the Southern Pine Chemical Company much research work has been done with result that new products have been Jeveloped from our processes of destructive distillation. The plant of the Nelio Resin Processing Corporation at Jacksonville, Florida, was badly damaged by fire, but this property was fully insured and is now being rebuilt. Paint and Varnish Division: The pent-up demand for paints and varnishes insures capacity operation through 1946. This division of our Company has been seriously handi capped by restrictions on various raw materials but regardless of this fact, this division shows a substantial gain in sales for the year just closed. An outstanding development of this division that is just now being put into production is Sprtd Luster. This is a re markable water thinned paint made on a soybean base that promises to revolutionize the decoration of home interiors where a glossy, enamel-like finish is required and where quick drying and absence of odor is essential. Glidden Feed Mill: During the year a great deal of development work has been done in connection with our line of stock and poultry feeds and at the present time we are producing a full line of high quality products which is meeting a fine acceptance with the trade. Our Feed Mill utilizes; certain important products from our vegetable oil process ing plants. Our Production and Research Departments are continuing their efforts in the develop ment of new products, and during the next few months announcement will be made of new lines which will add to our volume of sales. In the war years the value of our diversi fied industry has been proven, and the fine way in which the various divisions of the business have cooperated to the good of all has been most encouraging. Fortunately, our Company has no reconversion problems, and when our country has fully returned to peacetime pursuits, there will come a new challenge and a new op portunity to all the members of our organization. On behalf of the Board of Directors, I desire to express our appreciation for the fine cooperative efforts of our organization in the year just closed. Yours very truly, ADRIAN D. JOYCE, Prtsident. GLD002843 CONSOLIDATED The Glldden Comps October- CURRENT ASSETS ASSETS Cash................ ... .......................................................................................... . . 5 5,169,542.99 Government securities: U. S. Treasury Certificates of Indebtedness--at cost............................... $ 1,500,612.00 Excess Profit! Tat Refund Bondi............................................................... 417,120.12 Dominion of Canids Victory Loan Bondi............................................... 180,995.48 2,098,727.60 Trade notes receivable...................................................................................... $ 27,582.65 Trade accounts receivable.......................................................................... 6,172,376.41 $ 6,199,959.06 Less reserves ... . ................... .............................. ................................... 246,606.97 5,953,352.09 Inventories -- raw materials, in process, and finished goods--Note A . . . Other current account!.' receivable and advances, lesa reserve of 825,426.24 . 25,010,799.46 295,639.76 To t al Cu r r en t As s e t s ........................................................................... $38,528,061.90 OTHER ASSETS Cash surrender value of life insurance........................................................... $ Claim for refund of federal taxes on income of prior years........................ Miscellaneous notes and acixxints receivable and advances, less reserve of $11,542.79 ...................................................................................................... Estimated Canadian postwar refund of excess profits tax............................ Other investments.............................................................................................. 645,333.00 230,341.85 60,835.40 51,000.00 35,893.47 1,023,403.72 PROPERTY, PLANT, AND EQUIPMENT Land-Note B..................................................................................................$ 2.298.68S.48 Buildings, machinery, and tquipment--Note B........................................... 26,144,607.79 $28,443,293.27 Lets reserves for depreciation, depletion, and amortization........................ 13,379,029.82 15,064,263.45 DEFERRED CHARGES Prepaid insurance and expenses................................... ................................... 420,108.69 $55,035,837.76 GLD002844 BALANCE SHEET ny and Subsidiaries 31, 1945 LIABILITIES, CAPITAL STOCK, AND SURPLUS CURRENT LIABILITIES Serial notes payable (maturing July 1,1946) . . . . . Accounts payable....................................... ... Accrued taxes, royalties, interest, ar.d insurance .... Federal, state, and dominion taxes cm income--estimated Less U. S. Treasury Notes -Tax Series............................ To t a l Cu h h e n t Lia b il it ie s ........................................ ......................... $ 1,000,000.00 ........................ 5,774,881.56 ........................ 476,065.75 $ 4,469,336.12 2,000,000.00 2,469,336.12 S 9,720,283.43 LONG-TERM DEBT Serial notes payable, maturing $1,0(0,000.00 annually July 1, 1947, to 1951, inclusive, and $4,000,000.00 on July 1, 1952, interest 1M% to 2% . . . 9,000,000.00 RESERVE For contingencies.............................................................................................. 1,200,000.00 CAPITAL STOCK AND SURPLUS Capital stock: Convertible preferred, 4,3-2% cumulative, par value $50.00 a share redeem able at $52.50 a share, convertible into common stock as provided by Amended Articles of Incorporation (current rate approximately .73 share of common stock per share): Authorized 200,000 shires Issued and outstanding 199,540 shares...............................................$ 9,977,000.00 Common, without par value: Authorized 1,200,000 shares Outstanding 892,000 shares Reserved for conversion 145,505 shares Stated capital ... .............................................................................. 4,460,000.00 $14,437,000.00 Surplus--Notes C, D, E, and F: Capital surplus...............................................'.....$ 9,961,116.97 Earned surplus.................................................................. 10,717,437.36 20,678,554.33 35,115,554.33 $55,035,837.76 CONTINGENT LIABILITY Letter of credit outstanding................................................... $ 35,110.37 Stt nolts to/ncnndl stairmttils on sh and following pagt. GLD002845 CONSOLIDATED PROFIT AND LOSS AND SURPLUS The Glidden Company and Subsidiaries Fiscal year ended October 31,1945 PROFIT AND LOSS STATEMENT Net isles................................ ... ..................................................... ...................................................1111,616.438.39 Cost of goods sold, selling, administrative and general expenses, including provision of 21,441,078.S9 for depreciation, depletion, and amortitation--Note B ................................ 104,601,964.37 3 7.013,474.02 Other income.............................................................................................................................................. 318,850.96 Other deductions: Interest on long-term debt (including premium of 330,000.00 for payment of note prior to maturity) .................................................................................. 3 Other interest ...................................................................................................... Loss on disposal of properties.......................................................................... Miscellaneous...................................................................................................... 3 7.332 324.98 260,472.24 37,204.87 193,839.28 91,164.70 582,681.09 Pr o f it Bef o r e Ta x es o n In c o me ................................................................................... 3 6,749.643.89 Estimated taxes on income: Federal normal income tax and surtax........................................................... 3 950,000.00 Federal excess profits tax.................................................................................. 3,302,000.00 Dominion and state taxes(after deducting 320,000.00 for postwar refund) . 150,000.00 4,402,000.00 Co n s o l id a t e d Ne t Pr o f it ....................................................................................................... 3 2.347,643.89 SURPLUS CAPITAL SURPLUS Balance at November 1. 1944 ...................................................................................................... 3 8,444,162.99 Add: Proceeds from sale of 63,1411 common shares in excels of amount credited to stated capital........................... ........................................... 3 1,565,125.91 Amount assigned to properties acquired by issuance of 3,409 common shares in excess of amour t credited to stated capital............................ 57,953.00 Excess of par value o ver cost of 400 shares of convertible preferred stock retired ...................................................................................................... 2,74196 1,625,820.87 310,069,983.66 Deduct: Excess of cost over stated value of 10,088 common treasury shares retired........................ 108,866-89 Balance at October 31, 1945 ...................................................................................................... 3 9,961,116.97 EARNED SURPLUS Balance at November 1, 1944 .......................................................................... 3 9,906,670.17 Add net profit for the year.............................................................................. 2,347,643.89 Deduct: Cash dividends paid: Convertible preferred--31.25 per share....................... Common--31 20 per shart........................................... 3 448,986.37 1,043,777.20 312,254,314.06 3 1,492,763.57 Additional amortization of emergency facilities for prior years, less federal income taxes recoverable--Note B: Applicable Year Amortization Taxei 1941................ . . i 204.60 3 103.53 1942 ................ . . 15,511.34 11,684.32 1943 ................ . . 123,986.70 104,041.46 1944 ................ . . 134,752.34 114,512.54 S 274,454.98 3 230,341.85 44,113.13 1,536,876.70 ince at October 31, 1945 .................... ................................................ 10,717,437.36 To t a l Su r p l u s a t Oc t o ! e r 31,1945 ................................................ 320,678,554.33 Stt noltj on following pity. GLD002846 NOTES TO FINANCIAL STATEMENTS The Giidden Company and Sabxldlarie* October 31,1945 Note A --Inventories of principal raw ma rials are traced at cost (lasc-In, But-cut method) which did not sieved rcplactmant marker; other investorlet are stated at the lower of cost (accetnulatsd iTi|t) or replacement market. Note B -- Property, plant, and equipment are stated at cost or less, redaction haTine been made la 1932 to eliminate appreciation and to provide for further write-downs. Depreciation claimed la the Company's federal income tax return for the pear 1945 exceeded the rmoone included ia this ttsteaesr bp $68,5*62.08 dee to depredation claimed on costs written of or credited to revaluation reserve Haring 1932. The amount stated for property, plant, and equipment includes emergency facilities acquired at a cost if $889,553.83, which cost has been fully amortized in accoidince With provisions of the Internal Revenue Code. Note C--The agreement relating no long* term notes payable provides that the Company wfll net dedare or pay dividend^ (other rhin dividends payable in common stock) on any shares o/its common stock ifla the aggregate such dividends would exceed an amount equal to the consolidated net earning accu nutated eubrequent to the fiscal year eaded October 51, 1942, nor expend la excess of an aurciste of 1230,000.00 in the acquisition or retirement of outstanding stock of any class except out of such consolidated net earnings so accumulated. Conv^dsted nci earnings (as defined in the agreement) since October 31, 1942, less dividends paid, amount to 51.545,333.01. Note D--Net assets of Canadian subsidiary included herein comprise net current assets, 1787,798.09, Included at the Control Board rare of eichanr*, and property, plant, and qutpmeat and other assets, $353,827.51, Included at amounts shown by the hooks of that subsidiary Consolidated net profit Includes 8132,919.31 for the Canadian subsidiary, representing that subsidiary's net profit for the year after giring effect to adjustmen t of its at current assets to Control Board rate of exchange in effect at October 31, 1945. Consoli dated earned surplus Includes 81,676.765.94 of surplus of the Canadian subsidiary. Note E--Profits of the compsn ea Includi thoee from transactions subject to the provisions of the Renegotiation Act providing for the recapture of any profits found as a result of renegotiation to be excessive. In renegotiation proceedings for the years ended October 31, 1943, and 1944, it was determined that twofitt realised from soeh transactions pure not excessive, nnd it is believed that the effect. If any, that renegotiation proceeinis may nave upon the financial statement* of the companies for the year ended October 31, 194$, wilt not be material. Note F--In prior years certain items of t'lscount nnd expense, provision for contingencies, nnd losses on dismantlement* have been charged to capital surplus. U such its ms together with additional depredation claimed for federal income tax purposes for the year 1932 to 1945 ioclusive, had been charged against earned surplus instead of capital surplus, the respective amount* of *och surplus account! would be 89.1D8 055.20 and 8tl.m499.13 at October 31 1945 ERNST & ERNST CLEVELAND UNION CQNMKRCK OU1LOINO Board of Dirertor i. The Giidden Company, Cleveland. Oh o. We have examined the consolidated balance sheet of The Giidden Company nnd subeldiaries as of October 31, 1945, and the eon* solidated statements of profit and loss and surplus for tbe fiscal yaar than eaded, have reviewed the system of internal control end the accounting procedures of tbe companies ami, without making a detailed audit ef the transactions, have examined or tested accounting record, of the companies and other supporting evidence, by methods and te the extent we deemed appropriate. Oar examination was made in accordance with generally accepts! auditing standards applicable in the circumstances nod included nil procednree which we considered necessary. Such procedures included test confirmation of trade receivables nnd observation of procedures employed by the companies is ascertaining inventory quantities at locations selected by us. In our opinion, the accompanying balance sheet and related statements of profit and low nnd surplni present fairly the consoli dated position ofThe Giidden Co mpany and its subsidiaries at October 31,1945, nod the consolidated results of their operations for the fiscal yeat.in conformity with generally accepted accounting principles applied on a basis consistent with thatol the preceding year. ERNST k ERNST Cleveland, Ohio CcritjbJ Public A%u*U%U December 20,1945 GLD002847 DIVERSIFIED PRODUCTS BY GLIDDEN FOODS Durkee's Famous Dressing Durkec's Margarine Durkec's Shortening Dunham's Shred Cocoanut Durkee's Spices and Worcestershire Sauce Special ingredients for Bakeries and Confectioner* SOYBEAN PRODUCTS "Alpha" Protein* Gamma Piotein Fine Chemicals Lecithin Soya Meal Soja Flour Soja Flakei Poi lrry and Live Stock Feeds PAINTS SPAED Jai-A-Lac Rijolin Enamel Spiay-Day*Lite Giiiair Aviation Fiaishes Endurance House Paint Gliideuspar Varnish Nubelite Inc ustrial Paints Inc ustrial Lacquers, Enamels ind Varnishes VEGETABLE OILS Soybean Oils Cocoanut Oits Cottonseed Oils Peanut Oils Corn Oils Palm Oils Linseed Oil CHEMICALS AND PIGMENTS Titanium Dioxide Uthoponc Cadmium Colors Litharge Red Lead Euxton White Lead Cuprous Oxide Micilith-G Dry Colors METALS AND MINERALS Powdered Iron and Copper Powdered Lead and Tin Willies Type Metal NAVAL STORES Tar* and Resins Turpcnriae Solvents Synthetic Rubber Compound! Compounds for Plastic* *Trtdrmork Urtirtrrti BOARD OF DIRECTORS ADRIAN D. JOYCE ROBERT H.HORSBURGH RICHARD W. LEVENHAGEN WILLIAM J. O'BRIEN DWIGHT P. JOYCE PAUL E. SPRAGUE CLIFTON M. KOLB JOHN A. PETERS OFFICERS ADRIAN D. JOYCE, President ROBERT H. HORSBURGH, Executive Vice-President RICHARD W. LEVENHAGEN, Vice-President WILLIAM J. O'BRIEN, Vice-President DWIGHT P. JOYCE, Vice-President PAUL E. SPRAGUE, Vice-President JOHN A. PETERS, Treasurer CLIFTON M. KOLB, Secretary WILLIAM W. CONANT, Assistant Secretary CLARENCE L. COLE, Controller Transfer Agent THE NEW YORK TRUST COMPANY New York City Registrar THE CHASE NATIONAL BANK New York City GLD002848