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Saint Joseph Lead Company Annual Report -- 1940 America's Corporate Foundation; 1940; ProQuest Historical Annual Reports Pg-0_1 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 BOARD OF TRUSTEES Clinton H. Crane Chairman Frederic E. Camp, East Blue Hill, Me. Daniel K. Gatlin, St. Louis, Missouri C. Merrill Chapin, Jr., Vice-President Hendon Chubb, of Chubb & Son Irwin H. Cornell, Vice-Pres., and Sales Manager Firm in V. Desloge, St. Louis, Missouri Stanly A. Easton, Pres., Bunker Hill & Sullivan Mining & Concentrating Co. Andrew Fletcher, : Vice-Pres,, and Treasurer James H. Grover, Pres., St. Louis Union Trust Co. J. Howard Holmes, St. Louis, Missouri Edward V. Peters, Vice-President Fred W. Shib ley, New York, N. Y. Clinton H. Crane, President EXECUTIVE OFFICERS H. B. McGown, Secretary Irwin H. Cornell, Vice-Pres., and Sales Manager George I. Brigden, Comptroller Andrew Fletcher, Vice-Pres., and Treasurer Robert Bennett, Assistant Secretary C. Merrill Chapin, Jr., Vice-President Charles Fleig, Assistant Secretary Edward V. Peters, Vice-President James G. Colvin, Assistant Comptroller STOCK TRANSFER OFFICE 250 Park Avenue, New York REGISTRAR City Bank Farmers Trust Company, New York i Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS In 1940, for the first time since 1930, the Company's mines were operated on a full-time basis throughout the year, resulting in the largest production of lead and zinc concentrates since that time. The sales, which were greater than in any previous year in the Company's history, also exceeded production and as a result the finished stocks were again reduced. Although the demand for lead is in excess of the United States productive capacity, the supplies from properties outside of our country should be sufficient to insure against any shortage. As a large percentage of the world zinc smelting capacity is in the British blockaded areas, the present demand for zinc metal is considerably in excess of the available smelting facilities; the industry, however, has taken constructive steps to increase output, and it is hoped that the immediate problems of supply may be minimized through cooperation between consumers and producers. On Page No. 8 are given comparative figures of stocks, prices, production and sales Consolidated Earnings The consolidated net income for the year ended December 31, 1940 after all charges amounted to $5,111,941.70 as compared with 5,292,907.56 for the previous year. In this connection, attention is called to the fact that the deduction for Federal income and excess profits taxes increased from $672,485.97 in 1939 to $1,305,670.04 in 1940. The Comparative Consolidated Earnings for the ten years ended December 31, 1940 are shown below: Year Income after Interest but before Other Deductions ----------- -pro Depreciation n for-------------Income Taxes Net Income be! ore Depletion, Etc. Provision** for Depletion, Etc. 1931 . . 1932.......... . . 1933 .......... . . 1934 ......... 193=*.............. .. , 1936 .......... ..... J937 ........... ... 1938 1939. .. 1940 . . , $1,622,220 01 *287,881.11 1,316.485.60 1,936,908.95 2,005,781.59 4,473,237 08 10,035.885.12 2,873,815.43 7,586.972 10 8,287,597.10 $1,149,702.39 1,011,845.62 1,022,922.73 1,121,960 66 1,072,013.14 1,063.605 02 1,055.575.37 1,059,034.49 1,058,924 04 1,064,639.12 $78,862.23 35,502 59 307,944 03 1,329.491.03 173,922 80 672.485.97 1,305.670.04 $472,517.62 *1,299,726.73 293,562 87 736,086.06 898.265.86 3,101.6S8.03 7,650.8 IS 72 1,640.858 14 5,855,562.09 5,917,287.94 $1,886,589.04 1,606,310 78 1,461,310.72 1.54S.604.47 412.043 61 590.686 46 522,873.57 309,601 68 562.654.53 805,346.24 * Loss. ** Includes abandoned leases for the years 1933 to 1937 inclusive and provision for obsolescence of the Doe Run Mill for the years 1935 to 1937 inclusive. ' Dividends A dividend of twenty-five cents per share was paid on March 20, fifty cents per share on June 20 and September 20, and one dollar per share on December 20, 1940, making a total of two dollars and twenty-five cents per share for the year. These dividend distributions, aggregating $4,400,280.00, were paid entirely out of the surplus earnings of the Company accumulated after February 28, 1913 and are, therefore, subject to Federal income tax. The following is a record of dividends for the years 1931 to 1940, inclusive: Year 1931 .. 1932 . , 1933 1934 . 1935 St jo5eoh Leau Company $2,438,079./5 292,569.75 586,701.30 782,269.30 Dividends Paid to Stockholders Per Share $1.25 .15 .30 .40 Minority Interest in Subsidiaries $14,618.75 Year St. fr>$poh Lt'au ^uiiifjany 1936. 1937 , , 1938 1939 1940 $i,95 5,670.90 4,by.iyS>0 1,95 5.6S0 00 3,911,36000 4,400,280.00 Per Share 100 2 50 1.00 2 00 2.25 Minority Interest in Subsidiaries Financial Information The Consolidated Balance Sheets as of December 31, 1940 and December 31, 1939 of St, Joseph Lead Company and Subsidiaries, and the related Summaries of Consolidated Net Income and Surplus for the years ended December 31, 1940 and December 31, 1939, are submitted herewith as a part of this report. AH Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. subsidiaries of the St Joseph Lead Company are included1 in these statements, with the exception of AguiJar Corporation and its foreign subsidiary, whose statements are shown separately. No future commitments have been made for the purchase and sale of commodities which would have a materia] effect on the financial position of the Company. The only Federal, State and Municipal securities owned by the Company at December 31, 1940 amounted to $122,000.00 par value and these are not available for sale, being on deposit with New York, Pennsylvania and Missouri Industrial Compensation Commissions, and the United States Department of the Interior. In the audit of our books by Messrs. Haskins & Sells, verification of inventories was again made by physical tests of the quantities shown by the records as being on hand at December 31, i9-40. The Accountant's Certificate addressed to the stockholders is given on Page No. 12 of this report. During 1940, capital expenditures by the St. Joseph Lead Company and consolidated subsidiaries amounted to $1,024,578.24 in comparison with $274,632.31 in 1939 and $442,787.44 in 1938. In February 1940, the pensions payable under the Company's Pension Plan which was placed in effect in 3924 were increased from $30.00 to $40.00 per month. On December 16, 1940, the stockholders approved the adoption of a Retirement Plan for Salaried Employeeswhich entailed a cost to the Company of approxi mately 27,650.00 per month over the next five years, provided the Company did not elect to anticipate such payments, and $4,500.00 per month thereafter. In order to effect a saving of about $137,000.00, it was decided to take advantage of the Company's large cash resources and reduce from five to two years the period of higher monthly costs. Accordingly, a payment of $495,024.63 was made to the Metropolitan Life Insurance Co. in December 1940 and a similar payment was made in January 1941; it is expected that the balance, approximating $265,000.00, will be paid prior to the expiration of the period referred to. In accord ance with the Company's policy, pensions and retirement expenditures are included in operating expenses in the year in which paid. Lead Operations The Southeast Missouri properties were operated on a full-time basis during the year as were those of the Mine La Motte Corporation (50% owned). , The development work during 1940 proved entirely satisfactory. Zinc Operations The two mining properties located in Northern New York were also operated at full-time, and the development showed satisfactory results. At the smelter and sulphuric acid plant located at Josephtown, Pennsylvania, full-time operation was maintained. The Cottrell precipitator to handle fumes from the sintering machines was completed in August. The 1940 capital expenditures at this division amounted to $836,772.70. A 25% increase in acid and zinc metal capacity will be available in the first quarter of 1941. The Ritz Mine, located in Oklahoma, and the Jarrett Mine in Kansas, properties of Kansas Explorations, Inc. (100% owned), were operated throughout the year and steps were taken to place in production in the first half of 1941 the Snapp mine of this Company. The Block "P" Lead and Zinc Mine, located at Hughesville, Montana, remained dosed through the year and an early reopening is not contemplated. South American Operations s The Aguilar Mine, located in the Province of Jujuy, Argentina, was operated at the rate of approximately 800 metric tons of ore per day. The comparative production, sales and inventory tonnages are as follows: Lead Concentrates------------------ >----------------- Zinc Concentrates- (in metric tons) ^ (in metric tons) Year Production Sales Stocks at End of Year Production Sales Stocks at End of Year 1936................... ............. 1937 .................... ........... 1938.................. . ... S939 ..................... . . .. 1940 ........... .. , 10.467 19.709 29,836 36.728 36,866 9,409 19,782 '28,816 33,307 *35,778 : 1,058 985 1.873 5,294 6,382 7,543 12,116 29,478 42,250 65,032 5,276 6,250 4,467 26,179 +36,182 2,272 8,138 33,149 49,220 78,150 * Does not include 5.000 metric tons of lead concentrates sold for future delivery, f Does not include 5,038 metric tons of zinc concentrates sold for future delivery The 1940 capital expenditures amounted to 1,037,158.50 pesos which is equivalent to $242,351.20 at the rate of exchange prevailing during the months of such expenditures. Cash receipts not required for capital 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. and operating expenditures were used to liquidate the open account between the Cia. Minera Aguilar, S. A. and its parent company, the Aguilar Corporation. With funds so received, the Aguilar Corporation in May purchased 4,250 shares of its preferred stock and 1,930 shares of its common stock for 797,406.26, and in October, an additional 1,691 shares of its preferred stock for 322,206.52; an aggregate cost of the shares purchased of 1,119,612.78. Of this amount, St. Joseph Lead Company received 739,187.82 for 3,919 shares of preferred stock, thereby reducing its investment in Aguilar Corporation from 1,515,000.00 to 775,812.18. As a result of these transactions the ownership by St. Joseph Lead Company of the total outstanding capital stock of Aguilar Corporation increased from 86% to 89%. The Consolidated Balance Sheets of Aguilar Corporation and subsidiary at December 31, 1940 and December 31, 1939, together with Summaries of Consolidated Net Income and Deficit for the years ended on those dates are submitted as a part of this report and will be found on Pages Nos. 9 to 11. The compara tive net income after depreciation and all charges, except provision for depletion computed on appreciation of ore reserves, is as follows: Year 1936........................... 1937........................... 1938.......................... . 1939.......................... . 1940........................... . * Loss, Income after Interest but before Other Deductions 192.78 998,294.21 807,923.50 930,981.17 867,790.12 Provision for Depreciation 115,340.41 130,214.52 149,105.03 175,793.81 193,667.52 Net Income before Depletion 115,147.63 1 858,079.69 658,818.47 755,187.36 674,122.60 t----Provision for Depletion------ On Cost On Appreciation $ 35,143.18 322,584.30 63,407.60 579,914.66 73,447.08 100,082.61 121,188.16 671,733.70 915,337.33 1,108,320.38 The books of Compania Minera Aguilar, S. A., the Argentine subsidiary of the Aguilar Corporation (a Delaware corporation), were audited by Messrs. Price, Waterhouse, Peat & Co. of Buenos Aires, Argentina. Miscellaneous Operating Information The 1940 operations of the Sheep Ranch Mine,; a small gold property in California were satisfactory, and development work in the lower level is encouraging. Although a number of properties were submitted to the Exploration Department, none were accepted. Stockholders The number of stockholders of record on' December 31st of each year since 1931 and a classification of their holdings are as follows: i Year Number 19 or Less 20-99 100-199 200-Over 1931................. .......... 1932 .............. ........... 1933................. .......... 1934 ................ ........... 1935................. .......... 1936 ................ .......... 1937 ............... .......... 1938................. ........... 1939.................. .......... 1940................. .......... 5,063 5,360 5,145 5,300 5,304 5,560 5,992 6,463 6,586 6,697 1,784 1,584 1,511 1,549 1,491 1,483 1,571 1,719 1,695 1,772 ^ 1,349 1,796 1,684 1,712 1,748 1,851 2,038 2,213 2,260 2,263 831 875 835 873 911 1,000 1,139 1,227 1,337 1,371 1,099 1,105 1,115 1,166 1,154 1,226 1,244 1,304 1,294 1,291 General The Stockholders are again reminded that the net value of the capital assets set forth on the accompany ing Consolidated Balance Sheets are depleted and depreciated figures based on appraised values as of 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, 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 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 has been developed through prospecting, or made available by reason of the improvement in mining practices, the basis of determining depletion was changed as of January 1, 1935, by dividing the undepleted book value by the estimated tonnage of ore in the mines and applying the unit value thus determined to the tonnage sold. This change results in a considerably lower provision for depletion than in years prior to that date. Clinton H. Crane, President. New York, February 21, 1941. ; -4 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST* JOSEPH LEAD COMPANY AND SUBSIDIARIES Summaries of Consolidated Net Income For the Years Ended December 31, 1940 and 1939 Net Sales ................................................................. .................................. Cost of Sales (exclusive of depreciation and depletion)............ ....................... Gross Profit from Operations before Depreciation and Depletion . . . Deduct: Selling, general and administrative expenses ......................... Capital stock and miscellaneous taxes............... . $ 748,953.94 128,213,00 Net Profit from Operations before Depreciation and Depletion................. Other Income (^Deductions); Profit on sale of real estate .... , . . So,952.91 Interest, dividends, etc.................... ...................... .y IS,190.45 Loss on sale of stocks................................................................. *294,S36.57 Income before Depreciation, Depletion, and Federal Income and Excess Profits Taxes ................................................................................................. Provision for depreciation ... , .... ................................ Income before Depletion and Federal Income and Excess Profits Taxes . Provision for Depletion and Federal Income and Excess Profits Taxes: Depletion....................................... .. $ 805,34624 Federal income taxes . . .. 1,050,924.66 Federal excess profits taxes................................................. .. 254,745.38 Net Income for the Year ... Year ended December 31, 1940 1939 $38,507,829.10 $30,362,605.36 29,153,371.25 22,195,676.99 $ 9,354,457.85 $ 8,166,928.37 877,167.54 $ 8,477,290.31 $648,048 47 70,083.03 718,131.50 $ 7,448.796.87 *189,69321 $129,506.61 21,271 69 *12,603.07 138,175.23 $ 8,287,597.10 1,064,639.12 $ 7,222,957.98 7,586,972.10 1,058,924.04 $ 6.52S,048.06 2,111,016.28 $ 5,111,941.70 $562,654.53 672,485.97 ------ 1,235,140.50 $ 5,292,907.56 Summaries of Consolidated Surplus For the Years Ended December 31, 1940 and 1939 Surplus at Beginning of the Year (including surplus from revaluation of ore reserves--1940, $313,327.67; 1939, $348,509.18)................................................. Additions: Net income for the year........................................................... .............. ......... Year ended December 31, 1940 1939 $ 9,894,472.29 $ 8,512,924.73 5,111,941.70 5,292,907.56 Total .....................................................................$15,006,413.99 Deductions: Cash dividends paid during the year. ............................... . ............. 4,400,2S0 00 $13,S05,832.29 3,911,360.00 Surplus at End of the Year (including surplus from revaluation of ore reserves--1940, $94,774.S6; 1939, $313,327.67) .. . . . $10,606,133.99 $ 9,894,472 29 Notes: AH subsidiaries of the parent company, with the exception of Aguilar Corporation and its foreign subsidiary, are included in the above summaries. The equity of St Joseph Lead Company in the net profits of Aguilar Cor poration and its foreign subsidiary, not included in the above summaries, before provision for depletion of ore reserve values in excess of cost, was $489,S93.72 for the year 1940 and $562,360.75 for the year 1939; after pro vision for depletion of ore reserve values m excess of cost, St, Joseph Lead Company's portion of the net losses of said subsidiaries was $504,09734 for the year J940 and $23i, 157.92 foi the year 1939, Gross profit, before de preciation and depletion,_ of the foreign subsidiary on its sales in 1939 to St. Joseph Lead Company of products which remained in the inventories of the latter at December 31, 1940 and 1939 amounted to approximately $293,000.00 and $116,000 00, respectively. ' .. For a statement relating to payments by the Company under the Pension and Retirement Plans, see com ments in the text of this report on page 3. No inter-company profits or losses are included in the above summaries. 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH JLEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1940 and 1939 ASSETS Capital Assets: Ore reserves and mineral rights: Appraised value as of March 1, 1913 ............................. Less reserve for depletion .................................... December 31,1940 13,500,000.00 13,500,000.00 ------ December 31,1939 13,500,000.00 13,500,000 00 ------ Additions subsequent to March 1, 1913 (at cost) ........ 21,242,952.67 21,236,287.18 Less reserve lor depletion......................................... 15,932,595.31 5,310,357.36 15,345,801.88 5,890,485.30 Appreciation arising from revaluation subsequent to March i, 1913.............................................................. 4,315,000.00 Less reserve for depletion ....................................... 4,220,225.14 4,315,000.00 94,774.86 4,001,672.33 313,32767 Total ore reserves and mineral rights, net... . Shafts and underground equipment (at cost)....................... Less reserve lor depreciation........................................... 5,233,264.01 4,198,852.66 5,405,132.22 6,203,812.97 5,221,91885 1,034,411.35 4,038,597.50 1,183,321.35 Land, buildings, plant and equipment (at cost)............... . 18,534,033.08 Less reserve lor depreciation..................... .............. . 12,407,000.29 18,117,817.36 6,127,032.79 12,009,049.63 6,108,767.73 Railway construction--Cost being refunded . .................... 26,435,00 39,16000 Total capital assets, net............................. . ... Investments and Advances: Aguilar Corporation (at cost--1940, 89% owned; 1939, 86% owned) .............................................................. ............... . 775,812.18 Mine La Motte Corporation (at cost--50% owned) .. .. tU1 730,484.63 Kadco Corporation (at cost--50% owned) ......... . Stocks of other mining companies (at cost--market quo tation value--1940, 4,650.00; 1939, 101,100.00) ...... , 4,000.00 Sundry securities, loans, etc. (at cost, less reserve, 200,000.00) .................................................................. . 275,644.27 Current and Working Assets: Cash on hand and in banks..................................................... Notes and accounts receivable--Trade (less reserve--1940, 19,88026; 1939, 20,185.12) .......................................... Other notes and accounts receivable................................... Inventories (valuation not in excess of market): Finished lead, zinc, etc. (at cost, exclusive of deprecia tion and depletion) .............................. ....... ............ Lead, zinc, etc., in process (at cost, exclusive of depre ciation and depletion) .......................................... .. Purchased lead and zinc (at cost).................................. Materials and supplies (at cost, less reserve for slow- moving items--1940, 111,496.16; 1939, 109,286.75) 12,400,614.17 2,584,797.75 58,046.33 798,140.05 91 Ofl 23.03 1,291,818.15 2,080,203.72 Miscellaneous Assets: Federal, State and Municipal securities on deposit with Federal and State departments (at cost; market quo tation value-1940, 142,690; 1939, 138,843.13) ............. 120,815.89 Cash in closed banks............................................................... 18,508.75 Deferred Charges: Prepaid insurance, taxes, etc.............................................. .. 12,593,011.36 1,515,000.00 780,484.63 100,000.00 298,000.00 1,785,941.08 296,137.29 8,497,522.55 1,904,560.67 42,894.78 20,123,743.20 2,289,092.26 945,154.92 413,853.06 1,909,832,37 120,836.23 139,324.64 23,263.08 149,847.07 13,535,062.05 2,989,621.92 16,002,910.61 144,099.31 112,935.40 Total ......................................................... . 134,791,867.35 32.784.629.29 Notes: The net value of the capital assets shown in the above consolidated balance sheets should be considered in the light of the comments included in the text of this report on Page No. 4. All subsidiaries of the parent company with the exception of Aguilar Corporation and its foreign subsid iary, are included in the above consolidated balance sheets. The equity of St. Joseph Lead Company m the net profits of Aguilar Corporation and its foreign subsidiary, since acquisition, not included in the above consolidated balance sheets, before provision for depletion of ore reserve values in excess of cost, was 2,083,580.14 at Decem ber 31, 1940 and 1,482,776.53 at December 31, 1939; after provision for depletion of ore reserve values in excess of cost, St. Joseph Lead Company's portion of the net losses of said subsidiaries, since acquisition, was 1.058,396.50 at December 31, 1940 and 542,465.12 at December 31, 1939. Gross profit, before depreciation and depletion, of the foreign subsidiary on its sales to St. Joseph Lead Company of products which remained in the inventory of the latter at December 31, 1940 and December 31, 1939 amounted to approximately 293,000.00 and $116,000.00, 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1940 and 1939 Capital Stock: Authorized, 2,500,000 shares of $10 00 each LIABILITIES December 31,1940 .. , $25,000,000.00 December 31,1939 $25,000,000.00 Issued, 1940, 1,996,S40.25 shares; 1939, 1,996,S367 shares .... $19,968,402.50 Less in treasury, 1940, 41,160.25 shares; 1939, 41,156.7 shares ... ................................... .. 411,602.50 $19,968,367.00 411,567.00 Outstanding, 1,955,680 shares ................................ . $ 19,5 56,S00.00 $19,556,800.00 Scrip outstanding .......................... .......................... ......... 6.00 $19,556,806.00 41.50 $19,556,841.50 Current Liabilities: Accounts payable (trade)........................................... .... . . Due to subsidiaries not consolidated ................. ........ , Wages payable ........ ......................... ..................... Accrued taxes: Federal income and excess profits .. . .. . . . Other ............... ................................................... $1,646,55540 175,61027 144,191.53 1,346,687.79 18I.275.5S Deferred Credit: Unrealized profit from sale of houses, etc....................... Reserves: For injury claims and workmen's liability insurance...., For employees' life insurance and retirement....................... For contingencies ................................................................... $219,4S5.92 592,638.65 309,938 55 Surplus: Earned ......................................................................................... Revaluation of ore reserves.................................................. $10,511,359.13 94,774.86 1,181,342.81 62.966 37 98,844.82 3,494,320.57 696,153.53 148,039.84 12,543.67 1,122,063.12 $I84,S66.31 626,805 74 311,938.55 $9,581,144.62 10,606,133.99 313,327.67 2,187,347.37 22.357.53 1,123,610.60 9,894,472.29 Total , .. ... $34,791,867.35 $32,784,629.29 Notes Continued: respectively. Aguilar Corporation was in arrears in dividends on its $7.00 cumulative preferred stock (79% owned by St. Joseph Lead Company at December 31, 1940 and 75% owned at December 31, 1939) in the amounts of $1,030,393.00 and $ 1,346,450.00 at December 31, 1940 and December 31, 1939, respectively. St. Joseph Lead Company and the foreign subsidiary of Aguilar Corporation were contingently liable at December 31, 1940 to refund to customers the sales price, $827.7/9,87, of concentrates paid for by the customers and stored in Argentina, in the event any future Argentine law should prevent shipment thereof, and were sim ilarly contingently liable at December 31, 1939 in the amount of $280,000.00. For a statement relating to payments by the Company under the Pension and Retirement Plans, see com ments in the text of this report on Page No. 3. .... No intercompany profits or losses as between St. Joseph Lead Company and subsidiaries consolidated are included in the above consolidated balance sheets. / Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. XL S. REFINED LBMi STOCKS, LEAD AND ZINC PRICES Comparative Annual Statistics Year Average Lead and Zinc Prices in Cents Per Lb. Tons of l U. S. Refined F.O.b. Louis Lead Stocks E.& M.J. At End of Year Average i F.O.B. m. Louis St joe Average Zinc F.O.B. St, Louis E.&.M.J. Average 1931............... ... 1932 ........... ........... 1933 ............. ....... 1934.............. ............ 1935 .............. ........ 1936.............. .......... 1937 ............ ............ 1938............... ........... 1939............. . ... 1940 . . . .. 151,653 176,157 203,061 235,457 222,306 171,856 129,131 115,902 58,777 40,926 4.049 3.042 3.735 3.724 3.915 4.560 5.859 4.589 4.903 5.029 4.007 3.055 3.652 3.700 3.878 4 534 6.015 4.59S 4.942 4.986 3.640 2.876 4.029 4.158 4 328 4901 6.519 4610 5.110 6.335 ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Year 1931............... 1932............... 1933 ............. 1934.............. 1935 .............. 1936 .............. 1937............... 1938............... 1939 .............. 1940............... Ore Mined 4,465,794 3,233,172 2,652,944 3,269,864 3,382,403 3,804,451 5,536,952 3,816,637 5,255,960 6,209,863 Production in Tons Lead Concentrates 196,481 147,242 114,651 124,240 133,044 J47.160 L ,21;2,827 157,188 202,003 225,041 ' Pig Lead Equivalent 131,586 99,242 78,248 86,060 92,611 101,999 146,274 107,600 138,307 154,281 Zinc Concentrates 63,348 34,677 34,74! 46,353 47,214 54,590 71,031 60,797 74,681 85,571 Slab Zinc Equivalent 31,498 17,017 16,898 22,389 22,857 26,400 34,519 29,606 38,188 44,406 Lead Sales and Stocks at End of Year in Tons Year 1931...................... .............. 1932..................... ................ 1933.................... ................. 1934 .................. ................. 1935..................... ........... 1936 .................. ................ 1937 ................... ............... 1938 ....... . . ................ 1939 ................... ................. 1940 ............. ............ .. Lead Sales St. Joe Production 105,262 81,467 72,462 84,964 87,077 126,846 160,091 97,865 172,481 178,i 11 Purchased Lead Sold 69,085 53,473 47,988 39,566 41,714 47,776 38,930 50,782 39,347 60,199 Total Lead Sales 174,347 134,940 120,450 124,530 128,791 174,622 199,021 148,647 211,828 238,310 Pig Lead Equivalent of Stocks 78,390 96,484 100,453 103,918 108,S49 83,575 72,969 79,775 46,173 30,737 includes purchased lead and estimated recoverable lead in concentrates to gether with other lead stocks in process of refining at smelters. 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Summaries of Consolidated Net Income For the Years Ended December 31, 1940 and 1939 Net Sales (Including sales to St Joseph Lead Company--1940, $3,481,326 03; 1939, $267,574 60) .. Cost of Sales (exclusive of depreciation and depletion) .................... Year ended December 31, 1940 1939 $2,612,023.14 1,662,3203! $2,172,411.92 1,174,751.57 Gross Profit from Operations before Depreciation and Depletion Deduct: Selling, general and administrative expenses Taxes ... ........................... .. . .. ? 85,215.64 13,601.53 9^9,702 83 $ 66,298,07 93,817 22 12,849.22 $ 997,660.35 79,147.29 Net Profit from Operations before Depreciation and Depletion Other Income .... .... . . ... - Gross Income before Depreciation and Depletion Interest on indebtedness ............................ ......... $ 850,S85.61 23.652 25 $ S74,537.86 6,747.74 $ 918,513.06 17,236.83 $ 935,749.89 4,768.72 Income before Depreciation and Depletion . 4 Provision for depreciation............................................................... .. . - 867,790.12 193,667.52 $ 930,981.17 175,793.81 Income before Depletion . ... Provision for depletion computed on cost ............... . . ,. . .... . 674,122 60 121,188.16 $ 755,187.36 100,082.61 Net Income for the Year before Provision for Depletion Computed on Appreciation of Ore Reserves . . .. Provision for depletion computed on appreciation of ore reserves Net Loss for the Year . , i, L $ 552,93444 1,108,32033 $ 555,385.94 $ 655,104.75 915,337.33 $ 260,232.58 Summaries of Consolidated Deficit For the Years Ended December 31, 1940 and 1939 Deficit at Beginning of Year . ,, . Year ended December 31, 1940 1939 ? 610,695.48 $ 350,462.90 Net loss for the year ......................................... .................................... 555,385,94 260,232.58 Deficit at End of Year . .. . . 1,166,081.42 610,695.48 Notes: Included in the above summaries are Aguilar Corporation and its only subsidiary, Compania Minera Aguilar, S. A. (a foreign corporation). , No provision has been made in the above summaries for Argentine income taxes as the basis of assessment has not been agreed upon with the Argentine tax authorities, or for United States Federal income taxes as the domestic company had net losses in 1940 and 1939. .. No intercompany profits or losses as between Aguilar Corporation and its subsidiary are included in the above summaries. 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Consolidated Balance Sheets, December 31, 1940 and 1939 ASSETS' Capital Assets: December 31,1940 Ore reserves and mineral rights: Cost, including exploration and development prior to the commencement of operations Less reserve for depletion.......... $ 1,507,858.82 393,208.63 $ 1,114,590.19 Appreciation arising from revaluation.... Less reserve for depletion .... $13,790,750,50 3,597,890.37 10,192,800.13 Total ore reserves and mineral rights, net $11,307,450.32 Land, buildings, plant and equipment (at cost) ........ Less reserve for depreciation................... ................ 2,308,700,20 '. 702,847.78 * 1,005,852.42 Total capital assets, net $12,913,302.74 December 31,1939 $ J,507,858.82 272,080.47 $ 1,235,778.35 $13,790,750.50 2,489,569.99 11,301,180.51 $ 2,120,349,00 509,180.26 $12,536,958,86 1,557,108.74 $14,094,127.00 Current and Working Assets: Cash on hand and in banks.................................................. $ Accounts receivable--trade .................................................... Due from St. Joseph Lead Company (Parent Company),,,. Other accounts receivable ................................... ..... ............. Inventories: Lead and zinc concentrates (at cost, exclusive of depre ciation and depletion; less than estimated market),.., Silver (at estimated value) ..................... v Materials and supplies (at cost) ............ ; 388,133.95 120,370.00 175,(510.27 11,008.00 593,543.63 24,314.01 549,161,89 Goodwill ........................................................... $ 398,404.28 355,034.86 02,906.37 8,029.96 1,802,208.35 50,000.00 238,353.25 51,628.27 437,480.17 1,351,957.16 50,000.00 Deferred Charges 30,881.78 14,059.53 V Total..................................................................... $14,85(3,392.87 $15,510,144,29 Notes: ;J,1 Included in the above consolidated balance sheets are Aguilar Corporation (a domestic holding company) and its only subsidiary, Compania Miners Aguilar S. A. (incorporated and conducting business in Argentina). Current assets, current liabilities, deferred charges and reserves are shown in the above consolidated balance sheets at the closing quoted rate of exchange at December 31, 1940 and 1939, respectively. 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. 10 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Consolidated Balance Sheets, December 31, 1940 and 1939 LIABILITIES Capital Stock; Preferred stock--$7.00 cumulative shares without par value (entitled upon redemption or liquidation to $115.00 a share): 1940--Authorized 94,059 shares; issued 14,259 shares at a stated value of $49 00 a share .............. 1939--Authorized 100,000 shares; issued 20,200 shares at a stated value of $98.00 a share .............. t Common stock--Shares without par value, stated value $1,00 a share: 1940--Authorized 248,070 shares; issued S8.470 shares 1939--Authorized 250,000 shares; issued 90,400 shares $ Deccmber31,1940 698,691.00 88,470.00 787,161.00 December 31,1939 1,979,600 00 90,400,00 2.070,00000 Current Liabilities: Loans payable--Bank . . . $ 429,229.71 Accounts payable--trade ....................... 122 406 24 Wages payable................................. 19.008.36 Accrued taxes.................................. . 2,684.47 Proceeds from sales of concentrates for future export , 311,047.47 Other accounts payable . . .......... , , 3,436.31 $ ' 887.SI2.56 5 [751.78 14.882 74 4.204.3S lJo4.i9 72,743.09 Deferred Credit: Unrealized profit on foreign exchange, etc. __ 9,307.66 Reserves: For expenses on concentrates held for future delivery For compensation and accidents . . For maintenance and renewals .... , . $ 354,220 84 31,152 06 8,151.11 393,524.01 $ 151,94680 17365.77 8,725.95 178,038.52 Surplus: Capital surplus: Arising from revaluation of ore reserves (of which $13387,254.16 has been transferred by the subsidiary to its capital stock account).................................. .* Arising from reduction in stated value of preferred stock, $989,SOO.OO, less $826,57378 cost of stocks ac quired in excess of stated values thereof . , $13,790,750.50 163,226 22 13,790,750.50 Total capital surplus .. ,,, > 13,953,976.72 13,790,750.50 Earned surplus (deficit): Surplus based on depletion computed on cost , Deduct depletion computed on appreciation of ore reserves ....................................................................... ? 2,431,S08.95 3,597,890.37 $ I,S7S,874.5l 2,4S9,569,99 Earned surplus (*deficit) . ,. *1,166,OS 1.42 $ *610,695.48 Remainder--Capital surplus , 12,787,89530 13,180,055.02 Total .. .... ; ,. $14.856392 S7 $15,510,144 29 Notes Continued: The above consolidated balance sheets do not include any liability for Argentine income taxes as the basis of assessment has not been agreed upon with the Argentine tax authorities. Cumulative dividends on the $700 preferred stock have not been paid since its issuance, and at December 31, 1940 and 1939 amounted to $1,030393 00 and $1346,450 00 respectively. The foreign subsidiary and St, Joseph Lead Compjny are contingently liable at December 31. 1940, to re fund to customers the sales price. $<>27.779 8/ oi concentrates paid for by the customers and stored in Argentina, in the event any future Argentine law should prevent shipment thereof, and were similarly contingently liable at December 31, 1939, in the amount of $280,00000. . _^ , No intercompany profits or losses as between Aguilar Corporation and its subsidiary are included in the above consolidated balance sheets. : II Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 22 EAST 40TH 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 subsidiary companies as of December 31, 1940 and the summary of con solidated net income and surplus for the year ended that date, have reviewed the systems of internal control and the accounting procedures of the companies, and have examined or tested their accounting records and other supporting evidence by methods and to the extent we deemed appropriate, including physical tests of the inventory quantities. The accounts of Aguilar Corporation, a majority-owned holding company (not consolidated) which is treated by you as an investment and whose assets consist only of cash on deposit and the investment in its subsidiary, were examined by us, but the accounts of Compania Minera Aguilar, S. A., which is the foreign subsidiary of Aguilar Corporation, have been examined and reported upon by other accountants, and the data with respect to such foreign subsidiary included in the accompanying consolidated balance sheet of Aguilar Corporation (incorporated in Delaware) and its foreign subsidiary as of December 31, 1940 and related summary of consolidated net income and deficit for the year ended that date, are as shown by such report. The report of other accountants states that inventories are as certified by the management. In our opinion, based upon our examination of the accounts of St. Joseph Lead Company and its subsidiary companies except Compania Minera Aguilar, S. A. and upon the report of other accountants on their examina tion of the accounts of the last-mentioned company, the accompanying balance sheets and related summaries of consolidated net income and surplus, with the footnotes thereon, fairly present the financial condition at December 31, 1940 of St. Joseph Lead Company and its wholly-owned subsidiary companies, and of Aguilar Corporation and its foreign subsidiary company, and the results of their operations for the year ended that date, in conformity with generally accepted accounting principles followed by the companies on a basis con sistent with that of the preceding year. HASKINS & SELLS New York, February 21, 1941. ;I2 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 19# *4 O O Xo m m m Cxi Q > 25 : 05 COW <c --*- 05 u. m w JQfll 05 W 25 05 < -* O U>OH W *5 05 -J CO CO m< < x o co mo < s Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.