Document wrjaoEL0YaEN1KdN77xKq9JXo

Saint Joseph Lead Company Annual Report -- 1934 America's Corporate Foundation; 1934; ProQuest Historical Annual Reports Pg- 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 Daniel K. Catun, Sc. Louis, Missouri C. Merrill Chapin, Jr. Vice-President Hendon Chubb, of Chubb & Son Irwin H. Cornell, Vice-President Firmin V. Desloge, St. Louis, Missouri BOARD OF TRUSTEES Clinton H, Crane Chairman Andrew Fletcher, Vice-President and Treasurer James H. Grover, Pres., St. Louis Union Trust Co. Fred W. Shibley, Vicc-Pres., Bankers Trust Co. Hon. E. C, Smith, St. Albans, Vermont M. F. Watts, of Watts 8c Gentry, St. Louis EXECUTIVE OFFICERS Clinton H. Crane, President Irwin H. Cornell, Vice-Pres., and Sales Manager Andrew Fletcher, Vicc-Pres., and Treasurer C. Merrill Chapin, Jr., Vice-President E. V. Peters, Vice-President H. B. McGown, Secretary Robert Bennett, Assistant Secretary George L Brigden, Assistant Secretary STOCK TRANSFER OFFICE 250 Park Avenue, New York REGISTRAR City Bank Farmers Trust Company, New York BOND INTEREST and PRINCIPAL Payable at Messrs. J. P. Morgan & Company, New York Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY 250 Park Avenue, New York City PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The following report is submitted in order that the Stockholders may have a general picture of the opera tions of the St. Joseph Lead Company and its subsidiaries for the fiscal year ended December 31, 1934. Comparative Annual Statistics The condition of the lead industry is shown by the following tabulation of production and price figures. Year Total United States Refined Lead Figures in Tons Production, Primary Smelters.............................................. U. S. Shipments only............................................................ Stocks at end of year.............................................................. Price f.o.b. St. Louis Lead cents per lb. (St. Joe average)................................... Zinc cents per lb. (E. & M. J. average)............................ 1934 412,298 379,807 235,457 1933 374,153 347,156 203,061 1932 342,137 317,261 176,157 3-700 4.158 3.652 4.029 3.055 2.876 1931 1930 1929 1928 478,591 429,949 151,380 688,787 637,384 103,247 817,721 727,271 54,900 819,604 702,721 33,618 4.007 3.640 5.456 4-556 6.646 6.512 6.133 6.027 The following gives the comparative production, sales and stocks of the St. Joseph Lead Company and subsidiaries. Production Tons of ore mined--Missouri and New York Tons of lead concentrates.................................. Tons of lead content........................................... Tons of zinc concentrates.................................. Tons of zinc content........................................... 1934 3,269,864 124,240 92,870 46,353 26,340 Pig Lead Sales, Including Lead Content in Concentrates Sold Tons of St. Joe production............................... Tons of purchased lead sold............................. 84,964 39,566 1933 2,652,944 114,651 84,440 34,741 19,880 72,462 47,988 1932 3,233,172 147,242 107,096 34,677 20,020 81,467 53,473 1931 4,465,794 196,481 141,999 63,348 37,056 105,262 69,085 1930 5,999,813 243,614 177,935 86,795 50,064 137,502 82,221 1929 5,750,412 245,958 178,181 60,475 35,115 160,490 61,399 1928 4,833,194 204,181 148,568 45,928 27,361 136,640 52,342 Total............................................................... 124,530 120,450 134,940 174,347 219,723 221,889 188,982 Lead Stocks in Tons, Including 90% of Lead Content in Concentrates............................. 102,348 99,374 93,990 77,134 51,107 22,042 16,271 Lead Operations . ;. Throughout 1934 there was unfortunately a continuation of the difficult conditions that the Lead Belt community of Southeast Missouri had been forced to bear. The banking situation in that locality was some what improved by the reorganization of certain local banks. The company's operations however, had to be maintained on a curtailed basis. On March 1, 1934, the working time was reduced from a six to a five day basis, in each two week period, and on November 1, 1934, although there was no increased lead demand, due to the higher living costs, the former schedule was reinstated and operations were in creased from 10 days to 12 days in each four week period. Wages and salaries were increased 25 cents per shift on June 1, 1934. The Rivermines Miil of the Doc Run Lead Company was shut down in August. Since that date the Federal Mill has operated full time, alternating weekly its own crew and that of the Rivermines organ ization. The Herculaneum Smelter was operated throughout the year on a one furnace basis, thus eliminat ing the former shut-down during the summer months. The 1934 diamond drilling and other exploration work have produced encouraging results. The continued cooperation of the Union Electric Light and Power Company in working out equitable power rates in connection with curtailed production schedules has been very helpful to our Company, as without their assistance it might have been necessary to have shut down certain of the divisions which would have resulted in increased unemployment. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. At the present time 113 suits have been filed against the company for occupational diseases allegedly caused by breathing dust, and the total amount sued for approximates $1,91", 500. In 1915 the company had an examination made as to the possibility of any man incurring a disease from underground dust. At that time, recognized experts after careful study, declared that in their opinion there was no such hazard. In 1917, the question of underground health was again investigated, and a report from one of the foremost authorities stated that the working conditions were excellent. In 1933, as a result of the filing of numerous suits, a further study was made of operating conditions, and representative miners who had been drilling underground, some for over 25 years, were examined by experts with the result that the company has been definitely advised that it is impossible to acquire silicosis from breathing the dust of our Missouri Lead Belt Mines. The first Missouri occupational disease case was tried during November and December in the United States District Court at St. Louis, and was submitted to the jury on December 4, 1934. The jury deliberated until December 6, 1934, when the announcement was made that there was no possibility of reaching a verdict, therefore the court discharged the jury, and declared a mistrial. Zinc Operations On March 5, 1934, the Edwards Mill operation was increased from a five to a six day week basis, and on March 12, 1934, the Balmat schedule was also increased. The mines are still being operated on a five day week. Wages and salaries were increased 10% on May 1, 1934- The development at both mines has been satisfactory. The Kadco dust control units have fulfilled expectations, through greatly reduced drill ing costs in all raise work, a saving in drifting operations and by an improvement in working conditions. On March 16, 1934, the two furnace operation of the clcctro-thcrmic zinc smelter and sulphuric acid plant at Josephtown was increased to four, and this basis was continued until May 1,1934, when the two furnace schedule was again necessitated. Wages and salaries were increased 10% on April 1, 1934. The increased sales of lead free zinc oxide to the rubber and paint industries has been satisfactory. There was also an improvement in the trade interest in Jozite, which was developed as a substitute for certain zinc oxide uses. None of the five mines owned by the Kansas Explorations, Inc., in the Tri-State District were operated dur ing the year. A small income was received from royalties on the Dardcnnc tailings lease, and from a mining lease on the same property. The Block "P" mine in Montana was maintained throughout the year on a watchman basis. Miscellaneous Operations The company's gold property at Atlanta, Idaho, showed satisfactory earnings. The known life of the mine is estimated at about two years. It is hoped, however, that the No. 6 level which is being extended westward to undercut the old workings on the adjoining leased property and to explore certain company owned areas, may develop additional ore, which could prove profitable with the higher gold price. On April 1, 1934, salaries were increased 10% and wages 50 cents per shift. On December 24,1934, authorization was given by the Aguilar directors to place the Aguilar Mine, located in the Province of Jujuy, Argentina, in production on the basis of 200 tons of ore per day. It is expected that the mill will be in operation on or about January 1, 1936. The additional capital investment necessi tated by this program will approximate $750,000. Although numerous mining properties were offered to the company during the year, none were consid ered worthy of inspection with the exception of four, which were however, turned down after examination. In continuation of the company's policy, all properties have been maintained in satisfactory condition, and expenditures have been charged against cost of operations, with the exception of $158,615-07 for certain new construction and development work which has been capitalized. Financial Condition The strong financial position of the St. Joseph Lead Company and its subsidiaries has been maintained, and is reflected in the accompanying Consolidated Balance Sheets as of December 31, 1934 and 1933. The United States Government, State and Municipal Securities owned at the close of the year totaled $3,316,000 par value. All arc short term government issues with the exception of $31,000 State of New York Bonds, and $55,000 New York City Notes. The New York State and New York City securities are on deposit with the New York State Insurance Commission. The total market value on December 31, 1934 was $3,361,438.50. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. During 1934, all outstanding Doc Run Lead Company stock was exchanged for St. Joseph Lead Company stock on the basis of the comparative book values of the two companies as of November 30, 1933. The $100,000 investment in the Kadco Corporation which is carried at cost on the Balance Sheet under Sundry Securities and Loans, was made after a study covering the benefits obtainable with the Kadco dust removal system, and was for the purpose of furnishing $100,000 operating capital to the Kadco Corporation in return for 50% of its capital stock. As of December 31, 1934 only $3,902.26 of trade accounts receivable were more than seven days past due. During the year $2,546.04 was written off as uncollectible. Earnings . : ' ' The accompanying Summaries of Consolidated Net Loss and Consolidated Surplus for the years ended December 31,1934 and 1933 show the result of the last two years of operations, and the following table sets forth the comparison with prior years. Consolidated Earning* 1934 Profit from operations........... $2,403,101.67 Deduct interest and expense on bonds........................... 465,796.43 1933 $1,782,282.02 465,796.42 1932 $ 203,909.10 491,790.21 1931 $1,974,485.73 352,265.72 1930 $5,809,486.42 1929 $11,954,769.82 1928 $7,815,038.98 Gross Incomb $1,937,305-24 Deduct Provision for Depredation.......................$1,121,960.66 Provision for Income Taxes.................. 79,258.52 $1,316,485.60 *$ 287,881.11 $1,022,922.73 $1,011,845.62 $1,622,220.01 $1,149,702.39 $5,809,486.42 $1,319,064.38 390,314.61 $11,954,769.82 $1,268,935-08 883,938.98 $7,815,038.98 $1,050,348.88 455,623.88 Total Deductions............ $1,201,219.18 $1,022,922.73 $1,011,845.62 $1,149,702.39 $1,709,378.99 $ 2,152,874 06 $1,505,972.76 Net Incomb Before Depletion. $ 736,086.06 $ 293,562.87 *$1,299,726.73 $ 472,517.62 $4,100,107.43 $ 9,801,895-76 $6,309,066.22 Provision tor Depletion-- Includes Abandoned Leases of $71,997.11 in 1934 and $190,323.42 in 1933....... $1,548,604.47 ., . $1,461,310.72 C $1,606,310.78 $1,886,589.04 $2,566,469.67 $ 2,264,740.04 $1,775,803.27 Deficit. In order that inventories of lead, zinc and other company products, which have been greatly increased due to the policy of maintaining employment at the highest possible level, would reflect only actual costs, all inter-company and inter-division profits were written off as of December 31, 1934. This write down reduced current 1934 earnings by $143,322.98. The $99,760.80 of profit on the unsold production of prior years was charged to surplus. i Depreciation and Depletion The reason that a provision is made for Federal income taxes in 1934, even though a loss after depletion is shown in the accompanying Summary of Consoldated Net Loss is because our Federal Income Tax return will show a taxable profit owing to different methods in figuring depletion. Depletion as computed on the Federal Tax basis will approximate $625,000 in comparison with $1,476,607.36 on the book basis. The company's book figures arc based on production, and at a fixed rate per ton of ore mined; whereas the per centage method permitted under the Revenue Act of 1934, and which will be used for Federal income tax purposes, is based on sales at the fixed rate of 15% of the gross income from the property, provided that such allowance docs not exceed in any year 50% of the net income after depreciation. Therefore, on the book basis, provided production remains about the same, the deduction for depletion each year will not vary materially until the total book value or cost of the property has been fully depleted, when no further deduction will be made. On the percentage basis, however, the allowable deduction will vary each year, depending upon the sales and selling price, and therefore in some years it may be considerably less or more than that determined by the company's method. Another difference between the two methods is that the percentage method allows a deduction each year even though the aggregate of the annual depletion deductions is in excess of the book value or cost of the property. Although both methods arc workable it is felt that our Company should continue the method now being used, especially as the depletion deduction has been charged each year against current earnings, and is therefore not reflected in the large lead inventory of 102,348 tons, which can be liquidated when conditions improve, without any further depletion charges against earnings. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The basis for figuring the provision for depreciation also differs. The rates approved by the Bureau of Internal Revenue are different from those used by the Company, with the result that in the years prior to 1931 the total depreciation allowed as a deduction on our Federal income tax returns was somewhat greater than that taken on the Company's books, but after 1931 the amount of depreciation shown on the Company's basis will be greater. In 1934, for example, depreciation on the book basis is $1,121,960.66 as compared with an estimated total of $1,000,000 to be claimed for income tax purposes. The difference in the methods for figuring depletion and depreciation over the past twenty years, together with the fact that the Bureau allowed a Discovery Valuation of $8,518,858, in comparison with appreciation of $4,315,000 on the Company's books, has resulted in a difference in the residual book value of the capital assets as at December 31, 1933. The comparative figures are $21,739,928.26 as shown on the Company's Consolidated Balance Sheet, and $24,059,670.07 on the U. S. Treasury Department basis. The stockholders should appreciate, however, that these comparative values, which have been developed under two recognized methods of accounting, do not necessarily indicate the present value of the properties, as the true value of any mining property is dependent upon the profit at which it can be operated. If a property cannot be operated at a profit, it is worth no more than its salvage value. It is of interest to realize that from an ore tonnage viewpoint, in the areas owned on March 1,1913, although the appraised dollar value has been com pletely written off the company's books by the depletion deductions, ore is still being mined at a profit in these original properties and probably will be for years to come. Dividends During 1934, three dividends of ten cents per share each were paid. the period 1928 through 1934 are as follows: The comparative dividend figures for Dividends Paid to Stockholders 1934 1933 1932 St. Joseph Lead Company.... $ 586,701.30 ............... $ 292,569.75 Minority Interests in Sub sidiaries............................................................................................................... 1931 $2,438,079.75 $ 14,618.75 1930 $5,851,386.00 $ 128,865.00 1929 1928 $5,851,374.75 $5,851,335.00 $ 70,305.00 $ 76,253.00 Miscellaneous At a special meeting of the Stockholders held July 25, 1934, Article II of the By-Laws was changed so that at all future meetings any number of stockholders represented in person or by proxy shall constitute a quorum, except in special cases where the law requires that a specific proportion of the outstanding capital stock be represented. On September 6, 1934 two copies of Form 2 "Application for Temporary Registration of Securities" were filed with the New York Stock Exchange, one copy of which was filed by them with the Securities Exchange Commission, Washington, D. C. Registration of the company's stocks and bonds was granted. The application for permanent registration will be filed prior to July 1, 1935. There was a slight increase in the number of stockholders during 1934. The comparative share holdings as of December 31st of each year from 1931 to 1934 are as follows: Tear 1934................................................................................ 1933.......................................................................... 1932................................................................................. 1931............................................................................. Number 5,300 5,145 5,360 5,063 19 or Less 1,549 1,511 1,584 1,784 20-99 1,712 1,684 1,796 1,349 100-199 873 835 875 831 200-Over 1,166 1,115 1,105 1,099 Notice of Annual Stockholders' Meeting In case you do not expect to be present at the Annual Stockholders' Meeting on March 14, 1935, and wish your stock to be represented, you may sign and return the proxy accompanying the Notice of the Meeting, which is enclosed herewith. Clinton H. Crane, President. New York, February 21, 1935- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Summaries of Consolidated Net Loss For the Years Ended December 31, 1934 and 1933 Profit from Operations before Depreciation and Depletion Other Income: ; Interest--Net.......................................................................................... Dividends................................................................................................ Profits on Securities............................................................................... Miscellaneous............................................................ ........................... Total other income........................................................................ December 31,1934 $ 2,321,172.26 December 31,1933 $ 1,732,207.99 $ 41,671.08 11,125.00 26,418.30 2,715.03 $ 81,929.41 $ 42,273.72 2,500.00 3,561.92 1,738.39 $ 50,074.03 Gross Income........................................................................... Deduct Interest and Expense on Bonded Indebtedness ......................... $ 2,403,101.67 465,796.43 $ 1,782,282.02 465,796.42 Income before Depreciation, Depletion, Abandoned Leases, and Income Taxes Deduct Provision for Depreciation,............................................ . .. .......................... Income before Depletion, Abandoned Leases, and Income Taxes.......................... Other Deductions: Provision for Depletion.................................... ..... ....... ............................... Abandoned Leases............................................................................ . ....................................... Provision for Income Taxes............................................................. ,l........................................ Total other deductions....................................................... .............................................. Net Loss for the Year before adjustment for Minority Interest............................. Deduct Proportion of Net Loss Applicable to Minority Interest........ ................................ Net Loss for the Year.................................................. ...................................................................... $ 1,937,305.24 1,121,960.66 $ 815,344.58 $ 1,476,607.36 71,997-11 79,258.52 $ 1,627,862.99 $ 812,518.41 * 15.92 $ 812,534.33 Profit. $ 1,316,485.60 1,022,922.73 | 293,562.87 $ 1,270,987.30 190,323.42 -- $ 1,461,310.72 $ 1,167,747.85 6,612.28 $ 1,161,135.57 Summaries of Consolidated Surplus For the Years Ended December 31, 1934 and 1933 Surplus at Beginning of Year: Including Revaluation of Ore Reserves--1934, $702,991.48; 1933, $948,652.45............................ Add Credit arising from acquisition of Minority Interest in 'The Doc Run Lead Company.. December 31,1934 $ 7,972,399.31 32,782.15 Total.............................................................................................................................................. $ 8,005,181.46 Deductions: Net Loss for the Year.............................................. -- ,.......................................................... Adjustment of inventories applicable to prior years.-- .................. ................................... Cash dividends paid during year 1934......................................................................................... Total Deductions........................................................................................................................ $ 812,534.33 99,760.80 586,701.30 $ 1,498,996 43 Surplus at End of Year: , Including Revaluation of Ore Reserves--1934, $394,982.57; 1933, $702,991.48................... .. $ 6,506,185.03 December 31,1933 $ 9,133,534.88 $ 9,133,534.88 $ 1,161,135-57 $ 1,161,135.57 $ 7,972,399.31 Notation: The above Summaries should be considered only in the light of the comments included in the text of this report under ``Depletion and Depreciation." Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPAHm Consolidated Balance Sheets, December ASSETS Capital Assets: Ore reserves and mineral rights: Appraised value as of March 1, 1913................................. Less Reserve for depiction............................................ Additions subsequent to March 1,1913 (at cost).... .................. Less Reserve for depletion............................................................... Dcccmbcr^l, 1934 $13,500,000.00 13,500,000.00 -- $21,561,701.18 13,971,309.64 $ 7,590,391.54 December 31,1933 $13,500,000.00 13,500,000.00 ---- r $21,672,369.79 13,064,005.25 $ 8,608,364.54 Appreciation arising from revaluation subsequent to March I, 1913.................................................................................................. Less Reserve for depletion............................................................... $ 4,315,000.00 3,920,017.43 394,982.57 Total Ore Reserves and Mineral Rights, Net.................. $ 7,985,374.11 Shafts and underground equipment Cat cost)....... ..................... $ 5,020,171.57 Less Reserve for depreciation......... ............................. 3,621,430.47 1,398,741.10 Land, buildings, plant, and equipment (at cost)...................... $19,946,429.18 Less Reserve for depreciation............. ......................... 10,273,009.95 9,673,419.23 Railway construction--cost being refunded.............................. 166,835.00 Total Capital Assets, Net...................................... . ,$19,224,369.44 $ 4,315,000.00 3,612,008.52 $ 4,998,068.10 3,380,292.55 $19,952,695-05 9,328,643.36 702,991.48 $ 9,311,356 02 1,617,775.55 10,624,051.69 186,745.00 $21,739,928.26 Investments and Advances: Aguilar Corporation (at cost--86% controlled)................................. Mine La Mottc Corporation (at cost--50% owned)......................... Stocks of other mining companies (at market).................................. Sundry securities and loans (at cost)......................................... .......... $ 1,515,000.00 816,653-66 156,352.00 531,777.06 3,019,782.72 $ 1,515,000.00 805,484.63 147,752-00 432,136.17 2,900,372.80 Current and Working Assets: Cash on hand and in banks..................................................................... Federal, State and Municipal Securities (at market).......................... Notes and accounts receivable............................................................... Notes receivable--employees.................................................... ,............ Inventories of lead, zinc, etc. (at cost, less than market)................ Materials and supplies (at cost, less reserve for slow-moving items, 1934, $200,000.00)................................................................................. $ 1,746,157.83 3,361,438.50 1,084,941.81 235.22 6,376,024.32 1,504,748.79 Cash in Closed Banks................................................................................... $ 1,399,749.25 3,194,097.49 1,107,550.59 13,320.00 5,666,363.18 14,073,546.47 41,698.37 1,552,129.39 12,933,209.90 45,640.72 Deferred Charges: Unamortizcd debt discount and expense............................................... Prepaid insurance, taxes, etc................................................................... $ 163,065.45 179,005.84 Total.................................................................................. .................... $ 188,861.85 342,071.29 143,949.68 $36,701,468.29 332,811.53 $37,951,963.21 Notations: I The above Balance Sheets should be considered only in tight under "Depletion and Depreciation." 1 The Parent Company is contingently liable as .guarantiee South American Subsidiary of Aguilar Corporation, whiwuis Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. I SUBSIDIARIES n934, and December 31, 1933 LIABILITIES Capital Stock: Authorized, 2,500,000 shares of $10.00 each. December 31,1934 ................ $25,000,000.00 December 31,1933 $25,000,000.00 Issued, 1,996,798 shares......................................................................... $19,967,980.00 Less in Treasury--1934, 41,127 shares; 1933, 46,332 shares........ 411,270.00 $19,967,980.00 463,320.00 Outstanding 1934, 1,955,671 shares; 1933, 1,950,466 shares.. .. $19,556,710.00 $19,504,660.00 Scrip outstanding........................................... ................................... 428.50 $19,557,138.50 428.50 $19,505,088.50 Minority Interest in Subsidiary Companies: Capital Stock and Surplus..................... .......... 490.46 85,306.69 Bonded Indebtedness: St. Joseph Lead Company, Ten Year Convertible 5 lA% De benture Bonds due May 1,1941....................................................... Less Bonds in Treasury...................................................................... $ 9,752,300.00 1,752,300.00 $ 9,752,300.00 8,000,000.00 1,752,300.00 8,000,000.00 Current Liabilities: Accounts Payable............................................... Accrued Wages.................................................... Accrued Interest on Bonds in hands of public, Accrued Taxes (including Income Taxes)....... $ 795,379.54 60,657.68 73,333-38 466,761.39 1,396,131.99 $ 708,613.27 43,569.32 73,333.35 330,544.67 1,156,060.61 Deferred Credits: Unrealized profit from sale of houses, etc. Reserves: For Injury Claims and Workmen's Liability Insurance.................. For Employees' Life Insurance and Retirements............................... For Contingencies................................................................................... $ 118,469.12 421,895.59 614,393.31 86,764.29 1,154,758.02 $ 107,637.68 253,404.38 782,379.11 89,686.93 1,143,421.17 Surplus: Earned....................................................................................................... Revaluation of Ore Reserves............................ . . . ........................... $ 6,111,202.46 394,982.57 $ 7,269,407.83 6,506,185-03 702,991.48 7,972,399-31 Total, $36,701,468.29 $37,351,963.21 bight of the comments included in the text of this report dl certain bank loans of Cia. Mincra Aguilar, S. A., the fllns amounted to $21,200.00 at December 31, 1934. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS a SELLS CERTIFIED PUBLIC ACCOUNTANTS 22 EAST 40th STREET NEW YORK ACCOUNTANTS' CERTIFICATE St, Joseph Lead Company: We have made an examination of the consolidated balance sheets of St. Joseph Lead Company (Incorporated in New York) and its subsidiary companies as of December 31, 1934 and 1933, and of the related summaries of consolidated net loss and surplus for the years 1934 and 1933. In connection therewith, we made a review of the accounting methods, examined or tested, in a manner and to the extent which we considered appropriate in view of the companies' system of internal accounting control, accounting records of the company and other supporting evidence, and made a general revifew of the operating and income accounts for the years 1934 and 1933, but we did not make a detailed audit of the transactions for those years. Ail subsidiary companies controlled by your company were examined by us with the exception of the Cia. Minera Aguilar, S.A., the South American subsidiary of Aguilar Corporation, which subsidiary was audited by Messrs. Price, Waterhouse, Faller & Company to December 31, 1934. The inventories of lead, zinc, etc., are valued at cost, which is less than market, and were not verified by us as to quantities. The cost of inventories does not include either depletion or depreciation. In our opinion, subject to the foregoing and to the realizable value of investments and advances, the accom panying consolidated balance sheets and related summaries of consolidated net loss and surplus, with the notations thereon, fairly present, in accordance with accepted principles of accounting consistently followed by the com panies, their financial condition at December 31, 1934 and 1933, and the results of their operations for the years ended those dates. HASKINS & SELLS. New York, February 21, 1935. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAP COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR 1934 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.