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Saint Joseph Lead Company Annual Report -- 1939 America's Corporate Foundation; 1939; 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 Executive Offices, 250 Park Avenue, New York Frederic E. Camp, East Blue Berry, Me. Daniel K. Catlin, St. 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 .............. Stanly A. Easton, Pres., Bunker Hill & Sullivan Mining & Concentrating Co. Andrew Fletcher, Vice-President and Treasurer James H. Grover, Pres., St. Louis Union Trust Co. J. Howard Holmes, St. Louis, Missouri Edward V. Peters, Vice-President Fred W. Shibley, New York, N. Y. EXECUTIVE OFFICERS Clinton H. Crane, President Irwin H. Cornell, Vice-Pres., and Sales Manager Edward V. Peters, 1 Vice-President H. B. McGown, - Secretary Andrew Fletcher, Vice-Pres., and Treasurer George I. Brigden, Comptroller C. Merrill Chapin, Jr., Vice-President Robert Bennett, Assistant Secretary STOCK TRANSFER OFFICE 250 Park Avenue, New York : REGISTRAR City Bank Farmers Trust Company, ' New York Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH HAD COMPANY PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The first six months of 1939 showed a decided improvement over the corresponding period in 1938, and it was possible to operate the Company's mines on an 80% basis with an increase of only 1,000 tons in unsold stocks in comparison with a 60% basis and 8,000 tons stock increase during the first half of the previous year. Still further improvement developed during the last half of 1939 and, by the first of August, the demand had so increased that sales were in excess of production. In accordance with the Company's policy of selling stocks only when operating at full time, 100% operations were resumed on August 6, 1939. By the middle of August, the demand was further accentuated and war psychosis in September created an unjustifiable demand. As your management believed that there were ample supplies of lead, both here and abroad, to fill any require ment for actual consumption, it sold freely from stocks accumulated in previous years and exerted every effort to prevent buyers from accumulating more than current needs. Although the insistent demand continued until the middle of November, market conditions are now normal. Lead stocks in the hands of producers and consumers at the end of the year were lower than at any time since 1929, and domestic production and consumption are apparently in balance. However, foreign production appears to be in excess of consumption and, as prices in the United States are influenced by world markets, it is only through the restoration of world peace and normal conditions that any company can look toward the future with confidence. Consolidated Earnings The Consolidated Income of $6,528,048.06 for the year ended December 31,1939 before depletion and Federal income taxes shows an increase of $4,713,267.12 over, that of the previous year. The Consolidated Net Income of $5,292,907.56 after all deductions compares with $1,331,256.46 for 1938. The Comparative Consolidated Earnings for the ten years ended December 31, 1939 are shown below: Year Income after Interest but Before Other Deductions ---------- Provision for-------------Depreciation , Income Taxes Net Income before Depletion, Etc. Provision** for Depletion, Etc. 2930.. 1931.. 1932.. 1933.. 1934.. 1935.. 1936.. 1937.. 1938.. 1939.. . $5,809,486.42 . 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 $1,319,064.38 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 $390,314.61 78,862.23 35,502.59 307,944-03 1,329,491.03 173,922.80 672,485-97 $4,100,107.43 472,517.62 *1,299,726.73 293,562.87 736,086.06 898,265.86 3,101,688.03 7,650,818.72 1,640,858.14 5,855,562.09 $2,566,469.67 1,886,589.04 1,606,310.78 1,461,310,72 1,548,604.47 412,043.61 590,686 46 522,873.57 309,601.68 562,654.53 *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 Dividends of twenty-five cents per share were paid on March 20, June 20, September 20 and December 20, together with an extra dividend of one dollar per share on December 20, 1939. These dividend distributions, aggregating $3,911,360.00, 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 1930 to 1939, inclusive: Year St. Joseph Lead Company 1930... 1931. . 1932 .. . 1933.. 1934... . $5,651,386.00 2,438,079.75 292,569-75 586,701.30 Per Share $3.00 1.25 .15 30 Dividends Paid to Stockholders Minority Interest in Subsidiaries $128,865.00 14,618.75 Sc. Joseph Year Lead Company 1935 .. 1936. .. 1937 .. 1938 .. 1939. .. $ 782,269.30 1,955,676,90 4,889,198.50 1,955,680.00 3,911,360.00 Per Share $0.40 1.00 2.50 1.00 2.00 Minority Interest in Subsidiaries Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Financial The Consolidated Balance Sheets as of December 31,1939 and December 31,1938 of Sc. Joseph Lead Company and Subsidiaries, and the related Summaries of Consolidated Net Income and Surplus for the years ended on those dates, are submitted herewith as a part of this report. All subsidiaries of the St. Joseph Lead Company, with the exception of Aguilar Corporation and its foreign subsidiary, are included in these statements. No future commitments have been made for the purchase and sale of commodities which would have a material effect on the financial position of the Company. The only Federal, State and Municipal Securities owned by the Company at December 31, 1939 were $122, 000.00 par value on deposit with the 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, 1939. During 1939, capital expenditures by the St. Joseph Lead Company and consolidated subsidiaries amounted to $274,807.31 in comparison with $442,858.13 in 1938. Southeast Missouri Division Because of the improved demand for lead, on August 6,1939, the operating schedule was increased from four days per week to a full time basis for this division of five days per week. The same changes were also effected at the property of Mine La Motte Corporation (50% owned). The development work during 1939 proved entirely satisfactory. Balmat and Edwards Divisions The two mining properties located in Northern New York were operated at full capacity and on a basis of six days per week throughout the year. Development work at these mines also showed satisfactory results. Josephtown Division The zinc smelter and sulphuric acid plant located at Josephtown, Pennsylvania, operated at full capacity. The year's production and available inventory stocks were sold. Larger condensers, installed on the metal furnaces during the year, have enabled the plant to handle the entire output of the Balmat and Edwards Mines. Argentine Property The Aguilar Mine, located in the Province of Jujuy, Argentina, was operated at the rate of approximately 500 metric tons of ore per day until April, when the new equipment was made available. During the remaining nine months of the year, the average rate was about 800 metric tons per day. The production, sales and inventory tonnages for the years 1939 and 1938 are as follows: v Year Production..................................................................................................... Sales....................................................................................... Stocks, at end of year............................................................ Lead Concentrates (in metric cons) 1939 1938 36,728 29,836 33,30728,816 5,2941,873 Zinc Concentrates (in metric tons) 1939 1938 42,250 26,179 49,220 29,478 4,467 33,149 In 1939, capital expenditures amounted to 1,357,626 pesos, which is equivalent to $314,351.93 at the rate of exchange prevailing during the months of such expenditure. Cash receipts not required for capital and operating expenditures were used to pay the $203,046.02 Argentine bank loan and the $100,054.82 due St. Joseph Lead Company at the close of the previous year. As of December 31, 1939, the only outstanding indebtedness, except current indebtedness, of the Company was $1,119,699.80 due Aguilar Corporation of Delaware (parent company) on open account. It is anticipated that this indebtedness will be liquidated as rapidly as the current position permits. The Consolidated Balance Sheets of Aguilar Corporation and Subsidiary at December 31, 1939 and December 31, 1938, together with the Summaries of Consolidated Net Income and Deficit for the years ended on those dates are submitted, and will be found on the pages following the statements for St. Joseph Lead Company and Sub sidiaries. ' 1"/ ' ' ' Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Miscellaneous Operating Information The operations of the Sheep Ranch Mine* a small gold property in California, were not profitable; however, the ore developed in the lower level is somewhat more encouraging. The Block "P" Lead and Zinc Mine, located at Hughesville, Montana, remained closed throughout the year, and an early reopening is not contemplated. The Ricz Mine, located in Oklahoma, and the Jarrett Mine in Kansas, owned by Kansas Explorations, Inc., were placed in production during November. Unless the reduction in the zinc tariff is restored, or unless business conditions in the United States are materially improved, operations in this district will show only a negligible profit. Stockholders The number of stockholders of record on December 31st of each year since 1931 and a classification of their holdings are as follows: Tear 1931................. .......... 1932 ............... .......... 1933................. .......... 1934................. ........ 1935 ............... .......... 1936................. .......... 1937................. .......... 1938................. .......... 1939................. .......... Number 5,063 5,360 5,145 5,300 5,304 5,560 5,992 6,463 6,586 19 or Less 1,784 1.584 1,511 1,549 , 1,491 1,483 1,571 1,719 1,695 20-99 1,349 1,796 1,684 1,712 1,748 1,851 2,038 2,213 2,260 100-199 831 875 835 873 911 1,000 1,139 1,227 1,337 200-Over 1,099 1,105 1,115 1,166 1,154 1,226 1,244 1,304 1,294 General The Stockholders are again reminded that the net value of the capital assets set forth on the accompanying 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 necessarily 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. Although a number of properties were submitted m the Exploration Department, none were accepted. Clinton H. Crane, President. New York, February 21, 1940. 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, 1939 and 1938 Net Sales (including royalty earnings--1939, $4,196 34; 1938, $29,136.11). Cost of Sales (exclusive of depreciation and depletion) ............................... Year ended December 31, 1939 1938 $30,362,605.36 22,195,676.99 $19,646,827.59 16,179,892.24 Gross Profit from Operations before Depreciation and Depletion. $ 8,166,928.37 $ 3,466,935-35 Deduct; Selling, general and administrative expenses........................................ Capital stock and miscellaneous other taxes........................................ $648,048.47 70,083-03 $ 558,961.56 718,131-50 67,120.59 626,082.15 Net Profit from Operations before Depreciation and Depletion .. $ 7,448,796.87 $ 2,840,853.20 Other Income: Interest, net....................... ........................................................................ Dividends............................................................................... ..................... Profit on sale of real estate, etc., net..................................... ............... Miscellaneous............................................................................ ................. $ 8,846.89 6,601.00 116,903.54 5,823.80 138,175-23 $ 10,529.03 5,798.00 16,291.02 344.18 32,962,23 Gross Income before Depreciation and Depletion................................ Provision for depreciation.............................................................................. ......... $ 7.586,972.10 1,058,924.04 $ 2,873,815.43 1,059,034.49 Income before Depletion and Federal Income Taxes........................... $ 6,528,048.06 $ 1,814,780.94 Depletion and Federal Income Taxes: Provision for: Depletion............................................................................................. Federal income taxes......................................................................... $562,654-53 672,485.97 1,235,140.50 $309,601.68 173,922.80 483,524.48 Net Income for the Year........................................................ ............... -- $ 5,292,907-56 $ 1,331,256.46 Summaries of Consolidated Surplus For the Years Ended Decernber 31, 1939 and 1938 Surplus at Beginning of the Year (including surplus from revaluation of ore reserves--1939, $348,509*18; 1938, $357,749.49) Year ended December 31, 1939 1938 $ 8,512,924.73 $ 8,993,088.04 Additions: Net income for the year........................-............................. ................... ........................ Adjustment of over accrual of Federal income taxes, years 1934 to 1937 inclusive.... 5,292,907.56 -- 1,331,256.46 144,260.23 Total................................................................ ....................... .. .......... . Deductions: Cash dividends paid during the year.................................................................................... $13,805,832.29 3,911,360.00 $10,468,604.73 1,955,680.00 Surplus at End of the Year (including surplus from revaluation of ore reserves-- 1939, $313,327.67; 1938, $348,509.18)................................................................................... $ 9,894,472.29 $ 8,512,924.73 Notes: All subsidiaries of the parent compa-v with the exception of Aguilar Corporation and its foreign subsidiary, are included in the above summaries. The equity of o,. jo'eph lead m the net profits of Aguilar Corporation and its foreign subsidiary, not included in the above rro', for depletion of ore reserve values in excess of cost, was $562,360.75 for the year 1939 and $441,617.00 for the year 1938; after provision for depletion of ore reserve values in excess of cost, Sc. Joseph Lead Company's portion of the net losses of said subsidiaries was $231,157.92 for the year 1939 and $76,113 43 for the year I9i8. Gross profit (Wore depreciation and depletion) of the foreign subsidiary on its sales in 1939 to So josenh Lead Coi.ipanv of products which remained in the inventories of the latter at December 31, 1939 amounted to approximately ^>116,000.00. No intercompany profits or losses are included ip the ahoVe summaries. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH 1EAD COMPANY AND SUBSIDIARIES Consolidated Balance'Sheets, December 31 , 1939 and 1938 ASSETS Capital Assets: Ore reserves and mineral rights: Appraised value as of March 1, 1913................................y. Less reserve for depletion........................................................... December 31.1939 $13,500,000.00 13,500,000.00 December 31, 1938 $13,500,000.00 13,500,000.00 Additions subsequent to March 1,1913 (at cost)..................... ; Less reserve for depletion.................................. . -- .............. $21,236,287.18 15,345,801.88 Appreciation arising from revaluation subsequent to March 1,1913....................................................................................... Less reserve for depletion......................................................... . $ 4,315,000.00 4,001,672.33 Total ore reserves and mineral rights, net.................... Shafts and underground equipment (at cost)...................................... Lessrteserve for depreciation............................................................. $ 5,221,918.85 4,038,597.50 Land, buildings, plant and equipment (at cost)............... ............... $1$,117,817.36 Less reserve for depreciation............................................... ......... ... : 12,009,049.63 Railway construction--Cost being refunded.................................. $ 5,890,485.30 313,327.67 $ 6,203,812.97 1,183,321.35 6,108,767.73 39,160.00 $21,268,319.02 14,818,328.86 $ 4,315,000.00 3,966,490.82 $ 5,240,058.09 3,988,315-32 $19,084,912.36 12,179,422.75 $ 6,449,990.16 348,509.18 $ 6,798,499.34 1,251,742.77 6,905,489.61 65,165.00 Total capital assets, net.................................................. $13,535,062.05 $15,020,896.72 Investments and Advances: Aguilar Corporation (at cost--86% owned)...................................... Mine La Motte Corporation (at cost--50% owned)....... 1...... Kadco Corporation (at cost--50% owned)................................. Stocks of other mining companies (at cost--market quotation value--1939, $101,100.00; 1938, $147,000.00) ................... Sundry securities, loans, etc. (at cost, less reserve, $200,000.00) ... $ 1,515,000.00 780,484.63 100,000.00 298,000.00 296,137.29 $ 1,515,000.00 935,484.63 100,000.00 2,989,621.92 318,000.00 274,481.85 3,142,966.48 Current and Working Assets: Cash on hand and in banks................................................................... Notes and accounts receivable -- Trade (less reserve -- 1939, $20,185.12; 1938, $20,624.77)...................................................... Due from subsidiaries not consolidated................................................ Other notes and accounts receivable................................................... Inventories (valuation not in excess of market); Finished lead, zinc, etc. (at cost, exclusive of depreciation and depletion)......................................................................... Lead, zinc, etc., in process (at cost, exclusive of depreciation and depletion)......................................................................... Purchased lead and zinc (at lower of cost or market)............... Materials and supplies (at cost, less reserve for slow-moving items--1939, $109,286.75; 1938, $200,000.00)...................... $ 8,497,522.55 1,904,560.67 42,894.78 2,289,092.26 945,154.92 413,853-06 1,909,832.37 $ 3,162,035.16 1.506.521.43 100,054.82 66,095.70 16,002,910.61 4,463,887.11 1,078,117.27 59,491.18 1.807.283.44 12,243,486.11 Miscellaneous Assets: Federal, State and Municipal securities on deposit with Federal and State departments (at cost; market quotation value-- 1939, $138,843.13; 1938, $135,589-37)............................... .... Cash in closed banks...................................... ....................................... $ 120,836.23 23,263.08 $ 120,856.47 144,099.31 23,263.08 144,119.55 Deferred Charges: Mining and milling, prepaid insurance, taxes, etc............................... 112,935.40 157,079.33 Total............................................. $32,784,629.29 $30,708,548.19 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 under the heading "General." All subsidiaries of the parent company, with the exception of Aguilar Corporation and its foreign subsidiary, are included in the above consolidated balance sheets. The equity of St, Joseph Lead Company in the net profits of Aguilar Corporation and its foreign subsidiary, since acquisition, not included m the above consoiuiaicu balance sheets, before provision for depletion of ore reserve values in excess of cost, was $1,482,776.53 at December 31, 1939 and $920,415.78 at December 31, 1938; 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 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1939 and 1938 LIABILITIES Capital Stock: Authorized, 2,500,000 shares of $10.00 each............. ............................ December 31 , 1939 $25,000,000.00 December 31 , 1938 $25,000,000.00 Issued, 1939, 1,996,836.7 shares; 1938, 1,996,831-3 shares................. $19,968,367.00 Less in treasury, 1939, 41,156.7 shares; 1938, 41,151.3 shares___ 411,567.00 $19,968,313 00 411,513-00 Outstanding, 1,955,680 shares................................................................ Scrip outstanding..................................................................... $19,556,800.00 $19,556,800.00 41.50 $19,556,841.50 95-50 $19,556,895.50 Current Liabilities: Accounts payable (trade)..................... ................................................... Due to subsidiaries not consolidated...................................................... Wages payable............................................................................................ Accrued taxes (including income taxes).............. .................................. $ 1,181,342.81 62,966.37 98,844.82 844,193-37 $ 1,101,330.36 2,187,347-37 93,913.13 317,883.54 1,513,127.03 Deferred Credits: Unrealized profit from sale of houses, etc.......... ..................... ............ 22,357-53 67,627.58 Reserves: For injury claims and workmen's liability insurance......................... For employees' life insurance and retirements...................................... For contingencies..................... ........... ....................................... . $ 184,866.31 626,805.74 311,938.55 $ 163,001.84 647,921.83 1,123,610.60 247,049.68 1,057,973.35 Surplus: Earned............. ...................................... ................................................... > $ 9,581,144.62 Revaluation of ore reserves................................................................. 313,327.67 $ 8,164,415.55 9,894,472.29 348,509.18 8,512,924.73 Total.................................................................... ........... ................................. $32,784,629.29 $30,708,548.19 Notes Continued: $542,465-12 at December 31, 1939 and $311,307.20 at December 31, 1938. Gross profit (before depreciation and depletion) of the foreign subsidiary on its sales to Sc Joseph Lead Compaq in 1939 of products which remained in the inventory of the latter at De cember 31,1939 amounted to appLUAUu<ucL e>ilu,U\Xi.uO. Aguilar Corporation was in arrears in dividends on its $7.00 cumulative preferred stock (75% owned by St. Joseph Lead Company) at December 31, 1939 and 1938, in the amounts of $1,346,450.00 and $1,205,050.00 respectively. St Joseph Lead Company and the foreign subsidiary of Aquilar Corporation are contingently liable at December 31,1939 to refund to a customer the sales price* $280,000.00, of concentrates paid for by the customer and stored in Argentina, in the event any future Argentine law should prevent shipment thereof. No intercompany profits or losses as between Sr. Joseph Lead Company and subsidiaries consolidated are included in the above consolidated balance sneers. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. U. S. REFINED LEAD STOCKS, LEAD AND ZINC PRICES Comparative Annual Statistics Year Tons of U. S. Refined Lead Stacks At End of Year 1930........................................ 103,247 1931........................................ 151,653 1932................................................176,157 1933............................ ... 203,061 1934........................................ 235,457 1935......................................... 222,306 1936........................................ 171,856 1937......................................... 129,131 1938............................... . 115,902 1939 ............................................. 58,777 Average Lead and Zinc Prices in Cents Per Lb. Lead .O.B. M. Louis E. & M. J. Average Lead F,O.B, St. Louis St. Joe Average Zinc F.O.B. St. Louis E. &M.J. Average 5-384 5.456 4.556 4.049 4.007 3.640 3-042 3.055 2,876 3.735 3.652 4.029 3.724 3.700 4.158 3.915 3.878 4.328 4.560 4.534 4.901 5.B59 6.015 6.519 4.589 4.598 4.610 4.903 4.942 5.110 ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Production in Tons Year 1930............. , ........ 1931............. ......... 1932............. ........ 1933............. ........ 1934............. ........ 1935............. ........ 1936............. ........ 1937...................... 1938............. 1939............. ........ Ore Mined 5,999,813 4,465,794 3,233,172 2,652,944 3,269,864 3,382,403 3,804,451 5,536,952 5,255,960 Lead Concentrates 243,614 196,481 147,242 114,651 124,240 133,044 147,160 212,827 157,188 202,003 Pig Lead Equivalent 164,886 131,586 99,242 78,248 86,060 92,611 101,999 146,274 107,600 138,307 Zinc Concentrates 86,795 63,348 34,677 34,741 46,353 47,214 54,590 71,031 60,797 74,681 Slab Zinc Equivalent 42,554 31,498 17,017 16,898 22,389 22,857 26,400 34,519 29,606 38,188 Lead Sales and Stocks at End of Year in Tons Year 1930......... ................................... 1931......... ................................... 1932......... .................................... 1933......... ................................... 1934......... ................................... 1935......... ................................... 1936......... .................................... 1937......... 1938......... ................................... 1939......... Lead Sales St. Joe Production 137,502 105,262 81,467 72,462 84,964 87,077 126,846 97,865 . Purchased Lead Sold 82,221 69,085 53,473 47,988 39,566 41,714 47,776 38,930 50,782 39,347 Total Lead Sales 219,723 174,347 134,940 120,450 124,530 128,791 174,622 199,021 148,647 211,828 *Pi Lead Equivalent of Stocks 51,536 78,390 96,484 100,453 103,918 108,849 83,575 72,969 79,775 46,173 Includes Purchased Lead and estimated recoverable lead in concentrates together with other lead stocks in process of refining at smelters. 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, 1939 and 1938 Net Sales (Including in 1939 Sales of $267,574.60 to St. Joseph Lead Company) Cost of Sales (exclusive of depreciation and depletion) ............... .................... Year ended December 31, 1939 1938 $2,172,411.92 1,174,751.57 $1,681,156.74 805,414.76 Gross Profit from Operations before Depreciation and Depletion........ Deduct: Selling, general and administrative expenses................................... .... Taxes........................................................................................................... $ 66,298.07 12,849.22 $ 997,660.35 79,147.29 $ 57,202.39 10,566.69 $ 875,741.98 67,769.08 Net Profit from Operations before Depreciation and Depletion. . Other Income...................................................................................................... ....................... $ 918,513.06 17,236.83 9 807,972.90 15,849.12 Gross Income before Depreciation and Depletion...................................................... Interest on indebtedness.................................................................................................................. $ 935,749.89 4,768.72 $ 823,822.02 15,898.52 Income before Depreciation and Depletion..................................................................... Provision for depreciation.............................................................................................................. 9 930,981.17 175,793.81 Income before Depletion......................................................... .........................-- Provision for depletion computed on cost................................................. ................................ Net Income for the Year before Provision for Depletion Computed on Appreciation of Ore Reserves................................................................................. $ 755,187.36 ) 100,082.61 $ 655,104.75 Provision for depletion computed on appreciation of ore reserves.......................................... 915,337 33 $ 807,923.50 149,105.03 $ 658,818.47 73,447.08 $ 585,371.39 671,733.70 Net Loss for the Year..........................................................-- .................. .......................... $ 260,232.58 $ 86,362.31 Summaries of Consolidated Deficit For the Years Ended December 31, 1939 and 1938 Deficit at Beginning of Year Net loss for the year..................... Deficit at End of Year Year ended December 31, 1939 1938 $ 350,462.90 $ 264,100.59 260,232.58 86,362.31 $ 610,695-48 $ 350,462.90 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 1939 and 1938. No intercompany profits or losses as between Aguilar Corporation and its subsidiary are included in the above summaries. Reproduced with permission of the copyright owner Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Consolidated Balance Sheets, December 31, 1939 and 1938 ASSETS Capital Assets: Ore reserves and mineral rights: Cost, including exploration and development.............................. Less reserve for depletion.................................................. .......... December 31,1939 $ 1,507,858 82 272,080.47 $ 1,235,778.35 December 31,1938 $ 1,507,858.82 171,997.86 $ 1,335,860.96 Appreciation arising from revaluation............................ .............. $13,790,750.50 Less reserve for depletion......................................................... ... 2,489,569.99 $13,790,750.50 11,301,180.51 1,574,232.66 12,216,517.84 Total ore reserves and mineral rights, net........................ Land, buildings, plant and equipment (at cost).................................. Less reserve for depreciation....................................... ....... $12,536,958.86 $13,552,378.80 $ 2,126,349,00 569,180.26 $ 1,813,648.93 1,557,168.74 393,888.90 1,419,760.03 Total capital assets, net....................................... ----------- $14,094,127.60 $14,972,138.83 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 depreciation and depletion; less than market).............................. ............. Silver (at estimated value)............................................................... Materials and supplies (at cost)...................................................... $ 398,464.28 155,034.86 62,966.37 8,029.96 238,353.25 51,628.27 437,480.17 $ 135,860.72 136,044.28 3,999.56 1,351,957.16 144,182.26 24,120.16 445,317.78 Goodwill.............................................................................................................. 50,000.00 889,524.76 50,000.00 Deferred Charges: Prepaid insurance, etc....................... ............................................. ......... 14,059.53 4,397.04 Total $15,510,144.29 $15,916,060.63 Notes: Included in the above consolidated balance sheets are Aguilar Corporation (a domestic holding company) and its only subsidiary, Compania Minera 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, 1939 and 1938, 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. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORATION AND SUBSIDIARY Consolidated Balance Sheets, December 31, 1939 and 1938 LIABILITIES Capital Stock: Preferred stock--$7.00 cumulative: Authorized, 100,000 shares without par value (entitled upon redemption or liquidation to $115-00 per share); issued, 20,200 shares at a stated value of $98.00 per share............. Common stock: Authorized, 250,000 shares without par value; issued, 90,400 shares at a stated value of $1.00 per share.................... , December 31,1939 $ 1,979,600.00 90,400.00 $ 2,070,000.00 December 31,1938 $ 1,979,600.00 90,400.00 $ 2,070,000.00 Current Liabilities: Loan payable--Bank.............................................. .............................. -- Accounts payable--trade,................................................. . . . . .. $ 51,751.78 Wages payable.......................................................................................... 14,882.74 Accrued taxes........................................................ 4,204.38 Due St. Joseph Lead Company (Parent Company).............................. -- Other accounts payable............................................................................ 1,904.19 72,743.09 $ 203,046.02 70,459.35 13,502.00 2,482.70 100,054.82 1,837.55 391,382.44 Deferred Credit: Unrealized profit on foreign exchange, etc. Reserves: For expenses on concentrates held for future delivery For compensation and accidents................................... For maintenance and renewals...................................... 9,307.66 314.54 $ 151,946.80 17,365.77 8,725.95 $ 178,038.52 -- 10,691.37 3,384.68 14,076.05 Surplus: Capital surplus arising from revaluation of ore reserves (of which $13,387,254.16 has been transferred by the subsidiary to its capital stock account)............................................................ . $13,790,750 50 Earned surplus (deficit): Surplus based on depletion computed on cost.............................. Deduce depletion computed on appreciation of ore reserves.... $ 1,878,874.51 2,489,569.99 $13,790,750.50 $ 1,223,769.76 1,574,232.66 Earned surplus (`deficit). $ `610,695-48 $ `350,462.90 Remainder--Capital surplus ................ . v............................................... 13,180,055-02 13,440,287.60 Total . $15,510,144.29 $15,916,060.63 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 $7 00 preferred stock have not been paid since its issuance, and at December 31, 1939 and 1938 amounted to $1,346,450.00 and $1,205,050.00, respectively. The foreign subsidiary and St Joseph Lead Company are contingently liable at December 31, 1939, to refund to a customer the sales price, $280,000*00, oi concentrates paid fur ay the customer and stored in Argentina, in the event any future Argentine law should prevent shipment thereof. No intercompany profits or losses as between Aguilar Corporation and its .subsidiary are included in the above consolidated balance sheets. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 22 EAST 40TH STREET NEW YORK St. Joseph Lead' Company: ACCOUNTANTS1 CERTIFICATE We have examined the consolidated balance sheets of St. Joseph Lead Company (incorporated in New York) and its wholly-owned subsidiary companies as of December 31, 1939 and 1938, and the related summaries of consolidated net income and surplus for the years ended those dates, 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, 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 account ants, and the data with respect to such foreign subsidiary included in the accompanying consolidated balance sheets of Aguilar Corporation (incorporated in Delaware) and its foreign subsidiary as of December 31, 1939 and 1938, and related summaries of consolidated net income and deficit for the years ended those dates, are as shown by such reports. In our opinion, based upon our examination of the accounts of Sr. Joseph Lead Company and its subsidiary companies except Compania Minera Aguilar, S. A. and upon the report of other accountants on their examination of the accounts of the last-mentioned company, and subject to the realizable value of investments and advances, the accompanying balance sheets and related summaries of consolidated net income and surplus, with the foot notes thereon, fairly present the financial condition at December 31, 1939 and 1938, 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 years ended those dates, in conformity with generally accepted accounting principles consistently followed by the companies. HASKINS & SELLS New York, February 21, 1940. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAP COMPANY ' : PRESIDENTS ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR 1939 ~4 O o o CO CO CO id a >- :t-J 02 CObj CC ^U> m ca co j a oj ; a w as K *- O * kJ >D H 03 1C K-J 03 03 <COO<{ P3 >X< CO W 2Sf Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.