Document yjoZ5x3JbKe4JaZE1vNwLLd3

Saint Joseph Lead Company Annual Report -- 1938 America's Corporate Foundation; 1938; ProQuest Historical Annual Reports 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 BOARD OF TRUSTEES Clinton H. Crane Chairman Frederic E. Camp, Chestnut Hill, Pa. Daniel K. Catlin, St. Louis, Missouri C. Merrill Chapin, Jr. Vice-President 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. Hendon Chubb, of Chubb & Son Irwin H. Cornell, Vice-President Firmin V. Desloge, St. Louis, Missouri J. Howard Holmes, St. Louis, Missouri Edward V. Peters, Vice-President W.Fred Shibley, New York, N. Y. EXECUTIVE OFFICERS Clinton H. Crane, President Irwin H. Cornell, Vicc-Pres., and Sales Manager Andrew Fletcher, Vice-Pres., and Treasurer C. Merrill Chapin, Jr., Vice-President Edward V. Peters, Vice-President H. B. McGown, Secretary George I. Brigden, Comptroller 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 LEAD COMPANY 250 Park Avenue, New York City PRESIDENT'S ANNUAL REPORT TO STOCKHOLDERS The hope expressed in ray report to stockholders for the year 1937, that business in 1938 would approximate the 1935 level, was realized, but only because the last six months of the year were very much better than the first six months. The average lead shipments into industry for the year 1935 were 36,000 tons per month, as reported by the American Bureau of Metal Statistics, and for 1938 were 35,000 tons per month. During the first six months of 1938, these shipments averaged 30,000 tons, although they averaged 40,000 for the last six months. Reduced shipments and lower prices account for the falling off in earnings for the year 1938, as compared with 1937. The outlook for 1939 is more encouraging, as consumers' stocks are low and current shipments are better than a year ago. Consolidated Earnings The Consolidated Income of $1,814,780.94 for the year ended December 31, 1938 before depletion and Federal income taxes shows a decrease of $7,165,528.81 under that of the previous year. The Consolidated Net Income of $1,331,256.46 after all deductions compares with $7,127,945.15 for 1937. The Comparative Consolidated Earnings for the ten years ended December 31, 1938 are shown below: Income after Year Interest but Before Other Deductions _ ------------- Provision for-------------- Depreciation Income Taxes Net Income before Depletion, Etc. Provision** for Depiction, Etc. 1929.................... .. 1930.......................... 1931.................. ... 1932................. ........ 1933.......................... 1934.......................... 1935.......................... 1936.................... .. 1937.......................... 1938.................. $11,954,769.82 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 30,035,885.12 $1,268,935.08 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 $883,938 98 390,314.61 78;862.23 35,502.59 307,944.03 3,329,491 03 173,922 80 $9,801,895 76 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 $2,264,740.04 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 Loss. !'v : i !; 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 Quarterly dividends of twenty-five cents per share were paid on March 21, June 20, September 20, and Decem ber 20, 1938. These dividend distributions aggregating $1,955,680.00 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 1929 to 1938, inclusive: Year St Joseph Lean Company 1929.. .. 1930.. .. 1931.. .. 1932.. .. 1933.- $5,851,374-75 5,851,386.00 2,438,079.75 292,569.75 Pet Share $3.00 3.00 1.25 .15 Dividends Paid to Stockholders Minority Interest in Subsidiaries $ 70,305.00 128,865.00 14,618.75 ; Year St. Joscnh Lead Company 1934.. . 1935-. . 1936 . 1937.. . 1938... . $ 586,701.30 782,269.30 1,955,676.90 4,889,198.50 1,955,680.00 Per Share $0.30 .40 1 00 2.50 1.00 Minority Interest in Subsidiaries Financial The Consolidated Balance Sheets as of December 31, 1938 and December 31, 1937 of Sc. Joseph Lead Com pany and Subsidiaries, and the related Summaries of Consolidated Net Income and Surplus tor 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 above 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. , Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Financial On December 31, 1938, the Company did not own any Federal, State or Municipal Securities with the exception of $122,000 par value which were on deposit with the New York, Pennsylvania and Missouri Industrial Compensation Commissions, and the United States Department of the Interior. The scope of the audit of our books by Messrs. Haskins & Sells was extended this year, with respect to the verification of inventories, to include physical tests of the quantities shown by the records as being on hand at December 31, 1938. During 1938 capital expenditures amounted to $442,858.13. Due to the improved financial standing of the Argentine subsidiary of Aguilar Corporation, the St. Joseph Lead Company has been relieved as guarantor on the bank loans of this Company. Settlement of the Company's Federal income tax liability through the year 1937 has been effected with the Bureau of Internal Revenue. Southeast Missouri Divisions Because of the decreased demand for lead, the five days per week operating schedule in Southeast Missouri was reduced to three days on January 10, 1938 and continued on this basis until September 21, 1938 when an increase to four days was made. The property of Mine La Motte Corporation (50% owned) also located in Missouri was operated on the same time schedule. The development work during 1938 proved entirely satisfactory. Balmat and Edwards Divisions The Company's Balmat and Edwards Zinc properties, located in Northern New York, were operated on a basis of six days per week during the first quarter of the year, five days per week during the second and third quarters and resumed the six day schedule during the fourth quarter. Development work at these mines also showed satisfactory results. Josephtown Division The Josephtown, Pennsylvania, zinc smelter and sulphuric arid plant operated throughout the year on an average of approximately five furnaces. All but a small fraction of the zinc concentrate production from the Balmat and Edwards Mines is now being smelted at this plant. 1 " V i. I California Division The Sheep Ranch Mine, a small gold property in California, was placed in production in January 1938 and so continued throughout the remainder of the year. Under date of November 22, 1938, a modification of the original lease and option was effected and the property was purchased for the sum of $89,291.15. This figure represents the difference between the royalties paid and the purchase price of $150,000.00. Hughesville Division The Block P Lead and Zinc Mine, located at Hughesville, Montana, remained closed throughout the year because of the prevailing low metal prices. Tri-State Division The Ritz Mine, located in Oklahoma, was operated from January 1 until May 21 when it was closed because of low zinc prices. The Robinson Mine, located in Kansas, operated until December 15 when it was closed due to the exhaustion of its ore reserves. The Jarrett Mine, also located in Kansas, was not operated during the year. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Argentine Property The Aguilar Mine, located in the Province ofjujuy, Argentina, was operated throughout the year at the full capacity of its present equipment. Additional equipment necessary to increase the output from the present 500 metric tons per day to 800-1,000 metric tons per day has been purchased and is now being installed with the expectation that the property will be operated on the increased basis by June 1, 1939. Due to the low foreign zinc price, only 4,467 metric tons of zinc concentrates were sold during the year, with the result that 33,149 metric tons were in stock on December 31, 1938. The entire lead concentrate production of 28,816 metric tons was sold in the European and Argentine markets. That portion of the cash receipts which was not required for operating and capital expenditures was used to reduce outstanding loans. The Consolidated Balance Sheets as of December 31, 1938 and December 31, 1937 of Aguilar Corporation and Subsidiary and the related Summaries of Consolidated Net Income and Surplus for the years ended on those dates are submitted with this report for the first time and will be found on the pages following the statements for St, Joseph Lead Company and Subsidiaries. Stockholders The number of stockholders of record on December 31st of each year since 1931 and a classification of their holdings are as follows: Year 1931.................. .......... 1932.................. ............ 1933.................. ............ 1934.................. .... 1935.................. ............ 1936.................. ............ 1937.................. ............ 1938.................. .......... Number 5,063 5,360 5,145 5,300 5,304 5,560 5,992 6,463 19 or Less 20-99 1,784 ' 1,349 1,584 1,796 1,511 1,684 1,549 1,712 1,491 1,748 1,483 1,851 1,571 . 2,038 1,719 2,213 100-199 831 875 835 873 911 1,000 1,139 1,227 200-Over 1,099 1,105 1,115 1,166 1,154 1,226 1,244 1,304 General Although a number of properties were submitted to the Exploration Department, none were accepted. 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. Clinton H. Crane, President. New York, February 21, 1939. 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, 1938 and 1937 Year ended December 31, 1938 Net Sales (including royalty earnings--1938, $29,136.11; 1937, $86,908.30).................. Cost of Sales (exclusive of depreciation and depletion)................................................ $19,646,827.59 16,179,892.24 1937 $32,776,804.95 22,118,672.09 Gross Profit from Operations before Depredation and Depletion. $3,466,935.35 $10,658,132.86 Deduct: Selling, general and administrative expenses.............. ................. . Capital stock and miscellaneous other taxes....... ............................. $558,961.56 67,120.59 626,082.15 $595,906.92 78,830.28 674,737.20 Net Profit from Operations before Depredation and Depletion.... $2,840,853-20 $ 9,983,395.66 Other Income: Interest, net................................................... ......................................... Dividends................................................................................................. Profit on sale of investments, net........................................................ Miscellaneous............................................................. ............................. $ 10,529.03 5,798.00 16,291.02 344.18 32,962,23 $ 33,026.98 19,107.00 41,645.28 1,154-99 94,934.25 Gross Income before Depreciation and Depletion........... .................. Interest on Notes..................................................................................................... $2,873,815.43 $10,078,329.91 42,444.79 Income before Depreciation, Depletion and Other Deductions.... Provision for Depredation--..................................... ......................................... $2,873,815.43 1,059,034.49 $10,035,885-12 1,055,575-37 Income before Depletion and Other Deductions............ ....................... $1,814,780.94 $ 8,980,309.75 Depletion and other Deductions: Provision for: , Depletion............................................................... ............. . Obsolescence of the Doc Run Mill....... ....................................... Federal income taxes (including surtax on undistributed profits --1937, $32,856.61)......................................................;--------- Abandoned leases writtcn-ofF...................................................... ......... $309,601.68 173,922.80 483,524.48 $426,041.38 75,000.00 1,329,491.03 21,832.19 1,852,364.60 Net Income for the Year............................................................. .............. .... ...................... $ 1,331,256.46 $ 7,127,945-15 Notes: All subsidiaries of the parent company, with the exception of Aguilar Corporation and its foreign subsidiary, are included in the above summaries of consolidated net income. The equity of St. Joseph Lead Company in the net profits or losses of Aguilar Corporation and its foreign subsidiary, not included in the auovc summaries oi consolidated net income, stated, respectively, before and after provision for depletion of ore reserve values in excess of cost, was $441,617.00 profit and $76,113.43 loss for the year 1938, and $626,495.69 and $199,646.26 profit for the year 1937. No inter- company profits or losses are included in the above summaries of consolidated net income. Summaries of Consolidated Surplus For the Years Ended December 31, 1938 and 1937 Year ended December 31, 1938 Surplus at Beginning of the Year (including surplus from revaluation of ore reserves--1938, $357,749.49; 1937, $373,853.44).............................. $ 8,993,088.04 1937 $ 6,814,341.39 Additions: Net income for the year......................................... ......................-- ................................. Adjustment of over accrual of Federal income taxes, years 1934 to 1937 inclusive___ 1,331,256 46 144,260.23 7,127,945-15 ------ Total.................................................................................. Deductions: Redemption premium on St. Joseph Lead Company Ten-year 4% debenture notes due June 1, 1945 called lor payment during 1937................................................................................... ....... Cash dividends paid during the year.......................... ........... . --- $ 1,955,680.00 $10,468,604.73 $13,942,286.54 $ 60,000.00 1,955,680.00 4,889,198.50 4,949,198.50 Surplus at End of the Year (including surplus from revaluation of ore reserves--1938, $348,509.18; 1937, $357,749.49).............................. ......................... $ 8,512,924.73 $ 8,993,088.04 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPA! Consolidated Balance Sheets, ASSETS Capital Assets: Ore reserves and mineral rights: Appraised value as of March 1,1913-................ ,.................... Less reserve for depletion.................................. ....................... December 31,1938 $13,500,000.00 13,500,000.00 ------ December 31,1937 $13,500,000.00 13,500,000.00 -- Additions subsequent to March 1,1913 (sit cost)...................... $21,268,319.02 $21,177,245-30 Less reserve for depletion......... ...,........... .............................. 14,818,328.86 $ 6,449,990.16 14,517,967.49 $ 6,659,277.81 Appreciation arising from revaluation subsequent to March 1,1913................. ............................................................... .. Less reserve for depletion............................................................ $ 4,315,000.00 3,966,490.82 $ 4,315,000.00 348,509.18 3,957,250.51 357,749.49 Total ore reserves and mineral rights, net..................., Shafts and underground equipment (at cost)...................................... Less reserve for depreciation.............................................................. ................. .. $ 5,240,058.09 3,988,315.32 $ 6,798,499-34 1,251,742.77 $ 5,215,020.69 3,893,127.37 $ 7,017,027.30 1,321,893-32 Land, buildings, plant and equipment (at cost)................................ $19,084,912.36 Less reserve lor depreciation.............................................................. 12,179,422.75 Railway construction--Cost being refunded........................................ 6,905,489.61 65,165.00 $18,859,162.95 11,284,338.81 7,574,824.14 89,305.00 Total capital assets, net............................... ...... ........... . Investments and Advances: Aguilar Corporation (at cost--86% owned)............. .................... ... Mine La Motte Corporation (at cost--50% owned)......................... Kadco Corporation (at cost--50% owned)......................................... Stocks of other mining companies (at cost--market quotation value--1938, $147,000.00; 1937, $147,200.00)............................ Sundry securities and loans (at cost, less reserve, $200,000.00).... $ 1,515,000.00 935,484.63 100,000.00 318,000.00 274,481.85 $15,020,896.72 3,142,966.48 $ 1,627,500.00 935,484.63 100,000.00 318,002.00 246,489.92 $16,003,049.76 3,227,476.55 Current and Working Assets: Cash, on hand and in banks....................... ...................... ..................... Federal and State securities, other than on deposit with Federal and State departments (at cost: market quotation value--1937, $995,985.00)..................................................................................... Notes and accounts receivable -- Trade (less reserve -- 1938, $20,624.77; 1937, $20,785.22)........................................................ 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, $200,030.00)................................................................. f 3,162,035-16 ------1,506,521.43 100,054-82 66,095.70 4,463,387.11 1,078,117.27 59,491.18 1,807,283.44 $ 3,862,460.32 991,344.67 807,389.26 37.68 40,920.16 12,243,486.11 4,076,225.15 729,390.56 334,962.86 2,050,098.09 12,892,828.75 Miscellaneous Assets: Federal, State and Municipal securities on deposit with Federal and State departments (at cost; market quotation value--1938, $135,589.37; 1937, $130,628.76).................................................... $ 120,856.47 Cash in dosed banks.................. ......................................... ................ 23,263.08 $ 120,913.93 144,119-55 24,913.08 145,827.01 Deferred Charges: Prepaid insurance, taxes, etc.................................................................... Total................................................................................... 157-079.33 $30,708,548.19 147,002.23 $32,416,184.30 i < 0\ ! Notes: , The net value of the capital assets shown in the above consqlidj comments included in the text of this report. ., All subsidiaries of the parent company, with the exception of Ag the above consolidated balance sheets. The equity of St. Joseph ifad and its foreign subsidiary, since acquisition, not included ,q the ifovc after provision for depletion of ore reserve values in excess of cost, v 1938 and $478,798.78 profit and $234,593.77 loss at December 11,193' $7.00 cumulative preferred stock (75% owned by St. Joseph Co $1,205,050.00 and $1,063,650.00 respectively. _ No inter-company profits or losses arc included in the above cOnsc j Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. jlNY AND SUBSIDIARIES ! (December 31, 1938 arid 1937 - ' ,, / ! t LIABILITIES Capital Stock: Authorized, 2,500,000 shares of $10.00 each....................... ............. . December 31, 1938 $25,000,000.00 December 31,1937 $25,000,000.00 Issued, 1938,1,996,831.3 shares; 1937,1,996,807 shares................ . $19,968,313 00 Less in treasury, 1938, 41,151.3 shares; 1937, 41,127 shares.... . 411,513.00 $19,968,070.00 411,270.00 Outstanding, 1,955,680 shares................. .................................... .... . $19,556,800 00 $19,556,800.00 Scrip outstanding................................................................................ . 95-50 $19,556,895.50 338.50 Current Liabilities: i Accounts payable (trade)........................ i Wages payable........................................... Accrued taxes (including income taxes) $ 1,101,330.36 93,913-13 317,883.54 1,513,127.03 $ 1,130,396.97 80,015.19 1,586,554.59 2,796,966.75 Deferred Credits: Unrealized profit from sale of houses, etc. 67,627.58 67,168.14 Reserves: For injury claims and workmen's liability insurance For employees' life insurance and retirements........... For contingencies.......................................................... $ 163,001.84 647,921.83 247,049.68 $ 164,580.76 612,313.07 1,057,973-35 224,929.04 1,001,822.87 Surplus: Earned............................................................................. ..................... .. Revaluation of ore reserves........................................... ................... .. $ 8,164,415.55 348,509.18 $ 8,635,338.55 8,512,924.73 357,749.49 8,993,088.04 r Total 'dated balance sheets should be considered in the light of the Aguilar Corporation and its foreign subsidiary, arc included in *3 Company in the net profits or losses of Aguilar Corporation vc consolidated balance sheets, seated, respectively, before and . was $920,415 78 profit and $311,307.20 loss at December 31, 937, Aguilar Corporation was in arrears in dividends on its -ompany) at December 31, 1938 and 1937, in the amounts of isoiidated balance sheets. $30,708,548.19 $32,416,184.30 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. U. S. REFINED LEAD STOCKS, LEAD AND ZINC PRICES Comparative Annual Statistics Year Tons of U. S. Refined Lead Stocks At End of Year 1928................... ................ 33,618 1929................... ................ 54,900 1930................... ................ 103,247 1931................... ................ 151,653 1932................... ................ 176,157 1933................... 1934................... 1935................... ................ 1936................... ................ 222,306 171,856 1937................... ................ 129,131 1938................... Average Lead and Zinc Prices in Cents Per Lb. , Lead F.O.B.St.Louis E.&M.J. Average Lead F.O.B.St.Louis St. Joe Average Zinc F.O.B.St.Louis E.&M.J. Average 6.131 6.133 6.027 6.660 6.646 6.512 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 5.859 6.015 6.519 4*589 4.598 4.610 ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Production in Tons Year 1928........................ 1929................ ........ 1930................ ........ 1931................ 1932................ ........ 1933................ ____ 1934................ 1935................ 1936................ 1937 ...................... 1938............... Ore Mined 4,833,194 5,750,412 5,999,813 ' 3,233,172 2,652,944 5,536,952 Lead Concentrates 204,181 245,958, 243,614 196,481 147,242 114,651 124,240 133,044 147,160 212,827 157,188 Pig Lead Equivalent 137,673 165,114 164,886 131,586 99,242 78,248 86,060 92,611 101,999 146,274 107,600 Zinc Concentrates 45,928 60,475 86,795 63,348 34,677 34,741 46,353 47,214 54,590 71,031 60,797 Slab Zinc Equivalent 23,257 29,848 42,554 31,498 17,017 16,898 22,389 22,857 26,400 34,519 29,606 Lead Sales and Stocks at End of Year in Tons Year 1928................................................. 1929................................................. 1930................................................ 1931.............................................. 1932................................................. 1933.......................... ...................... 1934........................... .................... 1935........................... 1936........................... .................... 1937........................... .................... 1938........................... Lead Sales St. Joe Production 136,640 160,490 137,502 105,262 81,467 72,462 84,964 126,846 160,091 Purchased Lead Sold 52,342 61,399 82,221 69,085 53,473 , 47,988 39,566 41,714 47,776 38,930 50,782 Total Lead Sales 188,982 221,889 219,723 174,347 134,940 120,450 124,530 128,791 174,622 199,021 148,647 Pig Lead Equivalent of Stocks 16,397 22,163 51,536 78,390 96,484 100,453 103,918 108,849 83,575 72,969 79,775 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, 1938 and 1937 Net Sales............................................................................................................................... Cost of Sales (exclusive of depreciation and depletion)............................... Year ended December 31, 1938 1937 1 ,681,156.74 $1.,987,666.40 805,414.76 858,912.54 Gross Profit from Operations before Depreciation and Depletion.. Deduct: Selling, general and administrative expenses........................................ Taxes.............................................................................................................. $ 57,202.39 10,566.69 Net Profit from Operations before Depreciation and Depletion. .................... Other Income............................................................................ ....................... $ 875,741.98 67,769.08 $ 807,972.90 15,849.12 $ 74,808.61 12,042.10 $1:, 128,753.86 86,850.71 $1:,041,903.15 10,862.67 Gross Income before Depreciation and Depletion................... ...................... Interest on indebtedness..................................................................................................................... $ 823,822.02 15,898.52 ?1 ,052,765.82 54,471.61 Income before Depreciation and Depletion.................., J V....... .. Provision for depreciation............................................................................... ................................ $ 807,923.50 149,105.03 $ 998,294.21 130,214.52 Income before Depletion........ ................................................................................................ Provision for depiction computed on cost............................................... ....................................... $ 658,818.47 73,447-08 $ 868,079.69 63,407.60 Net Income for the Year before Provision for Depletion Computed on Appreciation of Ore Reserves............................................................... Provision for depletion computed on appreciation of ore reserves........................................... $ 585,371.39 671,733.70 $ 804,672.09 579,914.66 Net Income (*loss) for the Year...................................................................................... $ *86,362.31 $ 224,757.43 Notes: Included in the above summaries of consolidated net income arc Aguilar Corporation and its only subsidiary, Compania Mincra Aguilar, S. A. (a foreign corporation). No provision has been made in the above summaries of consolidated net income 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 1938 and 1937. No inter-company profits or losses arc included in the above summaries. Summaries of Consolidated Earned Surplus (Deficit) For the Years Ended December 31, 1938 and 1937 Deficit at Beginning of Year Net income (*loss) for the year.. Deficit at End of Year, Year ended December 31, 1938 $ 264,100.59 1937 $ 488,858.02 * 86,362-31 224,757,43 $ 350,462.90 $ 264,100.59 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. AGUILAR CORPORA: Consolidated Balance SLe ASSETS Capital Assets: Ore reserves and mineral rights: Cost, including exploration and development....................... Less reserve for depletion.................................................. .. December 31,1938 $ 1,507,858.82 171,997.86 $ 1,335,860.96 December 31,1937 $ 1,507,858 82 98,550.78 $ 1,409,308.04 Appreciation arising from revaluation........................................ $13,790,750.50 Less reserve for depletion....................... .................................. 1,574,232.66 $13,790,750-50 12,216,517.84 902,498.96 12,888,251.54 Total ore reserves and mineral rights, net....... ................. Land, buildings, plant and equipment (at cost)........................... Less reserve for depreciation ........................................................... $ 1,813,648.93 393,888.90 $13,552,378.80 1,419,760.03 $ 1,601,665-25 244,777-94 $14,297,559.58 1,356,887.31 Total capital assers, net............................................... ....... $14,972,138 83 $15,654,446.89 Current Assets: Cash on hand and in banks.................................................................. Accounts receivable--trade.......................................... ....................... Other accounts receivable.................................................................... Inventories: Lead and zinc concentrates (at cost, exclusive of depreciation and depletion; less than market)....................................... Silver Cat estimated value)........................................................... Materials and supplies (at cost)................................................... $ 135,860.72 136,044.28 3,999.56 144,182.26 24,120.16 445,317.78 $ 107,697.01 260,456.14 3,476.15 889,524.76 62,152.68 31,812.73 307,070.87 772,665.58 Goodwill......................................................................................................... 50,000.00 50,000.00 Deferred Charges: Deferred loss on foreign exchange..................................................... . Prepaid insurance, etc............................................................................ $ 4,397,04 $ 69,217.03 4,397.04 374.87 69,591.90 w Total..................................................... .................. ........... ....................... $15,916,060.63 $16,546,704.37 Notes: _, Included in the above consolidated balance sheetsjflpila: only subsidiary, Campania Miners Aguilar, S. A. (iawjwttal The Aguilar Corporation is contingently liable as agoarfl' 1 to $203,046.02 on December 31, 1938. | Current assets, current liabilities, deferred charges m #es the closing quoted rate of exchange at December 31,1933*47, t capital stock and capital surplus accounts reflect the approxtar' transactions of which the balances in these accounts consist. J The 'above balance sheets do not include any liability f agreed upon with the Argentine tax authorities. Cumulative dividends on the $7.00 preferred stock hives amounted to $1,205,050.00 and $1,063,650.00, respectively No inter-company profits or losses arc included in the a " Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. llftr AND SUBSIDIARY Acember 31, 1938 and. 1937 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 31,1938 $ 1,979,600.00 90,400.00 $ 2,070,000.00 December 31,1937 $ 1,979,600.00 90,400.00 $ 2,070,000.00 Long-Term Debt: Notes payable to stockholders, due June 17, 1940. 150,000.00 Current Liabilities: Loan payable--Bank............................................................................. Accounts payable--trade..................................................................... Wages payable......................................................................................... Accrued taxes.......................................................................................... Due St. Joseph Lead Company (Parent Company)............................ Other accounts payable................................................ $ 203,046.02 70,459.35 13,502.00 2,482.70 100,054.82 1,837-55 Deferred Credit; Unrealized profit on foreign exchange 391,382.44 314.54 703,940.40 58,804.80 13,335-85 2,949.16 779,030.21 Reserves: For compensation and accidents........................................................... $ 10,691.37 For fire and other insurance.......... ................ ..................................... ........ For maintenance and renewals......................... -------------- i .... .i......... 3,384.68 14,076.05 16,884.43 1,178.90 2,960.92 21,024.25 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 $13,790,750.50 Earned surplus (deficit): Surplus based on depiction computed on cost............................. Deduct depiction computed on appreciation of ore reserves... $ 1,223,769.76 1,574,232.66 Earned surplus ("'deficit).................................................... $ *350,462.90 $ 638,398.37 902,498.96 $ *264,100.59 Remainder--Capital surplus...................................................................... 13,440,287.60 13,526,649.91 Total............................................. .............................................................. $15,916,060.63 $16,546,704.37 jilar Corporation (a domestic holding company) and its sted and conducting business in Argentina). on bank loans of us subsidiary, which guaranty amounted es are shown in the above consolidated balance sheets at 7, respectively. Capital assets and related reserves and lar equivalents at the rates picvailing at the dates of the mine income taxes as the basis of assessment has not been i paid since its issuance, and at December 31,1938 and 1937, solidated 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: ACCOUNTANTS' CERTIFICATE We have made an examination of the consolidated balance sheets of St. Joseph Lead Company (incorporated in New York) and its wholly-owned subsidiary companies as of December 31, 1938 and 1937, and of the related summaries of consolidated net income and surplus for the years 1938 and 1937. In connection therewith, we made a review of the accounting methods and examined or tested accounting records of the companies and other supporting evidence in a manner and to the extent which we considered appropriate in view of the systems of internal accounting control. The inventories are stated at the values shown by detailed inventory records which are based upon periodic physical inventories. We examined such records of St. Joseph Lead Company and its wholly-owned subsidiary companies, and, as of December 31, 1938, made physical tests of the inventory quantities to the extent which we considered appropriate, without complete verification. The accounts of Aguilar Corporation, a majority-owned holding company (not consolidated) which is treated by you as an investment, were examined by us as in the case of the wholly-owned subsidiary companies^ 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 sheets of Aguilar Corporation (incorporated in Delaware) and its foreign subsidiary as of December 31, 1938 and 1937, and related summaries of consolidated net income and surplus for the years 1938 and 1937, are as shown by such reports. 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 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, in accordance with accepted principles of accounting consistently followed by the companies, the financial condition at December 31, 1938 and 1937, 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 datesi ' HASKINS & SELLS New York, February 21, 1939. 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 1938 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.