Document ymxbMqO2v8d8Qbbkx8Ee8qpmE

0000-NLI-000018408 f j THE COVER The original portrait of the "DUTCH BOY" was painted in 1907 by Lawrence Carmichael Earle, a distin guished portrait painter. Since his first appearance in National Lead Company advertising in that year, the "DUTCH b o y " has become a nationally-known trade mark and a symbol for high-quality products. I \ 0000-NLI-000018409 National Lead Company INCORPORATED DECEMBER 8, 1891 60th ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1951 jf fc: | CONTENTS Pages Officers and Directors.......................................................... 2 [ President's Message............................................................... 3-21 Financial Highlights.............................................................. 4 Financial Statements andNotes................................................22-27 Auditors' Report.................................................................... 27 Ten-Year Review of Operations.............................................. 28-29 Branches and Divisions......................................................... 32 j Affiliated Corporations.......................................................... 33 ! Products.........................................................................................34-35 0000-NLI-000018410 BOARD OF DIRECTORS LEONARD T. BEALE WILLIAM V. BURLEY ALFRED H. DREWES JOSEPH A. MARTINO DAVID A. MERSON GEORGE L. RATCLIFFE JOSEPH H. REID WINTHROP SARGENT, . JAMES A. TAYLOR HERMAN T. WARSHOW WILLIAM J. WELCH HARRY C. WILDNER EXECUTIVE COMMITTEE JOSEPH A. MARTINO, Chairman WILLIAM V. BURLEY JOSEPH H. REID ALFRED H. DREWES HERMAN T. WARSHOW DAVID A. MERSON HARRY C. WILDNER EXECUTIVE OFFICERS President JOSEPH A. MARTINO Vice-Presidents WILLIAM V. BURLEY GEORGE L. RATCLIFFE ALFRED H. DREWES JOSEPH H. REID DAVID A. MERSON HERMAN T. WARSHOW HARRY C. WILDNER Secretary JOHN B. HENRICH Assistant Secretary THOMAS J. MURPHY Treasurer JOSEPH J. MORSMAN, JR. Assistant Treasurer MICHAEL USS Comptroller GEORGE A. DEWEY Assistant Comptrollers THOMAS J. OWENS ARCHER D. SARGENT Executive Offices, 111 Broadway, New York 6, N. Y. General Counsel, ALEXANDER & GREEN, 120 Broadway, New York, N. Y. Stock Transfer Agent, THE CHASE NATIONAL BANK, 11 Broad St., New York, N Registrar of Stock, BANKERS TRUST CO., 14 Wall St., New York, N. Y. 0000-NLI-000018411 THE PRESIDENT'S MESSAGE March 17, 1952 to the Stockholders and Employees of National Lead Company: h e s t o r y o f the operations of your Company during 1951 Thas at least two broad aspects which merit particular atten tion in the writing of this report. So far as immediate effect is concerned, the most significant of these, of course, is the return of many of the problems which were so recently experienced during the years of World War II. The other, which is of greater importance from the long term point of view, is the active entry of the Company during the year into a number of fields which will serve to diversify further the scope of its activities and ulti mately lead to expansion of its business and earnings. EARNINGS Net income for 1951 amounted to 22,993,717, against $26,490,644 in 1950 and $14,749,011 in 1949. Expressed in relation to the number of shares of Common stock outstanding at the year end after the three-for-one split effected late in the year, earnings for 1951 were equal to $2.05 per Common share. The reduction in net income is a direct reflection of the increased federal income taxes levied in 1951. Earnings for the year, before provision for federal income taxes, amounted to $59,607,540, an increase of $5,049,741 over 1950. The per centage relationship between earnings before taxes and dollar sales remained virtually unchanged from 1950 to 1951. Operating results of foreign subsidiaries and partially-owned domestic companies for the year 1951 compared very favorably 0000-NLI-000018413 with those for the preceding year. Dividends received from these sources are included in the earnings of the Company reported above. It is estimated that the equity of the Company in the undistributed 1951 earnings of these affiliates, before consider ing any foreign exchange fluctuations, will approximate 9$ per Common share. DIVIDENDS Dividends totalling $16,539,562 were paid during the year 1951. Preferred stockholders received regular quarterly pay ments aggregating $2,157,806. The balance of $14,381,756 paid on the Common stock was equivalent to $1.41^4 per share on the 10,158,375 shares outstanding after the three-for-one stock split. Adjusted to reflect the stock split, 1950 payments were $1.3314 per share. In declaring the December dividend payment on the Com mon stock, your directors designated 25 <3 per share as the regular quarterly rate. Net income in the amount of $6,454,155 remaining after the payment of dividends was added to Earned Surplus account. SALES Sales for the year 1951 totalled $389,941,313, an increase of 14 per cent over 1950. The dollar volume for 1951 is a new high for the Company, comparing with previous peaks of $342,727,911 and $320,457,301 reported in 1950 and 1948. FOR THE < HEM1CAL INDUSTRY-- acid concentrating plants and handling equipment, lead-lined pipe, ralres, and tanks. WPP* 0000-NLI-000018414 From the point of view of over-all physical volume, business in 1951 exceeded that for 1950 by about 3 per cent. Because of increased activity in the drilling of oil wells, the Company's Baroid Sales Division supplied substantially greater tonnages of materials to this industry than in the prior year. Deliveries of railway journal bearings and castings by the Magnus Metal Divi sion increased in comparison with those for the year 1950 and the Company's titanium dioxide units operated at capacity for all of 1951. Principal tonnage decreases occurred in the lead products lines where production and deliveries were severely hampered by the shortage of lead and a confused pricing picture. For many years the Company has followed a policy of selling its non-ferrous metal products at fixed differentials over the base prices of these metals. After the January 1, 1951 increase in import duty on foreign pig lead, and imposition of a price ceiling on domestic metal production, it became increasingly difficult for the Company to purchase its metal requirements. Limited quantities were available at the domestic price and the purchase of costlier foreign material became necessary. This situation hampered operations greatly and was further compli cated when the price of domestic pig lead was raised from 17(f to 19^ per pound, without a compensating increase allowed to lead fabricators in their ceiling prices. This situation continued for several weeks, with shipments of manufactured lead prod ucts virtually suspended until regulations correcting the inequity were forthcoming. Early in February of 1952 legislation was enacted by Con gress removing the duty on pig lead imported into this country, 0000-NLI-000018415 000-1 VU-0000,8416 Roof for direct arc electr:. furnace, composed of pre-fn special refractory shap manufactured at The Ch. Taylor's Sons Co. plant in C; cinnati. Refractory prodiu are made from mullite ( aluminum and zircon silicat and have melting points abo 3100F. They are used as f-> nace linings or structures companies manufactun glass, ferrous and non-fen' metals, pottery tile, and in most every place where h. temperatures are encounter. Periodic kilns at Taylor, K. lucky, plant of The Chas. T loPs Sons Co., used to fire types of refractory produ, The kilns are fired to a tu rnum temperature of 2750 for eight days and allowea cool an additional five da\ FOR THE STEEL INDl'STR' lerro titanium alloys, nickel, refractories, and iron o< 0000-NLI-000018417 and at this writing the metal is more freely available than it has been for many months past. The charge against 1951 earnings for taxes amounted to $39,943,741, an increase of $9,016,864 over the record high of $30,926,877 reached in 1950. Of the total increase, $8,546,668 was in the provision for federal income and excess profits taxes, reflecting larger earnings before taxes and the increase in rates made effective during the year. Increasing federal income taxes serve to minimize the in crease in potential earnings which your Company enjoys through its growth and expansion into new fields. Although earnings before taxes increased $5,049,741 from 1950 to 1951, net income showed an actual decrease of $3,496,927. A con tinuation of this trend would do much to discourage progress in the industry of our country, and it is hoped that a correction may become a reality in the not too distant future. PLANT INVESTMENT ) The Company's gross investment in plant property and equip ment rose from $135,578,755 at December 31, 1950 to $154,012,668 at the close of 1951. Gross additions to the ac count totalled $20,882,250, reflecting primarily the cost of in creasing titanium pigment plant capacity at Sayreville, New Jersey and St. Louis, Missouri. Also included in these additions were the plant facilities of The Chas. Taylor's Sons Company, acquired during the year, further expansions of the fixed assets employed by the Baroid Sales Division and the cost of other plant extensions in the chemical, paint and metal lines. In 1951 operations at the Company's Atlantic plant, located in Brooklyn, New York, were transferred to other locations and the property was sold. For many years this unit had produced --9-- 0000-NLI-000018418 linseed oil, white lead-in-oil and a variety of paint products. It had likewise served as a warehousing point for pigment and metal products. Operating economies made possible as the result of changing conditions indicated the desirability of relocating these functions. The Company is continuing to warehouse mate rials for the metropolitan area from a new distribution center in Long Island City, New York. Depreciation, depletion and amortization charged against earnings in 1951 was $4,902,085, as compared with $5,896,695 in 1950. The decline reflects the application of the diminishing balance method of depreciating assets of the Titanium Division which has been discussed in prior reports. COMMON STOCK SPLIT At a special meeting of the stockholders held on October 16, I 1951, there was approved the proposal of the Board of Directors that each $10 par Common share outstanding be exchanged for three Common shares of $5.00 par each. To effect the resultant change in total par value of the Common stock outstanding, $16,930,625 was transferred to Capital Stock account, of which $9,410,244 represented Capital Surplus and the balance Earned First oil well to be brought into production at new Williston Basin field in North Dakota last year. Baroid Sales Division oil well drilling muds and weighting agents are used in the Williston Basin. (Inset) New Headquarters building of the Baroid Sales Division in Houston, Texas. The division moved to Houston from Los Angeles during 1951. ! fOR THE PETROLEUM INDUSTRY-- oil well drilling materials, testing equipment, and drilling techniques. 0000-NLI-000018419 0000-NLI-000018420 "Facing' bottom surface of a railway journal bearing on disking machine in the Fitchburg, Massachusetts, plant of the Magnus Metal Division, before bearing is lined with babbitt. Surplus. The stockholders also approved an increase in the authorized number of Common shares from 5,000,000 to 20,000,000, and an appropriate adjustment of the voting rights of the Preferred stocks. The Company's stockholders numbered 21,365 at December 31, 1951 as compared with 19,129 at the close of 1950. EXECUTIVE PERSONNEL In April 1951 Joseph H. Reid was named a vice-president of the Company. Mr. Reid, who is manager of the Titanium Division, joined National Lead Company in 1927 and became a director and member of the Executive Committee in 1950. Alfred H. Drewes was elected a Company vice-president in October of 1951. Mr. Drewes, who joined the Company in -- 12 -- 1 0000-NLI-000018421 1935, was elected a member of the Board of Directors and of the Executive Committee in October 1950 and had served as assistant to the president since 1947. In November Winthrop Sargent, Jr., was elected a director of the Company. Mr. Sargent became president of the Titanium Alloy Manufacturing Company in 1943 and has been general manager of the Titanium Alloy Manufacturing Division of National Lead Company since 1948. Charles Simon, treasurer of National Lead Company since 1925, retired on November 1, 1951. He had served the Com pany for forty-seven years, becoming a director in 1935 and a member of the Executive Committee in 1936. Mr. Simon was succeeded as a director by William J. Welch. Mr. Welch joined the Company in 1916 and has served in vari ous metal sales capacities. He is now manager of the Company's metal department and chairman of the metal sales committee. In January of this year George L. Ratcliffe was elected a vicepresident. Mr. Ratcliffe, whose affiliation with National Lead began in 1929, is general manager of the Baroid Sales Division and has been a member of the Board of Directors since 1948. Joseph J. Morsman, Jr., was named treasurer of the Company on Mr. Simon's retirement. His association with National Lead Company began in 1935 and he had previously served as assistant treasurer and assistant comptroller. In November of 1951 George A. Dewey was elected comp troller of the Company, having been assistant comptroller since 1946. Mr. Dewey has been a member of the Company's ac counting and auditing staffs since 1924. : 1 0000-NLI-000018422 f We here sadly report the passing on October 20, 1951 of Walter P. Carroll, who was a vice-president and a member of the Board of Directors at the time of his death. Mr. Carroll had been in the service of the Company for forty-one years. Rising through the ranks of the Chicago Branch, he was appointed manager of that unit in 1941 and was named to direct the activi ties of the metal department on a company-wide basis in 1949. Walter Carroll will be long remembered by the many who were privileged to know and work with him. His enthusiasm and imagination, his boundless energy and his rare good judg ment will be an unending source of inspiration to those who follow him. I LITIGATION | In connection with the final decree heretofore entered in the ; civil anti-trust suit brought by the Government, the United | States District Court for the Southern District of New York has | approved the plan submitted to the Court by the Company for the acquisition by the Company of the entire stockholdings and other financial interests, direct and indirect, in Titangesellschaft 1 m.b.H., manufacturers of titanium pigments at Leverkusen, Gerj many. It now has an extension of time to April 1, 1952 within I j which to submit a plan either for the sale of the Company's i j interests in its partly owned company in Japan or for the puri chase by the Company of the interests of others in that company. :! --14 -- 0000-NLI-000018423 There have been no changes in the status of the following previously reported litigations: the action by the Federal Trade Commission regarding lead pigments; the proceedings by the Government against the Company with respect to the sale and distribution of used storage batteries and lead salvaged there from; the trademark action with the Dutch Paint Company involving the "Dutch Boy" trademark, and the treble damage suit instituted by that company in regard to the sale and distri bution of titanium pigments. In February 1951 two actions were filed against the Company in the United States District Court for the Southern District of Texas by individual patent owners, alleging that the well log- Castor bean field near Yuma, Arizona. Baker Castor Oil Company has fostered an intensive program in the past few years to encourage the growing of castor beans in the United States, helping to eliminate dependence on overseas sources. (Inset) A stripper-harvester used by castor bean growers. FOR THt PRINTING INWSTKY -- type metals. priming base, ink pigments and other materials. ging activities of the Company's Baroid Sales Division infringe certain United States letters patent. The Company has answered, denying infringement and denying that the patents in suit are valid. Neither case has as yet come to trial. On February 4, 1952 the Government commenced an action in the United States District Court for the Southern District of New York against the Company, under the Defense Production Act, to enjoin alleged violations of price stabilization regula tions on some lead products and to recover alleged damages therefor. The Company has denied the charge, explaining that the fixed differentials over raw material costs at which these products are sold have not been increased for several years. PERSONNEL To the 14,436 men and women on the payrolls of the Com pany at December 31, 1951 goes much of the credit for the successful year just ended. It is interesting to note in comparison that employees numbered 13,137 at the end of 1950 and 11,502 at December 31, 1949. All branches and divisions have shared in the increases. In the overall field of industrial relations, your Management has endeavored to give full consideration to the economic prob lems of its employees consistent with sound operating policy for the Company as a whole. Relations with labor organizations representing employees at various locations continue on a satis factory basis. 0000-NLI-000018425 Extra compensation on the same basis as in 1950 was paid in December 1951, and in accordance with the provisions of the plan approved by the stockholders in 1945, a contribution out of earnings was again made to the Company's profit-sharing trust. The suggestion system initiated in 1949 has continued successfully and was extended to new locations during the year. I A total of 116 employees were retired during 1951 under 1 the Company plan and 97 death benefit claims, aggregating , $495,000, were paid. At December 31, 1951, 820 pensioners were receiving annuities under the plan. TITANIUM METAL Popular imagination has been captured during 1951 by titanium metal and it seems fitting that a rather complete report on the Company's activities in that field be included herein. As indicated last year, this product is being offered to the market by Titanium Metals Corporation of America, jointly owned by National Lead Company and Allegheny Ludlum Steel Corpora tion. Your Company is one of the pioneers in the development and production of titanium metal and Allegheny Ludlum has played a leading part in the fields of alloying and fabrication. Shortly after mid-1951, there was announced the completion of an agreement between Titanium Metals Corporation of America and the United States Government, under which the former undertook to construct the first large-scale and selfcontained titanium metal plant. Funds for the project are being provided by the Government. 0000-NLI-000018426 Leases were secured on major components of the former Basic Magnesium, Inc. plant built during World War II at Henderson, Nev. A certificate of necessity was awarded Titanium Metals Corp. of America and construction was begun. First actual production of titanium metal at Henderson took place in October 1951. Production and construction will con tinue concurrently until an output of 10 tons per day, provided for under the agreement, is reached in late 1952. At this writing, demand for the metal in fabricated form, largely for military purposes and the aircraft industry, substantially exceeds the productive capacity of the titanium industry. The future of titanium metal is closely linked to the achieve ment of lower production costs. Continuing and expanded re search is being directed toward this goal. It is expected that large-scale production at Henderson will bring with it the first commercially significant step in this direction. NEW HORIZONS Further progress in a number of fields of endeavor men tioned in annual reports for prior years marked the twelve months of 1951. The Company continued to add to its pro duction facilities and to diversify its business. A substantial expansion of titanium pigment production j 0000-NLI-000018427 S # WiaalfiV.: More than 2lf2 miles of test panels are used in continual atmospheric testing of exterior paints at the Sayville, Long Island, testing station, oldest continuous project of its kind in the country. capacity is now completed, and the resulting increases in avail able tonnage have served to satisfy the tremendous rise in de mand which has taken place in the last decade. The allocation of both pure and calcium base pigments has been discontinued, and for the first time since 1943 supply is to some degree in balance with the demands of the market. With pigment freely available, its adoption for other uses and the development of new markets seems assured. In May of 1951 the Atomic Energy Commission selected the Company as contract-operator of the feed materials production center now under construction near Cincinnati, Ohio. The plant units, located on a 1,200 acre site, will include a uranium ore refinery and other facilities for the production of uranium in forms suitable for use at the Commission's fissionable materials plants. The Company has assigned to this project a group of trained personnel who will serve as a nucleus for the formation of an employee group numbering in excess of 1,200 men and women. A smaller plant at Middlesex, New Jersey, is also operated by the Company for the Commission. Titanium Alloy Manufacturing Division is now producing -- 19 -- 0000-NLI-000018428 zirconium metal for commercial use on a limited basis. It is believed that this new metal will find many uses because of its corrosion-resisting properties. National Lead Company in August 1951 acquired an interest in Nickel Processing Corporation, which is cooperating in the rehabilitation and operation of the Nicaro mine and reduction plant in Cuba, under contract with the General Services Ad ministration of the United States Government. Sharing owner ship of Nickel Processing Corporation with the Company are Tin Processing Corporation and Cuban interests. Rehabilitation of the plant, idle since 1947, has been under way since last year and production was begun in January 1952. The operation, de signed to relieve a critical war shortage of nickel, will employ about 1,500 when full production is reached. Key technical and operating personnel have been made available to the project by National Lead Company. All of the capital stock of The Chas. Taylor's Sons Company was acquired in 1951. This concern manufactures various hightemperature refractories, mainly for the glass and metallurgical industries. It will operate as a subsidiary of National Lead Com pany with head offices and a plant in Cincinnati, Ohio and a second plant unit located in Taylor, Kentucky. In the Annual Report for 1950 reference was made to the research done by Company metallurgists in connection with the extraction of the cobalt content of ores mined by the Company in Missouri. Construction of a treatment plant to recover vital cobalt metal from this source has been begun at Fredericktown, Missouri, following the signing of a covering letter of intent FOR THE ELECTRONICS INDUSTRY materials lor television, radio I 0000-NLI-000018429 with the United States Government. The plant, to be ready for production in fourteen to eighteen months, will be constructed under a certificate of necessity and will recover nickel and cop per as well as cobalt. Funds for construction will be provided by the Government and the entire output of the plant will be sold to the Government during the term of the contract. IN CONCLUSION From a business point of view, the picture for the year 1952 is somewhat difficult to analyze clearly. While the major portion of the Company's products find their most important applica tions in a peace-time market, experience has shown that they are equally in demand under a war economy. Although general business in the first two months of 1952 was at a lower level than in 1951, the basic trend for the months ahead seems to be inflationary in character. Despite a heavier tax burden and pre dicted shortages of metals, which at this time are in freer supply than they have been for months past, it seems reasonable to expea that present sales volume will be maintained at least until there is some important change in the level of expendi tures under the present defense economy. One faaor in the picture can be relied upon with certainty. The loyalty and support of the Company's employees contribute immeasurably to the results achieved, and your Management confidently feels that growth and progress in the months ahead will reflea the same cooperative spirit. This report will be presented to the stockholders at their Annual Meeting which will be held at Sayreville, New Jersey on April 17, 1952. \ By Order of the Board of Directors, -- 21 -- President. 0000-NLI-000018430 National Lead Company AND ITS WHOLLY OWNED DOMESTIC SUBSIDIARIES Consolidated Balance Sheets DECEMBER 31, 1951 AND 1950 Current assets: ASSETS 1951 1950 Cash.............................................................................. $ 23,418,857 $ 24,370,746 United States Government securities, at cost (ap proximately equivalent to amounts at market quotations) (Note 1).......................................... Other marketable securities, at cost, less reserves of: 1951, $129,960; 1950, $522,892 (at market quo tations: 1951, $3,129,564; 1950, $2,824,775) . . 22,762,718 817,964 22,128,927 602,518 Accounts and notes receivable, less reserves of: 1951, $2,047,334; 1950, $2,036,257 ..................... 30,927,413 35,246,451 Notes receivable from employees................................ 302,519 277,755 Inventories (Note 2)............................................... Total current assets.......................................... 55,404,739 133,634,210 48,824,480 131,450,877 Investments (at cost or below) in and advances to unconsolidated subsidiaries, less reserves of: 1951, $4,776,385; 1950, $5,196,385 (Note 3) . Miscellaneous investments and advances, at cost- or below, less reserves of: 1951, $45,826; 1950, $846,778 ................................................................... 10,342,746 1,760,703 9,516,930 835,132 Plant, property and equipment, at 1915 appraised values, subsequent additions at cost (including in tangibles of $20,692,311 not being amortized), less reserves for depreciation, depletion and amortiza tion of: 1951, $71,215,202; 1950, $67,390,015 . . 82,797,466 68,188,740 Patents and licenses, less amortization........................... 40,027 48,409 Prepaid expenses, deferred charges, etc...................... 1,740,516 1,641,379 $230,315,668 $211,681,467 "The accompanying notes to financial states) -- 22 -- 0000-NLI-000018431 National Lead Company AND ITS WHOLLY OWNED DOMESTIC SUBSIDIARIES Consolidated Balance Sheets DECEMBER 31, 1951 AND 1950 LIABILITIES Current liabilities: Accounts payable and accruedliabilities .... $ Payable to unconsobdated subsidiaries..................... Provisions for taxes, including federal taxes on income.................................................................... Dividends payable February 1, 1952 and 1951 on Class B preferred stock............................................. -- 15,401,310 231,162 50,283,364 135,277 Total current liabilities................................$ 66,051,113 1930 $ 16,031,027 1,337,381 38,910,745 123,600 $ 56,402,753 Reserves: Pension......................................................................... $ Inventory (Note 2).................................................... 1,679,060 $ 2,646,778 15,011,777 13,486,331 $ 16,690,837 $ 16,133,109 CAPITAL Capital stock: Preferred Class A, 7 per cent cumulative, non- callable (par value $100); shares authorized 250,000, issued 243,676 .......................................... $ 24,367,600 Preferred Class B, 6 per centcumulative, non- callable (par value $100); shares authorized 250.000, issued 103,277 .......................................... 10,327,700 Common (par value $5); shares authorized 20,- 000,000, issued 10,158,375 (including 398,700 issued under Stock Purchase Plan, Note 4) . . 50,791,875 Common (par value $10); shares authorized 5.000.000, issued 3,367,075 (including 113,850 issued under Stock Purchase Plan, Note 4) . . $ 24,367,600 10,327,700 33,670,750 Capital surplus ............................................................... Earned surplus: Appropriated: Fire insurance reserve.......................................... Employer's liability reserve..................................... Contingencies reserve.......................................... Unappropriated.......................................................... 85,487,175 4,797,284 426,664 4,080,358 60,276,950 68,366,050 8,102,965 4,797,284 426,664 4,080,358 61,343,176 $155,068,431 $147,116,497 Less: Reacquired capital stock, atcost (Note 5) ... $ Employees' notes receivable under Stock Purchase Plan (Note 4).......................................................... 2,583,081 $ 3,491,008 4,911,632 4,479,884 $ 7,494,713 $ 7,970,892 $147,573,718 $139,145,605 $230,315,668 $211,681,467 integral parti of these statements. -- 23 -- National Lead Company AND ITS WHOLLY OWNED DOMESTIC SUBSIDIARIES Consolidated Statements of Income and Earned Surplus Unappropriated FOR THE YEARS ENDED DECEMBER 31, 1951 AND 1950 1951 1950 Sales, less returns and allowances (Note 6) . .$389,941,313$342,727,911 Cost of sales (Notes 2 and 6)........................ $284,245,815 $247,046,128 Depreciation, depletion and amortization . , . 4,902,085 5,896,695 Administrative, selling and general expenses . . 40,299,081 36,063,191 Taxes, other than federal taxes on income . . . 3,329,918 2,859,722 $332,776,899 $291,865,736 $ 57,164,414 $ 50,862,175 Other income (Note 7)................................... 4,070,915 3,815,624 Other charges and additions to reserves (Note 8)....................................................... 61,235,329 1,627,789 54,677,799 120,000 Net income before provisions for fed eral taxes on income........................ 59,607,540 54,557,799 Provisions for federal taxes on income (includ ing excess profits taxes: 1951, $8,770,000; 1950, $4,245,000) . 36,613,823 28,067,155 Net income for the year.......................... $ 22,993,717 $ 26,490,644 Earned surplus unappropriated, January 1 ... Adjustment of December 31, 1949 inventory ($766,276) less applicable federal taxes on income incident to adoption of "last-in, firstout" valuation method..................................... Net income for the year................................... $ 61,343,176 22,993,717 $ 49,942,543 475,091 26,490,644 $ 84,336,893 $ 76,908,278 Dividends: On Class A preferred stock, $7 per share . . On Class B preferred stock, $6 per share . . On common stock, $1.41% per share in 1951, $1.33% per share in 1950 (adjusted to re flect the 1951 stock split).............................. $ 1,640,051 517,755 2,157,806' 14,381,756 $ 1,640,051 494,400 2,134,451 13,430,651 Transfer to common capital stock account in connection with reduction in par value and split of the common stock............................... 16,539,562 7,520,381 15,565,102 $ 24,059,943 $ 15,565,102 Earned surplus unappropriated, December 31..........................................$ 60,276,950 $ 61,343,176 The accompanying notes to financial statements ate integral parts of these statements. -- 24 -- I 0000-NLI-000018433 Safe:- National Lead Company a n d it s w h o l l y o w n e d d o me s t ic s u b s id ia r ie s Consolidated Statements of Capital Surplus FOR THE YEARS ENDED DECEMBER 31, 1951 AND 1950 1951 1950 Capital surplus, January 1.................................... $8,102,965 $4,523,071 i Excess of aggregate subscription amount over i aggregate par value of common stock issued under Stock Purchase Plan: 1951, 19,050 i shares; 1950, 113,850 shares (Note 4) . . . 1,082,488 3,579,894 Excess of amount based on market quotation over cost of 7,785 shares of Preferred Class B treasury stock issued for capital stock of another company............................................... 224,791 I 9,410,244 8,102,965 Transfer to common capital stock account in connection with reduction in par value and split of the common stock............................... 9,410,244 Capital surplus, December 31 . . . -- $8,102,965 Notes to Consolidated Financial Statements 1. United States Government securities include the following cost amounts deposited at the respective balance sheet dates: December M 1951 1950 In connection with self-insurance of workmen's compensation risks, etc........................................ As collateral for bank loan of an unconsolidated subsidiary.................................................................. $1,010,345 750,275 $949,604 _________ $1,760,620 $949,604 2. Inventories are priced at the lower of cost (on various "average," "first-in, first-out" or "last-in, first-out" bases) or market. The inventory reserve has been maintained on the basis of the following quantities and prices of normal stocks: Normal Quantities (ShorzToDs) December 31 1951 1950 Fixed Inventory Price per Pound Lead........................................................ 49,68714 Tin........................................................ 1,12414 Antimony................................................ 1,400 Linseed oil................................................ 3,125 Flaxseed....................................................... -- 49,68714 1,12454 1,400 3,125 5,600 $-03 .21 .05 .06 .0348 The company has discontinued the pressing of flaxseed and considers the maintenance of the related reserve no longer necessary. Accordingly, during 1951, $430,000 was released to income. Physical quantities of certain metals were lower at the end than at the beginning of 1951. A provision of $1,775,147, representing the difference between year-end market prices and cost (determined under the last-in, first-out method), for replacement of such quantities is included in the inventory reserve at December 31, 1951. The inventory reserves include, in addition to the normal stock reserves, general inven tory reserves of $800,000 at both December 31, 1951 and 1950. Intercompany profits in inventories are not considered to be material in amount. 3. Unconsolidated subsidiaries comprise domestic subsidiaries more than 50, but less than 100 per cent owned and foreign subsidiaries. Based upon financial statements as of the close of their respective fiscal years. National -- 25 -- 0000-NLI-000018434 Notes to Consolidated Financial Statements--Continued Lead Company's equity in the net tangible assets of unconsolidated subsidiaries (other than those in Continental Europe) approximated $25,500,000 at December 31, 1951 and $23,210,000 at December 31, 1950. Such equities exceeded the company's investments in and advances to these subsidiaries, after deducting applicable reserves on the books of National Lead Company, by approximately $15,323,000 at December 31, 1951 and $13,829,000 at December 31, 1950, representing increases in such excesses of approxi mately $1,494,000 in 1951 and $149,000 in 1950. These increases are after dividends of $2,364,733 in 1951 and $2,596,477 in 1950 paid by the unconsolidated subsidiaries and included in consolidated net income. Total equities of $25,500,000 and $23,210,000 shown in the preceding paragraph include $12,908,000 and $10,021,000, respectively, represented by foreign net tangible assets, translated into U. S. dollars at appropriate rates of exchange. The realization of foreign assets and foreign earnings is subject to various exchange and other restrictions imposed by the respective foreign governments. Unaudited financial statements as of September 30, 1951 and 1950 received from the Continental European subsidiaries (other than the German subsidiary) indicate that National Lead Company's equity in the net assets thereof approximated the following for eign currency amounts at the respective dates: September 30 1951 1950 Norwegian kroner . . . '............................. Belgian francs....................................................... Dutch florins....................................................... French francs............................................................. 11,420,000 17,680,000 1,300,000 36,480,000 14,110,000 27,240,000 590,000 17,750,000 National Lead Company's investments in and advances to Continental European sub sidiaries, less reserves, approximated $136,120 at December 31, 1951 and $136,100 at December 31, 1950. Dividends of $97,729 (U. S. dollar amount) were received in 1950 from a Norwegian subsidiary and are included in consolidated net income for that year. 4. Under the company's Stock Purchase Plan for Officers and Other Key Employees adopted in 1950 certain officers and employees contracted to purchase common stock of the company. The purchase prices (markets at the dates of execution of the purchase contracts) are evidenced by promissory notes bearing interest at 3 per cent payable within 10 years from dates thereof, the shares serving as collateral. Payments against interest and principal of the notes shall be not less than fifty per cent of the dividends paid on such collateral shares. The employees have the option to, and the company may require that they, withdraw the collateral in hundred-share lots as payments become equal to the purchase price thereof. Upon death or retirement of an employee the company shall, if requested, repurchase at the original sales price shares not then fully paid for. Under other circumstances if the employee shall not complete payments the company shall have the option of so repurchasing shares not then fully paid for but may exercise any legal right to compel completion of the contract. Shares issued in accordance with the plan aggregated 19,050 in 1951 and 113,850 in 1950. Shares held as collateral aggregated 333,100 at December 31, 1951, after giving effect to the split of common stock, and 111,150 at December 31, 1950. No further purchases may be made under the plan. 5. Reacquired capital stock, carried in the balance sheets at first-in, first-out costs, comprises: December 31. 1951 No. of Shares Cost December 31. 1950 No. of Shares Cost Preferred Class A ... . 9,383 $1,147,727 Preferred Class B . . . . 13,092 1,435,354 9,383 $1,147,727 20,877 2,343,281 $2,583,081 $3,491,008 sales and cost of sales. 7. Other income comprises: 1931 Dividends received (including $2,364,733 from unconsolidated subsidiaries in 1951 and $2,694,206 in 1950)....................................... $2,973,695 Net profit on sales and other retirements of fixed assets.................................................................. Interest and miscellaneous.................................. 456,725 Investment reserves no longer required . . . 640,495 $4,070,915 -- 26 -- 1930 $3,287,845 83,329 444,450 $3,815,624 0000-NLI-000018435 Notes to Consolidated Financial Statements--Continued 8. Other charges and additions to reserves comprise: Additions to reserves: Investments in and advances to unconsolidated foreign subsidiaries...................................... Inventory, net (see Note 2)............................ Excess of cost of subsidiaries' stocks acquired during year over book amounts of net assets thereof at dates of acquisition............................ Net loss on sales and other retirements of fixed assets .................................................................. Miscellaneous....................................................... 1951 $ 42,945 1,345,147 201,098 35,834 2,765 11,627,789 1950 $120,000 $120,000 9. Numerous differences exist between taxable income and book income, including certain fluctuations in the inventory reserves; percentage depletion; depreciation charges; and as to the year 1951, purchases of past service annuities deductible for tax purposes but charged on the books to reserve for pensions. General: Under agreements with the Atomic Energy Commission, two consolidated subsidiaries are operating plants constructed with funds supplied by the Commission. Neither the assets, liabilities, nor results of operations of such plants are included in the accompanying financial statements. Annual fixed fees received by such subsidiaries as contract-operators are included in other income in the accompanying financial statements. Refunds under the Renegotiation Act of 1951, if any, are not considered to be material and no provision has been made therefore. Reference is made to comments included in the president's message on the status of Iitigafion under antitrust laws. Federal Trade Commission and Clayton Acts, Defense Production Act and patent infringements. No provision has been made for such taxes as may be paid if and when accumulated earnings of subsidiaries are distributed to the parent company, since such taxes may never accrue. LYBRAND, ROSS BROS. & MONTGOMERY Certified Public Accountants 90 Broad Street, New York City To the Stockholders of NATIONAL LEAD COMPANY, NEW YORK, N. Y. We have examined the consolidated and individual balance sheets of Na t io n a l Le a d COMPANY and its wholly owned domestic subsidiaries (other than one wholly owned domestic subsidiary) as of December 31, 1951 and the related statements of income and surplus for the year then ended. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We have also examined or reviewed, or have received reports of other independent public accountants upon their examinations of, the balance sheets and related statements of in come and surplus of the afore-mentioned wholly owned domestic subsidiary, the major domestic subsidiaries more than 50, but less than 100 per cent owned and the major foreign subsidiaries other than Continental European, for their respective 1951 fiscal years. Similar examinations or reviews were made for the 1950 fiscal years. In our opinion, based upon the above-outlined examinations and the above-mentioned reports of other independent public accountants, the accompanying consolidated balance sheets and related consolidated statements of income and surplus present fairly the con solidated financial position of National Lead Company and its wholly owned domestic subsidiaries at December 31, 1951 and 1950 and the consolidated results of their opera tions for the respective years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. Ly b r a n d , Ro s s Br o s . & Mo n t g o me r y New York, March 6, 1952. -- 27 -- 0000-NLI-000018436 TEN-YEAR REVIEW 1942 Net Sales ............................................ $127,679,608 Net Income before Taxes .... 12,154,827 Federal Taxes on Income .... 7,908,457 Net Income............................................ 4,246,370 1943 $148,622,919 13,537,168 8,336,291 5,200,877 1944 $166,168,715 18,304,136 10,740,382 7,563,754 1945 $167,562,928 11,218.22S 4,679,720 6,538,508 Earned Per Share of Common Stock (Adjusted to present capitalization) 0.24 Preferred Dividends............................ Common Dividends............................ 2,031,323 1,545,332 0.34 2,031,323 2,317,998 0.60 2,031,323 3,090,664 0.4 S 2,059,323 3,090,664 Current Assets: Cash................................................. 9,282,565 U. S. Government and other Marketable Securities . . . Notes and Accounts Receivable Inventoriesf................................. 5,210,381 11,913,477 25,444,442 12,742,150 17,002,791 12,560,223 21,787,559 10,313,702 16,131,607 14,859,530 23,601,398 9,571,663 17,902,25-t 15,171,135 29,361,453 Total Current Assets............................ 51,850,865 Total Current Liabilities . . . . 15,992,762 Net Working Capital...................... 35,858,103 64,092,723 19,054,627 45,038,096 64,906,237 21,566,069 43,340,168 72,006,505 16,843,516 55,162,989 Gross Property Account...................... 93,474,782 Reserves for Depreciation, Depletion and Amortization . . 36,687,351 Net Property Account...................... 56,787,431 94,198,239 41,464,768 52,733,471 98,025,024 100,794,666 46,250,242 51,774,782 55,147,610 45,647,05( Includes rash dividends of $3,869,137 and 5% stock dividend valued at $31 per share, t Inventories for 1942 to 1944, inclusive, are shown net of normal stock reserves. 0000-NLI-000018437 OF OPERATIONS 1946 1947 5167,447,243 $268,026,394 16,713,479 23,904,417 7,036,395 11,724,285 9,677,084 12,180,132 1948 $320,457,301 26,606,510 13,302,155 13,304,355 1949 $257,461,599 21,191,579 6,442,568 14,749,011 1950 $342,727,911 54,557,799 28,067,155 26,490,644 1951 $389,941,313 59,607,540 36,613.823 22,993,717 0.82 1.09 1.21 1.29 2.41 2.05 2,059,323 4,635,996 2,059,323 6,181,328 2,085,512 8,671,502* 2,134,451 7,317,900 2,134,451 13,430,651 2.157,806 14,381,756 11,681,055 12,953,907 18,393,548 15,573,093 32,617,337 11,500,197 21,461,427 44,550,399 9,304,183 2,524,445 28,120,306 59,118,313 17,961,612 10,517,353 16,114,669 43,857,133 24,370,746 22,731,445 35,524,206 48,824,480 23,418.857 23,580.682 31,229.932 55.404,739 78,265,033 22,410,068 55,854,965 90,465,930 30,252,412 60,213,518 99,067,247 35,359,277 63,707,970 88,450,767 25,864,583 62,586,184 131,450,877 56,402,753 75,048,124 133.634.210 66.051.113 67,583,097 106,793,660 122,739,173 133,879,240 133,252,879 135,578,755 154,012,668 56,018,905 50,774,755 57,407,848 65,331,325 59,856,625 74,022,615 64,080,311 69,172,568 67,390,015 68,188,740 71,215,202 82.797.466 0000-JVLI-OOOOI8438 Buildings housing major manufacturing units in titanium metal production at Henderson, Nevada. TITANIUM METAL OOOO-NLI-OOOO18439 t it a n iu m me t a l has unusually po tent physical characteristics as a structural metal. It is extremely strong--two or three times stronger than the best aluminum alloys, five times as strong as magnesium alloys, stronger even than the alloy steels. It is light--titanium is about one-half the weight of steel. It has unusual resistance to corrosion of all kinds, unique in that it is completely im pervious to salt water under all serv ice conditions. It has high hardness, high shock resistance, high melting point, extreme resistance to steam and abrasive erosion--more so than any other constructional metal. Proposed applications for titani um metal are countless and signifi cant. To enumerate a few: (1) air craft landing gear, propellers, fire walls, armor, skin, and internal com bustion engine parts; (2) jet engine parts, such as complete compressor section and after-burners; (3) appli cations in atomic energy plants; (4) various components of rockets and guided missiles; (5) chemical proc essing equipment and pharmaceuti cal manufacturing equipment (in many instances it is the only avail able metal capable of withstanding service conditions) ; (6) all types of marine use, such as submarine ex haust systems, propellers, exchang ers, pumps and propeller shafts, and (7) many types of ordnance equip ment--man-carried weapons as well as mobile units, armor plate and air borne tank components. FOR THE AIRCRAFT INDUSTRY-- Kirksite dies and melal, titanium metal, bearing metals, and castor oil. 0000-NLI-000018440 Branches and Divisions ATLANTA BRANCH, G. W. Pendery, Manager 400 Bishop Street, N.W., Atlanta ATLANTIC BRANCH, R. M. Bennett, H. F. Freiherr, Managers 111 Broadway, New York BAROID SALES DIVISION, G. L. Ratciifie, General Manager 2404 Danville Street, Houston, Oil Well Drilling Mud Service BALTIMORE BRANCH, H. A. Getz, Manager 214 West Henrietta Street, Baltimore CHICAGO BRANCH, P. J. Pater, Manager 900 West Eighteenth Street, Chicago DETROIT. MICH., 1627 W. Fort Street INDIANAPOLIS. IND., 1600 East 21st Street MILWAUKEE, WIS., 744 No. Fourth Street ST. PAUL, MINN.. 102 W. Fairfield Avenue CINCINNATI BRANCH, H. W. Hundley, Manager 659 Freeman Avenue, Cincinnati LOUISVILLE, KY., 1320 Herburn Building CLEVELAND BRANCH, E. G. Orling, George Sathre, Managers 1776 Columbus Road, Cleveland BUFFALO, N. Y., 116 Oak Street PITTSBURGH, PA., 1376 River Avenue DE LORE DIVISION, A. J. Wetzel, Manager Carondelet, Sc. Louis, Barium Sulphate and Calcium Sulphate Pigments EVANS LEAD DIVISION, R. M. Evans, Manager Charleston, W. Va., Manufacturers of Lead Oxides E. W. BLATCHFORD CO. BRANCH, M. J. Friday, Sr., Manager 111 Broadway, New York, Type Metals and Blatchford Base MAGNUS METAL DIVISION, W. V. Burley, General Manager 111 Broadway, New York, Railway Car Journal and Diesel Locomotive Bearings NATIONAL LEAD CO. OF MASS., Karl Fischer, G. A. Savage, Managers 800 Albany Street, Boston PACIFIC COAST BRANCH, D. D. Roberts, Manager 2240 Twenty-fourth Street, San Francisco LOS ANGELES. CAL.. 3113 East 26th Street SEATTLE, WASH., 1128 W. Spokane Street PHILADELPHIA BRANCH, J. W. Gardiner, Jr., G. A. Watts, Managers 2607 East Cumberland Street, Philadelphia ST. LOUIS BRANCH, E. E. Busse, R. R. Stamm, Managers 722 Chestnut Street, St. Louis KANSAS CITY, MO., 1406-1408 W. Thirteenth Street NEW ORLEANS, LA., 516 Tchoupitoulas Street OMAHA, NEB., 2810 A Street ST. LOUIS SMELTING & REFINING DIVISION, G. M. Wiles, Manager Fredericktown, Missouri SOUTHWESTERN BRANCH, W. H. Lessmann, R. R. Stamm, Managers 959 Terminal Street, Dallas STEEL PACKAGE DIVISION, W. T. Trask, Manager 722 Chestnut Street, St. Louis TEXAS MINING & SMELTING DIVISION, O. D. Niedermeyer, Manager Laredo, Texas, Metallic Antimony and Antimony Oxides TITANIUM ALLOY MFG. DIVISION, Winthrop Sargent, Jr., Manager 111 Broadway, New York, Products of Titanium and Zirconium TITANIUM DIVISION, J. H. Reid, Manager 111 Broadway, New York Manufacturers of Titanium Products; Miners of llmenite and Magnetite Iron Ore -- 32 -- 0000-NLI-000018441 Corporations In Which National Lead Company Is Interested Through Ownership of All or Part of the Capital Stock AMERICAN BEARING CORPORATION,* Indianapolis Peter Lambertus, President... Manufacturers of Precision Bearings BAKER CASTOR OIL COMPANY, New York I. M. Colbeth, President... Manufacturers of Castor Oil CANADIAN TITANIUM PIGMENTS LIMITED,* Montreal G. N. Bates, Sates Manager... Distributors of Titanium Oxide Pigments EVANS LEAD CORPORATION,* Charleston, W. Va. R M. Evans, President... Distributors of Lead Oxides HOYT METAL COMPANY OF GREAT BRITAIN, LID.,* London J. C. Hart, Managing Director... Manufacturers of Anti-Friction Metals MORRIS P. KIRK & SON, INC, Los An g e l e s , Portland, Ore., Salt Lake City J. Paul Kirk, President... Manufacturers of Lead Alloys and Oxides MAGNUS BRASS MFG. CO.,* Cincinnati W. V. Burley, President... Manufacturers of Locomotive Specialties MAGNUS METAL CORPORATION,* Chicago W. V. Burley, President... Railway Car Journal and Diesel Locomotive Bearings MASTER METALS, INC., Cleveland L. H. Herthneck, Manager... Smelters of Secondary Metals MINNESOTA LINSEED OIL CO., Minneapolis E. H. Russell, President... Manufacturers of Linseed Oil NATIONAL LEAD CO. OF OHIO,* New York Joseph A. Martino, President NATIONAL LEAD CO. S. A. (ARGENTINA),* Avenida Presidente Roque Saenz Pena 567, Buenos Aires C. M. Merrell, President NICKEL PROCESSING CORPORATION, Oriente, Cuba Manufacturers of Nickel Oxides THE CANADA METAL COMPANY, LTD.,* TORONTO, Montreal, Winnipeg, Vancouver James A. Taylor, President... Manufacturers of Lead Products, Brass and Bronze, Dross Smelters THE CHAS. TAYLOR'S SONS COMPANY,* Cincinnati Clifford R. Taylor, President... Manufacturers of Refractories TITAN CO. A/S., Fredrikstad, Norway Erik Anker, Managing Director ... Manufacturers and Distributors of Titanium Oxide Pigments SOCIETE BELGE DU TITANE S.A., Brussels, Belgium TITAN COMPANY, INC.,* Wilmington, Del. Erik Anker, Vice-President... Manufacturers and Distributors of Titanium Oxide Pigments SOCIETE INDUSTRIELLE DU TITANE, Paris, France TlTAAN N.V., Rotterdam, Netherlands TITANGESELLSCHAFT, m.b.H., Leverkusen, Germany TITANIUM METALS CORPORATION OF AMERICA, New York H. C. Wildner, President... Distributors of Titanium Metal Products TITANIUM PIGMENT CORPORATION,* New York J. A. Martino, President... Distributors of Titanium Oxide Pigments Wholly owned. -- 33 -- 0000-NLI-000018442  Products of National Lead Company PAINTS AND PAINT MATERIALS Sold under the DUTCH BOY brand name Exterior House Paints Interior Wall Paints Enamels Varnishes Metal Protective Paints Linseed Oil Lead Mixing Oil White Lead Red Lead Colors Flatting Oil Liquid Drier PIGMENTS AND CHEMICALS Basic Carbonate White Lead Basic Silicate White Lead (45X) Lead Acetate Lead Silicates Lead Oxides Calcium Carbonate Barium Sulphate Copperas-Iron Sulphate Zinc Chloride Copper Sulphate Antimony Oxides Lead Chemicals for the Plastics Industry OILS Linseed Oil l Special Paint Oils Castor Oil 0000-NLI-000018443 & 4, 'L Products of National Lead Company (continued) - ?*' l ead pr o duc t s Lead Pipe Sheet Lead Lead Traps and Bends Lead Cames Lead Sash Weights Ingot Lead Bar Lead Lead Shot Lead Wire Lead Washers Lead Wool l ead al l o y pr o duc t s Solder Bearing Metals Type Metals Electrotype Metal Stereotype Metal Antimonial Lead Tellurium Lead Storage Battery Plate Metal OTHER METAL PRODUCTS Railway Journal Bearings Satco Bearing Metals Diesel Engine Bearings Kirksite "A" Die Metal Pressure Die Castings Pewter and Britannia Metal Antimony ACID HANDLING EQUIPMENT Chemical Lead Pipe Chemical Sheet Lead Acid Pumps Acid Concentrators Lead Lined Pipe Lead Lined Valves Lead Lined Fittings Tin Lined Pipe Tin Lined Valves Tin Lined Fittings Hard Lead Valves OIL WELL DRILLING MATERIALS Clays Colloids Weighting Agents Suspending Agents Thinners Logging Service TITANIUM ALLOY MANUFACTURING DIVISION Ferro Alloys of Titanium Titanates Titanium Dioxide (natural Rutile) Zirconium Chemicals Zirconium Ceramic Materials Zirconium Metal TITANIUM PIGMENTS Sold under the TITANOX brand name Titanium Dioxide (Rutile) Titanium Dioxide (Anatase) Titanium Calcium Pigments Titanium Dioxide (Technical Grade) GENERAL PRODUCTS Magnetite-Iron Concentrates Magnetite Sinter Ilmenite Concentrates Journal Lubricator Pads Locomotive Lubricating Devices Titanium Metal Linseed Oil Cake and Meal Expansion Bolts Screen Plates for Paper Mill Industry Small Steel Containers Bentones Refractories 0000-NLI-000018444 0000-N LI-000018445 National Lead Company Facilities in the United States