Document zz9d9mmeYpj3aBvKz9w19QrQ6

Saint Joseph Lead Company Annual Report -- 1936 America's Corporate Foundation; 1936; ProQuest Historical Annual Reports Pg- 1 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY Incorporated March 25,1864, under the Laws of the State of New York BOARD OF TRUSTEES Daniel K. Catlin, St. Louis, Missouri C. Merrill Chapin, Jr. Vice-President Hendon Chubb, of Chubb & Son Irwin H. Cornell, Vice-President Firmin V. Desloge, St. Louis, Missouri Clinton H. Ceane Chairman Stanly A. Easton Pres., Bunker Hill & Sullivan Mining & Concentrating Co. Andrew Fletcher, Vice-President and Treasurer James H. Grover, Pres., St. Louis Union Trust Co. J. Howard Holmes, St. Louis, Missouri Fred W. Shibley, Vice-Pres., Bankers Trust Co. EXECUTIVE OFFICERS Clinton H. Crane, President Irwin H. Cornell, Vice-Pres., and Sales Manager Andrew Fletcher, Vice-Pres., and Treasurer C. Merrill Chapin, Jr., Vice-President E. V. Peters, Vice-President H. B. McGown, Secretary Robert Bennett, Assistant Secretary George I. Brigden, 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 year 1936 was the best year in the lead and zinc industry since 1930. Your Company's better earnings reflect the improvement in the industry; the marked change for the better came after the first of July, 1936. The early months of the year were no better than the latter months of the year before, but in July buying began in both metals, resulting in a substantial reduction in pig lead and zinc stocks during the latter months of the year. Smelter stocks of lead, which started in 1930 at about 51,000 tons, increased steadily to 235,000 tons at the end of 1934, dropped slightly to 222,000 tons at the end of 1935, were down to 172,000 at the end of 1936. Monthly shipments from Smelters had decreased from 53,000 tons in 1930 to 26,000 tons in 1932, then increased gradually until they amounted to 36,000 tons in 1935 and 43,000 tons in 1936. Your Company's own stocks did not begin to decline until October 1936. Production in Southeast Missouri was increased October 1st and again November 1st. At the present time your Company's production and sales are in balance. Consolidated Earnings The Consolidated Income of $3,409,632.06 for the year ended December 31, 1936 before depletion, abandoned leases, obsolescence of the Doe Run Mill and Federal income taxes, shows an increase of $2,475,863.61 over the previous year. The net profit of $2,511,001.57 after all deductions compares with $486,199.77 for 1935. The im provement is primarily due to the increase in lead sales from 87,077 tons for 1935 to 126,846 tons in 1936, (25,274 tons of these sales were made from lead produced in prior years), and an increase in both lead and zinc prices. The Comparative Consolidated Earnings for the nine years ended December 31, 1936 are shown below: Year Income after Interest but Before Other Deductions --------------Provision for---------------- Depreciation Income Taxes Net Income before Depiction, Etc. Provision** for Depletion, Etc. 1936................ ........ 1935................ .......... 1934................ .......... $4,473,237.08 2,005,781.59 1,936,908.95 $1,063,605-02 1,072,013.14 1,121,960.66 $307,944.03 35,502.59 78,862.23 $3,101,688.03 898,265.86 736,086.06 $590,686.46 412,043.61 1,548,604.47 1933................ .......... 1932............... .......... 1931.............. ........ 1930.............. 1929................ .......... 1928................. 1,316,485.60 *287,881.11 1,622,220.01 11,954,769.82 1,022,922.73 1,011,845.62 1,149,702.39 1,319,064.38 1,268,935.08 1,050,348.88 390,314.61 883,938.98 455,623.88 293,562.87 *1,299,726.73 472,517.62 4,100,107.43 9,801,895.76 6,309,066.22 1,461,310.72 1,606,310.78 1,886,589.04 2,566,469.67 2,264,740.04 1,775,803.27 Loss. .: Includes abandoned leases for the years 1933 to 1936 inclusive and provision for obsolescence of the Doe Run Mill for the years 1935 and 1936. Dividends A dividend of ten cents per share was paid on March 20th, twenty cents on bothJune 20th and September 21st, and fifty cents on December 21, 1936, making a total of one dollar per share for the year. These dividend dis tributions aggregating $1,955,676.90 were paid entirely out of 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 1928 to 1936 inclusive: Year 1936......... .. 1935......... .. 1934......... .. 1933........ 1932......... .. t'.'. ii! .'-i.il $1,955,676.90 782,269.30 586,701.30 292,569.75 Dividends Paid to Stockholders Minority Interest in Subsidiaries Year Ldi!Compmy 1931.- .. . 1930........ . 1929........ 1928... . . $2,438,079.75 5,851,386.00 5,851,374.75 5,851,335-00 Minority Interest in Subsidiaries $ 14,618.75 128,865.00 70,305.00 76,253-00 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Financial . The Consolidated Balance Sheets as of December 31, 1936 and December 31, 1935 of St. Joseph Lead Company and Subsidiaries, and the related Summaries of Consolidated Net Income and Surplus for the years ended on the above dates, are submitted herewith as a part of this report. During the year the Company's $2,500,000 Five-Year 3% Bank Note due June 17, 1940 was paid. This payment was made possible principally by the sale of 25,274 tons of lead from inventories. The refinancing in 1935 of the $8,000,000 St. Joseph Lead Company Ten-Year Convertible 5K% Debenture Bonds due May 1,1941, has proved most fortunate, as no increase in the capital stock has been necessitated and the long-term indebtedness has now been reduced to $3,000,000 Ten-Year 4% Notes due June 1, 1945. At the close of the year the Company owned $108,000 par value United States, State and Municipal Securities, having a market value of $126,263.75. These securities were on deposit with the New York and Missouri State Industrial Compensation Commissions and the United States Department of the Interior and are therefore not available for sale. , As only three of the Missouri occupational disease suits remain to be settled or dismissed by the Courts, as compared with 123 suits pending at the close of 1935, $600,000 has been transferred as of December 31, 1936 from the Reserve for Contingencies to Earned Surplus. It is believed that the balance of $189,846.12 remaining in the reserve is sufficient to cover any contingencies that may arise. The employees have been notified that until government pensions equal the amount to which an employee is entitled to receive under the Company Pension Plan, the Company will pay the difference. Based on mortality tables, but with no consideration for labor turnover, the reserve of $848,983-75 is more than ample because the estimated liability is $402,177.00 as of December 31, 1936. Beginning January I, 1937, earnings will be based principally on the difference between selling price and current cost of production. Production in excess of sales will be taken into inventories at cost, without any provision for depreciation or depletion and when sales exceed production, the cost of such excess will be figured on the basis of "last in first out". This method is a change in the procedure effective prior to January 1, 1937, wherein current costs were included in the inventories and profits on sales were based on average costs. It is believed that the new method will more accurately reflect current profits. Lead Operations Due to the increased demand for lead, the operating schedule in the Southeast Missouri properties was increased on October 1, and again on November 1,1936. On December 1,1936, the 1929 wage and salary schedules were reinstated. The Herculaneum Smelter was closed down for general overhaul from July 27 to September 20, 1936, when the one-furnace operation was again resumed. As of February 8,1936, the Doe Run Lead Company, a wholly-owned Subsidiary, was liquidated, all assets and liabilities being transferred to the St. Joseph Lead Company at their current book values. On November 16, 1936, the necessary legal papers were completed and the $175,000 due the National Lead Company for the purchase of their St. Francois properties was paid. Zinc Operations The Balmat and Edwards properties located in northern New York were operated throughout the year on a full-time schedule. On November 1st an increase of 5% in salaries and wages was authorized, and on December 1st the 1929 rates were reinstated. At the Josephtown zinc smelter in Pennsylvania, which was initially operated in 1931, the two-fumace basis of zinc oxide production was increased to three furnaces on April 11, and to four on July 27, 1936. Two additional furnaces are equipped for making slab zinc, and the entire metal output has been. sold. Due to the satisfactory demand for "St. Joe" oxide and zinc, an additional roaster has been ordered. Wages and salaries were increased in May'and in|November, and compare favorably with the average of the district. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Miscellaneous Operations At the Aguilar Mine, located in the Province ofjujuy, Argentina, the zinc circuit was dosed down in October so that the full capacity of the power plant, mill and trucking facilities could be used to increase the lead output. Orders for additional equipment have been placed, and it is expected that during the summer of 1937 the property will be operating on 500 tons of ore per day, producing both lead and zinc concentrates. The Block "P" Mine in Montana, and the mills of the Kansas Explorations, Inc., located in the Tri-State District, remained closed throughout the year. The gold mine at Atlanta, Idaho, was shut down on May 1st, and the property sold as of May 30, 1936. The personnel has been shifted to a California gold property known as the Sheep Ranch Mine, on which an option has been taken. 1' ; . . Stockholders The comparative share holdings for December 31st of each year since 1931 are as follows; Year 1936.................................. 1935.................................. 1934................................. 1933.................................. 1932.................................. 1931.................................. Number 5,560 5,304 5,300 5,145 5,360 5,063 19 or Less 1,483 ; 1,491 1,549 1,511 1,584 1,784 20-99 1,851 1,748 1,712 1,684 1,796 1,349 100-199 1,000 911 873 835 875 831 200-Over 1,226 1,154 1,166 1,115 1,105 1,099 General The stockholders are again reminded that the net value of the capital assets set forth on the accompanying Consolidated Balance Sheets are depleted and depreciated figures based on appraised values of March 1,1913 as to properties owned at that date, and on cost as to subsequent additions; 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 ofJanuary 1, 1935, by dividing the undepleted book value by the estimated tdnnage of ote 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 25, 1937. # 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 Ac End of Year 1936.................... ............. 1935................... ................. 1934.................... ....... 1933.................... ................. 1932.................... ................. 1931.................... .......... 1930.................... ......... 1929.................... ................ 1928.................. ................ 172,423 222,306 235,457 203,061 176,157 151,653 103,247 54,900 33,618 Average Lead and Zinc Prices in Cents Per Lb. Lead Lead Zinc F.O.B.St. Louis F.O.B.St.Louis F.O.B.St.Louis E.& M.J. St. Joe E.&M.J. Average Average Average 4.560 3.915 3.724 3.735 3.042 4.049 5-384 6.660 6.131 4.534 3.878 3.700 3.652 3.055 4.007 5.456 6.646 6.133 4.901 4.328 4.158 4.029 2.876 3.640 4.556 6.512 6.027 ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Production in Tons Year 1936............. .... 1935............ .... 1934............. .... 1933............. .. . 1932............. .... 1931............. .... 1930............. .... 1929............. .... 1928............. .... Ore Mined N. Y. and Mo. 3,804,451 3,382,403 3,269,864 2,652,944 3,233,172 4,465,794 5,999,813 5,750,412 4,833,194 Lead Concentrates 147,160 133,044 124,240 114,651 147,242 196,481 243,614 245,958 204,181 Pig Lead Equivalent 101,999 92,611 86,060 78,248 99,242 131,586 164,886 165,114 137,673 Zinc Concentrates 54,590 47,214 46,353 34,741 34,677 63,348 86,795 60,475 45,928 Slab Zinc Equivalent 26,400 22,857 22,389 16,898 17,017 31,498 42,554 29,848 23,257 Lead Sales and Stocks at End of Year in Tons Year Lead Sales jH St. Joe Production Purchased Lead Sold Total Lead Sales 'Pig Lead Equivalent of Stocks 1936.......... 1935.......... .......................................... 1934.......... 1933.......... ........................................ .. 1932.......... ......................................... 1931.......... 1930 ........ .......................................... 1929.......... ......................................... 1928.......... 87,077 72,462 81,467 137,502 160,490 47,776 41,714 39,566 47,988 53,473 69,085 82,221 61,399 52,342 174,622 128,791 124,530 120,450 134,940 174,347 219,723 221,889 188,982 83,575 108,849 103,918 100,453 96,484 78,390 51,536 22,163 16,397 '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. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Summaries of Consolidated Net Income For the Years Ended December 31, 1936 and 1935 Year ended December 31, 1936 Gross Sales (Including royalty earnings--1936, $41,088.32; 1935, $18,963.79)............................................................................................................. Cost of Sales (exclusive of depreciation and depletion)........................................... $22,646,210.86 17,526,818.66 1935 $15,286,698.04 12,524,602.98 Gross Profit from Operations before Depreciation and Depletion Deduct: Selling, general and administrative expenses...................................... Capital stock and miscellaneous other taxes................................... *. $ 509,033-95 55,960.59 $ 5,119,392.20 $ 450,803.05 564,994.54 30,558.54 $ 2,762,095.06 481,361.59 Net Profit from Operations before Depreciation and Depletion Other Income: Interest......................................................................................................... Dividends................................................................................................... Profit on sale of investments, net......................................... .. . Miscellaneous........................................ .................................................... $ $ 4,554,397.66 34,839.88 16,425.00 8,454.80 19,833.82 $ 79,553-50 $ 2,280,733.47 41,213.56 5,950.00 1,683.87 674.25 49,521.68 Gross Income before Depreciation and Depletion....................................................... $ 4,633,951-16 Interest and Expense on Bonds and Notes............................. ... . ........ .................... 160,714.08 $ 2,330,255.15 324,473.56 Income before Depreciation, Depletion and Other Deductions............................ $ 4,473,237.08 Provision for Depreciation............................................................................................ .............. 1,063,605.02 $ 2,005,781.59 1,072,013.14 Income before Depletion and Other Deductions................. ........................ .. Depletion and Other Deductions: Provision for; - Depiction..........................................................................,.................. Obsolescence of the Doc Run mill........................ ... .. Federal income taxes (no liability incurred for surtax on undis tributed profits)....................................................................... . Abandoned leases written-off......................................................... $ 490,686.46 100.000.00 307,944.03 ........ $ 3,409,632.06 898,630.49 $ 303,009.11 100,000.00 35,502.59 9,034.50 $ 933,768.45 447,546.20 Net Income for the Year before deducting Minority Interest................................. $ 2,511,001.57 Deduct Proportion of Net Income Applicable to Minority Interest....................................... ---- $ 486,222.25 22.48 Net Income for the Year....................... .................................................................................. $ 2,511,001.57 $ 486,199.77 Notes: The equity of St. Joseph Lead Company in net losses (exclusive of any provision for loss on foreign exchange and of deple tion of ore reserve values m excess ui cost) for the years 1936 and 1935 of subsidiaries not included in the above summaries of consolidated net income was $133,499-71 and $11,911.62, respectively. _ 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, 1936 and 1935 Surplus at Beginning of the Year (including surplus from revaluation of ore reserves--1936, $384,963-21; 1935, $394,982,57)............................................................................ ............... Year Ended December 31, 1936 1935 $ 6,506,185.03 Additions: Net income for the year............................................................................... ..................... ... Transfer from reserve for contingencies................................................................. ... 2,511,001.57 600,000.00 486,199.77 Total............................................................... ....................... ..................... ... $ 8,770,018.29 $ 6,992,384.80 Deductions: \ Redemption premium, including uaaraortized debt discount and expense, on St. Joseph Lead Company 5/42% bonds called for payment June 18,1935........ ............................................................ Cash dividends paid during the year --.............................................. ....... $ 1,955,676.90 5 551,098.78 1,955,676.90 782,269.30 1,333,368.08 Surplus at End of the Year (including surplus from revaluation of ore reserves--1936, $373,853.44; 1935, $384,963.21).......................... .. $ 6,814,341.39 $ 5,659,016.72 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD 0%, Consolidated Balance SheC( ASSETS Capital Assets: Ore reserves and mineral rights: Appraised value as of March 1,1913................................... Less reserve for depletion.......................................................... December 31,1936 $13,500,000.00 13,500,000.00 _ December 31, 1935 $13,500,000.00 13,500,000.00 Additions subsequent to March 1,1913 (at cost)...................... $21,010,438.18 Less reserve for depletion........................................................... 14,108,030.06 Appreciation arising from revaluation subsequent to March 1,1913................................................................ .. Less reserve for depletion......................................................... $ 4,315,000.00 3,941,146.56 Total ore reserves and mineral rights, net................ .... Shafts and underground equipment (at cost).............................. .. $ 5,118,991.70 Less resave for depreciation...... ..................................................... 3,783,253.07 Land, buildings, plant and equipment (at cost)............................... $19,368,359.28 Less reserve for depreciation............................................................. 11,499,771.75 Railway construction--Cost being refunded............ ................... 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 lower of cost or market; market quotation value--1936, $494,575 00; 1935, $295,727.00) Sundry securities and loans (at cost, less reserve, $200,000.00).... $ 1,890,000.00 824,653.66 100,000.00 488,377.00 225,530.24 $ 6,902,408.12 373,853.44 $ 7,276,261.56 1,335,738.63 7,868,587.53 126,975.00 $16,607,562.72 3,528,560.90 $21,428,204.03 14,106,279.21 $ 4,315,000.00 3,930,036.79 $ 4,987,367.22 3,635,766.34 $19,356,694.79 10,760,125.56 $ 1,890,000.00 818,653.66 100,000.00 294,627.00 226,048.32 $ 7,321,924.82 384,963.21 $ 7,706,888.03 1,351,600.88 8,596,569.23 150,410.00 $17,805,468.14 3,329,328.98 Current and Working Assets: Cash on hand and in banks....................................................... .. Federal, State, and Municipal securities, other than on deposit with Federal and State departments (market quotation value--1935, $423,698.67).................. ................................................................. Notes and accounts receivable--Trade (less reserve--1936, $21,426.63)....................................................................................... Due from subsidiaries not consolidated............................................... Other notes and accounts receivable............................................... . Inventories of lead, zinc, etc. (at cost, exclusive of depletion ahd depreciation; less than market)..................................... ........... Materials and supplies (at cost, less reserve for slow-moving items, $200,000.00)............................................................................ . $ 1,835,606.70 3,182,756.89 55,555.26 60,744.00 5,422,130.18 1,571,012.60 $ 1,421,702.12 12,127,805.63 420,745.26 1,441,786.32 2,945.51 44,141.00 6,986,366.16 1,426,968.49 11,744,654.86 Miscellaneous Assets: Federal, State and Municipal securities on deposit with Federal and State departments (market quotation value--1936, $126,263.75; 1935, $115,329.86).......................................................................... Special deposit (for bonds called but not presented for payment, including premium and interest--see contra).......................... Cash in closed banks....................................................................... . $ 106,395.76 ....... 649.40 28,193.10 $ 105,870.73 135,238.26 15,447.44 32,473.68 153.791.85 Deferred Charges: Prepaid insurance, taxes, etc.................................................................. 110,084.31 172,104.12 Total................................................................................ $32,509,251.82 $33,205,347.95 3 Notes: . The net value of che capital assets shown in the ^ftso of the comments included in the text of this report. F The parent company is contingently liable as a guaraSbai guaranty amounted to $650,000.00 at December 31,193$,6 All subsidiaries of the parent company, with the exccfflAj eluded in the above consolidated balance sheets. The BjSSt, in the net losses of said companies since acquisition (exd&n) of ore reserve values in excess of cost) was $147,696.91 ,l! dividends on its 7% cumulative preferred stock (75% oflSt in the amounts of $922,250.00 and $780,850.00, respective No inter-company profits or loss are included in the awso Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ||Y AND SUBSIDIARIES jcember 31, 1936 and 1935 LIABILITIES Capital Stock: Authorized, 2,500,000 shares of $10.00 each....................................... December 31, 1936 $25,000,000.00 December 31,1935 $25,000,000.00 Issued, 1936, 1,996,806 shares; 1935, 1,996,801 shares..................... Less in treasury--41,127 shares. ........................................ . .... Outstanding, 1936, 1,955,679 shares; 1935, 1,955,674 shares.......... Scrip outstanding..................................................................................... $19,968,060.00 411,270.00 $19,556,790.00 348.50 $19,968,010.00 411,270.00 $19,556,740.00 $19,557,138.50 398.50 19,557,138.50 Long-Term Indebtedness of St. Joseph Lead Company: Ten-year 4% debenture notes due June 1, 1945................................... Five-year 3% note payable--Bank, due June 17,1940....... .............. $ 3,000,000.00 $ 3,000,000.00 3,000,000.00 2,500,000.00 5,500,000.00 Current Liabilities: Accounts payable (trade)...................................... ...........................,. Wages payable......................................................................... . ...... Accrued interest on notes....................................................................... Accrued taxes (including income taxes)............................................ $ 1,300,614.77 58,479.63 9,999.65 498,126.11 $ 828,443.61 60,113.88 1,867,220.16 12,708.33 73,272.80 974,538.62 Miscellaneous Liabilities: Minority interest in capital stock and surplus of subsidiary company............................................................................................ Redemption account--St. Joseph Lead Company, ten-year con vertible 5H% debenture bonds called June 18,1935, including premium and interest (sec contra)................................................ $ -- 649.40 $ 512.94 649.40 15,447.44 15,960.38 Deferred Credits: ''! Unrealized profit from sale of houses, etc............................................ Reserves: For injury claims and workmen's liability insurance......................... For employees' life insurance and retirements..................................... For contingencies.................................................. ............................... $ 146,157.77 848,983.75 189,846.12 84,914.73 $ 147,945.80 635,898.33 1,184,987.64 633,880.91 80,968.69 1,417,725.04 Surplus: Earned.......................................................................................... ... -- Revaluation of ore reserves.............................................................. .. $ 6,440,487.95 373,853.44 $ 5,274,053.51 6,814,341.39 384,963.21 5,659,016.72 Total............................................................................................................. $32,509,251.82 isolidated balance sheets should be considered in the light bank loans of a foreign subsidiary, not consolidated, which >6,200.00 at December 31, 1935. Aguilar Corporation and its foreign subsidiary, are in St. Joseph Lead Company at December 31, 1936 and 1935, any piovisiou tor loss bn foreign exchange and of depletion 1,197.20, respectively. Aguilar Corporation, was in arrears in St. Joseph Lead Company) at December 31, 1936 and 1935, isolidated balance sheets. $33,205,347.95 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 22 EAST 40TH STREET NEW YORK ACCOUNTANTS' CERTIFICATE St, Joseph Lead Company: We have made an examination of the consolidated balance sheets of St. Joseph Lead Company (incorporated in New York) and its subsidiary companies as of December 31, 1936 and 1935, and of the related summaries of consolidated net income and surplus for the years 1936 and 1935. 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 system of internal accounting control. All subsidiary companies controlled by your company were examined by us with the exception of the foreign subsidiary of Aguilar Corporation (not consolidated), which subsidiary has been audited by another firm of independent public accountants. Physical inventories were taken by employees of the companies at varying dates during each year, and in substantiation of inventory quantities as of December 31, 1936 and 1935, we accepted certificates from officials of the companies. The cost of inventories of lead, zinc, etc., does not include either depletion or depreciation. In our opinion, subject to the foregoing and to the realizable value of investments and advances, the accom panying consolidated balance sheets and related summaries of consolidated net income and surplus, with the foot notes thereon, fairly present, in accordance with accepted principles of accounting consistently followed by the companies, their financial condition at December 31, 1936 and 1935, and the results of their operations for the years ended those dates. HASKINS& SELLS New York, February 25,1937. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH .LEAD COMPANY PRESIDENTS ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR 1936 ` Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.