nited States Gy psum Company (AN ILLINOIS CORPOMTION) Fortieth Annual Report Fiscal Year Ended December 31, 1941

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2 nited States Gy psum Company (AN ILLINOIS CORPOMTION) Fortieth Annual Report Fiscal Year Ended December 31, 1941

3 February 13,1942. To the Stockholders of the United States Gypsum Company: Net profits of United States Gypsum Company and subsidiaries for the year 1941 were $7,033,629, equivalent to an earning of $5.42 per share of outstanding common stock, after deducting dividends paid on the 7% preferred stock. The corresponding profits for the year 1940 were $7,052,974, representing an earning of $5.44 per share. The strike which closed a number of plants for about ten weeks during the summer is estimated to have cost the Cornpany in excess of $500,000 in net profits. This cost is attributable to the loss of business suffered by the Company while it was deprived of the use of part of its production facilities, and to unusual expenses incurred during the period. During the year the criminal action brought against the Company and certain of its officers and employees for an alleged violation of the Sherman Act came to trial in the Federal District Court in Washington, D. C. At the close of the Government s case the court directed a verdict for the defendants and dismissed the charges. This case not only absorbed a great deal of time and effort of officers and employees of the Company during the past year and a half, but

4 required the presence in Washington of the individual defendants during the whole seven weeks period of the trial. Three other suits are pending against the Company wherein the United States charges certain violations of the Federal Anti- Trust Laws. The legal expense and other costs to date in these cases is in excess of $400,000. Provision for income and excess profits taxes increased $3,049,000 for the year, from $4,132,000 for the year 1940, to $7,181,000 for This increase in taxes exceeded the $3,029,655 increase in net profits before taxes, resulting in the decline in net profits of $19,345. Cash dividends amounting to $4,732,371 were paid during the year, of which the preferred stockholders received $547,554, and the common stockholders received $4,184,817, or $3.50 per share. Expenditures for plant additions and improvements The Company is supplying important quantities of building materials for War and Navy Department projects, plants uired by the war efforts. The total building activity for ar 1942 will be dependent, to a large extent, upon the of this type of construction. Respectfully submitted, SEWELL L. AVERY, Chairman of the Board.

5 ASSETS United States and subsidiary Consolidated Balm Current Assets: Cash and demand and time deposits $ 3,242, U.~.xG;;t~ment obhgatrona OFher (short term) $ 6,513,OOO.OO 8,641,26X26 l&154, State, county and municipal bonds (market quotations $1,292,956) ,275, Ac.u;;;mad notes receivablc $11,008, Other Less-Reserve for doubtful accounts. In;;rzhT; priced not in excess of cost - Materials-raw and in process,..... $ 3,978, Finished goods Supplies $11,215,5% ,285, ,453, ,927,s ,359, $37,318, Investments, Etc. : Securities, of which $279,196 at carrying value is deposited for insurance reserve (market quotations $294,Oo).... S 285, Miscellaneous receivables, claims, etc ,% , Plant and Eaubment: Land, minera deposits and timber.... $ 8,279, Less--Reserve for depletion., ,427, $5 6,852, Buildings, equipment and steamers ,983, Less-Reserve for depreciation ,249, ,733, ,585, Deferred Charges, Etc.: Stripping, development, etc., less amortization $ Prepard msurance, taxes and expenses Patent expenditures, less amortization of $68, The gross amounts at which Plant and Equipment are stated are based on cost (including amounts at which acquisitions for stock were recorded), less reductions in mineral deposits in 1939 ($3,85~,000) and in buildings and uipment in 1932 (the effect of which is a reduction in present gross amount o 988,819,382 and in balance after depreciation of $2,758,455). 2%, , ,692.&l 1,104, ;$76;108,967.lj _* $

6 Gypsum Company ember 31,1941 Current Liabilities: LIABILITIES Accounts payable Dividends payable *... Accrued payrolls, local taxes, etc Federal and Canadian income taxes Reserves: For contingencies For insurance and guarantees $ 2,257, , ,214, ,436, $11,045, $ 876, , ,192, Capital Stock and Surplus: Preferred stock+loo-par value, 7%cumulative, non-callable- Authorized shares; Issued-87,277 shares $ 8,727, In treasury-9,055 shares (acquired at cost of $908,429) , Outstanding-78,222 shares $ 7,822, Common stock-$20-par value- Authorized-3, shares; Issued-1,251,821 skares $25,036, In treasury- 55,448 shares (acquired at cost of $1,256,822), of which 4,765 shares are subject to option agreements with officers and managers under _a plan approved by the stockholders ,108, Outstanding-1,196,373 shares ,--i-- $76,708,967.15

7 United States Gypsum Company. L a& SUBSIDIARY COMPANIES Summary of Consolidated Profit and Loss Accounts for the Years Ended December 31, 1941 and 1940 Net Profits from Operations before depletion and depreciation,... Deduct: Depletion of mineral deposits and timber $ 129, $ 1 Depreciation of buildings, equipment and steamers, based on gross amounts shown on balance sheet....*... Total depletion and depreciation Net profits from operations Other Income: Interest on securities (less amortization of premiums) $ 54, $ Other interest, royalties and rents (net) , , , Profit on sale of securities Total other income j h3.86 Net profits from operations and other income 914,506, l&66, Deductlon8 From Income: Loss on retirement of lant assets $ Expense arising from iederal anti-trust suits... 13, $5 278, , , Total deductions from income $ 291, , Net profits before provision for Federal and Canadian income and excess profits taxes $14,214, $11,184, Provision for Federal and Canadian Income and Escem Profks Taxes: Income tax Excessprofitstax Total provision for Federal and Canadian income and excess profits taxes.... Net profits for year $3 7,181,OOO.OO The foqoing includes net profit8 of Canadian subidiaria3 of $569,302 for the year 1941 and $413,453 for the year S 4,132,OOO.OO 3 7,052,974.11

8 / Paid-in Surplue: Balance at end of year ,831, $ 5,831, v (No transactions during year),> Earned Surplue: I+lance at beginning of year $24,588, $22,265,090.68, mrlrlnuu- L O&d States Gypsum Company ad SUBSIDIARY COMPANIES Consolidated Surplus Accounts for the Years Ended December 31, 1941 and 1940 Net profits for year ,033, ,052,974. I1 Total,...831,( , 829.3r&C64.~ ---,-- Deduct-Cash dividends- On preferred stock... $ 547,554.al 3 547,554.oo On common stock.... 4,184, ,182, Total... $ 4,732, ,729Q14.00 Balanceatendofyear $24,588,150.79, Te tk BOARD OP DIRECTORS, 1 United States Gypsum Company: -_ 1 We have examined the consolidated balance sheet of United States GyMlum Company k, [sn Illinois corporation) and its subsidiary companies as of December 31 nts of consolidated profit and loss and su$us for the year then ended, have reviewed em of internal control and the accounting procedures of the companies and, without a detailed audit of the transactions, have examined or tested accounting records of nies and other supporting evidence, by methods and to the extent we deemed Gur examination was made in accordance with generally accepted auditing plicable in the circumstances and included all procedures which we considered bn our o inion, the accompanyin consolidated balance _---_ ahcct ---- and related statements ---- of &&andposs and surplus Dresent 96airlv the nositia ARTHUR ANDERSEN h CO.

9 ASSETS current Atwets: 1941 Cash and demand and time deposits... $ 3,242, United States Government securities... 15,154, State, county and municipal bonds.... 1,275, Accounts andl[notes receivable (net) ,285, Inventories... 7,359, Total $ 37,318, Investments, Etc. : Securities and miscellaneous receivables $ 699, Employees stock-purchase contracts... 1, Total , Plant and $ 64,262, Deferred Charges, Etc S 1,104, Total Assets $103,385, LIABILITIES Current Liabilities: Accounts payable $ 2,257,876&l Dividends a Accrued lia iifi lties. able , ,651, Property-purchase installments Total $ 11,045, Deferred Maturities, property-purchase installments $ - Reserves (including reserves for depletion and depreciation).,..., ,869, Net Worth: Preferred stock, ,......,..... $ 7,822, Commonstock... 23,927, Surplus ,720, Total...., $ 64,470, Total Liabilities and Net Worth.. $103,385, Net Working Capital ,.,..... $3 2$272, United Stat{ ad SUBSIDIAl Comparative G 1940 $ 2,573, ,140, ,927, ,627, ;050; $63,30$ $ LO $95,010, $ l&0, , ,276, $ 6,873, ,981, ,822, ,913, ,419, $62,155, ,010,080.26

10 py- $ [- purn Company NIES ed Balance Sheets D 1939 t. I: $ 2,608, s yg@f p$!g:~ 5:949:100:95 $22,162, $ 2,451, ;010; ,753, ,364, $20,583, $ 5,782, ,113, ,383, ,802, ,682, $21,764, $ S 29p;;J; $ 302:850:58 $X4,852, $ S $3 326, $3 329jl18.97 $58,961, $ lj78j91.65 $88,496, $ 877JO4.31 $84,681, $ 857, ,912, ; g 9sog , ,6;~X$.O$ S 2,727;574:62 $ 895, , ,531, , $ 2,742, $3 1,496, , ,509, ,261; s - $ $ $ 7,822, : g$fe$e:e $ 7,822, ,883, ,280, $62,986, $88,496, % ;863; ,490, i84;68 l&.57 $59,264, $81,912, $19,434,

11 United States Gypsum Company DIRECTORS SEWELL L. AVERY, Chicago, Ill. WALDO A. AVERY, Detroit, Mich. M. H. BASQUIN, Chicago, Ill. A. E. ENQLISW, Los AngeZeJ, Calif. C. A. ENmIsH, b Angde$, CaZv. JOHN W. FOWLER, DeZray Beach, FZa. W. L. KEADY, Chicago, Ill. A. F. KING, New York, N. Y. OLIVER M. KNODE, Chicago, IZZ. JOHN E. MACLEISH, Chicago, IZZ. W. B. MCMILLAN, St. Lo& MO. WALTER P. PAEPCKE, Chicago, Ill. %ROLD L. PEARSON, Chicago, IZZ. C. H. SHAVER, Chicago, Ill. SOLOMON A. SMITH, Chicago, IZZ. OFFICERS Chairman of the Board SEWELL L. AVERY President OLIVER M. KNODE Yke President W. L. KEADY Yke President...., M. H. BASQUIN Vice Pre.Gdent J. H. NOLD Vice President J. P. SANGER Vice President A. F. KING Secretary and Treamrer C. H. SHAVER General Cowset SCOTT, MACLEISH AND FALK Transfer Agents UNITED STATES GYPSUM COMPANY, Chicago, Ill. THE CHASE NATIONAL BANK, New York, N. Y. Registrars of TranJfm THE NORTHERN TRUST COMPANY, Chicago, Ill. MANUFACTURERS TRUST COMPANY, New York, N. Y.

12 United States Gypsum Company General Ofices 300 West Adams Street CHICAGO, ILLINOIS BOSTON ALBANY NEW YORK BUFFALO MONTREAL TORONTO PHILADELPHIA PITTSBURGH BALTIMORE WASHINGTON CHARLOTTE ATLANTA BIRMINGHAM CLEVELAND CINCINNATI Sa Zes Ofices DETROIT INDIANAPOLIS CHICAGO MILWAUKEE MINNEAPOLIS ST. LOUIS KANSAS CITY OMAHA DALLAS HOUSTON DENVER SALT LAKE CITY SEATTLE PORTLAND SAN FRANCISCO LOS ANGELES Subsidiary Companies United States Gypsum Company (Delaware) Toronto Asphalt Roofin Mfg. Co., Ltd. Canadian Gypsum Company, Limited Gypsum Packet Company, Limited Samson Plaster Board Company 1111

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