ANNUAL REPORT

1948

i

President’s Report

SALES While demand for our products continued at high levels throughout 1948, our volume was

slightly curtailed by a somewhat lower level of total meat produc- tion and by a long strike. Total sales and operating revenues in 1948 amounted to $704,664,524, a reduction of less than 3% from the previous year after allowing for one week’s difference in the respective periods.

EARNINGS Our consolidated net income from all opera- tions for 1948 was $6~02,578. Aside from the

strike of plant employees which adversely affected our 1948 re- sults, earnings for the year were also reduced by abnormal price changes and because costs increased more than selling prices.

On our entire business we paid out in 1948 for livestock, raw materials, wages and salaries, taxes, expenses, etc., a little more than 99$ for each dollar taken in during the year. Net income was, therefore, slightly less than l$ for each dollar of sales.

DIVIDENDS Regular quarterly dividends were paid during the year on the $4.25 preferred stock. Quarterly

dividends of 25$ per share and an extra dividend of $1 .OO per share-a total of $2.00 per share-were paid during the year on the common stock.

SUMMARY OF OPERATIONS

1948 1947

Sales and operating revenues (52 weeks) (53 weeks)

$704,664,524 $738,293,912 Net income :

Total 6,702,578 15,448,823 Per share of common stock 2.70 6.82 For each dollar of sales l.O$

Dividends paid: 2.q

On preferred stock ($4.25 per share) 985,340 1,017,429 On common stock (1948-$2.00 per

share; 1947-$0.90 per share) 4,232,774 Working capital

1,904,738 49,259,702 53,860,255

FI ANCIAL

8

The decrease in working capital during the year

C NDITION is due principally to the fact that expenditures made during 1948-for additions to properties,

for retirement of first mortgage bonds and preferred stock, and for dividends-exceeded the funds made available by the year’s earnings.

Receivables and Inventories : Accounts receivable, less reserves, at the end of

the 1948 fiscal year amounted to $27,479,745, or $2,261,612 more _ than at the end of the previous year. Similarly, the value of in-

ventories increased from $53,432,284 on November 1, 1947 to 1 / $63,089,598 on October 30, 1948. The major part of the inventory increase was due to increased quantities but prices also were some- what higher. As in previous years, certain product inventories, such as pork, hides and vegetable oils, have been valued at cost according to the “last-in, first-out” inventory method, with the result that the major portion of the inventory quantities valued this way are carried at 1740 costs.

Consistent with the procedure followed in pre- vious years, we have provided a reserve of $8,200,000 at the end of the 1948 fiscal year to cover the excess of the estimated cost of pork, hides and vegetable oils replaced in November and Decem- ber, 1948 over the “last-in, first-out” inventory prices at which such products will be valued at the end of the calendar year 1948 for income tax purposes.

Properties : We spent $6,150,158 during the year for prop-

erty additions, improvements, and replacements. Most of these expenditures were for additions and improvements to existing facilities. Even though construction costs have been high, it has been our policy to maintain our facilities in good condition for efficient operation and to provide new or improved facilities when justified by the prospect of lower operating costs.

Capital Stock and Funded Debt: Pursuant to the retirement provision of our

$4.25 preferred stock, we retired 5,000 shares of preferred stock on February 2, 1948, and another 5,000 shares will be retired on or before February 1, 1747. In 1748 we also retired $1,138,000 of our first mortgage bonds through the operation of the sinking fund.

WILSON’S SALES DOLLAR Henf in 1948

Out of each dollar received from sales

in 1948, we paid out SO.S$ for live-

stock, materials and supplies; 9.8$ for

wages and salaries; 2.1$ for transpor-

tation of products; 1.3$ for taxes; 1.3$

for depreciation and repairs; 3.7$ for

all other costs and expenses;

leaving a little less than IQ

Other costs G expenses 3J(2 ,

Earnings ( remainder)

EMPLOYEE On March 16, 1948 the United Packinghouse

RELATIONS Workers (CIO) Union called a strike against several meat packing companies, including our

Company, to enforce demands for a very substantial wage in- crease. Before the strike was called, we offered to increase wages 9Q per hour, which was refused. As a result of the strike, opera- tions at six of our major meat packing plants were terminated or materially reduced beginning March 16. Because of our inability to settle the strike with the Union on a fair and equitable basis, our Company, during the strike, increased wages 9$ per hour. Throughout the strike many employees returned to work, and on June 7 full operations were resumed.

On or about October 18 other members of the industry granted a further wage increase of 4$ per hour to their employees. Following our policy of paying the wage rates pre- vailing in the industry, we increased the wages of our production employees by the same amount.

ANTI-TRUST In September, 1948, the United States Depart-

PROCEEDINGS ment of Justice filed a civil suit in the Federal Court in Chicago, Illinois, charging our Com-

pany and three other companies with violation of the Sherman Anti-Trust Act. This suit seeks to split up the four companies into fourteen separate units and, in the case of YVilson & Co., Inc., into two separate enterprises. In our opinion, there is no basis for this suit and we are confident that the Government will not be successful in establishing or proving its charges.

RESEARCH Research to develop new products, and improve the quality and lower the cost of existing prod-

ucts, is being continually emphasized by our Company. New, modern, expanded space and equipment will soon be completed to accommodate our growing research work. Our improved and distinctive label design, illustrated on the inside cover of this report, is now in use on most Wilson food products. This is a part of our broad merchandising program, which is so essential in these days of self-service stores and intense competition for the consumer’s food dollar.

LOOKING More meat is expected in 1949 than in 1948.

AHEAD Increased production, compared with a year earlier, should begin in the spring months as a

result of record feed supplies. By fall there should be consider- ably more meat. More production-the only sound soIution to

POPULATION PRODUCl

19'00 1910 1920 1930 *1940

ON 30

k

20

10

0

increasing demand and high prices-is in prospect, providing the livestock and meat industry is not again seriously threatened or subjected to governmental price and other controls.

The outlook for more meat is favorable to the meat industry as well as to consumers. Volume is a very important factor in the efficient operation of meat processing facilities.

Unusual price changes, such as we had in 1948,

also have a vital effect on meat packing results. With ample live- stock feed available and with prices allowed to vary in relation to supply and demand, we may expect orderly marketing of live- stock and a good distribution of meat throughout the year. Under these conditions, abnormal price changes on account of meat sup- plies are unlikely.

It appears that consumers are no longer willing to spend quite as high a percentage of their income for meat as in the last few years when many things were scarce and prices were advancing steadily. However, there continues to be a broad demand for meat, and no reason for expecting it to change very much in 1949. These prospects-relative stability in demand and a good lev e of production-provide the foundation for consider- 1 able confidence in the outlook for our Company in the year ahead.

and growing. The potential demand for meat is both great

Over the years ahead we will need more livestock and meat. Our population is growing faster than our meat pro- duction, as shown by the chart above. Yet our people want more

meat. They need it to improve their standards of living and health. We believe that more meat can be produced-and should be-in view of our nation’s great challenge to conserve and re- habilitate its land resources. Most soil-conserving practices are practical and profitable only because the crops produced can be marketed through livestock. Livestock and proper land use are natural companions. An expanding livestock and meat industry is in the national interest.

* * * *

Our Company has many things to be proud of and to give us confidence in the future. For example, we have a generous measure of good-will with our suppliers and our cus- tomers-coming from our efforts to trade fairly and produce quality, dependable products. But our deepest satisfaction, and highest assurance, lies in the great body of conscientious, loyal and able Wilson employees. They did a good job in 1948, and we are confident they will do as good or better in 1949.

President Chicago, Illinois, January 17, 1949.

The annual meeting of stockholders will be held on Tuesday, March 15, 1949. A formal notice of the meeting, together with a proxy statement and form of proxy, will be mailed to each stockholder on or about February 7, 1949.

WILSON 8z CO., INC. (DELAWARE)

AND ITS DOMESTIC AND FOREIGN SUBSIDIARIES

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Consolidated Statement of Income and Earned Surplus

Fiscal Year Ended October 30, 1948 (52 Weeks)

(The results of foreign operations included herein are shown on accompanying statement)

NET SALES and operating revenues . . . . . . $704,664,524

Dividends and interest on securities and miscellaneous other income . . . . i: . . . . . . . 152,443

$704,816,967

LESS:

Cost of goods sold, including provision for replacement of “last-in, first-out” inventories, but excluding items below $635,225,160

Excess of cost of replacement of “last-in, first-out” inven- tories involuntarily liquidated in prior years over the basic cost thereof, less estimated reduction of prior years’ federal taxes resulting therefrom . . . . 904,576

Selling, general and administrative expe;ses . . . 49,135,873 Depreciation . . . . . . . . . . 2,826,498 Taxes (other than on income) . . . . . . . 4,179,497 Interest and amortization of debt discount and expense on

First Mortgage 3oJ, Bonds . . . . . . . 490,196 Other interest . . . . . . . . . 457,911 Premium on First Mortgaie 3% Bonds purchased for sink-

ing fund . . . . . . . . . . . 11,380 Miscellaneous income deductions . . . . . . 48,605 Minority interest in net income of subsidiaries . . . 61,147 Provision for taxes payable on income-

Federal income tax . . . . . . . . 4,475,ooo Foreign income taxes . . . . . . . . 298,546 698,114,389

NET~NCOMEFORTHE YEAR . . . . . . . $ 6,702,578 EARNED SURPLUS at November 1, 1947 . . . . . 39,660,138

$ 46,362,716 DEDUCT:

Dividends paid in cash- On $4.25 preferred stock ($4.25 per share) . . . $ 985,340 On common stock ($2.00 per share) . . . . . 4,232,774

Excess of cost over recorded value of preferred stock retired I 72,185 5,290,299

EARNED SURPLUS at October 30, 1948 . . . . . $ 41,072,417

WILSON & CO., II!

AND ITS DOMESTIC AND

-lJ[

Consolidated Balance S

(Particulars of the foreign net assets included b

CURRENT ASSETS : Cash $ 9,896,640

Accounts receivable- Trade . . . . . . . . . . . . . $ 2:,X~~,~~~ Other . , . . . . . . . . . . . , ,

$ 28,175,865 Less-Reserve for doubtful accounts . . . . . . 696,120 27,479,745

Inventories- Packing house products valued on the basis of market, less

allowance for selling and distribution expenses, other products and supplies at the lower of cost or market (except for certain packing house and other products valued at cost on basis of “last-in, first-out”)-

Packing house and other products . . . . . . $ 54,149,797 Supplies . . . . . . z . . . z 8,939,801 63,089,598

Total current assets . . . ; . . . z $100,465,983

MISCELLANEOUS INVESTMENTS AND ADVANCES (at cost, less reserve) 1,004,037

ESTIMATED U. S. TAXES REFUNDABLE as result of replacement of “last-in, first-out” inventories, less $3,129,457 applied as reduction of reserve for U. S. taxes on income . . . . . . . 3,990,ooo

FIXED ASSETS : Property, plant and equipment, at acquisition values from prede-

cessor company as of February 27, 1926, plus additions since at cost, less adjustments made in 1933 as of October 31, 1932-

Land . . . . . Buildings ’ : : : : : : . . $29,689,603

$ 6,758,115

Machinery . 31,363,712 Cars, delivery equipment, etc. 1 : : . 7,638,331 Small tools and equipment . . . . . 511,463

$69,203,109 Less-Reserve for depreciation . . . 28,832,418 40,370,691

Leaseholds, less reserve for amortization . . . . . 193,087 47,321,893

DEFERRED CHARGES : Prepaid insurance, etc. . Unamortized debt discount and expense : : 1 : 1 1

$ 1,023,911 195,626 1,219,537

$154,001,450

INC. (DELAWARE)

ID FOREIGN SUBSIDIARIES

tlcl-

B Sheet-October 30, 1948

!d herein are shown on accompanying statement)

CURRENT LIABILITIES :

Notes payable Accounts payable, accr&d payroils, interest, etc. 1 : : :

1 Accrued general and social security taxes .

., Reserve for United States and foreign taxes on’incdme : 1 : L c Sinking fund requirement in respect of First Mortgage Bonds, 3%

Series due 1958 . . . . . . . . . . .

Total current liabilities . . . . . . .

RESERVE FOR REPLACEMENT OF “LAST-IN, FIRST-OUT” INVENTORIES

Total current liabilities and inventory replacement reserve . . . . . . . . . .

FIRST MORTGAGE BONDS, 3% SERIES DUE APRIL 1, 1958:

Outstanding Less-Sinking fuid payment dhe Abril i, 1949 sh’own’abo;e :

RESERVES :

For future inventory price decline . . . . . . . For foreign exchange fluctuations . . . . . . . For contingencies . . . . . . . . . . .

MINORITY STOCKHOLDERS’ EQUITY IN SUBSIDIARIES CONSOLIDATED

CAPITAL STOCK AND SURPLUS: Capital stock-

$4.25 Cumulative preferred stock, without par value (redeemable at the option of the Company or through retirement provision at prices ranging from $100 to $103 per share. Entitled in involuntary liquidation to $100 per share)-

Authorized and outstanding-240,000 shares . . .

Common stock, without par value-

Authorized ....... Outstanding

2,500,OOO shares ...... 2,116,981 shares

$ 18,998,112 12,926,499 1,774,581 8,157,089

1,150,000

$ 43,006,281

8,200,OOO

$ 51,206,281

$ 14,453,ooo 1,150,000

$ 5,000,000 385,000

3,150,000

13,303,000

8,535,OOO

1,047,168

79,910,OOl

$154,001,450

$ 19,919,561

19,874,254

$ 39,793,815

Earned surplus (restricted as to payment of dividends on common stock to the extent of approximately $22,000,000) . . . 41,072,417

Deduct-Treasury stock at cost-10,514 shares of $4.25 Cumu- $ 80,866,232

lative preferred stock . . . . . . . . . 956,231

WILSON & CO., INC. (DELAWARE)

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Statement of Foreign Net Assets

Included in Consolidated Balance Sheet as of October 30, 1948

CURRENT ASSETS : Cash Receivables (less’reserves)’ 1 : 1 1 : : Inventories . . . . . . . . . .

CURRENT LIABILITIES : Notes and accounts payable, accrued payrolls, interest,

NET CURRENT ASSETS . MISCELLANEOUS INVESTMENTS : : : : : : FIXED ASSETS-LESS RESERVE FOR DEPRECIATION . DEFERRED CHARGES . . . . . . . .

. . . $ 1,125,940

. . . 2,597,706

. . . 10,866,557 $14,590,203

taxes, etc. . 6,455,257

$ 8,134,946 - I . . . . . . 340,636 . . . 6,963,515 . . . 167,310

TOTAL NET ASSETS . . . . . . . . $15,606,407

The‘geographical distribution of the net assets used in the foreign business at October 30, 1948 was as follows:

Net current Fixed assets Miscellaneous assets less reserves items Together

South America . . . . . . $ 7,080,438 $ 6,820,131 $ 483,389 $14,383,958 Great Britain . . . . . . . 259,584 71,255 15,546 346,385 Europe . . Australasia : : : : : . .

284 172 54 510 794,640 71,957 8,957 875,554

$ 8,134,946 $ 6,963,515 $ 507,946 $15,606,407

Results of Foreign Operations For the Fiscal Year Ended October 30, 1948 (52 Weeks)

EARNINGS FROM OPERATIONS (exclusive of items deducted below) . $ 1,308,847

DEDUCT : &

Unrealized exchange gain on translation of foreign accounts into U. S. currency-transferred to reserve for foreign exchange fluctuations $ 60,000

Interest charges . . . . . . . . . . . . 157,377 217,377 4

$ 1,091,470 PROVISION FOR FOREIGN INCOME TAXES . . . . . . . 298,546

NET PROFIT FROM FOREIGN OPERATIONS . . . . . . . $ 792,924

The foreign currency net assets (which are subject to varying-degrees of exchange restric- tion) and income and expenses have been translated into U. S. currency on the following bases:

Current assets, miscellaneous investments, deferred charges and current liabilities-at free or other applicable rates of exchange.

Fixed assets-at approximate cost of the properties in U. S. dollars, less reserve for depreciation based on such U. S. dollar cost.

Income and expenses-at average free or other applicable rates.

ACCOUNTANTS’ REPORT

To the Board of Directors of Wilson &3 Co., Inc. (Delaware):

We have examined the consolidated balance sheet of Wilson & Co., Inc. (Delaware) and its subsidiaries as of October 30, 1948, and the consolidated statement of income and earned surplus for the fiscal year ended on that date. Our examination was 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.

In our opinion, the accompanying consolidated balance sheet and related statement of income and earned surplus, supplemented by the accompanying statement of foreign net assets and results of foreign operations, present fairly the con- solidated position of Wilson & Co., Inc. (Delaware) and its subsidiaries consolidated as of October 30, 1948, and the results of their operations for the fiscal year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

PRICE, WATERHOUSE & Co.

Chicago, January 14, 1949.

( A section of the modern hydrogen manufacturing unit of the Oklahoma City refinery. By the use of hydrogen, liquid oils are con- verted into solid fats for use in shortening and margarine.

The VEGETABLE OIL REFINERIES

W ILSON’S vegetable oil refineries, strategically located at Chattanooga, Tennessee ; Oklahoma City, and Chicago,

manufacture two fine quality shortenings, “Bake-Rite” and “Advance.” Bake-Rite, an unexcelled hydrogenated shortening, is widely used by the nation’s finest bakeries and discriminating housewives. Advance Shortening, a standard shortening, unex- celled in its field, is also manufactured at the Kansas City plant.

A battery of ten- ) trifugal vege- table oil refining machines at Chat- tanooga. This is typical of the modern equip- ment used in the Wilson refineries.

Laurel Cooking Oil, for the bak- ery and home trade, is made at Chattanooga, Oklahoma City, and Chicago. These plants also manu- facture hydrogenated oils used by our own margarine plant as well

Quality food stores feature Wil- ) son’s Bake-Rite and other short- enings in attractive displays such as this one in an Ohio food store.

A Wilson’s Advance shortening being packaged by automatic filling machines at the Chattanooga, Tennessee, refinery.

as for sale to numerous other margarine manufac- turers.

Strict laboratory control assures the uniformity and conformity to Wilson’s high quality standards of all refinery products.

A display of Wilson’s ) Advance shortening in a modern Texas food store.

A A curled hair interlacing machine in the Hair Products building of the Chicago plant.

A A top grain leather lounge chair in which Wilson’s Curled Hair filling is used.

I b

The HAIR PRODUCTS DIVISION

A NIMAL HAIR by-products of the meat packing industry contribute far more to human health and comfort than is

generally realized. Large amounts of curled hair, for example, are used in the manufacture of fine quality furniture, and mattresses, and in making automobile seats, railroad and bus seats, and theater seats. Hair insulation, with its high insulating efficiency, is widely used for insulating cold storage buildings and refrigerated railroad cars and trucks. Hair filters are increasingly preferred for air-conditioning and heating systems in homes, public buildings, business structures, modern trains, and buses. Donut type hair filters are used in the carburetor air cleaning units of the finest automobiles.

Wilson & Co., Inc., is one of the pioneers and leaders in the hair products field. Wilson’s Curled Hair, Naturzone Hair Insula- tion, and Edgeseal, Honeycomb, and donut filters, manufactured by the Hair Products division, are used extensively by the leading manufacturers of quality products in which curled hair, insulation, and filters are used.

Wilson’s Edgeseal and Honeycomb hair filter are used extensively in the air conditioning and heating systems of homes, theaters, public buildings, and such modern office buildings as Chicago’s famous Palmolive Building.

WILSON & CO., INC.

4100 South Ashland Avenue, Chicago 9, Illinois

DIRECTORS

THOMAS B. FREEMAN . . . . . . . . . CHICAGO

WILLIAM L. KLEITZ President, Guaranty Trust Co, of New York-NEW YORK

FREDERICK M. PEYSER . . Partner, Hallgarten i3 Co.-NEW YORK

ARTHUR W. STEUDEL President, The Sherwin- Williams CO.-CLEVELAND

ELMER T. STEVENS President, Charles A. Stevens 13 CO.-CHICAGO

EDWARD R. TINKER . . . . . . . . SYOSSET, N. Y.

RAWLEIGH WARNER Chairman of the Board, The Pure Oil CO.-CHICAGO

EDWARD FOSS WILSON . President, Wilson & Co., I"/zc.-CHICAGO

THOS. E. WILSON . Chairman of the Board, Wilson 61 Co., Inc.--CHICAGO

OFFICERS

THOS. E. WILSON Chairman of the Board

EDWARD FOSS WILSON President

Vice-Presidents

CHARLES W. BECKER JAMES D. COONEY E. J. DAVIDSON WILLIAM F. ET2 FRANK K. FOSS J. A. HAFNER J. A. HAMILTON ROSCOE G. HAYNIE R. K. HUGHES

GERALD B. THORNE HARRY J. WILLIAMS

P. W. SEYL Treasurer

GEO. D. HOPKINS Secretary and Assistant Treasurer

IVAN L. BEAMAN Comptroller

B. KAUFMANN A. K. GEMBICK Assistant Treasurer Assistant Secretary

C. R. HARRIMAN Assistant Secretary