September 12, 1961
Harris Trust & Savings Dank
111 est Monroe Street
Chicago 90, Illinois
Dear Mr. Weisenbom:
\\ e are enclosing a brochure which can be reviewed fairly quickly for an over-all
perspective on management, key personnel, history of the organization and a took at
Certified audit reports covering the past ten years of operation of Utah Cooperative Association and its wholly-owned subsidiary, Uinta Oil Refining Company, are
being mailed to you under separate cover. The PAX Division of Utah Cooperative
Association was spun off as a separate, wholly-owned corporation on July 1, I960.
Audit reports of the three companies for the year ended June 30, 1961, are not yet
available but will be submitted to you in person at our October meeting.
Consolidated operating results for the year ended June 30, 1961, will reflect a
net loss of nearly $300,000. Ninety-five per cent of this toss resulted from operations of the PAX Company. e plan to furnish substantially more detail concerning
this loss at our October meeting tliaa we can cover in this letter.
A brief resume of the problem areas are presented below:
1. In the Spring of 1960, me PAX Division of Utah Cooperative Association launched four new products on the national market on a guaranteed sale basis. V liile two of
the products were fai riy successful and will be retained in the family line of PAX
products, the other two did not meet with dealer or consumer acceptance. During the
last fiscal year, the PAX Company incurred approximately $175,000 In promotion and
other related expenses in an attempt to move existing Inventories to the consumer.
The results have Indicated that it would be unwise to budget additional expenditures.
Conservative accounting practices dictated a write-off on all company-owned and
jobber-held inventories amounting to $124,000. While we will undoubtedly salvage
a portion of tills write-off during the current year, we feel that the new manager erf
the PAX Company should not be burdened and his talents absorbed with these "inherits,
ed" inventory problems.
2. No. 5 burner fuel, a residual product from the refining processes of Uinta
Oil Refining Company, has In past years yielded an average netback of over seven