3. REMUNERATION OF OFFICERS

AND DIRECTORS
The aggregate direct remuneration paid by the Companies
during the year ended December 31, 1975:

To the fourteen directors .............. $ 19,600
To the six officers of whom
FOUIATS CINCClOTS ans ee hee Sees 265,551
To two others, deemed officers
pursuant to the provincial
SECM ESTAGIS oe cs cies sieve actienecn ore 74,173
$359,324

The aggregate cost to the Companies during the year
ended December 31, 1975 with respect to all pension
benefits proposed to be paid in the event of retirement at
normal retirement age (65 years):

Directors and! Officers)... .92020..66. 65. $ 27,676

Two others, deemed officers pursuant
to the provincial securities acts........ __ 4,309
$ 31,985

4. PENSION PLAN

The present value of the unfunded portion of past service
benefits is approximately $702,000 at December 31,
1975. The amount is being funded and charged to opera-
tions by annual payments of $73,000, including interest.

AUDITORS’ REPORT

5. COMMITMENTS

The Company is committed to an equipment leasing prog-
ramme for mining and highway equipment. At the year
end the outstanding contracts for leased equipment
amounted to $5,080,000 of which $973,000 will be pay-
able in 1976.

6. ANTI-INFLATION PROGRAMME

Effective October 14, 1975 the federal government passed
the Anti-Inflation Act and subsequently issued Regulations
which are presently scheduled to be in force until De-
cember 31, 1978. Under this legislation the Company is
subject to mandatory compliance with controls on
employee compensation and shareholder dividends. Be-
cause the Company sells almost wholly for export and the
federal government has abandoned its proposed export
levy it appears that the Company is not materially affected
at the present time by controls on prices and profit mar-

gins.

7. LEGAL ACTIONS
The Company and others engaged in the supply of asbes-
tos and asbestos products have been named as defendants
in several court actions in the United States. Substantial
damages are claimed for alleged injuries to health by
reason of the inhalation or ingestion of asbestos. The
Company is defending these actions.

The Company carried product liability insurance up to
and including November 1975 but after that date such
coverage has not been available.

To the Shareholders of Cassiar Asbestos Corporation Limited:

We have examined the consolidated balance sheet of
Cassiar Asbestos Corporation Limited and its subsidiaries
as at December 31, 1975 and the consolidated statements
of operations, retained earnings and changes in financial
position for the year then ended. Our examination in-
cluded a general review of the accounting procedures and
such tests of accounting records and other supporting
evidence as we considered necessary in the circumstances.

In our opinion, subject to the outcome of the legal
actions referred to in note 7, these consolidated financial

statements present fairly the financial position of the Com-
panies as at December 31, 1975 and the results of their
operations and the changes in their financial position for
the year then ended, in accordance with generally ac-
cepted accounting principles applied on a basis consistent
with that of the preceding year.

CLARKSON, GORDON & CO.

Chartered Accountants
Vancouver, Canada,

March 5, 1976.