The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1903-07-15
THE PROFITS OF
UNITED STATES STEEL
NetEarnings Equivalent
to Five Years Interest on
Total Bond ISSUE.

In view of the recent issue of S2U0,-
0OO, 600, per cent bonds, by the Unit
ed States Steel Corporation, that COM
pany's statement for the six months
ending June 80 is of special interest to
those who are ever on the alert TO
profit by the rule that it is well to buy
securities when they are cheap. IL
shows the net earnings for six
months, after deducting, each month,
the expenditures for ordinary repairs,
renewals and maintenance of plants,
also interest on bonds and fixed charg-
es of subsidiary companies, to be the
enormous sum of SCI, 1858, 235; and un-
filled orders on hand on July amount
ing to 4,666,578 tons. These figures are
pregnant with the evidence of past and
future prosperity
From the net earnings of 1858, 235
the sum of $7,3S5,299 is deducted, of
which $6,655,504 is set aside for Depre-
citation and Reserve, and $729,195 Tor
the Sinking Fund on bonds of subs1-
diary companies, thus leaving for bond
holders and stockholders the sum OF
$54. 182,936.
out of this sum of $54,1S2,936 there
was paid to bondholderS $7,600,00O
(This is six months interest on the is
sue of 1904, 100000 of 5 per cent fifty
years bonds. which are quoted on the
bond market at 10 and 1929 And there
was set aside for the Sinking Fund OF
the same bonds $4,000 In addition
to this 17,S59,839 was paid (subject to
adjustment on account of conversion or
preferred stock for the new Sixty
year per cent bonds) to preferred
stockholders; and $40, 166,O50 to holders
of common stock. After these pay
ments there still remained undivided
profits of a surplus of $17,037,047.
To the conservative investor and to
those who have been waiting for the
semi annual statement, the main point
of interest lies in ascertaining whether
it gave by it's net earnings an assur-
ance of its ability to pay continuously
fixed charges on its new issue of $780,
000.o08 (now quoted on the bond mar
ket at $3.50 as we'll as ON its prior issue
of 1902 900 000 The annual interest on
the total bond issues of 1902, 600. at
per cent, amount to SIS, 100000. The
net earnings for six months, as shown
by the statements, available for the
payment Of interest on bonds amounts
to $54,182936. Or, in other words, it
being borne in mind that interest on
bonds must be paid before dividends on
preferred or common stock, the net
earnings of the United States Steel
Corporation for six months were suff1-
cient to pay the fixed charges for a. full
year on it's total bond issue twice over;
or, at the same ratio of earnings for
the second half year, five, times over.
In view of this, can any reasonable
doubt prevail as to the ability of the
Corporation now making q net earning
in excess of $125, 000, 900 to payfa fixed
charge of $25,000;000. 49,, -.
1t would be difficult to martial condi-
tons which would reduce the net earn
ings of this Corporation fully ene-half,
and even then the sum available for in
terest would be more than sufficient to
pay the interest on all bond issues
twice over. Strikes, competition, gem
eral business stagnation, which could
bring about a loss in earnings equal to
a reduction of IS per cent, would place
half the railroads in the; eoun
try in the hands Of ,,areceiW-
ers. And even then an additional
element of security is possessed by the
Steel Corporation in its undivided
profits or surplus to which the semi
annual statement shows an addition Of
$17,037,047, sum in excess -, Of, six
months interest on $500,000,000 Of
bonds at per cent. 'yr@a'a-,f,S
If 1T were not that railroad securities
have been longer dealt in on the secur-
ity market and are consequently better
understood by the general public seek
ing investment for capital, it is safe to
say that the last issue of United States
Steel bonds would not be the bargains
they are now. While these bonds are
selling around SO and IS and will pay
close on to per cent on the invest
ment, railroads whose net earnings
cannot compare with the United States
Steel Corporation are selling much
above par and are yielding less than 4
per cent on the investment.