Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-07-13
U. s. STEEL PROFITS
Annual Net Earnings Equivalent toFive
Years Interest on Total Bond Issue.

New York, July Fin view of the
recent issue OF $500 00O, 900, five per cent.
bonds, by the United States Steel Cor
Doration, that company's statement for
the six months ending June so is of spe-
cial 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. 1t shows the net earnings for
six months, after dcducting, each
month, the expenditures for ordinary
repairs, renewals and maintenance Of
plants, also interest on bonds and fixed
charges of subsidiary companies, to be
the enormous sum of SCI, 56S, 235; and
untitled orders on hand on July l
amounting to 4,6G6,57S tons. These fig
ures are pregnant with the evidence Of
past and future prosperity.
From the net earnings of $61 ,56S, 235
the sum of s7.3S5,299 Is deducted. of
which $G,655, 504 Is set aside for deprc
citation and reserve, and $729, 1875 for the
sinking fund on bonds of subsidiary
companies. thus leaving for bondhold-
ers and stockholders the sum of $54,-
1895.
out of this sum of $54,1S2, 1886 there
was paid to bondholderS $500, 900.
(Thls Is six months interest on the Is
sue of 1904, 0O00G0 of five per cent. fifty
years bonds, which are quoted on the
bond market ut 10 and 1l2). And there
was set aside for the sinking fund OF
the same bonds $1,52O,0OO. In addition
to this $17,S59,S39 was paid (subjcct to
adjustment on account of conversion or
preferred stock for the new Ten-Sixty
year. five per cent. bOnds) to preferred
stockholders; and $40, l66,O50 to holders
of. common stock. After these pay
ments there still remained undivided
profits of surplus of sl7,037,O
To the conservative investor and to
those who have been waiting for the
semi-annual statement, the main point
of interest lies In ascertainlnS whether
It gave by its~net earnings an assur-
ance Of It's ability to pay continuously
fixed charges on its new Issue OF $zOO.-
OOO. 900 (now quoted on the bond mar
get at $50 as well as on It's prior issue
of $302, zoo, 600. The annual interest on
the total bond issues of $502,000,000, at
five per cent, amount to $25, 200, 600. the
net earnings for six months, as shown
nv the statements, available for the
payment of interest on bonds amounts
to $54.1 1926. Or In other words, 1t
be,ng borne In mind that interest on
bonds must be paid before dividends on
nreferrcd or common stock, the net
earnings of the United States Steel
CORPORATION for six months were suf-
ficient to pay the flXed charges Tor a
full wear on It's total bond issues twice
over: or. at the same ratio OF earnings
for the second half year, five times
% tl,iu COL q =
able doubt prevail as to the ability OF
the corporation now making net
earning In excess of $l23oo0,ooo 10 pay
u fixed charge of $25,OOO,0Oo.
IT would be difficult to martial condi-
tions which would reduce the net earn
inrs of this corporation fully one-hail
and even then the sum available Tor III
terest would be more than SUFFICIENT u
nav the interest on all bonds issues
twice over. Strikes, competition, gen
eral business stagnation, which couio
bring about Il loss In earnings equal tt
n reduction OF seventy-five per cent
would place the railroads IN the coun-
try in the hands of receivers. AhC
even then an additional element of Sc
curity Is possessed by the Steel Cor
5poration in It's undivided profits OF
surplus to which the semi-annua
statement shows an addition of $17,0S''
O47, a sum in excess of six months In
tcrest on $500 000,0 900 of bonds at five
per cent.
If 1t were not that railroad securitic:
have been longer dealt In on the Sc
curity market and are consequently
better understood by the general public
seeking Investment for capital II Is
safe to say that the last issue OF Uni
ted States Steel bonds would not bt
the bargains they are now. Wni'
these bonds are selling around IS ana 81
and will pay close on to six per cent. OF
the Investment, railroads whose ne
earnings cannot compare with th'
United States Steel Corporation arr
selling much above par and are yieiu
ing less than four per cent. on the IN
vestment. Esa Il; hes