The Wichita daily eagle., 1903-07-15
u. S. STEEL PROFITS.
Annual Net Earnings Equivalent to
Five Years interest on Total
Bond Issue

New York. July 14-In view of the
recent issue Of $500. Ooa, 900. five per cent
bonds. by the United States Steel Cor
poration, that companys statement for
the six months ending June 80 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 -deducting, 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 .5eS. 235; and
untitled orders on hand on July amount
ing to 4666.57S tons. These figures are
pregnant with the evidence Of past and
future prosperity.
From the net earnings of SS1, 56S 235
the sum Of S7,SS5. .299 is deducted, of which
st, ,655, ,504 is set aside for Depreciation and
Reserve and $729. 795 for the Sinking Fund
on bonds of subsidiary companies, thus
leaving for bondholders and stockholders
the sum Of s54 1885.
out of this sum of S54.1S2,9 1856 there was
paid to bondholders $7,6o0,0oo CThis is
six months interest on the Issue of $780,
900. 900 of five per cent. fifty years bonds,
which are quoted on the bond market at
ll0 and 1l2) And there was set aside
for the Sinking Fund of the same bonds
81, $40. coo In addition 10 this 81 ,Sa9 ~
wSS paid (subject to adjustment on ac-
count of conversion OF preferred stock
for the new Ten-Sixty year. five per cent
bonds) to preferred stockholders; and
Sl0 go to holders of common stock.
After these payments there still remained
undivided profits of a surplus Of Sl1,oS1 ,o47.
To the conservative investor and to
those who have been waiting for the
serai-annual statement the main point
of interest lies in ascertaining whether
it gave by its net earnings an assur-
ance of its ability TO pay continuously
fixed charges on its new issue OF $200,-
0o0.O00 (now quoted on the bond market
at So as well as on its prior issue Of
$302 000. .oe1 The annual interest on the
total bond issues Of $500 00oC00. at five
per cent. amount to S25.2d0 0oo. The net
earnings for six months as shown by the
statements. available for the payment of
interest on bonds amounts to So, IS. .936
or in other words IT being borne in mind
that interest on bonds must be paid be-
fore dividends on preferred or common
stock. the net earnings Of the United
Ststes Steel Corpora ton for six months
were sufficient To pay the fixed charges
for full year on its total bond issues
twice over: or. at the same ratio OF
earnings for the second half year, five
times over. IN view OF this. can any rea-
sonable doubt prevail as 70 the ability OF
the Corporation now making net earn
ing in excess u Sl25.O10eo 10 pay fixed
charge CT Ss5.oo0.G1a.
II would be difucdlt to martial condi-
tionS which would reduce the net earn
ings Of this Corporation fully onc-half
ana even then the sum available for
interest would be more than sufficient 20
pay the interest on All bond issues twice
over. Strikes competition. general busi-
ness stagnation. which could bring about
= loss in earnings equal 70 a reduction
Of seventy-five per cent. would place
half the railroads in the country in the
hands OF receivers. And even then an
additional element OF security is pos
sessed by the Steel Corporation IN its
( undivided profits or surplus TO which the
seni-annual statement shows an addition
/ Of 81. .037. .0s7. q sum in excess OF six
months interest on s5ad,eoo. 90 Of bonds
at FIVE per cent.
II Il were not that railroad securities
have been longer dealt in on the seeur-
/ ity market and are consequently better
] understood by the general public seek
{ ing investment for capital IL = safe 70
( say that the last issue Of United States
/ steel bonds would not be the bargains
( they are now While these bonds are
/ selling around S and s. and viii pay close
| on to six per cent on the investment.
! railroads whose net earnings cannot COM
/ pare with the United States Steel Cor
! poration are selling much above psr and
are yielding less than four per cent or
| the investment JOHN MARTHQL-