The Birmingham age-herald., 1903-07-14
U. S. STEEL PROFITS.
Annual Net Earnings Equivalent to Five
 Years Interest on Total Bond Issue.

In view of the recent issue of $200, 900 five per cent bonds by the United states Steel corporation, that company state ment for the six months ending June 50 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. It shows the net earnings for six months, after deducting, each month, the expenditures for ordinary repairs, re- newals and maintenance of plants, also interest on bonds and fixed charges of subsidiary companies, to be the enormous sum of $61, ,56S, ,235; and unified orders on hand on July l amounting to 4.666,5l8 tons. These figures are pregnant with the evil dence of past and future prosperity.
 From the net earnings of $61 1,56S, 2S5 the sum of $7,3S5, 299 Is deducted, of which $6 655, ,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 $54, 936.
 Out of this sum of $54.1S2, ,936 there was paid to bondholders s76O0.000. (This is six months interest on the issue of $3O4OOO,O GOO of five per cent fifty years bonds, which are quoted on the bond market at 110 and 112) And there was set aside for the sinking fund of the same bonds $1, ,520, ,000 In addition to this $l7,S59 S39 was paid Subject to adjustment on account of con- version of preferred stock for the new ten-sixty year. five per cent bonds) to pre- ferred stockholders; and s1O. 166. 0S0 to hold CTS of common stock. After these pay ments there still remains undivided profits of a surplus of Sl7,037,047.
 To the conservative investor and to those who have been waiting for the semi annual statement, the main point of in- terest lies in ascertaning whether it gave by it's net earnings an assurance of its ability to pay continuously fixed charges on it's new issue of $200 000, GOO (now quoted on the bond market at S3) as well as on it's prior issue of $302,OOO,00O. The annual in- terest on the total bond issues of $502,- 900 GOO, at five per cent. amount to $25.- 200 000. The net earnings for six months, as shown by the statement available for the payment of interest on bonds amounts to $54 182, ,936 Or in other words, 1t 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 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 req sonable doubt prevail as to the ability of the corporation now making a net earn ing in excess of $l25,OOoO GOO to pay fixed charge of s25.000.0OO
 It would be difficult to martial condi- tons which would reduce the net earn ings of this corporation fully one-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, general busi- ness stagnation, which could bring about a loss in earnings equal to a reduction of seventy-fve per cent, would place half the railroads in the country in the hands of receivers. And even then an additional element of security Is possessed bG the Steel corporation in its undivided profits or surplus to which the semi-annualfsta ment shows an addition of $l7,035,041, a sum in excess of six months interest on $500. 000.000 of bonds at five per cent
 If it were not that railroad securities have been longer dealt in on thel security market and are consequently bitter un- derstood by the general public seeking investment for capital, 1t Is safe to say that the last issue of United States Steel bonds would not be the bargains they are now. While these bonds arc, selling around S3 and S5 and will pay close on to six per cent on the investment. railroads whose net earnings cannot compare with the United States Steel corporation are selling much above par and are yielding less than four per cent on the investnSnt