New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-08
Studebaker Corp.
Cuts Dividend on
Common to apo.
War Causes Decline in Sales
of Automobiles-Large
Government Orders

The common stock of the Studebaker
Corporation, which during the war
boom period of 1915 sold up to 1876, was
placed On a per cent annual basis by
the directors, who met yesterday at
South Bend, Ind, for action on the
dividend. During 1916 and up to the
present the stock has been paying 10
per cent.
Reduction Of the rate was expected
in Wall Street, as the decline in the
price OF the stock, which began early
this year, had foreshadOwed such
action. The only question was the ex-
tent of the cut. The high price for the
stock in 1917 was 11012, established in
January. Since that time it has fallen
steadily, the low of the year, 5l% hav-
ing been reached on July q. After
the announcement yesterday of the
reduction in the dividend it broke to
52b, but later rallied to 535s, the
closing quotation. In announcing the
reasons for the cut in the dividend
rate A. R. Erskine, president of the
company, said:
Uncertain Outlook
"The directors feel constrained to
reduce the dividend on the common
stock on account of the uncertainties
of the future and the consequent ne
cessity of conserving working capital"
Net profits of the company for the
first six months of this year, he stated,
amounted to s2,966,19S, after deduc-
ton for existing corporation income
taxes, but without provision for eX-
cess profit taxes about TO be enacted
by Congress. Mr.. Erskine added:
"The sales of automobiles in the
first quarter of this year exceeded
those of any previous similar quarter,
but upon the entrane of our country
into the war the sales declined, and
our second quarter was unsatisfactory.
Factory production schedule was
changed in Nav TO conform with the
reduced volume of business, and we
are now operating on a So per cent
schedule. as compared with last year.
The effect of reduced volume in guam
tity production increases overhead
costs, and when coupled with the ex-
listing high cost of materials and labor
is damaging to the profits of the bust
ness. Since July l sales of cars have
improved, and the present demand Is
for about 1000 cars per week.
Capacity Business in Vehicles
"The regular business in the vehicle
division for the first six months was
excellent, and promises to continue
heavy throughout the year. In add
ton thereto we have received orders
from the government for large quanti
ties of escort wagons, ambulances,
drinking wagons, harness, etc, WIN
the result that our vehicle factories
will operate to the limit of their ca
pacity as far as the next year.
"The condensed balance sheet of the
corporation and subsidiary companies
as of June 80, 1917, shows total tangi-
BILE assets of S55,400,000, including
Sal 100000 of quick assets and Sl4,-
300 900 of plant and company account,
which stands against Sl5,900.000 of liza
bilities, including S13.200,OOO of bank
loans. Since June 80 outstanding bank
loans have been reduced to less than
S11 100000.
"The total tangible assets Of the cor
poration are greater than ever in its
history. while its bank loans are no
more than they have been several
times in previous years.