Evening journal., 1921-02-18
HERCULES CO.'S.
Earnings OFF
President Durham Points
Out Result of Adjust
ment of Inventories
PLAN ENLARGEMENT
OF CAPITAL SOON

aAAI4rALAtNA VI ANNtNNRAAN' A't@fN
earnings OF the Hercules Powder
Company the smallest in the COM
pany's history. according to the an
nual report OF Russell H. Dunham.
president. for 1920, made public to-
dav The amount available for divi-
dends on the common stock after
such adjustments was s72.SS6. at the
annual rate OF l.O2 per cent. accord
ing to the report. compared with
1856 per cent. during 1919, when
the net earnings were sl.2O5,2s4.
There is a profit and loss surplus
Of nearly $4,000 900. now almost
entirely invested in the companys
business. and the directors have
under consideration plans for the
enlargement OF the authorized capi-
tai stock. which soon will be sub
mitted to special meeting of the
stockholders.
President Durham in his report
says
THE balance sheet shows the con-
dition OF your company at the close
OF its eighth year. The gross assets
show practically no change from
the figures reported at the end OF last
year. though a detail comparison
shows an increase or substantially
$4,000. 900 in permanent investment
with a corresponding reduction in
working assets.
There has been no change during
this year in tho company's authorized
capital. though the issued capital
has been increased by the issue OF
S1.27S.000,0 0oo preferred stock on ac-
count OF the purchase OF the stock
and mortgage notes OF the Yaryan
Rosin and Turpentine Company.
Notwithstanding he reduction
in your company's current assets,
the balance sheet still shows very
strong financial position. Total cur
rent liabilities are but a very small
fraction OF The current assets. Ac-
counts payable represent invoices in
process OF passing through the COM
pany's books for payment. bills pay
able. drafts outstanding, covering the
purchase OF material where payment
by draft is the custom OF the trade.
Your company's earnings as
shown for the year. are the smallest
OF any year in its history and after
dcducting preferred dividends leave
only 100000 available for divi-
dends on the common stock. though
$1,144,OQ0.O0 has been disbursed a.
this year. This small return Is th'
composite result Of the years oper
atons and adjustments OF values
some OF which should properly hav
heen made in previous years, an'
some are an anticipation OF mex
years operations
The result OF the years opera
tions. freed OF the losses OF past and
future years, is approximately ST.
$50. 100000 net earnings. available FOL
dividends on preferred and common
stock. The earnings. before any ad'
iustments. were approximately So.
700 100000. The sale OF investment
securities. almost entirely Libert,
Bonds bought in 1917. 1913 and 1919
nctted loss OF about 500 900. 90
Ali OF which Is a proper deduction
from earnings OF previous years a
very radical adjustment OF inventor,
values OF materials and finished pro
ducts TO the basis OF present re
placement values netted a loss o
$500. 10000. including about $3.50.
10000 anticipating the adjustmen
OF prices OF materials for 1921 de
livery for which your company wa
committed.
The first eight months OF the yea
showed a very substantial improve
ment In your company's busines
over the same period OF the preced
ing year. Notwithstanding that tn
copper industry, the principal con
sumer OF your company's explosiv
products. continued on a very muc
reduced basis. The improvement &
net earnings was proportionatei
greater than in gross business, be
cause. as pointed out in last year
report. about one-fourth OF the gros
sales for the year 1913 represente
war products manufactured and de
livered without any profit whatsc
ever 10 your company.
The radical readjustment OF bu,
mess generally that has been /
progress during the last six month
Of the year 1920 has reduced value
OF nearly all commodities, and man
materials carried in your company
inventories at cost could be replace
at lower prices. In the naval store
line particularly the fall In marks
prices has been more than so pc
cent, and has reduced the seilin
values below the cost OF production
The fan In commodity prices wa
naturally accompanied by substar
iial curtailment OF demand. so IN,
your company's sales in all its lin,
have been at a very much small,
rate during the last quarter OF a
year than In the earlier periods.
Your company's inventories a
not excessive even at the reduce
rate OF production az which 70
companys plants are now operatir
IL has seemed, however. to your Z
hcers and directors. consistent wi
the company's conservative policy.
Immediately adjust the value of
inventories and commitments 10 I
basis OF their replacement cost
selling value under prevailing m,
ket conditions: al. 10 dispose OF
investment securities and re-inv
the proceeds in such a manner n