New-York tribune., 1921-08-28
$4,875,00O Deficit
By u. S. Rubber i'm
First Six Months
Writing Down of Inven-
tories as Result of Price
Reductions Held Respon-
sible for Poor Showing

The United States Rubber Company
showed a deficit for the first six
months of 1921 of S4,875, 900. The Gus
tomary semi-annual statement was
made public yesterday, and in this
statement President c. B. Seger points
out that if the reductions in selling
prices that took place in the first half
Of 1921 could have been foreseen they
could have been provided for by ap-
preparations of surplus, and further
writing down of inventories as of De-
cember 81, 1920 but that the final net
result would have been the same
whether the loss had been taken into
the 1920 balance sheet or absorbed in
the first six months income account for
1921.
President Seger described the condi-
tions that affected the company in the
first half of 1921 in part, as follows:
The business recession that started
during the last half of 1920 continued
during the first half of 1921, with some
improvement, however, in the latter
part of that period. In order to meet
this situation and conserve cash re-
sources to the greatest possible extent,
manufacturing operations were cur
tailed to the minimum consistent with
actual requirements. This resulted in
increasing the cost of production, due
principally to absorbing those elements
of overhead expenses which could not
be eliminated.
an ascertaining the results for the
first six moths of 1921, the cost of
goods sold was computed on the basis
of the cost of the goods carried in in
ventory as of the first of the year, plus
the cost of the goods manufactured
turing the period, thus absorbing in
cost any depreciation that may have
occurred in inventory after the first
of the year and also the higher cost
of goods manufactured during the per-
iod. The cost of finished goods car
ried over as Of the first Of the year
was conservative on the basis Of the
selling prices then prevailing, which
prices it was believed would be main
tanned for the period of time necessary
to effect the liquidation of stocks In
stead, however, it was found necessary
20 substantially reduce selling prices
for some classes Of merchandise. es-
pecially tires and mechanical goods
The effect of these price reductions was
necessarily rejected III tNc results OF
sales for the first SIX months of this
year, in addition to which there were
reflected in the net results for the per-
iod the burdens of the higher cost of
goods sold, as shown above.
'ln addition to the effect of the re-
duction in sales prices and the higher
manufacturing cost, cons deration
should be given to the matter Of selling
expenses. Owing TO the seasonal nature
of large proportion Of our business,
the benefits of the sales efforts neces-
sarily made during the first SIX months
OF the year Will be favorably reflected.
to cons derable extent, IL the sales
and profits for the last six months of
the year, whereas the expenses are
taken into account and charged against
the income of the first six months, be-
ing the period during which they were
incurred AS the result of this pro-
cedure selling expenses for the first six
m months of 1921, charged to the account
of that period, include a substantial
sum, representing sales efforts, the
benefits Of which viii accrue in the last
six months of the year, and, in some
cases, subsequently,"