The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1923-03-05
A. ]. & 7. HAD
PROSPEROUS
YEAR
Annual Report Explains Pay
ment of 9 Per Cent
on Stock
By HARRY GUSACK.

The American Telegraph and
Telephone Company during the year
1922 had one of the most prosperous
years in it's history, according to
the annual report of the company
made public today.
Taxes paid by the Bell system
Federal. State and local--amounted
to SAL 5000, this being an increase
Of $6,702 800 over 1921, the report
states. Another interesting item is
that traffic expenses of the Bell
system increased $4,575,577 in 1922
over the previous year. The volume
of wages, mostly telephone operators,
increased 81 per cent, while the
number of calls handled jumped 9.5
per cent.
Stock Pays Per Cent.
How the American Telephone and
Telegraph Company can pay a 9
per cent dividend on it's stock is
taken up in the report. This stock
is widely distributed, particularly
in. the District of Columbia, where
an educational campaign by the
Chesapeake and Potomac Telephone
Company has given it more promi-
hence than ever before. In answer
TO the question as to how the A. 7.
d i. can pay 8 per cent when
none of it's associated companies
earn that much on the property,
the report says:
The answer is that the American
Z Telephone and Telegraph Company
has been managed with the same
conservatism as good bank. The
surplus earnings have been turned
back into the property, invested in
profitable telephone plant. In other
words the stockholders have not
taken all of the profits in dividends.
Instead they have built up the
y company until today there is prop
erty having a book value of $I,75S,-
100000, all of which is at work to
earn a dividend for capital stock to
the amount of 9,347 400. The
true value OF the investment is
higher than the book value.
'F1e investment of the Bell
System in plant and equipment, in
Guiding construction in progress, as
carried on the books of the COM
panies as of December 81, 1922, ag-
gregated $1,75S, 200, 900, but as stated
in previous reports the true value
of this investment is much greater
than it's book cost.
1.-THE twenty-five associated COM
panies excluding your company
earned Sc per cent on the book
cost Of their plant during 1922, but
based on the true value of the
property, a lower return was
realized. This earning, while still
below what is, considered by regu-
latory bodies and the public to be
a fair return. represents slight
f11ar1
some areas where earnings are too
low, and in them every effort is be-
ing made for improvement.
Earns lila Per Cent.
Not including its equity in the
undivided profits of the associated
companies, your company in 1922
earned lila per cent on it's average
outstanding capital stock, compared
with lilo per cent for 1921. About
20 per cent of the net income of
the associated companies was re-
tanned by them as undivided profits
and has been invested in their re-
spective plants, l. e., in telephone
property required to meet the in
creased service demands. While
the average rate of return on the
book cost of the associated COM
panies was Sc per cent, due to the
conservative financial structure of
the Bell System, with a return of
only Al per cent the American
Telephone and Telegraph Company
would still have earned-but with
out any margin for surplus-its 8
per cent dividend.
conservative financial and bust
ness policies have been followed dur
ing the entire history of your COM
pany. Adequate provision has been
made for depreciation, and the
funds taken from earnings for this
purpose have been invested in the
business, so that the investment Of
it's stockholders and creditors has at
all times been kept unimpaired. In
the aggregate more than $40. 900, 600
in excess of par has been paid into
the treasury in cash in respect of
stock outstanding. At NO time have
all of the earnings been paid out in
dividends, but during it's entire his.
tory a portion thereof has annually
been retained in the business and in.
vested in OrOnprtV