STUDIES IN SECURITIES

ER

taxes, or $17,093,000 average annually comparative with the record
 for a single year of $22 549,000 in 1926. After deduction of
bond interest and preferred dividends, $199,194,000 total was
left for the common stock and $137,600,000 or 69% was distributed,
 evidencing the liberality possible in an established business
 in this field. As for stability of income, the 1921 year, so
disastrous elsewhere in industry, was the best American Tobacco
had up to then enjoyed.

Present capitalization consists of $1,150,000 funded debt, $52,-700,000
 6% cumulative non-redeemable preferred stock, and $40,-242,400
 common and $57,399,100 common class B non-voting stock
of $50 par or 1,952,830 shares in equity. Surplus beginning 1927
stood at $34,948,000, which was not far below the $40,095,000 of
1911 notwithstanding payment in 1920 of $38,375,000 or 75%
stock dividend, and as equal to 36% of the common stock it would
form the basis for a second but more moderate stock distribution
should the management see fit.

Figured on shares of $50 par value, into which the $100 shares
were divided in 1924, the earnings of recent year: “low:

J92-ct



i

EE

1922
1922
1921.

Only a single item of total income is stated by the company and
amounts taken out for advertising expense and for property upkeep
 may only be conjectured to be large. Present value placed
apon good-will, brands, ete., is $54,099,000, there having been no
increase since 1913 despite huge outlays representing perhaps in
part a capital as well as a current expense. Plant is on the books
at $9,607,000 against $9,203,000 five years earlier. Furthermore,
income includes dividends received from subsidiaries which might
pay more, such as 8% from $10,351,000 American Cigar Co.
common stock, 529% owned, having 119% or 129 earnings.

Dividend rate on American Tobacco common, which had been
12% since the 1920 stock distribution, and at the nearly equivalent
rate of 20% on the smaller stock issue since 1912, was increased
to 14% or $7 with the December, 1924, quarterly payment, and
again to $8 just a year later, when $1 cash extra was simultaneously
 paid.

A company practically free from funded debt, with current liabilities
 $2,199,000 against $97,685,000 current assets including
$16,450,000 cash, and a fifteen-year record of steady growing earnings
 and dividend liberality, American Tobacco has the qualifications
 necessary to place its stock among investments.
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