JAS. H. OLIPHANT & CO.

Year Net Year Net
1926........$26,249,000 1923........$23,040,000
1925........ 25,222,000 1922........ 21,992,000
1894 . 23.778.000 1521... 9s. 16,253.000

ay
icy 1

This record compares with an annual average of $9,518,000 from
1916 to 1920 and of $2,682,000 in the five years following 1911
when the dissolution of the tobacco trust put Reynolds on its own.

This addition of $20,000,000-odd to earning power was accomplished
 with re-investment of $110,583,000 surplus earnings in
15 years and less than $8,500,000 net outside capital retained in
the business. Latter item is result from (1) sale of $2,475,000
common stock in 1912 and $10,000,000 in 1918, (2) sale of $20,-000,000
 7% preferred stock between 1914 and 1920 and redemption
of it at $24,000,000 (120) in 1925, and (3) sale in 1919 and retirement
 in 1921 of $15,000,000 6% notes.
Sole capital liability is now $100,000,000 common stock, $25 par
value, consisting of $10,000,000 voting and $90,000,000 non-voting
“B”’ stock. This includes a 25% stock dividend paid in February
this vear.

Expansion through profits has been liberally capitalized with stock
dividend distributions. Thus $40,000,000 stock issued as dividend
in 1920 cut surplus to $2,064,000 and $20,000,000 paid in 1922
left $4,915,000 surplus. Surplus as of December 31, 1926 was
$50,204,000 of which $20,000,000 was subsequently distributed
marking down surplus to about $30,000,000 which is still larger
than at the end of any vear except 1925 and 1926.

Beginning 1926, simultaneously with preferred stock retirement,
the cash dividend on Reynolds common stock was increased from
$3 (129% on $25 par) to $4 and again July 1 to a $5 rate. This
is continued on the stock enlarged by recent 25% stock dividend
just as a $3 dividend was maintained in 1922 despite a 33 1/3%
inerease in stock.

Protection for the $5 rate is found in the record of $8.20 a share
earned in 1926, $7.44 in 1925, $6.99 in 1924, $6.76 in 1923 and
$5.96 in 1922. These are computed on amounts of common outstanding
 each year and through 1925 were after deduction of preferred
 stock dividends equal to about 44 cents a common share.

As of December 31, 1926 current liabilities were $12,610,000 and
current assets $128,526,000 including $16,931,000 cash. It is offieially
 stated taxes have been paid over the years or provided for in
maximum amounts and pending tax adjustments should mean substantial
 increase in company’s surplus account.
reel

ra