STUDIES IN SECURITIES 
ER 
taxes, or $17,093,000 average annually comparative with the rec- 
ord 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 dis- 
tributed, evidencing the liberality possible in an established busi- 
ness 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 up- 
keep 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 simul- 
taneously paid. 
A company practically free from funded debt, with current lia- 
bilities $2,199,000 against $97,685,000 current assets including 
$16,450,000 cash, and a fifteen-year record of steady growing earn- 
ings and dividend liberality, American Tobacco has the qualifi- 
cations necessary to place its stock among investments. 
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