rs. STUDIES IN SECURITIES Capitalization originally consisted of $15,000,000 7% preferred stock and $50,000,000 common, $100 par value, the latter repre- senting $50,000,000 of good-will on the balance sheet. In the past fifteen years, the $15,000,000 preferred stock has been retired and the $50,000,000 good-will written down to $1, all out of earn- ings. In 1920 a 30% stock dividend was declared on the common stock, in 1924 the par value of the common was reduced to $25 from $100 by the issue of four new shares for each one of old stock, and in February, 1927, a 509% stock dividend was declared, bring- ing the capitalization now to 3,900,000 shares of $25 par common stock. There are $3,432,500 purchase money mortgages outstand- ing and a contingent liability on $10,000,000 guaranty of obliga- tions on the Woolworth Building, latter easily protected by the building’s value. At the end of 1926 current liabilities were $4,294,000 (including $3,700,000 tax reserve) and current assets $49,373,000 (including $17,244,000 cash). Real estate and buildings owned and leased are carried at $20, 270,000 on the books, and rental receipts in 1926 from leases and subleases amounted to $2,140,000. The company charges off 5% per annum for depreciation of fixtures and 215% on buildings. The speculative possibility in Woolworth shares is two-fold : 1. Since 1906 the sales have increased each year without fail and net profits with few exceptions; in the first quarter of 1927, 25 new stores were opened in the United States (making the total 1505) and at least 50 more will follow before the year ends; from 1912 to 1926 the capitalization per store decreased from $103,000 to $44,000, whereas sales per store increased from $96,000 to $171,000 and profits from $8,600 to 419.000. 92. Woolworth has a majority interest in its English sub- sidiary which operates 242 stores in the British Isles and plans 50 additional in 1927. In 1926 the book value of the interest in the English company was written up $13,566,000 to $14,505,000. The invasion into Germany will show per- haps 10 stores operating by this year-end. The 1926 net was equal to the current $5 dividend on the enlarged stock once and a half times, and 1927 indicates a new record of sales and even a better margin of profit than 1926. The steadiness of this company’s expansion gives assurance to the $5 dividend and its past record of growth is the basis of expectation of larger income return. [811]