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606

(441)

Aug. 1/96.

Memorandum for Mr. W.C. McMillan.

Referring to our conversation regarding the proposed payment of another one per cent. dividend on the preferred capital stock of this company, will you kindly consider the following figures:

The earnings of our various departments from Sept. 1/95 to June 30/96, after deducting $30,000.00 for improvements at the Peninsular plant, are $307,574.10. The earnings for the remaining two months of the present fiscal year are uncertain because of the very close prices at which contracts were taken and the uncertainties attending the next thirty days. Let us presume however that the earnings from all sources during these two remaining months will net, pay an even $13,000.00, which would make our total earnings for the year $320,000.00.

We have already paid three dividends of 1% each, equalling [[equaling]] $150,000.00: also the interest on our first mortgage bonds to March 1 was paid, $50,000.00. On September 1 we will have another interest payment to make amounting to $50,000.00. Thus you will see that the interest and dividends already paid out of the profits of the current year amount to $250,000.00. If no further dividends are paid and if our earnings are not increased after June 30, we will have a surplus for the year of $57,574.00. Should our earnings during July and August however amount to $13,000.00, it will give us a surplus of $70,000.00.

In view of the extraordinary business depression now existing in our line and of the dullness ahead of us, do you consider it would be wise to pay another dividend of 1% during the latter part of this month? During our previous conversations we have felt that we could do this safely. To-day we both view it differently, and while I feel that neither of us is strongly opposed to the payment

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