May 1, 1921 



THE INDIA RUBBER WORLD 



589 



Annual Report of the United States Rubber Co. 



THE TWENTY-NINTH ANNUAL REPORT of the United States 

 Rubber Co., presented at the annua! meeting, April 19, 1921, 

 showed a new high record of sales and gratifying earnings 

 for the calender year 1920. Net sales amounted to $256,150,130, 

 compared with $225,589,465 for the preceding year. In 1913, the 

 year before the war, net sales amounted to only $87,349,692. Net 

 profits for 1920, after interest deductions, and provision for de- 

 preciation of plants and adequate reserves for Federal, Canadian 

 and British taxes on income and profits, were $21,220,983, com- 

 pared with $17,730,237 in 1919. From this there remained to be 

 deducted $5,200,000 for dividends on preferred stock, including 

 dividends payable January 31, 1921, $18,718 for dividends on 

 minority stock of subsidiaries, leaving a surplus for the year of 

 $16,002,265 applicable to the common stock, which was e(iuivalent 

 to $19.75 a share on the $81,000,000 of common stock outstand- 

 ing, compared with $24.18 a share earned in 1919. 

 The annual report follows in full. 



THE CHAIRMAN'S REIPORT 



To the SlockhoUlcrs of the United States Rubber Co.: 



Complying with the by-laws of the company, the chairman of 

 the board of directors hereby submits to the stockholders the an- 

 nual rc])ort for the fiscal year ended December 31, 1920. 



On February 3, 1921, there was sent to the stockholders a pre- 

 liminary statement of the operations of the company during the 

 year 1920. and of the position of the company at the close of the 

 year. This was done in order to give the stockholders as prompt 

 information as possible as to the affairs of the company, owing 

 to the unsettled business conditions then existing. The results 

 reported in the preliminary statement were substantially the same 

 as those shown herein. 



The consolidated general balance sheet as of December 31. 

 1920, of the United States Rubber Co. and its subsidiaries, after 

 eliminating all offsetting accounts between the companies, com- 

 piled by the comptroller and certified by public accountants, is 

 appended hereto and made a part hereof. 



VOLUKE OF BUSINESS AND PEOnTS 



The net sales of the company for the year 1920 were $256,150.- 

 130, being an increase of $30,503,665 over the sales of the previous 

 year. 



The net income before interest, but after malting provision for 

 depreciation of plants and adequate reserves for Federal, 

 Canadian and British taxes on income and profits amounted to $26,864,297 



The net interest charges amounted to 5,643,314 



Thui leavinfT net profits for the year $21,220,983 



The dividends on the preferred stock incUidine divi- 

 dend payable January 31, 1921, amounted to $5,200,000 



The -'lividends on minority stock of subsidiarv' com- 

 panies amounted to 18.718 



MaVinp a 'otal of 5.218,71 B 



Leaving surplus for the year applicable to the common stock.... $16,002,265 

 Dividends on common stock (8 per cent) including dividend pay- 

 able January 31, 1921, amounted to 6,480,000 



Leavine balance of surplus for the year $9,522,265 



To which there was added for adju.stments made durinE the year 492,952 



Makin? a total of $10,015,217 



Frr-r- which there wps approiiriated and set aside as a rc^en'c to 

 prrvide for any contingencies that might arise hereafter in con- 

 nection with inventory valuations, contracts or other matters. 6,000.000 



Leavincr a balance to be carried to surplus account December 31. 



1920. of $4,015,217 



The totil surplus at the beginning of the year 1920 



amoimied to $52,310,163 



From rvhich there was distributed a common stock 



dividend of 12M per cent, February 19, 1920 9.000,000 



Thus leaving **urplup amounting to 43.310.16.^ 



Which addtd to the surplus for the vear, i. e., $4,015,217, makes 



the surplus as of December 31, 1920 $47,325,380 



DIVIDENDS 



Dividends at the rate of 8 per cent have been paid upon both 

 the preferred and common stocks for the year 1920. 



TEN-YEAJR GOLD NOTES 



The company, on August 1, 1920, issued and sold $20,000,000 

 of 10-year 7^ per cent gold notes which were secured by $25,- 

 000,000 of its first and refunding mortgage bonds issued under the 

 terms of the mortgage. As the time was not then favorable for 

 selling bonds, the company sold these notes, the proceeds of 

 which were used in payment for additions to fixed properties. 



CHANGES IN ORGANIZATION 



After the death of Elisha S. Williams, who, as vice-president, 

 had general charge of the mechanical goods division, the operat- 

 ing departments of the company were reorganized in accordance 

 with the plan of organization indicated elsewhere in this report. 

 The office of second vice-president was created and several of 

 our valuable men in their respective departments elected to such 

 office It is believed that increased efficiency will result from 

 such change in organization. 



STOCK CARKIED FOR EMPLOTES 



The item of notes receivable of employes, $7,430,207, appearing 

 in the general balance sheet, is represented by notes of employes 

 given for purchase of shares of the common capital stock of the 

 company secured by 98,326 shares of such stock. Your chair- 

 man is of opinion that the making of it practicable under our 

 profit and value sharing plans for our employes to acquire and 

 hold a greater amount of stock than they themselves would other- 

 wise be able to own, thus increasing the personal interest in 

 the prosperity of the company, is of advantage to both company 

 and employe. 



In addition to the above, common stock in the amount of $2,- 

 427,705 (book value) is being carried under service contracts 

 and agreements with some of the principal officers of the com- 

 pany, as shown in the balance sheet. 



INVENTORIES 



To meet the heavy decline in prices of certain materials, notably 

 cotton fabrics, inventories have been written down $11,151,444 

 below cost, thus bringing the inventory valuations down to a con- 

 servative basis. This reduction was charged against reserves 

 previously created in anticipation of such a decline in prices. In 

 addition to this write-ofT of $11,151,444. there was appropriated 

 out of the income for the year 1920 and set up as a reserve the 

 sum of $6,000,000, which your chairman believes is sufficient to 

 take care of any contingencies that might arise hereafter in con- 

 nection with inventory valuations, contracts, or other matters. 



PLANTS AND FIXED PROPERTIES 



There has been expended upon the plants and fixed properties 

 of the company during the year 1920, $28,616,616, notably in the 

 enlargement of our tire plants at Detroit, Michigan; Hartford, 

 Connecticut; Providence, Rhode Island, and Indianapolis, In- 

 diana. The work is practically completed and paid for and your 

 chairman feels there will be no necessity for additional expan- 

 sion of plants or fixed properties for some time to come. 



EXPORT BUSINESS 



The export sales of the company increased 9.66 per cent, com- 

 pared with those for the previous year. 



Export business during- the latter part of the year suiifered in 

 common with domestic business from greatly reduced buying. 



Plans for further expansion of export business have been tem- 

 porarily held awaiting more favorable general conditions, but al- 

 ready there are some indications of revival and it is hoped that 

 the company will be justified during 1921 in executing plans 

 which will make the products of the company available, through 

 direct distribution, in every important market of the world. 



CRUDE RUBBER AND RUBBER PLANTATIONS 



The year 1920 opened with crude rubber (first latex crepe") 

 at 55 cents a pound and closed below 20 cents a pound. Your 

 company carried over about seven months' supply of crude on 

 hand and to arrive at .2679 cents, which is below the average 

 cost of production, and with the revival of business the price of 

 crude rubber is certain to advance. 



While we did not push the production of our estates in Sumatra, 

 owing to the low prices, the amount of rubber received therefrom 

 in 1920 was in excess of the previous year. During the year we 

 have increased the area of our plantations both by development 



