April 1, 1917. 



THE INDIA RUBBER WORLD 



411 



Annual Report of the United States Rubber Co. 



THE annual report of President Samuel P. Colt, of the 

 United States Rubber Co., which was sent to the stock- 

 holders early last month, is even better than the pre- 

 liminary report furnished earlier, at the time of the $60,000,000 

 bond financing. 



The net sales of $126,759,129 are $1,759,000 larger than the 

 prelimiHary estimates, and the balance of net profits for in- 

 terest on funded debt of $13,495,155 is practically $1,000,000 

 better than the preliminary estimate of a balance of at least 

 $12,500,000. 



As a matter of fact, net sales for 1916 gained $33,898,113, 

 or 36.5 per cent, over the previous year. The balance for 

 interest (including floating debt) and dividends of $14,743,774 

 was $3,257,070, or 28 per cent, in excess of the corresponding 

 figures for 1915. 



It will be noted that while the sales and profits were both 

 greater than in any previous year the percentage of profits 

 to sales was less than in the previous year, and, therefore, 

 the changes in prices inaugurated early this year were justified. 



With the sim.plification of organization will come economies 

 in administration, and the funding of indebtedness will further 

 reduce actual running expenses. Already the company has 

 begun the liquidation of subsidiary companies through ab- 

 sorption by the parent organization. 



The increase in the tire business is worthy of special men- 

 tion, being nearly 60 per cent larger than that of 1915. 



Evidently the Sumatra plantations are proving a valuable 

 asset of the company. The expert business shows a gain, 

 but only a small one. 



The reports of the president and tlie treasurer follow: 



THE PRESIDENT'S REPORT. 



To the Stockholders of the United States Rubber Co. : 



The by-laws of the company provide that the president "shall 

 make a report in writing to the stockholders at their annual 

 meeting, reviewing the general business and condition of the 

 company." In compliance therewith, your president submits the 

 following report fur the fiscal year ending December 31, 1916. 



The treasurer's report, which is hereto appended and made 

 part hereof, gives the consolidated general balance sheet as of 

 December 31, 1916, and the consolidated income statement for 

 the year ended December 31, 1916, of the United States Rubber 

 Co. and all its subsidiary companies. 



Ft'NlUN'G OF COMPANY'S INDEBTEDNESS. 



The most important event of the year has been the funding 

 of the indebtedness of the company and its subsidiaries through 

 the banking house of Messrs. Kuhn, Loeb & Co. Negotiations 

 to this end were begun some months ago and but recently con- 

 summated. Through the sale of $60,000,000 first and refunding 

 mortgage 5 per cent bonds, the company is now provided with 

 funds wherewith to pay its entire debt and the debts of its 

 subsidiary companies, with the exception of $9,000,000 General 

 Rubber Co, debentures due December 1, 1918, and $2,600,000 

 Canadian company bonds due October 1, 1946. In addition to 

 the payment of the indebtedness, further working capital is also 

 provided. The bonds of the Canadian company are not being 

 retired at present through the refunding, inasmuch as they do 

 not mature for nearly 30 years; and the debentures of the 

 General Rubber Co. are also left undisturbed for the present, as 

 the company has under consideration fither plans for dealing 

 with its important crude rubber interests. Provision, however, 

 is made for the issue of additional bonds up to the amount of 

 the capital stock of the company at any time outstanding fat 

 the time of tire authorization $97,252,900") to take care of the 

 above named bonded obligations, should it hereafter be found 

 desiralile to do so; and, under conservative restrictions, to pro- 

 vide also for tho future growth of the company. 



This funding has been carried out in a most thorough man- 

 ner: and. while the bankers have been exacting in their require- 

 riients where the security of the bond was involved, they have 

 at the same time shown a breadth and a spirit of fairness in the 



whole transaction and a desire to have the company unhampered 

 in the economic administration of its business, which cannot be 

 too strongly commended. 



To authorize the transaction, our stockholders responded to 

 the call for proxies with a unanimity most gratifying to your 

 directors and president, and which I wish to take this oppor- 

 tunity to acknowledge. More than three-quarters of each class 

 of stock (the percentage of the wliole being over 82 per cent) 

 voted in favor of the transaction and no shares voted against it. 



SIMPLIFYING OUR ORGANIZATION. 



With the funding of our debt, we will be able to simplify our 

 organization and thereby bring about economies in adminis- 

 tration in several ways, among which will be the liquidation of 

 companies whose separate organization is now unnecessary. 

 Steps to this end will be promptly taken. 



VOLUME OF BUSINESS. 



The net sales of the company for the year 1916 were $126,- 

 759,000, as against $92,861,000 the previous year, an increase of 

 $33,898,000 or about 36 per cent. 



PROFITS AND DIVIDENDS. 



The net profits of the business for the year 1916, before de- 

 ducting interest charges, amounted to $14,743,000; after deduct- 

 ing interest charges the profits were $11,226,000. These profits 

 cover the dividends upon the preferred stocks, and enhance the 

 intrinsic value of the common stock. 



MAIXTENAN'CE. 



The custom of maintaining the fixed properties of the com- 

 pany in the highest state of efficiency and charging the cost of 

 such maintenance to expense account has been again followed 

 during the past year. Our plants are all in first-class, up-to- 

 date condition and are now being run to full capacity. 



BASIS OF INVENTORIES. 



Following our usual practice, inventories of manufactured goods 

 and materials have been taken at cost where cost was below 

 market, and at market where market was below cost. Market 

 to-day is generally above cost. 



UNITED ST \TES RUBBER EXPORT CO., LIMITED. 



Our export business, now consolidated under one organiza- 

 tion, the United States Rubber Export Co., Limited, is being 

 successfully pushed forward, although it is still relatively small, 

 being only about 6'/2 per cent of our total business in 1916 as 

 against 5 per cent in 1915. 



UNITED STATES TIRE CO. 



Our new "Royal Cord" tire and the new non-skid "Usco" 

 tire have given us the most complete line of tires manufactured 

 by any company. There is still a wide and increasing demand 

 for the "Nobby Tread" and "Chain Tread," which are acknowl- 

 edged to be the best non-skid tires in the market. Our tire 

 sales for 1916 show an increase of 57.9 per cent over those of 

 1915. 



OUR SLIM.\TRA Rl RBER PLANTATIONS. 



The development of our rubber plantations ih Sumatra has 

 steadily continued during the past year. The amount of crude 

 rubber received therefrom in 1916 was substantial and was 

 largely in excess of previously estimated production. The 

 future" increase in production will be rapid, as the great number 

 of young trees are more and more coming into bearing. Our 

 most sanguine expectations from these estates are being realized 

 and it is believed that they will prove to be one of the most 

 valuable assets of the company. 



AnVANTE IN PRICES AND OUTLOOK. 



While the profits of the company for 1916 were the largest in 

 its history, the percentage of profits to sales was less than in 

 the previous year, owing chiefly to the advance in materials and 

 labor during the year. With the view of meeting the.se condi- 

 tions an advance in jirices of manufactured goods, varying from 

 10 to 20 per cent was made early this year. 



The increase in net sales of the company for the first two 

 months of the present year over the corresponding months of 

 last year exceeds 20 per cent. 



