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GENERAL FARM PROGRAM 



Financial Report on International Harvester Covering 1948 Operations 



The International Harvester Co. prettied up its sky-high 1948 profits last month 

 with a barrage of high-powered newspaper ads and booklets all declaring that 

 "Profits mean progress." Skillfully juggling its own figures, the giant farm- 

 machine monopoly tries to prove that it exists in business solely for the greater 

 good of employees and customers. 



But all those columns of print and fancy charts (which will be charged off taxes) 

 only conceal the real facts about IHC operations. Here are some to keep in mind: 



profits and sales peak 



In every respect, 1948 operations smashed all previous records established by 

 the company. Sales, profits before and after taxes, assets, plowed-back profits, 

 new plant and equipment — every item hit a new high. The table below gives 

 the sales and profit picture, as reported by the company in its annual reports to 

 stockholders: 



Note especially that 1948 reported sales and profits shot far ahead of even 

 the banner year, 1947. But that doesn't count at least 9.2 million dollars addi- 

 tional net profit not publicly reported. 



IHC included in published net profit only 11.3 million dollars in cash dividends 

 received from subsidiaries, although the company's own figures show their share 

 in profits of subsidiary companies was actuall}^ 20.5 million dollars. With the 

 hidden 9.2 million dollars, 1948 profit came to .$6.5,000,000. That means actual 

 1948 profits after taxes were 33 percent above 1947, 191 percent above 1946, 165 

 percent above 1945, 139 percent above the wartime average in the years 1941-44, 

 177 percent above the peacetime average in the years 1936-39. So to say, as 

 company propaganda does, that 1948 profits were merely "good" is a vast under- 

 statement. A better word is "exorbitant." 



profit rate 



Keeping in mind that actual 1948 after-tax profits were about 2% times as large 

 as the average yearly wartime profit, it is no surprise to find that the $65,000,000 

 represents a very good profit rate, too. Net profit expressed as a rate of return 

 on invested capital is an excellent measure of a company's profitability. IHC's 

 $65,000,000 represents a 16.2 percent profit rate on its invested capital of 

 $400,000,000. 



That means that on every $100 of stockholders' investment, the Company 

 made $16.20 clear profit last year. This is proof of the extreme profitability of 

 IHC operations, since only 5 more years of profit at this level would be sufficient 

 to replace the corporation's entire capital investment. More than 50 years of 

 capital accumulation could be equaled with only 6 years' profits. 



At the same time IHC was stacking up these extraordinary yearly profits, it 

 was imjjroving its over-all financial strength and its ability to continue making 

 top profits. 



ASSETS AND EXPANSION 



IHC total assets are well over the half-billion mark. As of October 1948, 

 total assets amounted to $672,000,000. More than one-fifth of this ($142,000,000) 

 represents undistributed profit — profits left over after dividend payments and 

 plowed back in the company. Called either "surplus" or "reserves," these 

 hoarded profits are available for any purpose (recently used almost entirely for 

 plant expansion) and assure stockholders of ample dividends for years to come. 

 Quite properly they could be used to provide pensions for IHC workers whose 

 efforts have created this tremendous wealth. 



