388 TIMBER BONDS 



Bonds reserved for future issue, shall, if issued, mature 

 at the rate of $100,000 every six months, beginning Janu- 

 ary 1st, 1923. 



These bonds are secured by an absolute first mortgage 

 upon all the property now owned and that may hereafter 

 be acquired by the Stearns Coal & Lumber Company, and 

 also, through deposit with the Trustee of its entire issued 

 capital stock and total closed issue of first mortgage bonds, 

 upon all the property now and hereafter owned by the 

 Kentucky & Tennessee Railway Company. 



GUARANTEE. 



These bonds are guaranteed both as to principal and 

 interest by the actual endorsement on each bond of Mr. 

 Justus S. Stearns, President of the Stearns Coal & Lumber 

 Company, who is in receipt of a large income and whose 

 net worth in good realizable assets, entirely outside of his 

 interest in this Company, is approximately $2,500,000. 



VALUATION OF SECURITY. 



Based upon the expert reports of Mr. J. P. Brayton as to 

 the timber, Mr. J. K. Seifert as to the coal and Messrs. 

 Price, Waterhouse & Company as to the Company's ac- 

 counts, we value the property securing these bonds as fol- 

 lows: 



Land and Timber owned in fee $3,013,197.50 



Coal owned in fee, and leased 3,000,000.00 



Kentucky & Tennessee Railway 640,143.09 



Coal Mines 218,500.16 



Saw Mill and Equipment 387,401.59 



Working Capital 250,000.00 



Total valuation of assets $7,509,242.34 



EARNINGS. 



Based upon our investigation of the Company's opera- 

 tions and upon the additions to its saw mill, coal mines 

 and railway to be immediately provided from the proceeds 

 of these bonds, we estimate the Company's average annual 

 net earnings and sinking fund payments as follows: 



