Some Leading Examples of Prices and Terms and Promotion Plans Upon Which Securities Were Put Out.

Perhaps one of the most notable examples of plans for flotation of securities was the 8 per cent cumulative convertible preferred stock of the Pierce-Arrow Motor Car Company, offered by prominent brokers in 1916. This stock must be redeemed at 125 up to the amount of cash paid on common stock in excess of $5.00 a share in any year. The preferred is convertible into common stock, share for share, at the holder’s option (preferred stock $10,000,000) earnings five times preferred dividends; the common shares are without par value (common 250,000 shares).

Among other issues by banking houses of New York and other cities may be mentioned in 1912, General Motors Company’s 6 per cent first lien sinking fund gold notes dated 1910, due 1915, $200,000,000 (since paid off); 1913 Chalmers Motor Company of Michigan, 7 per cent cumulative preferred stock (no bonds) $1,500,000, redeemable at $115 a share, earnings over 9¹⁄₂ times preferred interest; company taken over by new company in 1916. January, 1916, Willys-Overland Company convertible 7 per cent cumulative preferred stock, redeemable at $110, interest 6¹⁄₂ times earnings; November, 1916, Chalmers Motor Corporation of New York, shares at no par value, at $35 a share (264,000 shares), book value $29 a share, earnings, $5.40 a share; National Motor Car & Vehicle Company common shares at no par value (80,000 shares), no bonds, no preferred stock. Offered at $42.50 a share, earnings old company equal to 12¹⁄₂ per cent on new stock.

Most motor companies started with a small capitalization and business, and to provide additional working capital, as their business expanded, issued preferred or common stock.

Most of the better grade issues were for preferred stock, usually carrying with it a proviso that it could be retired at will at a stated price, some as high as $125.

Very few companies in the motor field have any bonded debt. Some companies which incurred such indebtedness in the past have paid it off; for example, the General Motors Company, and the Pierce-Arrow Motor Car Company.

The issues of securities by established motor companies have, as a rule, shown large liquid assets, and earning capacity record, and have been of the same general class.

In the automobile accessory line many flotations were put out in 1916 and a few in 1917, among which were:

(a) Edmunds & Jones Corporation.
(b) Perlman Rim Corporation.
(c) Motor Products Corporation.
(d) Fischer Body Corporation.
(e) United Alloy Steel Corporation.
(f) Transue & Williams Steel Forging Co.

(a) Edmunds & Jones Corporation (manufacturers of automobile lamps). This corporation issued $1,000,000 worth of preferred 7 per cent cumulative stock (no bonds), redeemable at $120, earning over six times preferred dividends.

(b) A somewhat unusual plan was the Perlman Rim Corporation (manufacturers of demountable automobile rims) which issued 100,000 shares of stock of no par value, divided into two classes as follows:

Class “A,” having voting power.... 3,000 shares Common, no par value or voting power 97,000 shares

The estimated earnings of this company for 1917 are $3,000,000. In addition the company has been allowed claims for infringements sustained by the courts, amounting to $2,000,000.

Class “A,” no par value, non voting . . 95,000 shares
Class “B,” no par value, voting . . . . . . . 5,000 shares

This corporation has taken over five companies manufacturing miscellaneous products, such as automobile radiators, windshields, etc. Their earnings for 1916 were $788,000.

(d) A more usual form is the $5,000,000 issue of 7 per cent cumulative preferred stock and 200,000 shares common stock, of the Fischer Body Corporation. It is not contemplated to pay a dividend on the common until the company has $1,000,000 surplus earnings. Its net profits for the year 1916 were $1,000,000 on a total volume of business amounting to $20,000,000. The preferred stock is redeemable at $120.

(e) The United Alloy Steel Corporation issued 525,000 shares without par value, of which 500,000 were used to acquire United Steel Company, manufacturing alloy steel parts for the automobile trade.

For expansion purposes to provide more adequate equipment to supply the increasing demand for its product, $4,000,000 additional cash capital was to be provided. The estimated net earnings for 1916 were about $7 a share on 500,000 shares.

(f) Transue & Williams Steel Forging Company issued 110,000 shares without par value. One hundred thousand shares and $750,000 cash was to be paid for company subscriptions at $45.50 a share. The net earnings for 7 months of 1916 were $648,026 or $12 a share.