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Show filO GRANDE PASSES PREFERRED TO HELP WESTERN PACIFIC Expected In East Cessation of Payments Will Be Only Temporary. The Denver & Rio Grande bai itfued the following -tat? merit anent the pairing of its aemi-annual dividend of 22 per eent last week: r Penver k Rio Grande directors concluded that current income should ft rut of all protect the guarantees of the company as well at it fixed charge and after careful consideration they unanimously decided to follow a strictly conservative course and forego declaring declar-ing the usual aemi-annual dividend of 24 per cent on the preferred stock, even though groee operating revenues of the company for the current fiscal year 'two months estimated' will approximate ap-proximate 23,5()0t(VM)t compared with $23,563,436 for preceding year, and net revenue exclusive of taxes $7,500,000 against 7,779,467 a year ago. Operating expenses this year include in-clude depreciation charges under the interstate commerce commission method of accounting approximating $5i0,0ft0, whereas there were no such charges against 'operating expenKec before. Without this depreciation charge, esti mated auralua ior the eyrynt fia-nal year woula approximate that of last year. Meet Western Pacific Interest. "Cash balances todav are about 2,6OQ,0O0, rfnd there is no floating debt, but in view of the guarantee of inter est oa Western Pacific first mortgage bonds directors concluded to take the safe courte of temporarily suspending the preferred stock dividend and applying ap-plying the amount, about $1,250,000, in the parment of semi-annual interest due September 1 on $50,000,000 Western West-ern Pacific first mortgage 5 per cent gold bonds. "It was deemed best to follow this extremely prudent policy and thus conserve con-serve cash resources of the company, as well as its other treasury asset and insure beyond question the stability stabil-ity to meet- its guarantee on the bonds and also protect its $50,000,000 Western West-ern Pacific stock. Completing New Road. "Delav in completion of Western Pacific in accordance with engineers' es timates has heen disappointing, but unfinished un-finished construction work la being gradually closed up, and arrangements are being made for applying standard operating method of accounting commencing com-mencing with new fiscal year, so that for .Inly and thereafter monthly statements state-ments of earnings, expenses, etc., will be published." The Boston Xews Bureau comments as follows: "The passing of the Denver k .Rio Grande semi-annual preferred dividend was expected. The present position of the -road left a snapenaion of the die bursements the only reasonable course to parses. rrom earnings at nana inaieations are that not much mora than 2, 350,000 would be earned after all charge in the year to Jun 30, while 5 per eent dividend on the 447.779,800 preferred stock outstanding calls for $2,488,990. Accordingly a deficit of more than .100,000 is apparent." Host Act Consistently. This in itself is not large and would hardlj justify passing of a rat that ha now been in force for the past ten years. But Denver's Western Pacific Pa-cific railroad is still in th construction construc-tion era, and nntil that road demonstrates demon-strates its ability to turn a little something some-thing ujto the parent road 'a treaaury the latter' resource should be -husbanded even to th extent of passing th dividend. To the end of the last fiscal year Western Pacific had spent practically all of th $70,438302 which had been raised for it to that data. It is quite probable that th road made further demand for funds on Denver ft Rio Grande's treasury thia year, aa th latter lat-ter road ia obliged to supply fund to complet construction work on th new line. Further, of the 5p,000,000 Westers Pacific first mortgage bonds outstanding outstand-ing half, or $25,000,000, are in the hands of the public. It is probable that Denver had to make good a part of th interest chsrge on this obligation, obliga-tion, in addition to deferring intercMt due it on the $25,000,000 bonds in ita treasury. Think Delay Only Brief. . June 30 last Denver had a net balance bal-ance of current assets of only $2,500,-000. $2,500,-000. ' While it might squeeze by on this, had it onlv itaelf to look out for, it was far from being in a position posi-tion to care for aaar demanda from the Western Pacific Having $2,488,990 for a year or so on its preferred dividend, however, the road will probably make out all right. Further, Western Pacific Pa-cific returns before long nra bound to be of very fair proportions, and a resumption re-sumption of th disbursement eonse-.quently eonse-.quently will be only a matter of a short time. Denver haa paid 5 per cent on th preferred since 1901, when th rate was advanced from 4 per eent to 5 per eent. In 190 and 1899 it paid 4 per eent, and in 1898 2H per cent. In 1897. and 189d th preferred stockholder stockhold-er received 2 per eent, in 1893 2 per eent. in 191 iVi per cent, in 1890 S rer cent, ia 1888 3 per cent, and ill 887 per eent. Probability f diacontinuaac of Denver's dividend haa been a factor j ia market quotations ever since it became be-came known that construction require- aients of the Western Pasifie would exceed the original estimates by about j $25,000,000. j Maw Road Owes 17,000,000. I To secure this $25,000,000 Denver : sold $22,379,000 first and refunding i boa da, turning tha cash to the new company and receiving $25,000,000 par value Western Pacific second mortgage bonds, on which no interest has been paid. Denver also sold $4,000,000 par ' value of it own preferred for Wert I ern Pacific purposes, and further ' loaned the . compaay approximately I $400,000. Including unpaid intereat on W eitera Pacific's second mortgage bonds, this company ia iadebted to Denver about $7,000,000. Juna 80 last Denver carried oa its book a deficiency charge against Weatera Pacific amounting to $5,759,250. This has been ; increased ia the past year. I'nder this increased burden of ' chargea Denver's surplus available for ! divideads has annually been growing , leas. Ia 1907 the company earned $4.-16.000 $4.-16.000 available for dividends overall I chargea. la 1908 it earned only $3,- B3A.0O0, ia 1907 $3,035,000. aad ia 1910 $2,Sg 3,000. - - I |