The Film Daily (1926)

,d|, May 23, 1926 THE ■^«^ DAILY 21 ancial Structures (Continued from Payc 7) seems a characteristic of the Igiieiit companies. Like several rototypes, Fox Fihns was born /ery modest capitalization. The ly was formed, a little more 11 years ago, by the njan from I takes its name and his assoIhe initial investment totaled nillion dollars, from which has the present company with an gross business in excess of :imes the original outlay. company appears as a lesser •hen compared with the domiFamous Players-Lasky organand while total capitalization is than the other motion picture ers under review in this discus1, ;ported gross revenues fall con'fly under the level of First Naand Universal. In other rethe company closely resembles ows. : is to say, it produces and diss motion pictures throughout ited States and Canada, through ber of wholly owned or consubsidiaries. Similarly, activave been carried into the foreld on a substantial scale. Its loal revenues are derived from el comedies, one-reel varieties ucational productions. A numfeature pictures is produced ear. espect to current working cap)sition, Fox has somewhat the a age over its rivals since invencomprise a smaller percentage rent assets and cash is larger. Nov. 28, 1925, for example, cash, )ans and marketable securities amounted to $4,790,000, which ilres with total current liabilities y $1,170,000. L;ning power seems relatively sta f an enterprise of this type. Re e to terms of present capitaliza net profits have fluctuated be a minimum of $2.28 a share in ind a maximum of $5.32 in 1922. figures compare with $5.05 a earned for the combined 400. hares of Class A and 100,000 i of Class B stocks. Both of issues share equally in dividend ents and are preceded by $5,260, f funded debt. ly the Class A shares are listed. ere does not appear a likelihood early change in the present $4 end, in view of the earning powlus far developed, this stock high enough for the present. Loew's, Inc. ce. 37; Dividend. $2; Yield, 5.4%) ganized in 1919 as a successor :.oew's Theatrical Enterprises, v's. Inc., has now extended its 1 of vaudeville and motion pichouses to 105 in various parts of tjUnited States and foreign counIn the meantime its scope has greatly enlarged through the isition of Metro-Goldwyn Pic■ Corp. Thus the company has d the functions of the production distribution of pictures to its nal line, and is now a complete in the industry. There is only one class of stock outstanding, of which there are a little over 1,000,000 shares. Funded debt until recently has been confined to subsidiary obligations, but within the last few' weeks an issue of $15,000,000 6% debentures was sold in order to provide funds to liquidate bank loans, facilitate the exhibition of its films in Germany, and acquire new theater enterprises. Earnings were fairly uniform for the first few years of the company's history, being in the neighborhood of $2 a share on the stock. How well the enlargement of the company's activities was justified is revealed by the sharp increase from $2.78 in the year ending Aug. 31, 1924, to $4.44 in the last fiscal year. Up to date, this improving trend has shown no let-up as $3.44 per share was reported for the 6J/2 months ending March 14, 1926. This period includes the best months so that the figure . reported does not necessarily portend so favorable a rate for the entire twelve months, but everything points to a record year and a fair prospect for an increase in the dividend over the present $2 a share basis. The theater business has contributed towards this improvement. Total paid attendance for the 6i4 months ending March 14, 1926, amounted to $47,000,000, against $44,000 000 for the corresponding period the year previous, and $75,600,000 for the full year ending Aug. 31, 1925. Loew's, Inc., stock is selling on a low yield basis, but from the vievvpoint of current earning power it is not over-valued, and barring unforeseen developments there is nothing to suggest any material falling of? in income. At 37, the stock seems among the most attractive of the amusement shares. Metro-Goldwyn, Preferred U'ricc, 23; Dividend, $1.89; Yield, 8.2%) As its title indicates, this motion picture producing and distributing organization is a consolidation of the former Goldwyn Pictures Corp. and the Metro Corp. As. is customary with the motion picture producers. Metro-Goldwyn controls a number of theaters in conjunction with its primary business. In addition to the theaters which are operated by subsidiaries, other wholly or partly owned sub-companies are included m the organization. Their purpose is to feature productions of well known authors and motion picture stars. In addition to its own theaters, however, Metro-Goldwyn has an important outlet for its films through the Loew's, Inc., chain of amusement houses. The company is closely affiliated with Loew's inasmuch as the latter owns all of the $3,100,000 of $5 par value common stock outstandmg. Moreover, the directorate of both companies is much the same. In fact, Metro-Goldwyn is really the motion picture subsidiary of the Loew's circuit, although, of course, its finances and' operations are indcijendent. An extensive foreign business is done by the Metro-Goldwyn Dist. Corp., a wholly owned subsidiary, which distributes the parent compa ny's and other producer's films in practically all foreign countries. In addition to the common stock capitalization already mentioned, the company has an outstanding issue of $4,970,000 of preferred stock which is unique in that its par value is fixed at the unusual figure of $27 a share. Dividends are cumulative in the amount of 7% or $1.89 a share. While inventories make up more than 90% of the company's $12,240,000 of working capital, financial position is good. There is no funded debt other than $560,000 of a subsidiary and bank loans at the close of last August were nominal. Earnings during the past seven years have shown very wide fluctuations. Following large deficits in 1921 and 1922, however, the trend has been progressively upward an^d in the twelve months ended August 31, 1925, a balance of $10.90 a share v^'as shown for the preferred stock. This issue is a fairly attractive low-priced spec-vestm,ent. Its possibilities marketwise are somewhat restricted hut a further period of seasoning should result in moderate improvement in market value. Pathe Exchange, Inc. (Price, 49; Dividend, '$3; Yield, 6.1%) Although distribution of "news" and feature films is still the backbone of its business, Pathe Exchange is a well rounded unit in the moving picture industry, producing its own films and having full control over its own supply of raw film. Last year, Pathe released slightly less than 500 films through the 13,000 moving picture theaters vi'hich it serves. Over 150 of these films were Pathe News pictures and Pathe Review films, the balance being represented in features, serials, comedies and other pictures made by independent producers. The strong position that the company occupies as a producer is indicated by the fact that it serves over three-quarters of all the moving picture theaters in the l.Tnited States. To further round out its activities in the film industry, Pathe has united with the du Pont interests in the formation of a subsidiary company known as the du Pont Pathe Film Manufacturing Co. which is particularly interested in the exploitation of a non-inflammable film manufactured bv a new process which formerly was controlled exclusively by the French Pathe company. Another departure which seems likely to prove auite profitable to Pathe is the manufacture and sale of the Pathex Camera and Projector. This device is a small camera made primarily for amateur use which sells for around $100, plus the cost of the special film, which is developed for projection in the Pathex laboratories. Earnings last year, although not quite as high as had been generally expected, held to the steadily rising trend shown within recent years. The net income of over $1,430,000, after all charges iiuluding depreciation and taxes, was equal to $7.67 a share on the 177,561 shares of no par value Class .\ and B common stock outstanding at the end of the year. The 1925 balance sheet disclosed a strong financial condition with a ratio of 6.5 to 1 between current assets and current liabilities. There are no bank loans or other unfunded debts outstanding. The outlook for Pathe for the current year appears in every way satisfactory and the stock has good speculative possibilities. *Also 5% in stock. Universal Pictures, Preferred (Price, 93; Dividend, $8; Yteld, 8.6%) In its present form, Universal is one of the newest of the motion picture companies since it was organized as recently as January, 1925. Actually, however, the business may claim kinship with the pioneers since the constituent units date back to the earliest days of the industry. The company's volume of sales compares very closely with that of First National, but its capital investment is considerably larger, inasmuch as Universal controls an extensive chain of its own theaters directly, whereas First National secures an outlet for its production by indirection. The Universal policy, therefore, resembles that of Famous Players. Like its great rival, the company is engaged in every phase of the industry, from production to distribution and the ownership of theaters. It also has extended the scope of operations to foreign countries where its own productions and those of other companies are distributed on an ambitious scale. The latter include International News and Century Comedies. Earnings of Universal Pictures have shown striking and consistent growth, being approximately $24,800,000 for the fiscal year ended Nov. 7, 1925, compared with $16,100,000 for 1921, a gain of more than 54%. Net income has increased at an even more rapid rate, indicating a broadening margin of profit on larger volume of gross. Thus, net profits were $634,334 in 1921 against $1,930,000 last year, an increase in excess of 200%. The company has no bonded debt. Its $2,880,000 of first 8% cumulative preferred stocks are followed by $2,000,000 of 7% preferred and 250,000 no par common shares. The 8% preferred list on the New York Stock Exchange has a high equity in earning power and while it is not fully seasoned appears an attractive holding for its high yield and possibilities for improvement in market value. Earnings last year were equivalent to $64.18 a share, average for the last three years being $59.51 a share. The common is listed on the New York Curb Market. Per share earnings for this stock rose from the ocjuivalent of $1.01 five years ago to $6.18 last year. At current levels around 33 it would seem to have good speculative possibilities since, on the basis of nearly 20% earned on market price, the issue is out of line with other amusement stocks.