Owens Illinois Glass Company

OWENS-ILLINOIS

BUSINESS SOARS

Beer Big Aid - June Quarter

Net May Top Total for

March 31 Year

HIGHER DIVIDEND LIKELY

All plants of the Owens-Illinois Glass Co. are running at full available capacity, but are unable to meet the demand for their product. Of the company's 21 units, 15 are operating 100 % and six are working to the limit of their contracted facilities. So great has been the demand on Owens-Illinois for bottles, it has been compelled in several instances to sublet business to other manufacturers.

Owens-Illinois' sharp upturn in business so far this year is largely traceable to the legalization of 3.2 % beer. Although the company, with its plants strategically located, had been preparing for this business, the initial rush taxed facilities beyond capacity.

This condition was prolonged by additional state legislation on beer from time to time. While a slowing up in orders may be expected as brewers build up adequate bottle stocks, replacement requirements are expected to give the company steady business. The company produces about 85 % of the country's total beer bottle output.

Owens-Illinois would stand to benefit further from the repeal of the 18th Amendment. The world's largest bottle maker, it is in a position to start manufacturing whiskey and wine bottles on a large scale with little delay.

Legalization of distilled liquor and wines, in the opinion of interests in the trade, would be even more important to bottle makers than legal beer. In the instance of beer a high percentage of containers are returned to brewers for reuse under a deposit agreement. Distilled liquor and wine bottles are discarded after consumption, inasmuch as they constitute but a small part of the retail price. Many of these bottles are of the non-refillable type.

Profits From Stock Purchase.

Early in May, Owens-Illinois and its officials purchased a block of 40,000 shares of National Distillers Products Corp. stock at $25 a share. In addition to representing a handsome book profit at the present price of $114 a share, this interest will undoubtedly weigh heavily in favor of Owens in the placing of future bottle orders by this distilling company, the largest entity in its line in the country.

As a dominate factor in the hollow glassware business in the United States, Owens-Illinois manufacturers a broad line of glass containers. Its line includes various styles of containers for the drug trade, milk and soft drink bottles, jars, food containers, and "general purpose" bottles for polishes, inks, and mucilage. Also, the company continues its original bottle machine manufacturing business, leasing machines on a royalty basis to licensed domestic and foreign manufacturers.

In April, the Hemingray Glass Co. and the O'Neil Machine Co., were acquired. The former manufacturers glass insulators; the latter, glass blowing machines of the vacuum type. Also in April Owens-Illinois exercised an option to buy 16,000 of the outstanding 18,322 preferred shares of the Container Corp., anticipating a demand for cardboard beer containers for case lots. It owns practically all the preferred stock and over 50 % of the common shares of the Closure Service Co., manufacturer of bottle caps. Operations of the Carlyle Paper Co., formerly a wholly owned subsidiary supplying paper for containers for shipping bottles and for other uses, have been absorbed by the parent company.

Activity Shown in Earnings.

Several new lines recently have been introduced by the company. These include a milk bottle with the name and emblem of the purchasing dairy imprinted in color, a collection of aquarium jewels for fish bowls, glass insulating wool for ventilating systems and glass blocks. A building composed of the latter material has been erected at the Chicago Exposition and many filling stations are being built with this translucent material made in brick form.

Earnings of Owens-Illinois are reflecting its activity. Profit for the three months ended June 30 is estimated at between $2,500,000 and $3,000,000. This is in sharp contrast with the net of $2,466,008 reported for the 12 months ended March 31, 1932. Common share earnings for the fiscal year ended March 31, last, amounted to $2.02 on the 977,173 shares then outstanding, compared with $2.20 on 922,173 common shares in the preceding corresponding period. With present indications pointing to the maintenance of a high volume of business for the final six months of 1933, interests familiar with the company's activities believe Owens-Illinois will show between $6 and $7 a share for the current year. For the 12 months ended December 31, last, net was equal to $2,067,885, or $1.62 a common share.

With a strong financial position, earnings running at a relatively high level and all of its preferred stock repurchased for retirement, Owens-Illinois is in a position to pay a higher dividend on its $25 par value-common stock than the current disbursement of 50 cents quarterly. It is likely that consideration will be given by directors to such action at the next dividend meeting scheduled for July 18. In some quarters, however, there is a disposition to believe that the increasing of the dividend will be deferred to later in the year.

In the past the company has been liberal in its treatment of stockholders. During the 10-year period ended December 31, of total earnings of $39,870,337, the cash dividend aggregated $30,216,748 and stock dividend, paid at par value, amounted to $4,601,803. Cash dividends of $4 a share were paid in 1928, $4.50 in 1929, and $3.50 in 1930, in addition to stock disbursements each year of 5 %. As a result of a sharp slump in the glassware business in 1931 the dividend was reduced to $2.25 and in 1932 was further cut to $2, the current rate.

Since the beginning of 1933 the company has entirely eliminated its 6 % preferred stock. Of the $8,300,000 outstanding on December 31, $$300,000 was purchased for cash and the remaining $8,000,000 was acquired from the Illinois Glass Co. during May as part of a transaction whereby Owens-Illinois exchanged 200,000 shares of its 10-year 5 % debentures and $8,000,000 of its preferred stock.

Liquid Position Good.

Also, the last of the company's original issue of $5,000,000 5 % debentures issued January 1, 1929, was retired July 1 and the remainder of the 6 % Root Glass Co. bonds, payment of which had been assumed upon acquisition of the Root company, have been called for retirement August 1. Aside from the full authorized issue of 1,200,000 shares of common stock, the only securities of Owens-Illinois to be outstanding after August 1 will be an issue of $2,500,000 first mortgage 6 % bonds of the Illinois Pacific Coast Co., whose properties were acquired by Owens-Illinois Pacific Coast Co., a wholly owned subsidiary of Owens-Illinois Glass.

As of the close of December, 1932, when the last balance sheet was made public, the company's finances presented a good liquid position, the current ration having been 16 to 1. Current assets totaled $19,039,629 and current liabilities $1,128,407, making net working capital $17,911,221, as compared with 414,558,569 in 1931.

Cash and U. S. Government securities due within one year at the close of December aggregated $5,147,558; Liberty bonds, $235,007; Federal Land Bank bonds, $909,116. Notes and accounts receivable, less reserves totaled $3,737,880. Inventories were valued at $9,010,565.

Surplus at the close of 1932 totaled $7,364,470 and total assets $48,479,086.