Document nkXYo2bER8NRjMaqG5ZQqj9y6

PREFERRED STOCK of the ACME WHITE LEAD AND COLOR WORKS i '4 'J *- Preferenee over Common Stock The holder of preferred stock owns an interest In a business of such proportion as the amount of his Jtock tears to the company's total capital. He is entitled to a fixed dividend instead nt taking chances as to a larger or smaller dividend or no dividend at all, which the holder of common s*ock must do. Under the laws of Michigan these dividends must he cumulative; that is, if for any reason the dividend for any one period should no* be paid it would stand as a preferred claim against 'ha net assets erf the company and must be paid before the holders of common stock can draw any dividend or any share of their investment. The law further provides that if for any reason the corporation shall "cease business or become insolvent", the holders of preferred stock shall receive in full the par value of v titfg 0007-SWP-047393 2- Taxes and. Exemptions Redemp tion Voting Power their investment and any unpaid dividends, "before anything can be divided among the holders of common stock. The record of this company shows that such an event in this case is extremely improbable. This explanation of the nature of preferred stock is offered merely for the benefit of those "who"may"not have had experience with this particular form of invest ment, and to show that, the holders of this preferred stock will be amply protected. This preferred stock is full paid and non assessable. It is also tax paid; that is, it is exempt from taxation in Michigan. The company pays taxes on all of its property, and therefore the stock, which rcpreaents a share m that property, cannot be taxed again. The holder of preferred stock, like the holder of common stock, is not personally lieble fnr any debts of the company except those for labor. This stock is subject to redemption at par on November 30th, 19217. Tvir Insures to the purchaser a long term investment, .vhich lerds jt additional value. It might be profitable, however, for the company, prior to that date, to withdraw this 6# stock and substitute an issue at a lower rate of interest. The company reserves the privilege, therefore, of taking up any or all of this preferred stock at any time between November 30th, 1912 and November 30th, 1927. As this reservation affects the duration of the investment and therefore its value, it is provided that if the company should exercise this option, at must pay for the stock a premium of 10. As the date approaches when this option can be exercised, it is expected that this provision will tend to keep the market value of the stock at premium. In accordance with he usual practice In preferred stock issues, this preferred stock does not entitle the holder to vote fer directors. This restriction is for the protection of the preferred stock as well as the common stock. It is intended to insure the continuance of the present management of the company, under which its business has been conducted so profitably. It is provided, however, for the protection of the preferred stock holders, tha.t in case a dividend on the preferred stock should be passed for sixty days, or in case of a 10# impairment on the common stock, the preferred stock holder shall have an equal right with the common stock holder to participate in the election of directors and the control of the corporation. 0007-S WP-047394 0007-SWP-000115689 GROWTH OF THE CORPORATION Organized, December 9th, 1884 Paid in Capital, - > 5,000.00 Authorized Capital, 10,000.00 Capital increased Dec. 14, lfc86 to 25,COO.00 ti t Feb. 12, 1897 " 75,000.00 it n II Dec. 7, 1899 " 150.000.00 II Nov. 25, 1901 " 400.000.00 t It Nov. 29, 1902 " 500.000.00 . .H If Dec. 10, 1904 " 750.000.00 11 II Dec. 10, 1906 1.250.000. 00 M It Dec. 12, 1907 " 2 000 000.00 Of the increase in common stock $365,000.00 consisted of additional cash investments by the four principal stockholders. $100,000.00 was sold to employes and the balance, amounting to $775,000.00 represents stock dividends earned by the company. SALES 1884 - - - $ 25 691.53 1894 -------- 568 059.46 1899 --------- 650 334.91 1903 --------- 1,370 553.34 1904 - - - $1,696,597.60 1905 - - - 2,499,943.05 1906 - - - 2,987,428.75 1907 - - - 3,160,403.19 DIVIDENDS For the last ten years., with, per cent to capital: Cash Year. Dividends. Stock Dividends. Total Dividends. Per cent. 1898 1899 1900 1901 1902 1903 1904 1905 1906 $ 1,750.00 1,750.00 10,500.00 10,500.00 28,000.00 35,000.00 35,000.00 52,500.00 52,500.00 $---------------75,000.00 150,000.00 50,000.00 100,000.00 400,000.00 $ 1,750.00 76,750.00 10,500.00 160,500.00 78,000.00 35,000.00 135,000.00 52,500.00 452,500.00 7* 107* n 107* - 19-1/2* 7* 27* H ,. 60-1/3* $227,500.00 $775,000.00 $1,002,500.00 0007-SWT-047395 0007-SWP-000115690 -4- KET EARNINGS Over and above ir.tc-rest payments for the last ten years, with per cent on raprtal stock: Year 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 Total Earnings $ 25,750.00 31,750.00 20,500.00 145,500.00 78,000.00 75,000.00 95,000.00 187,500.00 " 7,500.00 ^ r,ooo.oo 1,073,500.00 Per cent 34# 42# 14# 97# 19-1/2# 15# 19# 25# 42# 7-3/4# The variation in er-mircs Is natural, and is due to changes in business c'-n<-itions from year to year. Some times Spring stocks are btr.gi.t in the Pall, and. sometimes not until after the first of *he vear. In some years expen sive work has been done opening up new fields, the results of which have not shovor: at once. The next year, perhaps, very little of this work has been done, and the company has had the benefit of the increased business resulting from the expenditure of the year before. Then, too, accumulations of assets have at times been omitted from our statements until a substantial stock could be declared, or until a re-appraisal seemed necessary for insurance purposes. Last year it was expected that the company would do a business of 3,500,000.00. It incurred all the neceaaary expense to that end and would have reached that mark had it not been for the stringency and panic in the Fall. A reduction in volume for the year 1907 was experienced by almost every concern doing a large business. For the last ten years the company's AVERAGE NET EARNINGS HAVE BEEN liO'SE THAN TtflCE the amount necessary to pay the 6# dividend on thi3 issue of preferred stock. 0007-SWF-047396 0007-SWP-000115691 - For the last four years the average net earn ings have been practically FOUR TIMES the amount of a H dividend on the preferred stock. If this preferred stock had "been issued ten years ago it would have taken the place of an equal amount of indebtedness, and if interest at 6# on the amount of the preferred stock is deducted from interest payments during those ten years and included with net earnings, the average net earnings for the last ten year3 have "been MORS THAN THREE TIMES, and for the last four years have been practically FIVE TIMES the amount of a 6# dividend on the preferred stock Owing to the responsibility of the company's four directors and their personal indorsement of all its commercial paper, it has been possible to transact this constantly increasing volume of business with a smaller investment of capital than would ordinarily be required. If the interest paid is considered a3 really a part of the net earnings, or a3 dividends on borrowed capital, THE NET EARNINGS FOR THE LAST TEN TEARS WERE AS FOLLOWS: Year Net Earnings 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 | 37,933.43 45,429.48 35,016.50 162,493.54 89,064.68 93,313.45 125,034.50 220,099.65 384,312.57 216,390.40 Total $1,409,088.20 IN EVERY YEAR SINCE 1898 the earnings have been MORE THAN ENOUGH to pay INTEREST on our borrowed capital, AND 7g ON OUR INVESTED CAPITAL, and also $775,000.00 IN STOCK DIVIDENDS. 0007-SWP-047397 0007-SWP-000115692 6- STATEMENT OP THE COMPANY'S CONDITION AT THE CLOSE OP ITS BUSINESS YEAR, NOVEMBER 50, 1907. The proceeds of the sale of the preferred stock will he used to replace an equal amount of the present borrowed capital. In this statement we show this as accomplished, so as to present more clearly the relation of the preferred stock to the business as a whole: ASSETS: Cash Book Accts. Mdse. Equipment Heal Estate $ 120,025.37 1,583,557.07 661,338.55 347,404.00 514,801.78 Total Assets $3,227,126.77 LIABILITIES: Long time loans Short time loans Accts. Payable Capital Surplus $ 314,150.00 670,853.43 145,123.34 2,000,000.00 97,000.00 Total Liabilities $3,227,126.77 Quick Assets Insur ance The company has NO BONDED OR MORTGAGE INDEBTEDNESS. None of itB assets are pledged to secure any debt. The quick assets, cash,, accounts and merchandise, aggregate $2 ,364,920.99. This is mere than twice the indebtednes of $1,130,026.77. The preferred stock authorized, is $750,000; and the SURPLUS of quick assets over liabilities is $1,234,694.22. In addition to thi3 surplus, the preferred stock Is secured by the value of the real estate and buildings, over $500,000., and equipment valued at nearly $350,000. The company's plant, equipment and merchandise are Insured for *1 ,293,350. 0007-SWP-047398 PatentB New leal Plant Good fill Organi sation In the foregoing statement nothing la allowed for the -valuable patents and trademarks owned by the company, nor for its formulas, nor for the good will of its large and profitable business. The company control? the manufacture of White head by what ia known as the "Mild Process". This is a compara tively new process which the company acquired about two years ago. It has been thoroughly demonstrated through the operation of a small plant that the process is a practical and commercial success. The company has just completed at a cost of over $100,000 a building for a new Lead Plant, which it has equipped with itB own mechanical force, and has just commenced to operate. This plant will have a minimum capacity of over 5,000 tons, worth approximately $600,000 per annum. At present the margin of the price of the finished White Lead over the material cost of the Pig Lead is approximately 100. per cent. The expense for labor and power ie exceedingly light in this process, which is almost entirely mechanical. The product la a staple and will be rapidly turned into money at almost no selling expense - an exceedingly desirable feature. One advant age of this process over the Old Dutch Process in general use, is in the time required - not to exceed ten days as against one hundred days, which when the value of the material is considered, must necessarily represent a great saving in Interest. It is confidently expeoted that this department will add materially to the net profits of the business. The good will of a business consists of its established .trade, its reputation and that of its goodB, and its workXng^iorganlzation. * v j? The epapcuy employs an offloe force of over 90 persons. In the advertising office and printing shop there are. 110. The work of the faotory includes six different lines of business - Paint, Varnish, Dry Colors, Salsomine, Whiting and White Lead. The force includes 35 specially trained superintendents, chemists, engineers and foremen and over 600 factory employee, a large number of whom are skilled workmen. The sales departments include some 120 sales directors, managers and salesmen. Vo conoern has a more highly trained, enthusiastic and efficient sales foroe than the Acme Quality representatives. Many of the * company's employee have been with it for from fifteen to 0007-SWF-047399 0007-SWP-000115694 twenty years, and. a number of the most valuable men are interested In the company through their holdings in a special issue of employes1 stock. Supplementing this organization, the company operates sixteen branches and branch factories, extending from Boston to San Francisco. Bstabllshed Trade In the course of its S3 years of business growth the company has formed many valued connections, some of them now of many years standing, with the moBt progressive and loyal distributers, Jobbers and dealers, throughout the United States, and in a number of territories and foreign countries. Advertising The company is the most extensive and most Bucoessful advertiser in the paint and varnish field. It was the first to put into effect a plan for the comprehensive advertising of the-full line of the varied products of a paint and varnish factory; and as a result the Acme Quality line is today the one that la moat widely and favorably known. The value of this good will -- that is, the wide and excellent reputation of the company** products, its efficient organization and its long-established and valuable connections in the trade, cannot be over-estimated. So conoern starting in business could hope to attain an equal volume without an expenditure in these directions of at leastanequal amount of time, labor and money. While the. value of this good will oannot be estimated, it has cost the company over twenty years of hard work and over *3 ,500,000.00 in sales and advertising expense to build It up. PBRSOWBL. Ona of-,%t&0riao8t important points for consideration In oonnectipx^wttl^'in; investment of this nature is the management of the .Qhft&cu&'f. ttftr character of the officers, their sueoess in busines&feytfolr personal responsibility and their standing in the coaa&hityv For over twenty years the stock of this company has been held by.Messrs. R. Kirks White, Albert X. F. White, William . Davies and Thomas Real. It is what is known as a close corporation. Mono of the oomrnon stock Is or ever lias been for sale. The only exception la a special issue of stock held by some of the older employes holding important positions in tha organization. These four stockholders have constituted the Board of Directors during all this period, and have been responsible for the management of the business, with the sueoess Indicated above. Their individual responsibility and- their connection with conservative and successful banking and manufacturing 0007-SWP-047400 i 0007-SWP-000115695 Income Security Interests in Michigan, is well known to business men of the state, and can easily be verified on investigation. Their personal worth and th=ir reputations are back of this concern, and they personally indorse all of Its commercial paper. A corporation whose common stock Is scattered among a great many people is apt to have no one to whom it can turn In an emergency. The responsible stockholders would refuse to assume liabilities not shared by all the rest. On the other hand, where there are only a few stockholders, each of whom is responsible and has a large investment at stake, they can and must get together and take sreps for the preservation of the company's interea' and their own. The close holding of this company's common stock Is an element of strength for the company and of safety for the holders of preferred stock. TWO ESSTSHTIALS OP A GOOD IETVESTM3MT The two important points in connection with any in vestment are income and security. Six per cent per annum is now the prevailing Interest rate. Anything in excess of that is a premium which indi cates some element of speculation or risk. This preferred stock offers the investor a net income of per annum, payable quarterly, and, being exempt from taxation, is equivalent to the ordinary 8<j( investment. It is only good business that before putting money into a concern-the prospective investor should oonsldar carefully how he would be affected if the company should for any reason be forced into liquidation. In other words, what shrinkage of assets would have to occur and what other interests, would have to be wiped out before he would suffer any-lossv . We-Invite your careful consideration to what would hava^tot'ooour in this company's business before its pre ferred- stock could be affected in any way. Pirstt This business, which has been conducted at a profit for over twenty years, and which has for the last ten years paid, its stockholders an average of 23 per annum, must suddenly become unprofitable. Second: Then you must assume that the company's directors would disregard their owr. interests and the interests of those they invite to become associated with them. Thait after the business had become unprofitable, they would be so> foolish as to continue it long enough to wipe out all the present surplus, and their own holdings of common stock, and imperil JkD007-SWP-047401 0007-SWP-000115696 Third: Even if the company's directors would attempt such a course It would he Impossible to oarry It out. The losses of the business could not be concealed from the creditors and the result would be a prompt liquidation. If that should occur there would of course be a shrinkage of assets but the quick assets could be shrunk approximately $500,000 and still be enough to pay the creditors and the holders of preferred stock in full. After that there would be $850,000 in.Real Estate and equipment to fall back on. These oonsideratlons should convince the investor that the security back of this issue of preferred stock is., ample beyond question. The investor is not asked to take any chance on the profits or losses of this business^ Th3[ proceeds of tbe sale of this stock are to be used, to replace an equal amount of the company's borrowed capital. Thtf inv estor is, in faot, asked to lend the company money on long time at a good rate of interest, and with exceptionally good security. He has between him and any lose the earning power of the oompany, the surplus in the business, the personal responsibility of the company's dlreotors, who are indorsers on its paper, and the entire value of the $1,250,000 of ooamon stock which-, according to the company's statement of Assets and Liabilities, is worth' more than par and which, when-Its earning power and the-value or Its patents and good will are considered, is worth-two for one* In this respeot, and- as compared.' with nearly all preferred stock issues that are being offere<t'to the publlo today, this issue should be conaj^fif^iUltafiyL. par with- an issue of first mortgage bonds.- STOCT COMPARED WITH OTHER WORMS 0* IEVESTMHHT *j * J Savings* Bank Aooounta. There is no question as to the security of a savings bank account. The inoome, however, will not exceed 3 or 4* gross. The account is subject to taxation, at the rate of 1 or 2% or more. This leaves & small net Income as compared with the 6j net afforded by this preferred stock. Of course, the depositor can withdraw his money at any time, while we do not guarantee to redeem this stock on demand. We offer the stock for sale, as a long time investment. There is always 0007-SWP-047402 -r 0007-SWP-000115697 a good demand on the Detroit* Exchange for the preferred stocks of Detroit concerns. The prospective Investor must, make up his mind from the facts submitted, whether or not there is likely to be such a market for a security of this kind as will enable him to get his money out of it should he desire to do so. He should bear in mind that he will receive a premium of 4jf or more (the difference betweeni6 net and 3 gross} for taking this chance. If at the end of two years he should need his money and should be forced to accept 95 on the par value of hie investment, the 8 premium would more than make up for the 5 lose. Beal,Estate Mortgages. Here there is something in favor of this preferred Btock, both as to income and security. The average income on real estate mortgages is 6, though in some sections as high as 1% can be obtained. This, however, is the gross Income and allowance must be made for taxation and soma-* times for collection. Even in the'townships \f Michigan the tax rate is rarely, if ever, lower than 1%. In the cities it will run 2<f or more. The net income, therefore, may be only 4 or Improved real estate may depreciate as rapidly as any other form of security. Insurance and taxes must be looked after. Interest payments are fre quently delayed. Property taken on foreclosure is not readily convertible, and it is not at all unusual for a mortgagee to be obliged to take over property and hold it for years before a sale can be made. This stock gives a net income of all taxes paid, equivalent to an 8 investment. The income is paid quarterly without any demand on the part of the stockholder. The margin of security Is much greater than will be found in any real estate mortgage, offering anything like the Bame net income. - *So--called*Bfaftrg&lns in Stock Exchange Securities. JV There are many of these widely advertised at present* which offer the investor an Income of from 7 to 8jjf grossj and he is allowed to assume that these "bargains" afford, the security which Is understood to go with prefer red stock. The concerns whose stock is thus offered are usually incorporated under the laws of Hew Jersey, or Mew York, or Meat Virginia; at any rate, they are not Michigan corporations. Their stock iB taxable in this state, so that from the gross Income an allowance for taxes must be made. Most of these concerns are what are commonly known as "trusts", and the way that they are being prodded and stirred up by legal officers of the Federal government and of the states is apt to some extent to affect their security, as well as their profits. Ihen It comes to the question of 0007-SWP-000115698 <. security, it will tie found that their preferred stook is preferred technically and in name only. Most of these concerns were formed through the purchase cf independent corporations. The promoters bought out these smaller concerns at any prices which the former owners happened to ask, and paid for them in full in preferred stock, giving an equal amount of common stock as a bonus. In many caaeB bonded indebtedness was created for practi cally the full value of the company's assets. In almost every case the eoimnon stock of these concerns is entirely water and represents no value, aside from the company's earning power. The actual investment in net assets is represented by the preferred stock, provided there are no bonds. Their preferred stock ought to he called common stock and their common stock ought to be called watered stock or bonus stock. This is demonstrated by the fact that these concerns pay very small dividends on their common stock or no dividends at all. If the in vestor will consider these points when comparing this company's preferred stock with the so-called "stook exchange bargains", he will find that in case of a liquidation or a receivership for one of these large trusts, the common stock would be entirely wiped out. The bond holders might be paid in full but as to the holders of preferred stock it would only he a question of how much their holdings would be depreciated. Com paring the security of this issue of preferred stock with these so-c&lled bargains, this issue is as safe as a government or municipal bond, for there are be tween the preferred stockholder and any possible loss a considerable surplus, the individual responsibility of directors worth from four to six million dollars, an issue of one million two hundred and fifty thousand dollars of common stock, which has earned an average of 23 in dividend^ for the last ten years, and which is not andvnevess^iyafebeen for sale, and which is worth on a oonaBnvhtivSSaMimate at least two for one. asked why, if this stock is so desirabl&j- the* present stockholders do not take it thembelves* ' One-answer 1b that they are active business men, interested in a number of profitable manufacturing enter prises, in which they are so closely identified with the management that they can keep close watoh over their interests at all times. It is therefore safe for them to confine their holdlnpn to common stocks, which are ordinarily more hazardous, but which are at the same time more profitable. T'-e preferred stockholder has a fixed income, and he ? creferr * ~vrr-the common stockholder, both as to income nr.d prise. This makes a much more desirable and businesslike investment for anyone not active in the management of the company. 0007-SWP-047404 J 0007-SWP-000115699 -13- Another la that one or. two of the directors are reaching an age when they mut consider the possibility of death and the division of estates, and they desire for the benefit of the company, its stockholders, its creditors and its splendid organization of employes and customers, to arrange its affairs so that in case of the death of any or all the present directors, the remaining directors and then those who are at present the principal employes can continue the business with safety and success. With this in view, it is simply good, business Judgment on their part to replace a substantial proportion of the company's indebtedness with preferred stock. It is not a case of their desiring to be relieved of the indorsement* of the company's paper - they will continue to indorse all of the paper that is not replaced by the proceeds of the sale of the preferred stock. Another point is, fhat the plan of Interesting the principal employes in the \ usiness through the issue of employes' stock, has worked so well that it is now thought desirable t,o endeavor to 'nterest as many as possible of the company's customers and the consumers of the oompany'8 goods. The scattering of this preferred stock in com paratively small amounts throughout the country should necessarily greatly strengthen the company's position. Finally the directors do not wish to see the company absorbed by any trust. So many of our Miohigan enterprises, as they have outgrown the resources of their original managers, and the banking accomodations of their own cities, have through financial necessity been obliged to sell out to trusts or holding companies. This has meant the removal of general offices to the East, where capital was obtained, and the distribution of a much smaller pro portion of Its expenditures in this state. It has also meant the closing of plants in many localities. The directors of this'company desire to preserve its identity as a Michigan corporation. They feel that the normal growth?-of this business will demand additional capital from year to year, and they offer this preferred stock to the Michigan public, as the first step In the policy of financ ing the growth of the company right here at home, so that the company will continue to spend in Michigan the money that has been earned here. i 0007-SWP-C47405 0007-SWP-000115700 FR0CKDUH2 If payment is made by check, the check should be drawn for the par value of the number of shares desired, $25.00 per share. Checks should be made payable to the order of the Acme White lead A Color Works, Detroit, Michigan, or Security Trust Company, Detroit, Michigan. Remittance should be made to the Acme White Lead A Color Works or the Security Trust Company. If desired, the remittance may be left with the investor's own bank, and the Acme White Lead A Color Works notified. A certificate will then be sent to his bank which will deliver the certificate to him and send the cheek to the oompany. Vo charge is made by the Security Trust Company, for the transfer of certificates. The oertifleates will be dated on the day that the remittance is received. Dividends will commence to run from the date of the oertifloate. ACIOE WHITH LKAD AMD COLOR WORKS, Detroit, Michigan T. sV %r: 0007-SWP-000115701