Secret Out

Whenever things got dull along publisher's row, bookmen could always amuse themselves with a guessing game called "How Much Is Harry's Take?" The Harry in question was Harry Scherman, 59, founder and president of the Book-of-the-Month Club. The take which interested bookmen was B.O.M.C.'s profit on the $25 million worth of books it distributed last year (over $13.5 million in actual sales, $10.5 million given away free). Scherman could keep it a secret because he and three members of his family owned almost 94% of B.O.M.C.'s stock (Vice President Meredith Wood and his wife owned the rest).

But last week Harry Scherman let the public in on his secret, because he wanted to let the public in on his company by floating B.O.M.C.'s first public stock issue. As set forth in a registration statement filed with SEC, B.O.M.C. has netted an average $750,000 a year since 1940, made $921,775 during the first seven months of 1946. On the basis of these fat earnings B.O.M.C. plans to split its present outstanding 400 shares 2,000 for 1. If SEC approves the registration, B.O.M.C. will sell the public 200,000 of these shares (par value: $1.25) and 100,000 shares of a brand new issue.

The offering price of the stock has not been decided. But on the basis of B.O.M.C.'s excellent earnings, and the well-earned reputation of Harry Scherman as a shrewd bookman, the public will probably be willing to pay a good price. Two-thirds of the cash received will go to B.O.M.C.'s present stockholders (Harry Scherman & wife will sell 121,500 shares), will be taxable as a capital gain up to 25%. The remainder will be added to B.O.M.C.'s working capital. And as a happy ending to this book financing of the month, Harry Scherman & friends will still keep their tight control of B.O.M.C.

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