EXHIBIT NO. 10-A.-Selected financial statistics, large railroads in the United EXHIBIT NO. 10-A.-Selected financial statistics, large railroads in the United EXHIBIT NO. 10-A.-Selected financial statistics, large railroads in the United States, years 1956 and 1957-Continued Large railroads: These are railroads so classified by the Interstate Commerce Commission in its summary financial publication-Monthly Statement M-150. Net railway operating income: The net left from operating revenues after payment of all expenses, including depreciation and all taxes, but before deducting fixed charges. Net income: The net amount of all operating revenues and other corporate income after payment of all expenses, including depreciation, all taxes, all fixed charges, and contingent interest. Fixed charges include fixed interest on corporate bonds and other obligations, rentals on leased properties and equipment, and other payments required by past corporation agreements and commitments. Contingent interest: Interest on income bonds and other obligations, payable only if earned. This interest is charged under ICC accounting procedures whether it is paid or not. Depreciation: The operating expenses charged to depreciation of road and equipment property accounts under ICC accounting procedures. These are amounts of cash taken out of operating revenues and kept by the carriers for use as the carriers desire. Cash available from operations: The total cash kept by the carriers from current earnings and depreciation accruals during the period. This is the total cash left from corporate operations that is available for the payment of dividends, replacement and improvement of properties, retirement of debt, and other purposes EXHIBIT NO. 11.-Rate of return, based on capital stock and net income, all steam railways in the United States, 1921–561 1 Stock in the hands of the public, not held by railway companies. Source: Interstate Commerce Commission, Statistics of Railways in the United States. EXHIBIT NO. 12. EXCERPTS FROM STATEMENTS OF J. M. SYMES, PRESIDENT, PENNSYLVANIA RAILROAD CO. Before President's Emergency Board No. 1061 and to Stockholders of the Pennsylvania Railroad Co. in Annual Report for the Year 1954 and at Stockholders' Meetings 2 RAILROAD FINANCIAL POSITION Before Emergency Board No. 106 In 1954 annual report and at stockholders' meetings I have indicated that my railroad experience covers a span of about 38 years. PENNSYLVANIA ROAD'S PRESIDENT CALLS I have seen many changes take place in the industry during that time, and I have seen some very serious problems confronting it but I must say, in all fairness to this case, that I have never visualized such a gloomy outlook of the future as appears on the horizon today (p. 1753). I have portrayed, as briefly as possible, certain salient features of the Pennsylvania Railroad-as to its physical size, its capacities, the area it serves, the amount of traffic it handles, the revenue it takes in, its cost of doing business, its low earnings, as related to gross revenue and investment, its employment, and other factors, pertinent to a better understanding of the testimony I am about to present. These figures should indicate that, because the Pennsylvania Railroad rep resents such a large part of the industry, it is bound to be more or less typical thereof (p. 1759). I now wish to discuss the recent decline in railway traffic, and the prospects for the year 1954. I would also like to give you some idea of the extent to which the Pennsylvania Railroad is prepared for the anticipated decline in traffic. Perhaps I should say I wish to discuss the extent to which we are unprepared for the anticipated decline in traffic and, in this respect, I think our situation is typical of most American railroads. This subject, it seems to me, is of great importance in determining the wisdom of granting demands, of organizations representing railroad employees, which would contribute materially to our operating costs. OUTLOOK THE BEST IN 8 YEARS Annual report expresses regret that better results couldn't be produced for last year PHILADELPHIA. "We are more opti mistic going into 1955 than at any time in the past 8 years," James M. Symes, president of the Pennsylvania Railroad, told shareholders in the annual report. His statement followed an expression of regret that "the board of directors, the officers, and employees of the company*** were not able to produce better financial results for the stockholders in 1954." The Nation's largest railroad previously reported 1954 net income of $18,500,000, equal to $1.41 a share, on gross revenues of $848,800,000. This was off sharply from 1953 net of $38,800,000, equal to $2.95 a share, on gross of $1,034 million. But the 1954 results represented a substantial comeback from early months of the year, when a sharp drop in revenues resulted in net deficit for first quarter of $10 million. FAVORABLE FACTORS LISTED Consolidated income of the Pennsylvania Railroad System for 1954 was $28,259,519, equal to $2.15 a share, compared with $47,254,664, or $3.59 a share, in 1953. Mr. Symes based his optimistic outlook on the following factors: Extraordinary expenditures required to rehabilitate the property after their "overloading and overworking" in World War II are behind the Pennsy. "Instead of a billion-dollar program in a 6-year period, our costs for improvements and new equipment will be on a reduced basis and more nearly normal in the years ahear," he stated. "The business recession that depressed our volume sharply in 1954 has The figures which I shall present been reversed and the present trend is will also be helpful to you in judging encouraging. 1 Fifteen cooperating railway labor organizations, 1953-54 Rules case, Chicago, Ill. Transcript vols. 13 and 14, February 22 and 23, 1954. (Mr. Symes was then executive vice president of the railroad. 2 Annual report to stockholders, February 23, 1955; Wall Street Journal Reports, March 17, 1955, and May 11, 1955. RAILROAD FINANCIAL POSITION-continued Before Emergency Board No. 106— our ability to pay such demands, in the light of current conditions. In presenting this material, I propose to compare the decline in traffic that is expected in 1954, as compared with 1953, with the decline in traffic in 1930, as compared with 1929 *** (pp. 1874-1875). You all remember the seriousness of the 1930 depression. I am not trying to say that we are going into anything like that now-but there is evidence to indicate that we are going into a depression or recession-whatever we want to call it-of about 50 percent of the severity of the 1930 one, insofar as ton-mile volume of traffic in our railroad is concerned. But that is a very serious situation now-because we are just not in position to stand it-even though it might be only 50 percent as severe. I am now going to show why we are not in as good a position to stand an abrupt decline today as we were in 1930. *** (p. 1880). Rail PHILADELPHIA.-Pennsylvania road's operations for the first 4 months this year will produce net income of more than $11 million, compared with a deficit of $3,375,000 for the like period last year, James M. Symes, president, told the annual meeting. The net income equals 85 cents a share. Mr. Symes said earnings for the 4 months are the best for any such period in the last 10 years. For the 3 months ended March 31, 1955, Pennsy had net income of $7,112,000, or 54 cents a share. "We now estimate that gross revenues for the 4 months will be up about $6,750,000 or about 21⁄2 percent," Mr. Symes said, adding that operating expenses for the period will be down nearly $9 million. Pennsy's gross revenues for the first 4 months of 1954 totaled $278.5 million. The road set up its 25-cent quarterly dividend rate this year "with the hope that it will be supplemented by an extra dividend at the end of the year, depend |