Question. Under funded debts, assumed, in your text, beginning on page 83, you show where that assumed debt came from? Answer. Yes, sir. Question. The table on page 84 is what? Answer. That is a summary of funded debt liability as of May 25, 1902, and at the end of each of the calendar years, 1902 to 1931, inclusive. Question. That is the same kind of a story, on the funded debt? Answer. Yes, sir. Question. And the kind of issues are stated on page 85, again? Answer. Yes, sir. Question. With the dates? Answer. Yes, sir. Question. And the retirements, a statement of retirements following that? Answer. Yes, sir. Question. And the balance outstanding as shown on page 86 is how much as of December 31, 1931? Answer. That item was $13,770,000, which represents the balance outstanding of the funded debt authorized by the Utica Gas & Electric Co. and issued by them. Question. Over this period of years? Answer. Yes, sir. Question. Being made up how? How do you arrive at the result? Answer. Funded debt, $19,872,358.29, principal amount retired, $5,962,358.29, leaving the balance December 31, 1931, $13,910,000, from which must be deducted 5 percent refunding and extension bonds held alive in sinking fund, $140,000, leaving outstanding in the hands of the public $13,770,000 actually outstanding. Question. You next discuss the outstanding interest, discount, premium, and expenses incident to funded debt issued and/or assumed? Answer. Yes. Question. What was the total amount of discounts and commissions? Answer. $1,023,345. Questions. Expenses of issues? Answer. Expenses of issues, $164,032.08. Question. What is this premium on bonds retired? Answer. That is the premium on bonds of the Utica Gas & Electric Co., retired, which was charged to this account. Question. Do you mean as called before date of maturity. Answer. Yes, sir. Question. Making a total of what? Answer. $1,277,377.08. Question. What does that represent? Answer. That represents an average of 6.848 percent of the total amount of bonds issued by the Utica Gas & Electric Co. Question. And is that taken up in analysis form on the next page? Answer. It is, sir. Question. As to the various years? Answer. Yes, sir. Question. Now, then, you have a net offset of $90,000-well, you have told about that already. That is the premium. Now, you have here a note marked note B, which is shown as against this item of $165,000 in the discount column. What is that? Answer. That is an item of $30,000 paid to the Mohawk Hudson Power Corporation for negotiating the sale of the $6,000,000 principal amount of general mortgage series D 5 percent bonds. Question. That is $30,000 paid by a subsidiary of its holding company? Answer. Yes; to its immediate holding company, and was the only fee paid by the company during the period under review for the negotiation of the sale of securities. Mr. MACHOLD. Could the record show the date when this happened? Mr. CHANTLAND. Yes. By Mr. CHANTLAND: Question. Can you find it, Mr. Taylor? Mr. MACHOLD. Am I right when I say that it was prior to the organization of the Niagara-Hudson Power Corporation? The WITNESS. During the year 1926. Mr. MACHOLD. Read the question, please. (The question was read.) By Mr. CHANTLAND: Question. What was done with this item of $1,277,377.08, being the various kinds of expenses against funded debt issues? Answer. Why, surplus was charged with $157,381.39 and $1,1 ,119,995.69 was charged to unamortized debt discount and expense, to be amortized over the period of the life of the bonds. Question. Now, in this report, does the reflection of that last account appear? Answer. Yes; on page 18 of the report. Question. That would be the balance to which this has been reduced from $1,119,995.69 to what? Answer. $605,574. The $90,000 referred to-I want to call your attention to the fact that the $90,000 premium on the bonds retired was included in the amount charged to surplus and will be shown in the surplus account at the time when we come to analyze that. Question. Oh, I see; the $90,000 is a part of the $150,000? Answer. Yes, sir. Question. That should be so stated. Now, as to the preferred stocks issued, there were no voting rights with those? Answer. Excepting under certain prescribed conditions. Question. Such as an insolvency or default? Answer. Default in payment of the dividends was one and also in case of a sale of the property or increase in the capital stock having precedence over present issues of stock. Question. Weren't part of these preferred stocks sold through company customers and through salesmen? Answer. Yes; they were, on both occasions, the 7 percent and the $6 preferred. Question. Plus premium received, less expenses paid, what was the amount received on the 7 percent preferred issue of April 1, 1920? Answer. On the 60,000 shares of the $100 par value stock, the total commissions and expenses were $252,343.09. The stock, however, was sold at a premium of $95,604. 102777-34-pt. 53-20 Question. Yes; making the net what? Answer. The new consideration received was $5,843,260.91. Answer. Amounting to $97.39 per share. Question. Yes. Now, the story of the 6 percent? Answer. These 40,000 shares of $6 no par value stock were sold for $4,000,597.50, less expenses, commissions and expenses, in the amount of $126,921.88, making the net cash consideration $3,873,675.62. Question. Or an average per $100 share? Answer. Or an average of $96.84 per share. Question. Now, the $4,000,000 no par value issue which you have already talked about-that was that exchange, was it? Answer. Yes. Question. Where did the voting control of this company stay throughout its career, in what stock? Answer. In the common stock of the company. Question. The set-up of the stock situation appears on page 95, does it, as of what date, as for what period? Answer. As at December 31, 1931. Question. That is the thing that finally landed there? Answer. Yes, sir. Question. Showing a moving picture of the stocks on page 96, is that it? Answer. Yes, sir. Question. I wish you would read into the record at this point the waiver that was a part of the common-stock certificate as it appears in your report on page 94. Answer (reading): No holder of the * * * common stock of this corporation shall be entitled as of right to purchase or subscribe for any part of any unissued stock of this corporation, or of any additional stock of this corporation of any class, to be issued by reason of any increase of the authorized capital stock of this corporation, or bonds, certificates of indebtedness, debentures, or other securities convertible into stock of this corporation; but any such unissued stock or any such additional authorized issue of new stock, or of securities convertible into stock, may be issued and disposed of by the board of directors to such persons, firms, corporations, or associations, and upon such terms as the board of directors may in their discretion determine, without offering any thereof to the stockholders than of record or any class of stockholders or any stockholder, on the same terms or on any terms. Question. So, there was this specific condition written into the certificates of the common stock, giving to the board of directors the right to issue and dispose of additional stock? Answer. Yes. In order to clarify the situation and to show to what extent any holder other than that of the common stock might be entitled by reason of the record vote, I will try to clarify that in these words: Although the 7 percent and $6 preferred stock is entitled to voting rights under certain prescribed conditions, the increase in the voting power of the common stock by reason of the exchange of these 40,000 shares of $100 par value stock for 400,000 shares of no par value enables the common stockholders to retain complete control of the company, as it gives them 80 percent voting control of the present outstanding stock and 71.5 percent of the total authorized stock of the company. Mr. MACHOLD. Does that appear in the report? The WITNESS. No, sir; it appears in the summary, which is prefixed to this report. By Mr. CHANTLAND: Question. Let us now go to your chapter no. 7. That deals with income, expenses, and surplus and how the income arose, and certain dividends deductions and how the surplus has been created and disposed of-is that correct? Answer. Yes, sir. Question. And some other items? Answer. Yes. Question. How do you divide this chapter? Answer. Section 1, income from electric operations; section 2, income from gas operations; section 3, allocation of commercial, new business, general and miscellaneous, and retirement expenses between electric and gas operations; section 4, allocation of taxes between electric and gas operations; section 5, merchandising and jobbing; section 6, corporate income deductions; section 7, dividends, surplus and return on fixed capital, capital employed, and common-stock equity. There is a condensed comparative statement on the following page, which presents a distribution of the income and distributes the income for the years 1925 to 1931, inclusive. Question. Which shows operating revenues from 1925 to 1931? Question. With the total for the years in the last column? Question. And it shows operating revenues for the same years? Question. The net operating revenues? Answer. Yes. Question. And other deductions? Answer. Yes. Question. And the net balance available for dividends on stock? Answer. Yes. Question. The operating revenues ran from what figure to what figure during this period? Answer. Total operating revenues Question. I didn't ask you that. Answer. The net? Question. No; I said, "The operating revenues ran from what figure to what figure during this period? Answer. For 1925, $23,870,342.81 Question. Strike that out. Mr. Taylor, answer my question, will you please? During this period what was the low revenue-what was the operating revenue for the year 1925, total? Answer. $4,264,079.86. Question. For both gas and electric? Answer. Yes. Question. The high, what year? Answer. 1929, when it was $5,380,388.41. Question. Now, the net operating revenues, what was the low year in this period? Answer. 1925, when the net operating revenue was $2,338,983.45. Question. And the high? Answer. The high was in 1929, when the figure was $3,118,743.50. Question. And the net for the 7 years aggregated what? Answer. $19,885,135.73. Question. Was something carried into the surplus each year? Answer. Except for the year 1927, when there was a deficit of $70,879.13. Question. In the balance to surplus account? Question. What was it built up to the following year? Answer. The following year, $230,670.12. Question. And 1929? Answer. 1929, $349,684.25. Question. And it dropped to what in 1930? Answer. Dropped, in 1930, to $114,346.10. Question. And in 1931? Answer. $41,089.23. Mr. MACHOLD. These surplus figures are not cumulative, are they? The WITNESS. No. By Mr. CHANTLAND: Question. These surpluses that you have stated are the result of each year's operations; is that right? Answer. Yes; that is the result of each year's operations. Question. The balance of each year's earnings that they left in the surplus account? Answer. Yes, sir. Question. The next page is gas, and we will not stop for that. On page 100, you have certain calculations there as to the relation between the earnings and the fixed charges and so on? Answer. Yes, sir. Question. Will you read that into the record, with the preceding text? Answer (reading): The table immediately preceding shows in comparative form the disposition of the gross revenues received for each of the years 1925 to 1931, inclusive. The table is self-explanatory and needs no especial comment. The number of times that fixed charges and deferred dividends were earned is stated below for each of the years 1928 to 1931, inclusive: Number of times fixed charges earned: 1928, 2.71 times; 1929, 2.91 times; 1930, 2.9 times; 1931, 2.86 times. Number of times preferred stock dividends earned: 1928, 1.64 times; 1929, 1.92 times; 1930, 1.9 times; 1931, 1.79 times. The percentage of earnings available for dividends on common stock which were paid to the stockholders and the percentage of such earnings retained in the business for each of the years 1928 to 1931, inclusive, is as stated below: Percentage of earnings on common stock paid to stockholders: 1928, 45.19 percent; 1929, 42.65 percent; 1930, 80.76 percent; 1931, 92.11 percent. Percentage of earnings on common stock retained in surplus: 1928, 54.81 percent; 1929, 57.35 percent; 1930, 19.24 percent; 1931, 7.89 percent. Question. The residual percentages were retained in surplus? Question. Now what have you on page 102? Answer. A comparative statement of income from electric operations for each of the years 1925 to 1931, inclusive, by classes. Question. And on page 103? Answer. That is a comparative statement of electric revenues statistics, by years, from 1928 to 1931, inclusive, showing the classes |