EXHIBIT No. 10.-Reduction in residence rates OLD RATES (AS OF DATE ACQUIRED BY AMERICAN GAS & ELECTRIC SYSTEM) Wildwood, N. J. (population, 5,330), | Scranton, Pa. (population, 143,433), 1925: 20 kilowatt-hours at 15 cents. 30 kilowatt-hours at 12 cents. 250 kilowatt-hours at 10 cents. 300 kilowatt-hours at 9 cents. Balance at 8 cents. Minimum $1. Moscow, Pa. (population 892), 1927: 100 kilowatt-hours at 15 cents. 100 kilowatt-hours at 121⁄2 cents. Woodburn, Ind. (population 493), 1919: 1907: All energy at 121⁄2 cents. Discount, 10 percent. Minimum, $1. Marion, Ind. (population, 24,496), 1907: All energy at 10 cents. South Bend, Ind. (population, 104,193), 1922: 50 kilowatt-hours, at 8 cents. Benton Harbor, Mich. (population, 15,434), 1922: 27 kilowatt-hours, at 12 cents. Discount, one-half cent per kil- Wheeling, W. Va. (population, 61,659), 1907: All energy at 15 cents. Discount, 10 percent. Canton, Ohio (population, 104,906), 1907: All energy at 11 cents. Discount, 10 percent. Wildwood, N. J.: 30 kilowatt-hours at 71⁄2 cents. Water heating, 1 cent per kilowatt- Minimum $1. Roanoke, Va.: 25 kilowatt-hours at 6 cents. Customer's charge, 35 cents. Minimum $1. 25 kilowatt-hours at 6 cents. Customer's charge, 35 cents. Minimum $1. 25 kilowatt-hours at 6 cents. Customer's charge, 35 cents. Brief statement regarding the American Gas & Electric Co.-Their financial structure and policies In his testimony of February 22, 1935, Judge Robert Healy was kind enough to say of American Gas & Electric Co. system that it was integrated and coordinated, that it constituted a real contribution to the electric light and power business of the country, that it has been admired by engineers and that he would not want to see it broken up. This may not be quoting him verbatim, but at least the record will bear out that in effect he said these things. The judge continued, however, to the effect that he could not say as much for our financial policies and structure. It may be that the great amount of detail which he has reviewed in connection with these matters has confused him as to the facts regarding our financial policies, particularly as our system was the first one reviewed by the Federal Trade Commission over 5 years ago. In any event I would like to outline our financial policies and clear up all possible questions regarding them. 1. Our securities and those of our subsidiaries are backed by real values: Fixed capital of all subsidiary companies.--- Less for the purpose of this memorandum only all "write-ups" Total.. Other capital invested in business related to the principal Cash and cash items and other current assets. Unadjusted debits covered by reserves (restricted bank de posits, salvage, etc.)____ Deferred interest in the form of unamortized bond discount__ Total.. Now against this our subsidiary companies owe $394, 932, 541. 28 42, 500, 000. 00 352, 432, 541. 28 3,657, 761. 10 28, 683, 488. 60 524, 418. 15 1,067, 325, 36 13, 279, 374. 04 399, 644, 908. 53 Bonds.. 207, 131, 900.00 Current liabilities (accrued taxes, accounts payable, pay rolls, etc.). Other liabilities-not current_ Unadjusted credits.. Total___. Leaving applicable to reserves and surplus and capital-stock issues... 14, 720, 080. 62 1, 817, 228. 14 900, 819. 98 224, 570, 028 74 The subsidiary companies have reserves set aside for depreciation, bad debts, etc... 175, 074, 879. 79 43, 528, 839. 82 Leaving for capital and surplus... Of this preferred stock consisting of 783,644 shares would represent... 131, 546, 039. 97 78, 364, 400, 00 Leaving to represent the common stock.......... 53, 181, 639. 97 Now briefly the foregoing shows after deducting every dollar of alleged "writeups" that there is real value back of all securities including the common stock, that cash and current assets are nearly twice current liabilities and that the conservative policy practiced has created fair and ample reserves. Just a few words as to "write-ups" so-called. These "write-ups" are the result of a company stating on its books the value of property as of the date it acquired it, rather than stating it at the so-called "historical cost" as shown by former owners. I can see only two ways in which this could be harmful to investors or customers and these are based on (( 'write-ups" being unwarranted. 1. If securities were sold to investors based on these unwarranted "write-ups", and 2. If such "write-ups" were used as a basis for determining rates. We cannot be charged with either of these two things. The foregoing figures show over $53,000,000 left for common stock after deducting the "write-ups' which is assuming that all these "write-ups" are unwarranted which in our case is not true. The record shows that we have never asserted these "written-up" values as a basis for determining rates. In all fairness these points should be brought out in connection with our companies. Now as to American Gas & Electric Co. itself. 1. Do its assets consists solely of some shares of common stock of operating companies for which the holding company had paid little or nothing? The answer to this is most certainly not. Here is a condensed list of its investments: 1. Bonds of operating companies (at cost)... 2. Preferred stock of operating companies (at cost)-- 3. Loans and advances and other accounts due from subsidiary companies (at cost).. 4. Miscellaneous investments (at cost). 5. Cash and curret assets (including $6,827,869.59 in Government securities). 6. Miscellaneous accounts receivable.. 7. Deferred items consisting of unamortized discount and expense on bonds___ 8. Common stock of subsidiary companies (at cost). Total. Now against the above American Gas & Electric Co. owes 1. Bonds (due in 2028) _ . 2. Current liabilities.. 3. Liabilities-Noncurrent_ Total Leaving for reserves Capital stock and surplus. The reserves for income taxes, contingencies, etc. amount $56, 491, 760. 00 29, 447, 508. 67 2, 968, 941. 30 1, 946, 371. 70 21, 524, 343. 69 1, 656. 32 5, 861, 491. 68 54, 342, 352. 51 172, 584, 425. 87 50, 000, 000. 00 873, 919. 91 1, 655. 00 50, 875, 574. 91 121, 708, 850. 96 2,686, 307. 17 119, 022, 543. 79 35, 562, 300. 00 83, 460, 243. 79 Note the company's current position. Now the subsidiary company statement showed us unquestioned value (after deducting all "write-ups") for their bonds and preferred stock with over 53 million dollars left for their common stocks. Let us see how the holding company shows its interest in these securities on its books. |