(2) Person-to-person, appointment and messenger rate and report charge.

Rate for Initial Period of Three Minutes or Less.

Rate for Periods in Excess of the Initial Three Minute Period.

Where the Initial Rate is The Overtime Period is The Overtime Rate is

(3) Night rates.

1 minute

Station-to-station night rates are the same as station

$0 05

05

05

10

10

to-station day rates.

TELEGRAPH SERVICE SCHEDULE No. C-1.

General Service:

Applicable to general telegraph service between any two points on systems.

Rate:

Service

Telegrams...

Rate

.30 cents for the first ten words or less and 22 cents for each additional word.

Day letters........ 45 cents for the first 50 words or less and 9 cents for each additional 10 words.

Night letters.......30 cents for the first 50 words or less and 6 cents for each additional 10 words.

[Cal.

C. L. 146]

In re APPLICATION OF THE ASSOCIATED TELEPHONE COMPANY

FOR A PERMIT TO SELL STOCK AND BONDS.

Application No. 9372-Decision No. 12713.

Decided October 15, 1923.

Issue of Stock and Bonds Authorized.

OPINION.

In this application the Associated Telephone Company asks permission to issue and sell $200,000 of common capital stock and $500,000 of first mortgage and collateral trust 6 per cent. bonds for the purpose of financing the cost of additions, betterments and improvements and of paying outstanding indebtedness. The company asks permission to sell its bonds at not less than 93 per cent. of their face value, plus accrued interest, and its stock at par, less an allowance of $3.00 per share of stock, sold to pay selling expenses.

Associated Telephone Company was organized on or about August 30, 1920, and is engaged in giving telephone service in and about the cities of Long Beach and San Bernardino. On December 31, 1920, it reported 13,042 sub scribers, on December 3, 1921, 15,126 subscribers, on December 31, 1922, 17,210 subscribers and on August 31, 1923, 19,849 subscribers. For the year ending December 31, 1922, it reports revenues of $486,708.64, operating expenses, including taxes and depreciation, as $347,790.65, leaving a gross income of $138,917.99. After paying interest on bonded debt, it reports net profits for the year as $71,669.32. For the six months ending June 30, 1923, the company reports gross revenues of $283,298.81, operating expenses as $173,267.98, gross income of $110,230.83 and net profits for the period of $68,733.84.

The company was organized with an authorized capital stock of $2,000,000, divided into 20,000 shares of the par value of $100 each, all shares being common. At present it reports $1,011,200 of stock outstanding on which there has been paid, since its issue, dividends at the rate of 8.4 per

cent. per annum. On August 31, 1923, applicant reports its outstanding bonded debt as $1,129,200, consisting of $829,200 of mortgage and collateral trust bonds and $300,000 of collateral trust bonds.

By Decision No. 10006,* dated January 20, 1922, the Commission authorized applicant to issue and sell for cash at not less than 934, $300,000 of ten-year 7 per cent. collateral trust bonds due February 1, 1932, and to issue and pledge as security $400,000 of mortgage and collateral trust 6 per cent. bonds due August 1, 1950. The order of the Commission provides that as the collateral trust bonds are paid a proper proportion of the mortgage and coilateral trust bonds deposited as collateral should be returned to applicant's treasury and thereafter not disposed of in any manner whatsoever except as authorized by the Railroad Commission. It appears that at present $288,000 of the collateral trust bonds are outstanding in the hands of the public and $12,000 are held by the trustee under the collateral trust agreement.

to

It

The application shows that Associated Telephone Company will be called upon to make extensive additions and betterments. To facilitate the financing of such additions and betterments, applicant believes it advisable retire the collateral trust bonds now outstanding. therefore asks permission to use the proceeds from the sale of $300,000 of the bonds now applied for to finance, in part, the cost of retiring the collateral trust bonds. It asks permission to use the proceeds from the sale of the remaining $200,000 of bonds and of the stock to finance the cost of additions and betterments. It appears from the testimony herein that of the $500,000 of bonds to be sold $400,000 are at present pledged as security under the authority granted by Decision No. 10006.* The $400,000 of bonds are not included in the outstanding bond debt to which reference has been made.

The additions and betterments to be financed with proceeds from the sale of stock and bonds are described in ex

See Commission Leaflet No. 124, p. 875.

[Cal.

C. L. 146]

hibits attached to the application. It appears that the company estimates its capital expenditures to June 1, 1924, at $485,010.60. Of this amount $96,197.55 has already been expended and has not been paid or provided for through the issue of other securities. The remaining expenditures, amounting to $388,813.05, include $187,120.52 for additional switchboard equipment, $145,824.73 for additional cable, $36,068 for new telephone instruments and the remainder for drop wire and miscellaneous lines.

ORDER.

Associated Telephone Company having applied to the Railroad Commission for permission to issue and sell stock and bonds, a public hearing having been held before Examiner Fankhauser, and the Railroad Commission being of the opinion that the money, property or labor to be procured or paid for by the issue of stock and bonds referred to in this application is reasonably required by applicant and that the expenditures herein authorized are not in whole, or in part, reasonably chargeable to operating expenses or to income,

It is hereby ordered, That Associated Telephone Company be, and it is hereby, authorized to issue and sell at par for cash $200,000 of its common capital stock and to issue $500,000 of its mortgage and collateral trust bonds and to sell such bonds at not less than 93 per cent. of their face value, plus accrued interest.

The authority herein granted is subject to further conditions as follows:

1. The proceeds received from the sale of $300,000 of the bonds herein authorized to be sold shall be used to finance, in part, the cost of retiring the $300,000 of collateral trust bonds referred to in the foregoing opinion.

2. Applicant may use a sum not exceeding $3.00 per share of stock sold to pay selling expenses. The remainde of the proceeds from the sale of the stock, together with the proceeds from the sale of $200,000 of bonds authorized

herein, shall be used to finance, in part, the cost of the additions and betterments described in this application.

3. The authority herein granted to issue bonds will become effective when applicant has paid the fee prescribed by Section 57 of the Public Utilities Act, which fee is $200, and will expire on June 30, 1924. The authority to issue stock will become effective upon the date hereof and will expire on June 30, 1924.

4. Applicant shall keep such record of the issue, sale and delivery of the stock and bonds herein authorized, and of the disposition of the proceeds, as will enable it to file on or before the twenty-fifth day of each month a verified report as required by the Railroad Commission's General Order No. 24,* which order, in so far as applicable, is made a part of this order.

Dated at San Francisco, California, this fifteenth day of October, 1923.

* See Commission Leaflet No. 9, p. 82.

[Cal