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thereon, which said report is hereby referred to and made a part hereof,

It is hereby certified, That the acquisition by The Tuscarawas County Telephone Company of certain properties of The Ohio Bell Telephone Company, and the acquisition by the latter company of certain properties of The Tuscarawas County Telephone Company, as described in the application and report aforesaid, will be of advantage to the persons to whom service is to be rendered and in the public interest.

April 28, 1924.

CALIFORNIA.

Railroad Commission.

In re APPLICATION OF THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY FOR AN ORDER AUTHORIZING THE ISSUANCE OF PREFERRED STOCK.

Application No. 9863-Decision No. 13369.

Decided April 2, 1924.

Issue of Preferred Stock Authorized.

OPINION.

In this application, The Pacific Telephone and Telegraph Company asks permission to issue and sell at $87.50 per share, 250,000 shares of its 6 per cent. preferred capital stock of the aggregate par value of $25,000,000, and to use the proceeds to reimburse its treasury for amounts paid into the sinking funds of its several bond issues and for its uncapitalized expenditures for fixed capital and investment accounts since October 31, 1922.

The Pacific Telephone and Telegraph Company owns and operates directly or through subsidiary corporations, a general telephone system in the States of California, Nevada, Oregon, Washington and Idaho. The system is composed of local and long distance telephone lines and exchanges and the buildings, rights-of-way, franchises and equipment therefor. The company reports that it has an authorized capital stock of $100,000,000 divided into $18,000,000 of common stock and $82,000,000 of 6 per cent. preferred stock. As of December 31, 1923, the company reports all of the common stock and $57,000,000 of the preferred stock outstanding. As of of the same date, it reports $62,152,200 of bonds outstanding. Its bonded debt consists of $31,247,000 of first mortgage collateral trust 5 per cent. bonds due January 2, 1937; $6,314,000 of first mortgage bonds of the Home Long Distance Tele

phone and Telegraph Company due January 2, 1932; $24,591,200 of refunding mortgage 5 per cent. bonds due May 1, 1952.

In addition to its outstanding bonded indebtedness, the company reports as of December 31, 1923, advances from system corporations aggregating $31,425,000, notes payable of $10,000, accounts payable of $3,382,516.84, and accrued liabilities not due of $2,708,395.51. The company reports its revenues and expenses for the years ending December 31 as follows:

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The operating expenses for 1922 include $5,665,650 for depreciation of plant and equipment, and those for 1923 the sum of $6,228,500. During both 1922 and 1923, the company paid 6 per cent. dividends on its outstanding preferred stock. The increase in the amount of dividends paid is caused by the issue of additional preferred stock. The company paid no dividends on its common stock.

In its Exhibit A, applicant reports the increase in fixed capital accounts from October 31, 1922, to December 31, 1923, at $21,115,323.29. This amount is made up as follows:

The net increase of other asset accounts is reported at $17,272,500.37, most of which represents, directly or indirectly, advances to system corporations. Exhibit A also

shows that applicant has from October 31, 1922, to December 31, 1922, decreased its funded debt by the sum of $1,045,800.

On December 31, 1923, applicant had $31,435,000 of 6 per cent. notes outstanding. These notes were payable to the following corporations or persons:

American Telephone and Telegraph Company...

The Home Telephone and Telegraph Company of Spokane
W. W. Eden and L. B. Eden....

$31,400,000 25,000

10,000

$31,435,000

TOTAL

The remainder of the money necessary to finance the above construction expenditures, advances, and purchase of bonds is represented by accounts payable, or earnings invested.

Applicant asks permission to use the proceeds from the sale of the $25,000,000 of stock it is now proposed to issue to reimburse its treasury to the extent that such proceeds are sufficient for amounts paid into its various sinking funds and for its uncapitalized expenditure for fixed capital and investment accounts prior to December 31, 1923.

It is of record, however, that the company intends to use the proceeds from the sale of its stock to liquidate its outstanding indebtedness which was incurred to acquire the properties to which reference has been made.

ORDER.

The Pacific Telephone and Telegraph Company having applied to the Railroad Commission for permission to issue and sell $25,000,000 of its 6 per cent. cumulative preferred stock, 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 such issue is reasonably required for the purposes specified herein and that the expenditures for such purposes are not in whole or in part reasonably chargeable to operating expense or to income.

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