43.600

35,743,595.

2747152417 (247 525 603 68 279 0332431 347 781 893 068 441 53 953 694 3407 609859 76 715 787

Schedule No. 5

SECURITIES ISSUED, REMAINING TO BE ISSUED, AND OUTSTANDING UNDER PENN CENTRAL CO. AUTHORIZATIONS FROM THE INTERSTATE COMMERCE COMMISSION, FROM JAN. 1, 1966 TO AUG. 31, 1969

Note 1: The above schedule does not include shares of stock of Penn Central Co. issued as follows: 1966-62,830 shares; 1967-91,780 shares; 1968-66,910 shares; and 1969 (8 months)-24,614 shares, pursuant to stock option plans of the Pennsylvania RR. Co. authorized in finance dockets 19910 and 23145 and pursuant to stock option and stock purchase plans of the New York Central RR. Col. assumed by Penn Central Co. in finance docket 21990.

Note 2: The above schedule does not include (1) shares of stock and bonds issued to the trustee of the New York, New Haven & Hartford RR. Co., debtor in reorganization, in payment for its properties pursuant to finance dockets 21990 and 24361, (2) bonds of said debtor which were assumed in said dockets, (3) $35,000,000 principal amount of collateral trust bonds issued by Pennsylvania Co., a subsidiary of Penn Central Co., pursuant to finance docket 25712, and (4) shares of stock and collateral trust bonds of Penn Central Co. issued in exchange for stock of the Pittsburgh & Lake Erie RR. Co. pursuant to finance docket 25114.

Note 1: The above schedule does not include shares of stock of Penn Central Co. issued as follows: 1966-62,830 shares; 1967-91,780 shares; 1968-66,910 shares; and 1969 (8 months)-24,614 shares, pursuant to stock option plans of the Pennsylvania RR, Co. authorized in finance dockets 19910 and 23145 and pursuant to stock option and stock purchase plans of the New York Central RR. Co. assumed by Penn Central Co. in finance docket 21990.

Note 2: The above schedule does not include (1) shares of stock and bonds issued to the trustee of the New York, New Haven & Hartford RR. Co., debtor in reorganization, in payment for its properties pursuant to finance dockets 21990 and 24361, (2) bonds of said debtor which were assumed in said dockets, (3) $35,000,000 principal amount of collateral trust bonds issued by Pennsylvania Co., a subsidiary of Penn Central Co., pursuant to finance docket 25712, and (4) shares of stock and collateral trust bonds of Penn Central Co. issued in exchange for stock of the Pittsburgh & Lake Erie RR. Co. pursuant to finance docket 25114.

Schedule No. 6

PENN CENTRAL CO. CONDITIONAL SALES AGREEMENTS, JAN. 1, 1966-AUG. 31, 1969

Conditional sales maturities in 1970 and 1971 reflect estimated equipment financing of $97,540,000 in 1969 and $100,000,000 in 1970.

INTERSTATE COMMERCE COMMISSION,
Washington, D.C., July 31, 1970.

HON. WINSTON L. PROUTY,

U.S. Senate,

Washington, D.C. 20510.

DEAR SENATOR PROUTY: This is in reply to your request following recent hearings before the Subcommittee on Surface Transportation, at which the Commission appeared July 8, 1970, to supply various information for the record.

The questions and answers follow in the order presented, with a joint response to the first two:

Question. 1 Does the Commission intend to extensively audit the accounts of railroads which form a part of a conglomerate enterprise?

Question. 2 Could you develop figures to submit to this Committee as to the appropriation and manpower which would be required by the Commission to undertake an individual audit in depth of each conglomerate corporation having as a subsidiary a railroad subject to your jurisdiction?

Answer. The audit program of the Bureau of Accounts contemplates an annual examination of those railroads which form a part of a conglomerate enterprise. However, we do not contemplate making an in-depth audit of each conglomerate corporation which has a railroad subsidiary subject to our jurisdiction. For example, the United States Steel Corporation owns several railroads but no audit of this Corporation is planned. However, in connection with the examination of those railroads owned by U.S. Steel or others in like circumstances, we do intend to examine any and all transactions that might have occurred between the regulated railroad and its parent. The scope of our special conglomerage audit in this regard has been previously provided to the Committee.

With respect to the Bureau's needs for additional auditors to cope with the conglomerate situation, we feel that an additional 20 auditors and accountants in grades ranging from GS-12 through GS-15 would suffice. This would require an appropriation of $380,000 annually. At present, there are 8 professional vacancies in our field staff. Coupled with the 20 positions mentioned above, we believe this to be the maximum number we could immediately absorb in an orderly orientation and training program.

The foregoing represents only the Bureau of Accounts' immediate requirements. In considering staff needs for the future, other matters must be considered. For instance, if many conglomerate examinations should develop into Section 12(1) investigations such as those of Penn Central and Kansas City Southern Industries, the needs will be much greater than our present staff even though it should be augmented by the 20 positions mentioned above.

If additional personnel are necessary, we will request them at the appropriate time.

Question. 3 In your opinion, or if you prefer, in the opinion of your General Counsel, would additional legislation be necessary to enable the ICC to undertake such a project? If so, how soon can the Commission present draft legislation giving it such additional authority as it deems necessary?

Answer. It is the view of the General Counsel that legislation would be required for the Commission to subject non-carrier holding companies to the reporting and accounting requirements of the Interstate Commerce Act. However, this matter is presently under study by the General Counsel and others. As soon as their consideration is complete and the Commission has sufficient information on which to base a decision, we shall be pleased to inform you further on this matter.

Question. 4 Inasmuch as all of the loan guarantee legislation which we are considering is patterned after the 1958 Act which was administered by your Commission, can you give us an opinion as to the success of that 1958 legislation? Are you in a position to summarize briefly for the record the Commission's experience under that legislation?

Answer. With respect to Part V of the Interstate Commerce Act, it is our view based on experience to date that the loan program has been successful. Loans have been made to 14 railroads in the total aggregate amount of $243,972,360, and as of June 30, 1970, $165,344,568 remains outstanding. Full repayment of all such loans is not scheduled to occur until 1978.