Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1916-09-19

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Its initial period, and has supervised
Its financing up to the present time.
We have been furnished with al
the information in the possession O.
the present company. and the &C
countants and engineers have made
from various angles. Independent es
Inmates Of the condition of the plan
and its business during the initla
period. from 1889 to 1908, We are
satisfied that during considerable
portion of that period the revenues
Of the company were not sufficient tc
enable It to meet its expenses, pro
vide for the depreciation, and pay .
reasonable return on the capital in
vested.
But by the year 1908 the business
had reached point where 1t was
profitable. At that time there was a
reorganization to the extent that the
present Omaha Electric Light 4
Power Company, a corporation organ
ICED under the laws Of the state Of
Maine, received formal transfer Of
all the assets of the old company, and
took over the management Of Its
business.
From 1903 until the present time
the business has been profitable, and
during at least part Of that time
has produced an excess above rea'
sonable return on the capital invest
ed, sufficient to reduce somewhat
the deficits incurred during the early
period. y
In ,endeavoring to arrive at the
amount Of development expense
which should be allowed, we have
had the benefit Of various calcula.
tons by the experts employed.
Messrs. Haskins & Sells, the &C.
countants, submitted q report show
ing that the amount Of the accumu-
lated losses of the company, that Is,
the amount by which its revenues
fell below fair return on its invest
ment, from 1889 to 1915, would
amount, at the end Of that period, to
$3,71s,210.s1. III. & s. Special Re-
port.)
The experts In the employ Of Mr..
B.. J. Arnold calculated the accumu.
lated deficit at the end Of the same
period to amount to $1,6s3,112.0
(B. J. A. p. 81
Mr. Edward N. Strait, Of the Wis
consin Railway Commission, submit
ted calculation based on different
rates Of income during the periods in
question Of 1924, s93.0o At the re-
quest Of the committee he made
computations ranging from $562,634
Est. Table D l, p. 1867 based on an
income of per cent from August
81, 1889, at the beginning Of the bust
ness, to June 30th, 1915, with inter-
est on deficits compounded at per
cent per annum, up to $1,495,606,00
(St. Table 16. p. 62), based on cal
culation Of per cent revenue from
1889 to 1903 and thereafter 8 per
cent, with deficiency or excess Of
revenue calculated on the same
basis and compounded
The committee has seen At to re-
ject entirely the calculations Of Has
kins & Sells on this item as being
based on data not accepted by the
committee, and has concluded that
the recommendation of Mr.. Arnold
and Mr.. Strait we're excessive, for the
same reason.
After consideration of the entire
matter we have concluded to recon-
mend an additional allowance Of
$750.00O to the Company's invest
ment as development expense, based
on the calculations made by Mr..
Strait, this amount to cover all allow.
ances that might be made or claimed
in such cases on account Of over.
head engineering and also what Is
denominated going value"
D. In addition to the physical
plant property and the legitimate al
lowance for developing the same. and
the current working capital, the
company has an additional invest
ment In the depreciation reserve, set
aside out Of the annual earnings, to
meet the cost Of replacing the plant,
resulting from wear, obsolescence,
or other causes.
We find that during the period
from 1908 to 1915 the revenue of the
had been sufficient to set
aside an annual sum to meet such
depreciation, amounting to per cent
Of the investment In the plant from !
time to time III. & S. p. ~. The
total amount set aside for 'deprecia-
lion during this twelve-year period is
z, 041, 440.42. OF this amount 1899.
1926 was withdrawn from the In.
vestment as completed depreciation,
Is appears under paragraph (A)
herein. And we have deducted the
amount from the invest
nent In the plant, SO as to reduce it
o Its present physical value. But
his does not mean that the amount
II the depreciation reserve has been
from the investment, I'M
ess it has actually been paid out 10
he stockholders in dividends, or has
been reinvested in the plant, and an \
additional allowance made for 1t as
lew investment there.
An analysis Of the accounts OF the
company and its assets has led to
he conclusion that this reserve In
he preceding amount which has &C.
ualiy accumulated out Of the earn