Evening star., 1952-03-20
Capital Transit Hits
Costs, Low Returns
lin Annual Report
By Donald B. HodIey

v. "A. .. bTOdQWdLcT yesterday
complained that the forces of in
f1ation. including employees de-
mands for higher wages. restrained
the company from earning a fair
and reasonable return in 1851.
However. a comparison of the
1851 report with those for 1850
and 1949. disclosed that compen-
sation of employees. including pen
sions and social security, rose only
slightly from that of the previous
year and was well below the 1949
level.
The report also revealed that
the company has decided to
abandon plans for an employe
stock purchase fund because Of
present Wage Stablization Board
and Internal Revenue Bureau re-
quirements."
These requirements could not
be met without some question as
to whether the employe could be
afforded full protection against
fluctuations in the market value
of the stock" 1t stated.
Without giving comparisons for
previous years, simplified state
ment of 1851 operations of the
transit firm listed the labor
item at $15,985.316. The same
item was listed in the 1850
report as $15.911,619 and in the
1949 report as $17,032,168. The
Wolfson group took control in
of 1949.
The 1851 simplified statement
also listed the cost of power. gaso-
line and other materials and ex-
+penses as $6,016,666. The same
item in the 1850 report was S.
806.514, and in the 1949 report,
sc. .561 1893.
Taxes Revised.
Because a revision in 1949 and
1850 tax liability was first in
cluded in the 1851 report, figures
on taxes and total operating costs
in the simplified statements for
1850 and 1949 could not be COM
pared.
''The Federal income tax re-
turn for 1949 was examined in
1851 by representatives, of the
Bureau Of Internal Revenue, who
allowed deduction for property
abandoned and approved a new
basis of claiming depreciation with
respect to railroad properties" the
1851 report said.
Accordingly, the tax liability
originally recorded with respect to
1949 and 1850 was reduced $416,-
832 and $198.783, respectively, by
transfer to earned surplus in 1851.
The balance of $7O,936 in a re-
serve for undetermined income
taxes for years prior to 1949, no
longer required, was also trans
ferred to surplus in 1851.
I'm the accompanying finan-
cial statements, an amount of
$487, 1853 has been added to earned
surplus previously reported as of
December 81, 1949, and the pro-
vision for income taxes for 1850
has been reduced by $198, ,783 and
net incomes for that year has been
a like amount over that
previously reported"
/ Financial Condition Improved.
Substantial. improvement was
made in. the financial condition
Of the company in 1851 and it
ended the year better off finan-
'cially than in any previous year
of the postwar period. Mr.. Wolf
son and Mr.. Broadwater stated in
the report.
After giving effect to a dividend
of $3.50 a share declared out of
earned surplus in January, the
company still has $4,110,334 in the
surplus account, they pointed out.
1.-THE fare increase granted by
the Public Utilities Commission on
July Is, 1850, aided us, in the first
six months Of 1851, to earn what
a return on investment
more nearly in line with that
recommended by prudent flnan-
cial advisers.
However, this was offset by
higher electric power costs, effec-
tive April !, 1851. higher labor
costs beginning July l, and higher
taxes and material costs through
out the year. Intensified competi-
ton from the private automobiles
also had its effect. AS a result,
more than 65 per cent of the net
income for the entire year was
earned in the first six months OF
1851.
Net income for the year was
$1,431 ,668, an increase of 327,02S
or 1915 per cent over 1850. and
equivalent to $5.97 a share on old
500 par value stock or $1.49 a
share on new $3.50 par value
stock created by the four -for-one
split last December.
S77,787 From Park.
The company earned $77,787
from Glen Echo Amusement Park
during 1851 compared with $685.
298 in 1850. Park revenues
reached $447,960 VS.. $377 .902 In
the previous year, and operating
er the Nation