will agree to purchase all shares of the new preferred stock not required for exchange purposes as above and will also agree to use his best efforts to obtain acceptances of the company's exchange offer." With the exception of the call premium on the new preferred stock, which will be determined in connection with the bidding," the provisions of said stock are the same as those proposed originally herein and are similar to those which we have heretofore found adequate for the protection of preferred stockholders. For a full discussion of these provisions, as well as a detailed description of Service Company and its operations, reference should be made to our previous findings in this matter. Balance sheets of Service Company, corporate, and consolidated Gas-Water, as of February 28, 1946, per books, and pro forma to reflect the proposed preferred stock refinancing, are attached hereto as Appendix A. Capitalizations and financial ratios of Service Company derived from such balance sheets are set forth on page 476. 7 The plant account of Service Company (corporate) as at February 28, 1946, was stated at gross original cost of $104,871,391 plus net plant acquisition adjustments (Account 100.5) of $4,615,137. Depreciation reserve totaling $10,643,710 represented 10.1 percent of gross original cost of utility plant. Attached hereto as Appendix B are pro forma income statements of Service Company, corporate, and consolidated with Gas-Water, for the years 1942 through 1945, as submitted by the company. Following are statements of income of Service Company for the 12 months ended February 28, 1946, corporate, and consolidated with Gas-Water as prepared by the company. The corporate per books column includes the income from and expenses of gas, ice and water operations only to dates of disposition of such properties in 1945. The pro forma columns, in addition to reflecting the company's assumption of a dividend rate of 3.8 percent on the new preferred stock, also are adjusted to present income from and expenses of present operations, interest requirements on presently outstanding debt, and income taxes which would have been payable had such debt and preferred stock been outstanding for the entire period. 'Any payments to dealers for services in soliciting exchanges will be made by the successful underwriter and disbursements for such purposes will not be made directly by the company. •The redemption premium will be an amount equal to the excess over $100 of the offering price, exclusive of accrued dividends, plus $3 per share if redeemed prior to March 1, 1951, $2 per share thereafter prior to March 1, 1956, $1 per share thereafter prior to March 1, 1961 and without any additional amount thereafter, plus accrued dividends. 'Presently being amortized over a period ending in 1958. •Includes $1,076,000 maturing within 12 months. • Earned surplus of Service Company is restricted, as to payment of common stock dividends, to the extent of $1,000,000 by order of this Commission. • Net utility plant as used herein is after deduction of contributions in aid of construc tion. Does not include unamortized debt discount and expense, unamortized debt premium, less expense, or preferred stock redemption premiums but does reflect deduction of full income tax contingency reserve. • Federal excess profits taxes reduced by $602,000, representing tax savings on accelerated depreciation of war facilities. • Equal to the reduction in Federal income and excess profits taxes resulting from the refinancing of debt securities in 1945. • Service Company's program for the elimination of (a) plant acquisition adjustments (Account 100.5) and (b) excess of carrying value over underlying book value of subsidiary company at date of organization calls for the charging off against earned surplus of $364,356 and $215,364, respectively, or a total of $579,720 annually. For analytical purpose in presentation of comparable earnings coverages, operating expenses have been increased, and income deductions correspondingly decreased, by the amount of $2,500,000 (see footnote ⚫) in the per books columns. on a national securities exchange and unless the applicant exchange shall establish to the satisfaction of the Commission that there exist in the vicinity of such exchange sufficiently widespread public distribution of the security and sufficient public trading activity therein to render the extension of unlisted trading privileges necessary or appropriate in the public interest or for the protection of investors. Further, even if the adequacy of public distribution and public trading activity is successfully established, the Commission may not approve the application unless it finds that the extension of unlisted trading privileges is otherwise necessary or appropriate in the public interest or for the protection of investors. Privileges so granted may continue in effect only so long as the security remains listed and registered on any other national securities exchange. All of the securities covered by these applications, except Pan American Airways Corporation purchase warrants, are listed and registered on the New York Stock Exchange. Pan American Airways Corporation purchase warrants are listed and registered on the New York Curb Exchange. In addition, Graham-Paige Motors Corporation common stock is listed and registered on the Detroit Stock Exchange, Kennecott Copper Corporation common stock is listed and registered on the Boston Stock Exchange and Sears, Roebuck and Company capital stock is listed and registered on the Chicago Stock Exchange. In previous cases we have found that the vicinity of the Pittsburga Stock Exchange includes western Pennsylvania, eastern Ohio and West Virginia.1 We see no reason for not applying those precedents here. We have heretofore found that the operating mechanics of the applicant exchange pertaining to trading in unlisted securities were not such as to render an extension of unlisted trading privileges inappropriate in the public interest or for the protection of investors. At the hearing on these applications the secretary of the exchange testified that there had been no change in the operating mechanics since the previous hearings. Accordingly, we adhere to our previous finding. The statistical evidence reflecting the distribution and trading activity in the 11 securities within the vicinity of the applicant exchange is set forth in the attached table, and the data therein represent findings of fact by the Commission. It will be noted that, except in the single case of Corning Glass Works' common stock, the figures in the column entitled "Distribution in Pennsylvania, Ohio, and West Virginia" are for the entire area of the States named, a larger area than that which we have found to be 1 Applications by the Pittsburgh Stock Exchange, 2 S. E. C. 178 (1937); 5 S. E. C. 42 (1939); 11 S. E. C. 522 (1942). 2 Id. included within the "vicinity" of the applicant exchange; in that one case the figures are for the territory constituting the exchange's vicinity. In attempting to satisfy the statutory requirement regarding the sufficiency of public distribution within its vicinity of all of the securities except Corning Glass common, the applicant introduced evidence also as to (1) the number of shares held by its member firms for customers residing in its vicinity and (2) the number of shares held in safekeeping or in loan accounts by four banks and four trust companies for customers residing in the vicinity of the exchange. These figures, of course, indicate merely the absolute minimum rather than the total distribution in the vicinity of the exchange. Where the applicant exchange has been unable to obtain exact information as to distribution, we may give due consideration to these minimum figures, together with the volume of trading originating in the vicinity, in determining whether there exists in the vicinity sufficiently widespread public distribution to render the extension of unlisted trading privileges appropriate in the public interest or for the protection of investors. On the basis of the facts set forth in the attached table, we are of the opinion that sufficiently widespread public distribution and sufficient public trading activity within the vicinity of the applicant exchange exist in the following securities to render the extension of unlisted trading privileges thereto on the applicant exchange appropriate in the public interest and for the protection of investors. AMERICAN POWER AND LIGHT COMPANY Common stock, no par value CERTAIN-TEED PRODUCTS CORPORATION Common stock, $1 par value CORNING GLASS WORKS Common stock, $5 par value ELECTRIC POWER AND LIGHT CORPORATION Common stock, no par value KENNECOTT COPPER CORPORATION Common stock, no par value KOPPERS COMPANY, INC. Common stock, $10 par value PAN AMERICAN AIRWAYS CORPORATION Capital stock, $2.50 par value PENNSYLVANIA-CENTRAL AIRLINES CORPORATION Common stock, $1 par value SEARS, ROEBUCK AND CO. Capital stock, no par value |