Luzerne County.Gas and Electric Corporation Annual Report Year Ended December 31 1951 This report and the financial statements contained herein have been prepared for the sole purpose of providing the stockholders of Luaerne County Gas and Electric Corporation with general and statistical information concerning the Corporation. It is not a prospectus or representatiion in connection with the purchase or sale of any securities.
Luzerne County Gas and Electric Corporation Board of Directors F RED D. Harm h1. I-1. PARKINSON iv. E. LONG FREDJ. RUTLEDGE CHARLES E. WARSAW Prcriht, CHARLES E. WARSAW Vice-Preszdei ent, I ~nn k3. Horn Secretary ad Treasw$r, JOIINS HOPKINS AI rrstaut Secretary, J. H. MACKENZIE A JSZ rtant Treasurer, JOSEPH B. TOWNSEND Assistant Trzusurer, EARNEST MACMORRIS Assistant Treasurer, W M. SFIEWAN General Office 217 b yoming Avenue, Kin,q~ton, Pa. Other o,q;ces bzleton, N~ncicoke, Pi? mocrh, Shickshinny and \I )-oming, Pa. Tramfer Ojice (Preferred Stock) Office of the Corporation 1401 Arch Street, Philadelphia 5, Pa. Registrar The Pennsylvania Company for Banking Preferred sto:t, Trusts E hlladelphla 1 Pa 3,. Annual Meeting First Tuesday of April at Kingston, Pa.
Luzerne County Gas and Electric Corporation Ofice of the President To THESTOCKHOLDERS: &NGSTON, PA.,!V%ARCH 26, 1952. There is presented herewith the Annual Report for the year ended December 31, 1951. Results for the year show substantial increases in residential and rural and commercial sales, offset by decreases in industrial and other sales, both as to electricity and gas. Total operating revenues for the year amounted to $5,504,792, an increase of $131,454, or 2.4%, over 1950. Electric revenues increased $X21,2-10, or 2.6C;,, and gas revenues increased $10,214, or 1.5 5$. The increase of $242,151 in total operating revenue deductions is principally accounted for by an increase of $235,287 in total operating and maintenance expenses, and an increase of $14,000 in provision for depreciation, partially offset by a decrease of $7,136 in provision for taxes. The major items of increase in operating expenses were: a smaller credit to electric generation costs for interchange power, increase in fuel costs, together with a general wage increase and a cost of living adjustment aggregating approximately $133,000 on an annual basis, and amounting to $32,830 for 1951. Net income for the year amounted to $944,759, a decrease of $91,750 compared with 1950. Sales of electricity for the year were as follow+-s: ( ;i Increase or Decrease C.lassification KWH Sulcs c,i! of Total over 1950 _- --- -----_ Residential and Rural... 47,317,771 23.3 10.6 Commercial Lighting... 27,575,287 13.6 6.9 Industrial Power..... 114,426,947 56.4 6.6" Other..... _......... 13,460,516 6.7 4.6" -. --- Total........,.. 202,780,521 100.0 1.2* The increase in sales to residential and rural customers is due to an additional 547 residential customers, as well as the greater use of household appliances. Average kilowatt hour sales per customer increased from 1,105 in 1950 to 1,198 in 1951, an increase of 8.4 ;. The increase in sales to commercial customers is due to increased sales per customer of 448 kilowatt hours, or 7.656. The decrease in industrial and other sales is accounted for by less sales to silk mills and electric railways. 4
Gas statistics for the year follow: % Increase or Decrease* Classific&iorz MCF Sales ;/;, of Total over 1950 - - - - --~ ~_ Residential........ 293,488 71.3 3.0 Commercial....... 90,008 21.9 1.5 Industrial........ 27,690 6.8 10.2* Other.................. 181-9.5* - -~ - - Total.... _......... 411,367 100.0 1.6 The increase in residential sales is due to an additional 56 customers, as well as a greater use of household appliances. Average sales per customer for 1951 were 17.71 MCF, compared with 17.26 MCF for 1950. The decrease in industrial sales is princi ally due to the loss of one customer and curtailment by several dress Pactories on account of market conditions. At the end of 1951, the Corporation served 44,270 electric customers and 17,631 gas customers, reflecting increases of 515 and 49, respectively, over 1950. Expenditures for ca ital additions amounted to $571,183, of which those for the electric c? epartment totaled $413,842, the major portion of which was for rebuilding a 20,000 KW generator at the Plymouth Plant, while expenditures for new business projects amounted to $156,444. Capital expenditures for the gas department amounted to $157,341, which includes $66,752 for new business projects and $57,324 for installation of a propane-air plant for peak load purposes. Of particular importance to you at this time is the Comprehensive Plan which The United Gas Improvement Company, the owner of all outstanding shares of Common Stock of this Company, filed on December 19, 1951 with the Securities and Exchange Commission pursuant to Section 11(e) and other sections of the Public Utility Holding Company Act of 1935, by which that company, among other things, through merger and other appropriate proceedings, proposes to acquire the assets and assume the liabilities of all its subsidiary companies, including this Company. The details of this Plan were summarized in the notice of filing and order for hearing on the Plan, issued by the Securities and Exchange Commission on January 22, 1952, a copy of which was mailed to holders of the 4% @h Preferred Stock of this Company on February 8, 1952 by The United Gas Improvement Company. Under this Plan, holders of such Preferred Stock are to receive for each share thereof one share of new 4% @/b Preferred Stock of The United Gas Improvement Company. Hearings on the Plan by the Securities and Exchange Commission have been completed but the Commission has not yet issued an order with respect thereto. Upon the issuance of such order, and as provided in the Plan, ap lication will be made to an appropriate United States District Court or P an order of said Court to enforce and carry out the terms and provisions of certain parts of the Plan. In addition, portions
of the Plan are also subject to the approval of the Pennsylvania Public Utility Commission and the Federal Power Commission. Applications to these Commissions in respect of these matters have been filed, but no hearings have as yet been held by them. In due course, you will be advised of the decisions of these Commissions and the Court and of any action required to be taken by you under the Plan, including the surrender of your holdings of 4% 76 Preferred Stock of this Company for new 4% s Preferred Stock of The United Gas Improvement Company. Submitted herewith are Statements of Income and Earned Surplus for the twelve months ended December 31, 1951 and 1950, and Balance Sheets at December 31, 1951 and l%o, together with copy of report of Lybrand, Ross Bros. & Montgomery, Certified Public Accountants, who have examined the accounts of the Corporation for the year. By order of the Board of Directors. CFIAS. E. WARSAW, President.
C ERTIFIED P UBLIC A CCOUNTANTS To THE B OARD OF D IRECTORS, Luzerne County Gas and Electric Corporation. We have examined the balance sheet of LUZERNE COUNTY GAS AND ELECTRIC CORPORATION as of December 31, 1951, and the related statements of income and earned surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We made a similar examination of such financial statements for the preceding year. In our opinion, the accompanying balance sheets and statements of income and earned surplus present fairly the financial position of Luzerne County Gas and Electric Corporation at December 31, 1951 and 1950, and the results of its operations for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. Philadelphia, Penna. February 25, 1952 LYBRAND, ROSS BROS. pr MONTGOMERY.
ASSETS AND OTHER DEBITS. INVESTMENT IN U TILITY P LANT, including $75,838 for intangibles, at original cost: Electric and common..... $20,218,490 Gas. 2,858,122 Lucerne Countv G J (Incorp 1951 19m Balance She $19,898,075 2,733,701 Less reserve for depreciation........ $23,076,612 7,886,890 W&631,776 7,336,563 $15,189,722 $15,295,213 INVESTMENT IN O THER P HYSICAL P ROPERTY, at original cost..................... $ 31,828 $ 31,828 SINKING AND MAINTENANCE FU N D S....... $ 1,092 $ 1,092 C URRENT AND A CCRUED A SSETS: Cash on hand and demand deposits in banks.. Special deposits, for payment of bond interest, dividends, etc....................... Accounts receivable, including installment accounts (less reserve for uncollectible accounts).......................... Rents receivable.................... Materials and supplies and merchandise, at averagecost.. Prepayments... 764,980 107,849 408,951 1,947 854,321 27,710 509,879 107,053 433,488 1,531 821,041 29,532 Total Current and Accrued Assets. $ 2,165,758 $ 1,902,524 D EFERRED D EBIT......................... $ 241 - $ 234 T OTAL A SSETS AND O THER D EBITS... $17,388,641 $17.230.891 See Notes to Financial Statements,
nd Electric Corporation n Pennsylvania) ecember 31, 1951 and 1950 LIABILITIES AND OTHER CREDITS. C APITAL STOCK AND SURPLUS: 191il Capital stock: Preferred, cumulative, par value $100 per share, authorized 36,000 shares: 4,% % Series : Issued and outstanding 25,000 s h a r e s.... $ 2,500,OOO Premium.... 2,670 1950 $ wq000 2,670 (Redeemable at any time at the option of the corporation at $110 per share or $2,750,000) Common, no par value, authorized and outstanding 176,694 shares.... Earned surplus since November 1, 1945.. Total Capital Stock and Surplus. L ONG- TE RM D EBT, FIRST M ORTGAGE B ONDS, 3%~~ Series, due January 1, 1966.... C URRENT AND A CCRUED L IABILITIES : Accounts payable (including $2,500 corn any).... Dividen (Ps declared, preferred stock. Matured interest.......... Customers deposits.... Taxes accrued : Federal income.... Federal excess profits... Other Interest accrued.... Other.. to parent...... 2,502,670 4,417,350 2,585,073 $ 9,505,093 $ 6,549,OOO 2,502,670 4,417,350 2,261,782 $ 9,181,802 - $ 6,549,OOO - 96,590 116,584 26,934 26,753 107,396 106,779 44,373 40,036 573,953-584,767-184,495 186,623 2,651 2,359 12,364 5,972 Total Current and Accrued Liabilities... $ 1,048,756 DEFERRED CREDITS : Unamortized premium on First Mortgage Bonds, 3%~ Series, due January 1, 1966. Customers advances for construction..... 69,392 7,455 $ 1$X9,873 ~--_ 74,348 7,455 RESEIZWJS : Prior years taxes......... Injuries and damages... $ 76,847 87,820 72,297 i 81,803 231,008 69,777 C ONTRIBUTIONS IN A ID OF CONSTRUCTION.... $ 160,117 =- $ 48,828 - - - -~_ $ 300,785 - $ 47,628 $17,230,891 ~ T OTAL L IABILITIES AND O THER C REDITS...... $17,385,641 -_~re an integral part of these Balance Sheets. 9
Lucerne County Gas and Electric Corporation Statements of Income For Twelve Months Ended December 31, 1951 and 1950 O PERATING R EVENUES: 19Jl 19ro Increase or Decrease* Electric... $4,809,707 Gas...... 695,085 $4,688,467 684,871 - $121,240 10,214 Total Operating Revenues. _.......... $5,504,792 $5,373,338 $131,454 - O PERATING R EVENUE D EDUCTIONS: Operating Expenses, Other than nance.............. Maintenance........... Provision for Depreciation. Provision for Taxes : Federal Income,.. Federal Excess Profits.... Other Federal...... State and Local.......... Mainte- Total Operating Revenue Deductions.. $2,428,336 $2,204,283 $224,053 390,579 379,345 11,234 664,000 650,000 14,000 569,263-584,767-104,952 109,926 194,593 181,251 4,974* 13,342 $4,351,723 $4,109,572 $242,151 N ET O PERATING R EVENUES............ $1,153,069 t&263,766 $110,697* OTHER INCOME, NET: Merchandising, Jobbing & Contract Work.. Other, 330 957 (2,074) 1,772 (302) TOTAL OTHER INCOME, NET........... _ 1,287 1,589 2,404 815* $1,154,356 $X,263,464 $109,108* INCOME D EDUCTIONS : Interest on Long-Term Debt: First Mortgage Bonds...........,. Notes Payable to Banks............ Amortization of Premium on Bonds......., Other Interest & Miscellaneous Charges.... $ 212,842 $ 212,842 5,863 (4,957) 14,400 - $ 5,963* - 7,632* Less-Interest Charged to Construction..... $ 214,653 5,056 $ 228,148 1,193 $ 13,495* 3,863 T OTAL INCOME D EDUCTIONS........., $ 209,597 $ 226,955 $ 17,358* $ 944,759 $1,036,509 $ 91,750* See Notes to Financial Statements, which are an integral part of these Statements. 10
Lucerne County Gas and Electric Corporation Statements of Earned Surplus, Since November 1, 1945 For Twelve Months Ended December 31, 1951 and 1950 1951 1950 BALANCE, J ANUARY 1s~........ $2,261,782 $1,773,268 Net Income for the Year........ 944,759 1,036,509 O THER C REDIT : Net Adjustment of Federal Income Taxes for Prior Years............ D EDUCTIONS : Dividends on Capital Stock: Preferred, $4.25 per Share.... Common, $3.50 per Share in 1951, $2.50 per Share in 1950. BALANCE, DECEMBER 31s~......,... 103,221 -.-- $3,309,762 $2,809,777 - I 106,260 106,260 618,429 441,735 $ 724,689 $ 547,995 -- $2,585,073 $2,261,782 See Notes to Financial Statements which are an integral part of these Statements. 11
Luzerne County Gas and Electric Corporation Notes to Financial Statements 1. Under date of December 19, 1951, The United Gas Improvement Company (U.G.I.) filed with the Securities and Exchange Commission and the Pennsylvania Public Utility Commission a Plan to merge all of its public utility subsidiaries, including Luzerne County Gas and Electric Corporation, into the U.G.I., to form one company to conduct the operations now being performed by the said subsidiaries. The purpose of the Plan is to achieve greater efficiency and economy in the operation of U.G.I. and its system companies, to effect a tax saving, to enable stockholders of U.G.I. to hold directly their investment in its subsidiary companies, and to complete compliance by U.G.I. and its system companies with the provisions of the Public Utility Holding Company Act of 1935. This Plan provides, among other things, that the security holders of U.G.I. and its subsidiary companies will receive the following treatment: Present First Mortgage Bonds of subsidiary companies will be exchanged for like principal amounts of new U.G.I. First Mortgage Bonds having substantially the same characteristics as the outstanding bonds. The present 4%~~ Preferred Stock of Luzerne County Gas and Electric Corporation will be exchanged for like amounts of new U.G.I. 4>i% Preferred Stock having substantially the same preference as the present Luzerne outstanding Preferred Stock. The present 4% y0 Preferred Stock of The Harrisburg Gas Company will be redeemed at the voluntary redemption price on or about the effective date of the merger. Present common stock will be exchanged as follows: One share of present U.G.I. Capital Stock will be entitled to one share of new U.G.I. Common Stock; one share of Consumers Gas Company Capital Stock will be entitled to 8/lOths of a share of new U.G.I. Common Stock; and one share of the Common Stock of The Harrisburg Gas Company will be entitled to four shares of new U.G.I. Common Stock. U.G.I. s holdings of stock in the subsidiary companies to be merged will be canceled and no new U.G.I. Common Stock will be issued therefor. The Plan will become effective upon receipt of necessary approvals, including those of the Securities and Exchange Commission (which has scheduled a hearing on February 27, 19.52) and the Pennsylvania Public Utility Commission. 2. The balance in the reserve for depreciation has been provided, prior to 1937 and 1939 (for electric and gas properties, respectively) under the retirement-reserve method and subsequently under the depreciation method. Under the latter method provisions were based upon the estimated average lives of the major classes of property and were approximately equivalent to amounts claimed or to be claimed as deductions for Federal income tax purposes. The balance so provided has been deducted, in the presentation of the balance sheets, from investment in plant, in accordance with the requirements of the Securities and Exchange Commission. In prior years the reserve for depreciation was shown on the liability side of the balance sheet. 3. Provisions for Federal income taxes for the years 1950 and 1951 have been made on the basis of consolidated returns filed or to be filed by U.G.I. and certain subsidiary companies, including this corporation. The provision for the latter year is less, and the net income correspondingly greater, by approximately $112,000, as a result of a substantial nonrecurring loss sustained by an affiliated nonutility company and deducted in arriving at income subject to Federal income taxes. 12
Statistics ELRCTRIC O PERATIONS : Customers (At December 31).. Sales--M Kilowatt Hours.... Generating Capacity-Kilowatts.... Population Served (Estimated) *Limited to 67,000 kilowatts by boiler capacit! 1951 44,270 202,781 75,000* 151,530 1950 - - - 43,755 205,253 75,000* 151,530 GAS OPERATIONS : Customers (At December 31) Sales-AZ Cubic Feet... Generating Capacity-M Cubic Feet Maximum Daily Output-M Cubic Feet Capacity of Storage Holders-M Cubic Feet. Miles of Mains.. Population Served (Estimated). 27,631 17,582 411,367 404,813 3,300 3,300 1,599 1,534 646 646 163.4 162.5 162,980 161,980 13