FORTY-FOURTH ANNUAL REPORT OF THE BOARD OF DIRECTORS or THE LAKE SHORE AND MICHIGAN SOUTHERN RAILWAY COMPANY TO THE STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31 1913 CLEVELAND OHIO 0 BO It CIA n- .1 J. FORTY-FOURTH ANNUAL REPORT OF THE BOARD OF DIRECTORS OF THE LAKE SHORE AND MICHIGAN SOUTHERN RAILWAY COMPANY TO THE STOCKHOLDERS FOR THB YEAR KNDBD DECEMBER 31 1913 CLEVELAND OHIO ORGANIZATION OF THE LAKE SHORE AND MICHIGAN SOUTHERN RAILWAY COMPANY DECEMBER 31. 1913 DIRECTORS J. PIERPONT MORGAN WILLIAM K. VANDERBILT JAMES STILLMAN Tarm R>p i. •• LEWIS CASS LEDYARD Turin Expire" GEORGE F. BAKER WILLIAM ROCKEFELLER May 1915 W. SEWARD WEBB MARVIN HUGHITT FREDERICK W, VANDERBILT \ WILLIAM K. VANDERBILT. JR CHAUNCEY M. DEPEW Term Expire* WILLIAM H. NEWMAN May 1916 WILLIAM C. BROWN EXECUTIVE COMMITTEE CHAUNCKV M. DEPEW, Chairman of the Board of Directors* WILLIAM C. BR.HVN, President*' WILLIAM K. VANDERBILT LEWIS CASS LED YARD FREDERICK W. VANDERBILT GEORGE F. BAKER WILLIAM ROCKEFELLER J. PIERPI'NT MORGAN WILLIAM H. NEWMAN * Members ex-ojficio OFFICERS President WILLIAM C. BROWN New York Senior Vice President ALFRED H. SMITH New York Vice President WILLIAM K. VANDERBILT, JR New York Vice President JMHN CARSTENSEN New York Vice President ALBERT II. HARRIS New York Vice President CHARLES F. DALY New York Vice President JOHN J. BERNET Chicago Assistant Vice President EDWARD T. GLKNNON Chicago Secretary DWIGHT W. PARDEE New York Treasurer MILTON S. BAUGER New York Local Treasurer RUDOLPH P. AHRENS Cleveland General Auditor Rlt HARD M. HUDDLESTON Chicago Auditor GEORGE M. GLAZIER Cleveland General Counsel FRANK J. JEROME Cleveland General Counsel ROBERT J. CARY Chicago General Counsel BEHTRASD WALKER Chicago General Solicitor CLYDE BROWN New York General CI:IUTIS Attorney FRANK V. WHITING New York General Manager DEWITT C. MOON Cleveland G en e i-ji 1 S n p er i n t ei 1 r1 e 1i1 ALBERT S. 1 NO ALLS Cleveland General Superintendent Telegraph EDWIN C. KEEN AN Chicago General I .and and Tax Agent HERBERT I). HOWE Chicago Chief Engineer GEORGE C. CLEVELAND Cleveland Superintendent Motive Power DONALD R. MACBAIN Cleveland General Purchasing Agent SYDNEY B. WIGHT New York Purchasing Agent GEORGE R. INGERSOU, Cleveland Freight Traffic Manager GEORGE H. INGALLS Chicago General Freight Agent WILLIAM A. NEWMAN- Cleveland Passenger Traffic Manager JOHN W. DALY Chicago General Passenger Agent LESTER A. RORISON Cleveland The annual meeting of stockholders for the election of directors is held in the city of Cleveland, Ohio, the first Wednesday in May. REPORT To Uie Stockholders of TUB LAKK SHORK AND MTCHIOAN SOCTHKRN RAILWAY COMPANY : The Board of Directors herewith submits its report for the year ended December 31, 1913, with statements showing results for the year and the financial condition of the company. The mileage embraced in the operation of the road is as follows : Hi!ee Main line and branches Proprietary lines 2'i0'72 Leased line-. ">43'70 Trackage right* 190*46 Total road operated l,S5-'37 A change lias been made in the classification of road mileage operated by trans• ferring to mileage of leased lines the Erie and Kalamazoo Railroad, 21-82 miles, for years reported as a part of mileage of main line and branches. This road being in fact a leased line, under a strict interpretation of the agreement, the change in classifi• cation is deemed advisable. There is a decrease in total miles of road operated, in com• parison with the previous year's report, owing to the transfer to The Michigan Central Railroad Company for operation of a section (19*60 miles) of the Detroit Toledo and Milwaukee Railroad. There were also some slight changes due to re-measurements and adjustments. A table showing in detail the miles of road and track operated will be found upon another page. There was no change in capital stock during the year, the amount authorized and outstanding December 31, 1913, being $50,000,000.00. The mortgage, bonded and secured debt outstand• ing on December 31,1912, was $169,406,167 10 It has been increased during the year by adding pro-rata liability for certificates issued under the New York Central Lines Equipment Trust, agree• ment of 1913 1,213,072 16 $170 619 ^39 26 It has been decreased by payments during the year of pro-rata of installments on account of equip• ment trust certificates as follows: January 1, third installment 1910 trust *889,149 54 January 1, first installment 1912 trust 198,330 75 November 1, sixth installment 1907 trust 447,226 18 1,534,706 47 Total mortgage, bonded and secured debt outstanding December 31,1913 $169,084,532 79 Annual Report SUMMARY OF FINANCIAL OPERATIONS AFFECTING INCOME Decrease OPERATING INCOME 1913 1912 Increase RAIL OPERATIONS 1.3S2~!tf mik* operatedl.tTC' U mlies operated Revenue! $57,941,920 37 554.283,616 52 53.658.303 85 Expenses 42^445.209 21 35.534.644 36 6.910.664 85 •3.262.261 00 NET REVENUE- RAIL OPERATIONS 515.496.711 16 518.748^972 16 Percentage of expenses to revenues (73-25*) (65*46*>) (7-79*) AUXILIARY OPERATIONS Revenues $1,411,189 34 51.206,895 79 $204,293 55 Expenses 1,300,187 15 1,091.491 27 208,695 88 $4.40233 NET REVENUE—AUXILIARY OPERATIONS 5111.002 19 $115,404 52 515.607,713 35 518.864,376 68 53.256,663 33 NET OPERATING REVENUE •355,339 66 RAILWAY TAX ACCRUALS 2J26.437 64 1.771.097 88 OPERATING INCOME 513.481.275 81 $17,093,278 80 $3,612,002 99 OTHER INCOME From lease of road 55,000 00 55.000 00 Hire of equipment—credit balance 667,085 87 551.998 49 5115.087 38 Joint facility rents 380.247 05 357,851 47 22,895 58 Miscellaneous rents 105,111 30 98,394 37 6,716 93 Net profit from miscellaneous physical property ' 12,753 53 1.211 26 11,542 27 1.213,371 26 1.272.125 22 558,753 96 Separately operated properties—profit 410.466 86 Dividend income 6.493,713 80 6,904.180 66 Income from funded securities 664.450 57 488.311 26 76.139 32 Income from unfunded securities and accounts 1.025,334 20 663.001 23 362.332 97 557 81 Miscellaneous income 6.144 92 6.702 73 <124,435 82 TOTAL OTHER INCOME 510.473.212 50 $10.348,776 68 53,487,567 17 GROSS INCOME '523.964.488 81 $27,442,055 48 DEDUCTIONS FROM GROSS INCOME $241,174 12 For lease of other roads 52,904.413 31 52.663,239 19 901,486 89 774,143 47 127.342 42 Joint facility rents 13.887 24 Miscellaneous rents 21.916 69 8.029 45 1.220 25 6,948 22 $4,727 97 Miscellaneous tax accruals 36.513 77 142.179 74 Separately operated properties—loss 178,693 51 6.632,067 65 6,678.440 31 46.372 66 Interest for funded debt 968.530 64 Interest for unfunded debt 549.177 27 419.353 37 (608.476 78 TOTAL DEDUCTIONS FROM GROSS INCOME Hl.466,148 20 510.857.671 42 $4,096,043 95 NET INCOME 512.488,340 11 816.584.384 06 DIVIDEND APPROPRIATIONS OF INCOME On guaranteed stock (I85&) 596.030 00 596.030 00 On common stock (18?&) 8.903,970 00 8.903.970 00 59.000,000 00 TOTAL DIVIDEND APPROPRIATIONS OF INCOME .59,000.000 00 INCOME BALANCE TRANSFERRED TO CREDIT 53,488.340 11 54.096,043 96 OF PROFIT AND LOSS $7,584,384 06 Amount to credit of profit and loss (free surplus), December 31. 1912 $41,187,167 89 Add: Balance to credit of profit and loss for the year 1913 53,488.340 11 Balance profit from operation of the Pitt*burgh McKeesport and Youghiogneny Railroad from July 1, 1907 to Docembcr 31, 1911 4,362.643 43 Profit from sale of 57.350.000.00 bonds of The Cleveland Short Line Railway 246.216 00 Propo°rSo,nrof profit from sale of a portion of the Detroit Toledo and Milwaukee 132.501 00 8.229,(199 64 Railroad S49.416.867 43 Deduct: Discount, commission and expenses on one year notes $166,864 24 Discount, commission and expenses on New York Central Lines equipment trust certificates of 1913 48,644 84 Adjustment of sundry accounts including uncollectible items 70,614 29 280.923 37 Balance to credit of profit and loss (free surplus), December 31,-1913 $48,135,944 06 5 The Lake Shore and Michigan Southern Railway Company The revenues from rail operations for the year were the largest in the history of the company, amounting to ¥57,941,920.37, an increase of $3,658,303.85 or 6*74% as com• pared with the previous year. Freight revenue was 838,434,441.92, an increase of 82,063,197.43. The revenue freight carried amounted to 43,094,033 tons, or 2,012,460 tons more than last year. With the exception of products of agriculture, each group of commodities shows a greater tonnage carried than in 1912. Products of mines show a conspicuous improvement in tonnage moved, especially in bituminous coal, which increased 686,831 tons, ores 730.782 tons, aud stone, sand and other like articles and other products of mines 257,860 tons. The movement of manufactured commodities was 701,060 tons greater than during 1912, the noticeable increases being in bar and sheet metal, cement, brick and lime and other manufactured articles.