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ERIE - LACKAWANNA MERGER STUDY

APPENDIX F

Methods Used in Adjusting Estimated Savings and Net Cash Required or Realized to Reflect Current Volume of Business

Savings

Studies I, IV, V, VII-L, VII-F, VII-M, VIII-F, IX, X, XII, XIII and XV were decreased 18.7% based on the decline in carload traffic from 1956 to a level 10% above 1958.

Study III was decreased 10.1% based on the decline in gross ton miles in freight service from 1956 to a level 10% above 1958.

Study VI was decreased 27.7% based on the decline in LCL traffic from 1956 to a level 10% above 1958.

Study VIII-P was decreased 8.9% based on the decline in passenger car miles from 1956 to 1958.

Study XIV-G was decreased 10.8%, Study XIV-T was decreased 13.4% and Study XIV-S was decreased 19.1%, all based on actual employment levels in March, 1959, compared with October, 1956.

Study XX was decreased by 12.2%, the weighted average decrease of all Study XIV employees based on actual employment levels in March) 1959.

Account 102 - passenger revenue in Study XXI was decreased 3.4% based on the decline from 1957 to 1958; and Account 107 - express revenue was decreased 19.5% based on the decline from 1956 to 1958.

It was assumed that no other studies would be affected by changes in volume of business.

Net Cash

Study VII-L was decreased 18.7% based on the decline in carload traffic from 1956 to a level 10% above 1958.

Study DC was decreased by 10.8% based on the decline in material and supplies inventories from 1956 to 1958.

Methods Used in Adjusting Estimated Savings
from Cost Level of 1956 to Current Cost Levels

Revenues:

Freight Revenues - 13.2% based on increases for Eastern District arising from Ex Parte 206, 206-A and 212.

Passenger Revenue - No change.

Mail Revenue - 30% based on increase granted Eastern railroads in 304 I.C.C. 135 (Docket 9200).

Express Revenue - 23.9% based on increases arising from Docket 32035 and Ex Parte 210.

Operating Expenses-.

Wages -

Non-operating - 12.2% based on total increase of 270 per hour effective May 1, 1957 (3c), November 1, 1957 (12c), May 1, 1958 (4c), November 1, 1958 (8c) on base of average hourly rate for DL&W for November, 1956.

Operating - 10.1% based on total increases of 270 per hour effective May 1, 1957 (30), November 1, 1957 (120), May 1, 1958 (4c), November 1, 1958 (8c) on base of average hourly rate for DL&W for November, 1956.

Material - 3.6% based on increase in A.A.R. Index of Average Unit Prices of Railway Materials and Supplies, including fuel, from 1956 to 1958.

Miscellaneous - 5% to cover overhead costs.

Payroll Taxes, including railroad retirement, unemployment insurance, vacation, paid holidays and health and welfare payments-.

19.6% and 28.2% for non-operating and operating employees respectively based on increase in General Managers formula effective June 1, 1958, and change in Railroad Retirement and Unemployment Benefit rates effective June 1, 1959.