our order herein; and provided further, that upon consummation of the transaction, we shall reserve jurisdiction in this proceeding for a period of 2 years from the date of consummation to make such additional findings and to impose such additional conditions, with respect to employees of Transit, Inc., upon petition by the employees or their representatives, as we may deem appropriate in the premises. An appropriate order will be entered.

50 M. C. C.

No. MC-F-37281

THE GREYHOUND CORPORATION-CONTROL; SOUTHWESTERN GREYHOUND LINES,

INC.-CONTROL

NORTHEASTERN MISSOURI GREYHOUUND LINES, INC.

Submitted March 10, 1948. Decided March 31, 1948

Purchase by Northeastern Missouri Greyhound Lines, Inc., of certain operating rights and property of Southwestern Greyhound Lines, Inc., and Robert H. Finley, doing business as Finley Bus Line, and acquisition by The Greyhound Corporation through Southwestern Greyhound Lines, Inc., of control of Northeastern Missouri Greyhound Lines, Inc., through ownership of its capital stock, approved and authorized, subject to conditions.

John R. Turney for applicants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MAHAFFIE, MILLER, AND MITCHELL BY DIVISION 4:

Northeastern Missouri Greyhound Lines, Inc., a Missouri corporation, of Mexico, Mo., herein called Northeastern, and Southwestern Greyhound Lines, Inc., of Fort Worth, Tex., herein called Southwestern, and Robert H. Finley, doing business as Finley Bus Line, of Mexico, by a joint application filed January 30, 1948, seek authority under section 5 of the Interstate Commerce Act for the purchase by Northeastern of certain operating rights and property of Southwestern and Finley. By another application filed concurrently, The Greyhound Corporation, a Delaware corporation, of Chicago, Ill., herein called Greyhound, and Southwestern which is controlled by Greyhound, seek authority under the same section to acquire control of Northeastern, through ownership of a majority of its outstanding capital stock. Applicants operate more than 20 motor vehicles. The applications are not opposed. No public hearing appears necessary. Southwestern, a Delaware corporation, is one of the companies included in the Nation-wide Greyhound system of motorbus operations. Its affiliation with other members of the Greyhound system, and its operations are generally described in Southern Kansas Greyhound Lines, Inc.-Pur.-Hawthorne, 45 M. C. C. 679, and Southwestern

1 This report embraces No. MC-F-3729, Northeastern Missouri Greyhound Lines, Inc.Purchase (Portions)-Southwestern Greyhound Lines, Inc., and Robert H. Finley.

Greyhound Lines, Inc.-Merger, 39 M. C. C. 721, and the cases cited therein. Its authorized capitalization consists of 5,700 shares of class A, and 20,000 shares of class B, no-par-value, common capital stock, of which all except 900 shares of the class A stock and 443 shares of the class B stock are outstanding. Greyhound owns all of the outstanding class A stock, which has the sole voting rights, and 82.8 percent of the outstanding class B nonvoting stock. Of the remainder of the class B common stock, 7.20 percent is owned by the Southern Pacific Company, a rail carrier, herein called the railroad, and 8.55 percent by Southwestern Transportation Company, a motor-carrier subsidiary of the railroad.

In Southwestern Greyhound Lines, Inc.—Merger, 39 M. C. C. 243, for reasons set forth therein, the Commission found that Southwestern was affiliated with a carrier by railroad subject to part I of the act within the meaning of section 5 (6), and that before the transaction therein proposed could be approved, it was required to make the findings required by the proviso of section 5 (2) (b), herein called the proviso. On further hearing in that proceeding, however, as indicated in Southwestern Greyhound Lines, Inc.-Merger, 39 M. C. C. 721, evidence was presented which established that the individuals on Southwestern's board of directors and its executive committee, who represented the railroad and its subsidiary, had resigned and that its bylaws had been amended reducing the number of its board of directors from nine to seven. It was further disclosed that the railroad and its subsidiary had disposed of all of their interest in Southwestern's voting stock. On April 9, 1946, the bylaws of Southwestern were again amended increasing the number of its directors from seven to eight members. Although R. A. L. Bogan, who is a director and stockholder of the Chicago, North Shore & Milwaukee Railroad, a rail carrier under part I of the act, operating between Chicago and Milwaukee, Wis., and who is also executive vice president of Greyhound, was elected as the additional director of Southwestern, Greyhound as indicated now owns all of Southwestern's outstanding class A voting stock and 82.83 percent of the class B nonvoting stock, while the railroad and its subsidiary referred to in the prior proceeding only own 7.20 percent and 8.55 percent, respectively, of its outstanding class B nonvoting stock, respectively. Considering these circumstances, we are of the opinion, under the evidence of record in this proceeding, that Southwestern is no longer affiliated with the railroad or its subsidiary, and that the additional findings required by the proviso accordingly need not be made herein. Compare Central Greyhound Lines, Inc.-Control and Merger, 45 M. C. C. 33, and the cases cited therein.

On May 30, 1944, in No. MC-1510, a certificate was issued to Southwestern authorizing operations, in interstate or foreign commerce, as a motor common carrier of passengers, over numerous regular routes in a territory bounded by Memphis, Tenn., and St. Louis, Mo., on the east, Kansas City, Mo., on the north, Denver, Colo., Albuquerque, N. Mex., and El Paso, Tex., on the west, and Corpus Christi, Tex., and Lake Charles, La., on the south, including a route authorizing the transportation of passengers and their baggage, and of express, newspapers, and mail in the same vehicle with passengers, between Jefferson City and Louisiana, Mo., over U. S. Highway 54 via Kingdom City and Mexico, Mo., serving all intermediate points.

Finley operates, in interstate or foreign commerce, as a motor common carrier, over regular routes, of passengers and their baggage, and of express, newspapers, and mail in the same vehicle with passengers, between Hannibal, Mo., and Kingdom City, via New London, Mo., and Mexico; between Shelbyville, Mo., and Mexico, via Paris, Mo., and between Paris and the junction of Missouri Highways 154 and 19, near Perry, Mo., serving all intermediate points.

Northeastern, a Missouri corporation, was organized on June 25, 1946, primarily for the purpose of acquiring and conducting operations, in interstate or foreign commerce, under the rights involved in this proceeding. It has an authorized capitalization of 7,500 shares of common capital stock, without par value, and an authorized stated capital of $150,000.

Under an agreement of November 3, 1947, Southwestern would transfer to Northeastern that portion of its interstate and corresponding intrastate rights between Jefferson City and Kingdom City, 2 busses, and $8,500 in cash, and Finley would transfer to Northeastern that portion of his interstate and corresponding intrastate rights between Kingdom City and Hannibal, 2 busses, certain office equipment, and $1,577.50 in cash. In payment for the operating rights and property Northeastern would issue 1,925 shares of its capital stock to Southwestern, and 1,575 shares to Finley. Of the stock so acquired, each party would allocate 500 shares to the value placed on operating rights and the balance to the value of the physical property. As hereinafter indicated, the proposed accounting will not be approved at this time but will be considered upon receipt of the journal entries proposed to record the transaction as required by our order herein. The parties have specifically agreed that Southwestern or its nominee shall hold 55 percent of Northeastern's outstanding capital stock, and Finley or his nominee 45 percent of the stock. The amounts of cash

2 Pursuant to certificates issued on May 20, 1943, and (March 9, 1948, in Nos. MC-54617 (Sub-No. 1), and MC-54617 (Sub-No. 4), respectively.

that Southwestern and Finley have paid in the incorporation of Northeastern shall be deducted from the amounts of cash as provided above. Our findings herein contemplate that Robert H. Finley, doing business as Finley Bus Lines, will record the investment in the stock of Northeastern in his motor-carrier investment account.

Southwestern's balance sheet as of June 30, 1947, shows assets aggregating $13,887,155, consisting of: Current assets $5,554,753, chiefly cash $2,500,654 and temporary cash investments $1,606,710; carrier operating property, less depreciation, $4,058,563; intangible property, less amortization, $2,012,709; investments and advances, associated companies $392,069 and other $101,050; special funds $1,531,607; and deferred debits $236,404. Liabilities were: Current liabilities $3,797,620, principally accounts payable $1,937,236 and taxes accrued $1,723,338; equipment and other long-term obligations $236,589; injuries, loss and damage reserves $176,071; other reserves $461,200; common capital stock, class A, $432,000 and class B, $1,815,700; and surplus $6,967,975. Its income statements for 1945, 1946, and the first 6 months of 1947, show net incomes, before provision for income taxes, of $7,418,373, $5,830,238, and $1,495,135, and net incomes, after such provision, of $1,861,026, $3,653,938 and $939,535, respectively.

Finley's balance sheet as of June 30, 1947, shows assets aggregating $88,596, consisting of: Current assets $2,122, principally cash $2,022; tangible property, less depreciation, $85,932; and prepayments $542. His liabilities were: Notes payable $23,155; mortgage payable $9,819; and sole-proprietorship capital $55,622. His income statements for 1945 and 1946, show net incomes as $10,519 and $9,336, respectively; and for the first 6 months of 1947 net income, before depreciation, of $4,317.

Northeastern's balance sheet as of June 30, 1947, shows total assets of $500 composed entirely of cash, and on the liability side capital stock $500. Its pro forma balance sheet giving effect to the proposed purchases as of June 30, 1947, shows assets aggregating $70,000, consisting of: Cash $9,878; carrier operating property $40,122; and intangible property $20,000. Its only liability would be: Capital stock $70,000. In accordance with our usual practice in similar transactions the accounting reflected by the pro forma balance sheet will not be approved at this time, but will be reserved for consideration and approval upon submission of the related journal entries.

At present Finley interchanges approximately 40 percent of his passengers with Southwestern at Kingdom City. The proposed unification of the rights in Northeastern would eliminate such interchange, and would result in accelerated schedules between Jefferson City, the