Early annual reports - 1967, 1968

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Otto Vondrak
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Early annual reports - 1967, 1968

Post by Otto Vondrak » Wed Jan 30, 2008 3:00 pm

I was browsing eBay found a neat item- a 1968 Annual Report. Since I like collecting the "firsts" and "lasts" of things, I bid, and won. Neat! In the same day, I found a listing for a 1967 Annual Report. Wait, Sixty-Seven? But Penn Central started on Feb 1, 1968, right? Or did I miss something in regards to the corporation versus the railroad?
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Post by charlie6017 » Wed Jan 30, 2008 4:50 pm

I noticed those items on ebay as well.............I was scratching my head on the 1967 report.
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Otto Vondrak
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Post by Otto Vondrak » Wed Jan 30, 2008 5:12 pm

Well, they are coming my way! I assume once I read them, all will become clear...
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Post by Dieter » Thu Feb 07, 2008 2:28 pm

67? Sounds like a typo. Did you figure it out yet?

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Post by conrail_engineer » Thu Feb 07, 2008 2:38 pm

It may be correct.

The Penn Central was basically the Pennsylvania Railroad buying the New York Central...I don't know if it was for a stock exchange or for cash, but it was acquisition, not merger. And the pieces were in place for some time before ICC approval...I don't know the date on that, either, but it was certainly some months at least before January 1968. So they knew it was gonna happen in 1967. As the Penn Central was a series of holding companies, some to divest and some to diversify, certainly the parent company was operating under the name of Penn Central at some point in 1967.

I guess it would depend on whether the report was FOR the fiscal year 1967, in which case it would have been presented to shareholders in 1968, probably after the reorganization; or whether it was the report GIVEN at the 1967 shareholders' meeting. In which case it would depend on whether the parent company was operating under the name Penn Central or not.

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Post by Otto Vondrak » Thu Feb 07, 2008 2:51 pm

They should be on my doorstep any day now (media mail). I definitely purchased TWO different reports- one 1967, one 1968. I know that the PC stock certificates were printed up years before the actual merger took place.

As soon as I get the annual report, I'll report annually on what I found out!!

-otto-
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Post by ricebrianrice » Tue Feb 12, 2008 7:39 am

Sometimes business fiscal years end funny.
The last place I worked, our business year ended in September so for example, any business completed between October 07 - September 08, was Fiscal Year 07, and the annual report that came out in November of 08, was for Fiscal Year 07, so the 1967 Penn Central Report could be for February 1968.

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Post by Otto Vondrak » Thu Feb 14, 2008 2:28 pm

The annual reports arrived- what an eye opener. My entire world view has changed. Good thing I'm reading "The Men Who Loved Trains" at the same time. That book opened my eyes to the background of events leading up to the Penn Central merger. The way I always understood things, the NYC and PRR merged on February 1, 1968, forming Penn Central. The way I understood it, two companies merged and made one new company. WRONG. The "merger" was actually the PRR acquiring or buying out the New York Central. Pennyslvania Railroad merely changed their name to Pennsylvania New York Central Transportation Company, or Penn Central for short. The Pennsylvania Railroad traces their existence all the way back to 1846. Which explains a lot...

The 1967 Annual Report is identified as the 121st Annual Report of the Pennsylvania New York Central Transportation Company in the table of contents. That would support the continuity of the original Pennsylvania Railroad to 1846. The letter to the stockholders from Saunders and Perlman is signed March 15, 1968. Because the two companies are reporting together, that would lead me to believe the acquisition of NYC happened prior to Feb 1, 1968, and that the Feb 1 date is merely the day railroad operations were combined.

The 1968 Annual Report is identified as the 122nd Annual Report of the Penn Central Company, again supporting the 1846 start date of the PRR. The letter to the stockholders is signed March 17, 1969.

Both annual reports describe the Penn Central's aggressive program of diversification that reads like a prospectus of a cheap penny-stock scam. While it managed to prop up the PC stock price for a few years, we all know how that ended in June 1970. More details from inside the annual reports when I get a chance.

This leads me onto my quest for reports from 1969 (when the New Haven was force-fed into the system), and of course 1970 when the whole house of cards came down.

-otto-
Last edited by Otto Vondrak on Mon Feb 18, 2008 12:07 pm, edited 1 time in total.
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Post by charlie6017 » Fri Feb 15, 2008 5:29 pm

Thanks for the summary, Otto---very interesting! ;-)
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Post by Otto Vondrak » Tue Mar 04, 2008 2:13 pm

I'm currently working on a project where I am recreating the Penn Central annual report as a PDF. This means retyping all the text. I won't be reproducing the financial statements, just the editorial portion.

-otto-
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lucid-one

Re:

Post by lucid-one » Sun Aug 10, 2008 1:38 pm

Otto Vondrak wrote:The way I always understood things, the NYC and PRR merged on February 1, 1968, forming Penn Central. The way I understood it, two companies merged and made one new company. WRONG. The "merger" was actually the PRR acquiring or buying out the New York Central. Pennsylvania Railroad merely changed their name to Pennsylvania New York Central Transportation Company, or Penn Central for short. The Pennsylvania Railroad traces their existence all the way back to 1846. Which explains a lot...
Well, actually, this was just a corporate administrative necessity, and doesn't indicate what kind of transaction occurred. New York Central was chartered in Delaware, while PRR had its corporate home in Pennsylvania. The newly merged entity had to be somewhere (and only one "somewhere" is allowed). Pennsylvania made the most sense in many ways -- thus that was made part of the deal. For one thing, having the successor to the "Standard Railroad of the World" chartered anywhere but Pennsylvania was probably a non-starter.

So was it a merger or a corporate takeover? The discrimination is slight and mostly irrelevant. The combined assets came under the ownership of a single entity after the proper financial exchanges were made (and the lawyers got their cut!). Practically every merger or acquisition is different, depending on what the situation is and what is agreed upon by the respective boards of directors for the entities being combined (and, of course, approved by shareholders).

In this case, one corporation ceased to exist, and the other continued on with a new corporate identity. I think the bankers involved probably liked this arrangement better (I'm thinking primarily of Mellon), although as we know, they all too soon lived to regret it.

In reality it makes no difference, as how you "spin" the transaction depends on which camp you were in at the time and how you viewed it. Perlman clearly felt taken over operationally, as that was his part of the whole thing.

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Re:

Post by JimBoylan » Mon Aug 11, 2008 3:40 pm

Otto Vondrak wrote:The "merger" was actually the PRR acquiring or buying out the New York Central. Pennyslvania Railroad merely changed their name to Pennsylvania New York Central Transportation Company, or Penn Central for short.
So, NYC stockholders got cash and/or PC stock in exchange for their shares,while PRR stockholders just stayed as they were? Possibly PRR stockholders could ask the PC Stock Transfer Agent for a replacement stock certificate with the new name but the same number of shares on it?

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Re: Early annual reports - 1967, 1968

Post by lvrr325 » Fri Aug 22, 2008 5:42 am

That's also how the PRR took control of the Lehigh Valley, stockholders got one share of PRR for like 2 5/8ths shares of LV, or some goofy figure like that (I think I posted the exact number in a thread on the LV board if anyone wants to look it up).

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