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Motor Freight, an Arkansas corporation, operates between Little Rock and Monroe, La., via Pine Bluff, Monticello (two routes between Pine Bluff and Monticello), and Hamburg, Ark., and Bastrop, La., pursuant to certificates issued February 5, 1937, in No. MC-1206. In Arkansas Louisiana M. Frt., Inc., Ext.-N. Little Rock, Ark., 20 M. C. C. 37, Motor Freight was authorized to extend its operations generally between Little Rock and North Little Rock, Ark., and between Monroe and West Monroe, La.

Applicants are jointly controlled through stock ownership by George Kimbel and N. F. Schilling, such control of Motor Freight having been acquired by purchase of 80 shares of its capital stock, pursuant to authority granted in Kimbel and Schilling-Control-Ark. La. Motor Frt., Inc., 15 M. C. C. 766. The remainder of Motor Freight's stock is owned by Joe N. Owen, 18 shares, Elzora Owen, 1 share, and J. F. Owen, 1 share. Schilling also controls Dealers Transport Company, a motor-vehicle common carrier and contract carrier of automobiles and automobile parts, the operations of which are described in the case last cited. The latter's operations as a contract carrier are not competitive with applicants' operations. In a pending section 213 application, Schilling seeks authority to acquire control of another motor carrier operating in Tennessee.

By agreements of March 27, 1939, as part of the merger plan, Kimbel Lines secured options to purchase the entire capital stock of Motor Freight, 100 shares, from its present stockholders for $40 per share. An aggregate cash payment of $400 was made, and the remainder of the consideration is evidenced by 36 notes for $100 each to be paid, beginning 30 days after approval herein, in 6 monthly installments of $300, and thereafter in 9 monthly installments of $200. Under the merger plan, which has been authorized by the directors of each applicant, Kimbel Lines would acquire all assets and assume all liabilities of Motor Freight, after which the latter's stock would be canceled and the corporation dissolved.

Kimbel Lines' balance sheet as of April 30, 1939, shows assets aggregating $145,475, consisting of: Current assets $40,884, principally accounts receivable $31,777; carrier operating property, including approximately 91 motor vehicles, less depreciation, $93,553; intangible property $1,000; and deferred debits $10,038. Liabilities were: Current liabilities $29,950, principally notes and accounts payable $21,337; equipment and other long-term obligations $54,957; deferred credits

In No. MC-FC-10055, on May 16, 1938, certificates issued in No. MC-1206 to Joe N. Owen, doing business as Monticello Truck Line, were transferred to Motor Freight. No. MC-F-1028, N. F. Schilling-Control-M. & N. Freight Lines, Inc.

$1,200; capital stock $2,000; and surplus, unearned $1,000 and earned $56,368. Its income statements for 12 months ended July 31, 1937, 5 months ended December 31, 1937, 7 months ended July 31, 1938, and 9 months ended April 30, 1939, show deficits of $5,480 and $8,926 and net incomes of $16,737 and $49,827, respectively.

Motor Freight's balance sheet as of April 30, 1939, shows total assets of $9,816, consisting of: Current assets $3,168, principally accounts receivable $2,544; carrier operating property, including approximately seven motor vehicles, less depreciation, $5,000; and deferred debits $1,648. Liabilities were: Current liabilities $8,670, principally accounts payable $7,698 (including approximately $4,700 owed to Kimbel Lines); mortgages payable $1,723; capital stock $300; and surplus (debit balance) $877. Its income statement for 10 months ended April 30, 1939, shows net income, before provision for Federal income tax, of $625.

Pro forma balance sheet of Kimbel Lines as of April 30, 1939, giving effect to the proposed merger, shows assets aggregating $154,335, consisting of: Current assets $39,097, principally accounts receivable; carrier operating property, including approximately 98 motor vehicles, less depreciation, $98,553; intangible property $5,000; and deferred debits $11,685. Liabilities were: Current liabilities $37,664, principally notes and accounts payable, including $3,600 deferred payment on acquisition of Motor Freight stock; equipment and other longterm obligations $56,680; deferred credits $1,200; capital stock $2,000; and unappropriated surplus, unearned $1,000 and earned $55,791.

The operations of Motor Freight, approximately 250 miles, are complementary to those of Kimbel Lines, the connecting point being Little Rock. Merger of the properties would permit reduction in operating expenses by elimination of duplicate accounting and other functions. Interchange at Little Rock would be unnecessary and through movement of freight between points on the respective lines would be facilitated. The merger is in line with our purpose to encourage corporate simplification.

As previously indicated, if the merger is consummated, Kimbel Lines would increase its intangible-property account by $4,000. Subsequent to the hearing, Kimbel Lines advised that it proposes to amortize this amount over a period of 10 years, and our findings will be conditioned accordingly.

We find that merger of the operating rights and property of Arkansas Louisiana Motor Freight, Inc., into Kimbel Lines, Inc., for ownership, management, and operation, including the right to certificates in No. MC-1206 and No. MC-1206 (Sub-No. 1), upon the terms and conditions above set forth, which terms and conditions are found

to be just and reasonable, will be consistent with the public interest, and that the conditions of section 213 have been or will be fulfilled; provided, however, that if the authority herein granted is exercised, Kimbel Lines, Inc., shall amortize in equal annual amounts over a maximum period of 10 years, commencing with the date of consummation herein, the amount of increase in the "Other Intangible Property" account as result of the instant transaction, in a manner consistent with the provisions of the uniform system of accounts for class I motor carriers, or in lieu of amortization in any year of the 10year period, Kimbel Lines, Inc., may write off to surplus, in accordance with said accounting provisions, one-tenth or more of the amount of such increase in the "Other Intangible Property" account, so as to remove from such account within said 10-year period, either through amortization or write-off, the entire amount of the increase.

An appropriate order will be entered.

35 M. C. C.

No. MC-F-843

N. F. HUBER ET AL.-PURCHASE-CENTRAL MOTOR FREIGHT LINES, INCORPORATED

Decided December 13, 1939

Findings in prior report, 25 M. C. C. 586, modified to authorize Huber & Huber Motor Express, Inc., in lieu of N. F., William C., and Louis H. Huber, doing business as Huber and Huber Motor Express, to purchase certain operating rights of Central Motor Freight Lines, Incorporated. Condition imposed. Additional appearance: John R. Turney for applicants and suc

cessor.

SUPPLEMENTAL REPORT OF THE COMMISSION

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

In the prior report, 25 M. C. C. 586, purchase for $1,500 by N. F., William C., and Louis H. Huber, partners, of Louisville, Ky., doing business as Huber and Huber Motor Express, of certain operating rights of Central Motor Freight Lines, Incorporated, of Knoxville, Tenn., was approved and authorized on October 5, 1939. By orders entered on October 21, 1939, in No. MC-FC-12474, Huber & Huber Motor Express, Inc., a newly formed Delaware corporation, with operating office at Louisville, and herein called the corporation, was authorized to succeed to the operating rights of the partnership. The corporation now petitions for leave to intervene herein, which petition is hereby granted. The corporation further petitions to be substituted as successor in interest, and in lieu of the partnership, so far as the authority granted by the findings in our prior report is concerned, the corporation stipulating that it adopts the record already made and that the terms and conditions of the transaction otherwise are the same.

The corporation's balance sheet, giving effect to the proposed transaction, shows assets aggregating $515,550, consisting of: Current assets $152,750, including cash $68,600 and accounts receivable, less reserve for uncollectible accounts, $64,466; carrier operating property, less depreciation, $329,250; intangible property $11,003; and deferred debits $22,547, principally prepayments $20,314. Liabilities were: Current liabilities $79,018, chiefly notes payable $34,133 and

accounts payable $38,097; debentures, 10-year convertible, $300,000; reserves $2,736; capital stock $133,800; and surplus (debit balance) $4.

The corporation has indicated its willingness to amortize the purchase price over a period of 5 years, and our findings will be appropriately conditioned accordingly.

We find, the findings in our prior report being modified accordingly, that purchase by Huber & Huber Motor Express, Inc., of the operating rights of Central Motor Freight Lines, Incorporated, as described in the prior report, including the right to operate pending determination of the latter's "grandfather" application in No. MC-19773, and the right to a certificate with respect to such rights which may be confirmed as a result of that application, herein authorized to be unified with rights which may otherwise be confirmed in the corporation, with duplications eliminated, upon the terms and conditions set forth in the prior report, as modified herein, which terms and conditions are found to be just and reasonable, will be consistent with the public interest, and that the conditions of section 213 have been or will be fulfilled; provided, however, that, if the authority herein granted is exercised, the corporation shall amortize in equal annual amounts over a maximum period of 5 years, commencing with the date of consummation herein, the amount of increase in "Other Intangible Property" account as result of the instant transaction, in a manner consistent with the provisions of the uniform system of accounts for class I motor carriers, or in lieu of amortization in any year of the 5-year period the corporation may write off to surplus, in accordance with said accounting provisions, one-fifth or more of the amount of such increase in "Other Intangible Property" account, so as to remove from such account within said 5-year period, either through amortization or write-off, the entire amount of the increase. An appropriate order will be entered.

35 M. C. C.

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