I v - The P&WV Hi-Line

37cExhibit 5 (Trend of Debt, Fixed Charges and Working Capital) showsthat in 1938 Working Capital showed a deficit of $3,069,260, while at the endof 1952 Working Capital was $3,193,.376. However, as indicated by t,he footnotes,these figures require some explanationeIn 1938 and 1939 the Company had outstanding nearly $3,500,000 inshort-term notes which were carried as Current Liabilities. In 1940, in viewof the unsatisfactory situation exLsting with respect to this indebtedness, aplan of financial readjustment was consummated by the issuance of $7,400,000Five Year 4% Secured Notes dated July l~ 1940. The proceeds of this Issuewere used to payoff loa.'1s from Reconstruction Finance Corporation amountingto $4,176,607 and the short-term indebtedness above mentioned. Working Capitalas of Dece 31, 1940, following the financial readjustment was $279,076,while as of August 31, 1953 it was $3,219~863oThe decline in Working Capital for 1945 was brought about by thefollowing transactions~1. Retirement of the Five Year 4% Secured Notes issued in 1940.2. Purchase of Pittsburgh Terminal Railroad and Coal bonds.3. Retirement of a portion of P&WV, First Mortgage bonds.The Five Year Notes maturing in the amount of $6,627,000were retired in a large part through the proceeds of the sale ofWheeling & Lake Erie Railway stocks which had in part representedcollateral for the obligation. In connection with the retirementof the notes a short-term borrowing of $1,000,000 was effected, ofwhich $900,000 remained outstanding at Dec. 31, 1945~In 1945 the Company purchased bonds of Pittsburgh TerminalRailroad and Coal Corporation in the face amount of $1,913,000,at a cost' of $1,266,000. This Company had assumed the liabilityof the West Side BeH Railroad Company ,as guarantor of PittsburghTerminal Coal Corporation's bonds. The Pittsburgh Terminal CoalCorporation defaulted interest due Jan. 1, 1939 on its First Mortgagebonds of which $2,573,000 principal amount remained outstandingas of Dec. 31, 193ge In April 1939, Receivers were appointed andin due course Pittsburgh Terminal Coal Corporation was liquidated.The li.abili.ty of tms Company in respect of Pittsburgh TerminalCoal Corporation bonds had on ,its general balance sheet been indicat.edas a cont.ingent liability only, and was not included in longtenn debt as such. Nevertheless, the Railway Compa.T1Y was compelledto assume the interest payments after the coal company defaultedand subsequently, after protracted litigation, was required to paya substantial portion of the coal compa:nyl s liabilities.The Company also purchased in 1945" $315,000 pri.llcipalamount of its awn First Mortgage bonds at a cost of $274~175.