Appendix — United States v. General Dynamics Corp.

Supreme Court brief1974

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Text

FILED

APPENDIX - OCT 10 Is73

Sng Gt oh Mth aes

Octoser Term, 1973.

No. 72-402

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

niet -yobnasta herentwmrom dos mee

Oe eee a et tae

Se ee eee

rent ne re og a a NTT SET Corporation

1 5

6— Annual Report of General Dynamics Corporation

1965

ee ee

24— Chart entitled “The United Electric Coal Com-

: panies Fixed Assets, Long Term Indebtedness,

Working Capital and Net Assets or Stockholders

Equity 1940 to 1967”

RRR RR RR

INDEX

25— Chart entitled “The United Electric Coal Com-

35— City, Water, Light & Power (Springfield) letter to

nations by District of Origin, ssa ng to 1967" ____

54— Freeman Coal Mining Corporation; Shipments

of Coal in Tons from the Crown Mine to Customer

Mining Corporation; Shipments of

Coal in Tons from the Orient No. 8 Mine to Cus-

tomer Destinations, 1967

2&8838 68 &

GX 656— Freeman Coal : of

Coal in Tons from the Orient No. 4 Mine to Cus-

tomer 1967 75

GX 57— Freeman Coal $ of

Customer

Gx 60— The United Electric Coal Companies; Shipments ‘

GX 61— Chart entitled “Total Coal Consumption in Tons

Gx 62— Chart entitled “Production of Coal in Illinois by

the Leading Companies and Their Subsidiaries for

the 1957 Calendar Year” 81

Gx 63— Chart entitled “Production of Coal in Illinois by

the Leading Companies and Their Subsidiaries

for the 1958 Calendar Year” 82

Gx 64— Chart entitled “Production of Coal in Illinois by

the Companies and Their Subsidiaries

for the 1959 Calendar : 83

Gx 65— Chart entitled “Production of Coal in Illinois by

the Leading Companies and Their Subsidiaries

for the 1960 Calendar Y : 84

GX 66— Chart entitled “Production of Coal in Illinois

the Leading Companies and Their Subsidiaries for

the 1961 Calendar Year” 85

Gx 67— Chart entitled “Production of Coal in Illinois by

2 the Leading Companies and Their Subsidiaries for

the 1962 Calendar Year” xt RB

Gx 68— Chart entitled “Production of Coal in Mlinois by

the Leading Companies and Their Subsidiaries ri

for the 1968 Calendar Y : 87

Gx 69— Chart entitled “Production of Coal in Minois by

the Leading Companies and Their Subsidiaries

for the 1964 Calendar Year” __ Bhs Ce 88

Gx 70— Chart entitled “Production of Coal in Minois by

the Leading Companies and Their Subsidiaries

for the 1965 Calendar Year” 89

;

$3e\ 2

f =}

“4

107

111

114

117

118

to Department of Justice dated October 20, 1966.

GX 135— March 26, 1970 Petition of Commonwealth Edison

RE gee Ee EO” y

Barron’s, October 18, 1969 189

GX 253— Article entitled “Nuclear Power Economics,” 1968-

1969 Report by Philip Sporn to the Joint Con-

gressional Committee on Atomic Energy, re-

printed in CCH { 8043 ise _/

Defense Exhibits

DX 1— October 9, 1957 memorandum from Frank Kolbe

to R. J. Hepburn re punch mining 197

DX 2— October 18, 1957 letter from J. M. Morris to

Frank Kolbe re Northern States Power Company,

Displacing gas with coal 198

DX 3— June 19, 1958 letter from A. J. Christiansen to

A. H. Truax with three page attachment... ==s-—:199

DX 4— July 1, 1958 letter from J. M. Morris to Frank

Nugent 204

DX 5&— July 11, 1958 letter from R. J. Hepburn to Frank

Kolbe with two page attachment 206

DX 6— August 4, 1958 letter from “President” to Mr.

Justin Potter __ 209

DX 7— November 21, 1958 Wall Street Journal article

“General Dynamics Seeks To Acquire Chicago

INDEX

&—~ December 11, 1958 letter from Geo. Robert Boller

to F. F. Kolbe with one page attachment.

Pr eae + orga

1i— May 27, 1959 letter from R. J. Hepburn to F. F.

12— October 2, 1959 Paul Weir Co. report to F. F.

13— May 27, 1960 letter from T. H. Latimer to R. J.

Hepburn

14— August 23, 1960 letter from J. M. Morris to

C. Evans Parks, Iowa Southern Utilities Co. ___

— a. 1960 letter from J. M. Morris to

sn Etiaidr teachin ae

J. M. Morris

17— November 15, 1961 letter from J. M. Morris to

H. L. Mann

18— June 12, 1962 memorandum from R. J. Hepburn

to J. M. Morris re Preliminary Report Sunshine

Coal Property, Centerville, Iowa

19— November 30, 1962 letter from H. L. Mann to

Robert J. Hepburn

20— December 10, 1962 letter from Robert J. Hepburn

to H. L. Mann re Iowa Coal Field

ges | he wanan geod grays ommembergers

in eo ok 1964 letter to Frank Nugent enclosing

one page draft letter to Arch Kraakevik of Illinois

Power Co.

23— June 16, 1964 memorandum from Irving Crown to

Frank Nugent with four page attachment... ___

24— June 29, 1965 memorandum from J. M. Morris

to R. H. Inman et al. re Industry field _

25— October 27, 1965 letter from J. M. Morris to

Frank Nugent with one page attachment

26— January 5, 1966 letter from Q. W. Wellington to

J. M. Morris

27— March 8, 1966 memorandum from Dale H. Emling

to J. M. Morris with two page attachment

28— March 14, 1966 letter from J. M. Morris to Frank

Nugent

29— July 13, 1966 memorandum from D. H. Emling to

R. H. Inman

30— July 29, 1966 memorandum from R. H. Inman to

T. H. Latimer, et al.

31— August 9, 1966 memorandum from D. H. Emling

and B. C. Jensen to R. H. Inman re Star Lake

Field, McKinley County, New Mexico =>

Page

212

214

215

216

PURSE EE . GREE

Defense Exhibits :—Continued

DX 82— September 12, 1966 letter from J. Morris to

Frank Nugent

DX 83— October 18, 1966 memorandum between R. H. In-

man and T. H. Latimer

DX 34— July 81, 1967 letter from Jack A. Simon to

Frank Nugent

DX 85— September 31, 1968 four-page coal contract be-

Dx 36— September 5, 1969 letter from John Welsh, Cater-

us g ty study

DX 37— September 12, 1969 letter from John T. Cusack

L. Hedlund

88— 1965 Annual Report Zeigler: Coke Company -

reek fi heres

DX 47— May 29, 1969 letter

Coal

DX 49a— Subpoena Questionnaire form and related court

orders

DX 49— Producer data exhibits, mine characteristics

DX 50— Producer data exhibits, comparison of leading

533

3 SER PEGE E BBeE Ta

producers with other producers 4ll

DX 51— Producer data exhibits, coal characteristics by

protneing. deteiets: 419

DX 52— Producer data exhibits, overburden of strip mines

and depth of deep mines os 447

DX 53— Consumer data exhibits, boiler specifications 458

Dx 54— Consumer data exhibits, types of sales by produc-

ing districts 461

DX 55— Consumer data exhibit, analysis of consumption

and production of coal by freight rate districts__ 462

INDEX

iat

DX 57— 1960 atility use of IMlinois coal .

DX 59— Analysis of potential and actual use of fuels other

:—Continued

Dx IBN oss age nn

cdi

tram Long with attachment

Dx pi age ee gen pete caper heen ape

Dx 7:5 geeabie aid tons Wa eed aie

F received in evidence in FTC Dkt. 8765 in the

matter of Kennecott Copper Corporation

Cement Company to Hugo Sims

Dx 80— Certified copy of respondent’s Exhibit No. 184A-

DX 83—

DX &—

DX 93—

INDEX

Defense Exhibits :—Continued

Si 1968 Anmual Report of Standard OM Company

(New Jersey)

82— Plaintiff's proposed findings of fact ba, Bb, 6b(2).

5d(4) and 5e(3), United States v. Standard Oil

Company (New Jersey

on et al.), Civ. No. 954-64,

D. NJ. (1964)

Plaintiff's

Dynamics .

90— 1969 Annual Report of Commonwealth Edison ___

91— Letter of January 17, 1969 from Preston Kava-

nagh to Security

92— Letter of December 4; 1969 from Preston Kava-

nagh to Security Analysts

Commonwealth Edison: Profile of No. 1, Nucle-

onics Week, April 4, 11, 18 (1968)

94— 1968 Annual Report of Commonwealth Edison

95— “Edison Seek A-site Downstate,” Chicago Daily

News, March 9, 1970

96— Advertisement entitled “Nuclear Power for Chi-

cago,” Chicago Daily News, March 13, 1967

97— Advertisement entitled “Commonwealth Edison

Reports on Chicago’s Air Pollution Problem,”

Chicago Sun Times, July 11, 1969

99— Advertisement entitled “No Smoke. No Dirt.

No Fumes,” Chicago Tribune, February 8, 1970_

a. §

Heep tied:

: wrinti: z

x - INDEX

Defense Exhibits :+~—Continued

DX 100— Advertisement entitled coiens OU thee

)

DX 103— of Coal-Fired and Nuclear Power

Plantsfor’the TVA System, June, 1966

DX 104— Letter of October 17, 1962 from Elmer Hill to

Barton Gebhart

DX 105— Letter of October 18, 1962 from Barton Gebhart

to Elmer C. Hill with two page attachment

DX 107— Central Station Nuclear Plants, AEC Division of

Industrial Participation, March 30, 1970

DX 108— AEC Release N-2, January 13, 1970, re Status

Report on U.S. Civilian Nuclear Power Plants __.

DX 110— Chart entitled “U.S. Utility Orders for Electric

Generating Equipment” ges

ee ee ee,

pores ees tenes A me eth gl

Refining Company to John T. Cusack ==

DX 112— Excerpt from Minutes of Meeting of Board of

Directors of General Dynamics Corporation on

September 30, 1966

DX 113— Excerpts from the Minutes of the Board of Di-

rectors of The United Electric Coal Companies

1959, May 18, 1960, July 15, 1960,

9, 1960, October 28, 1960, March 10,

DX 114— Proxy statement of The United Electric Coal

Companies 1954, 1955, 1956, 1957, 1958, 1959,

1960

DX 116— Nuclear Power Briefing For The Coal igo

»- September 29-30, 1966. USAEC _ igi

DX 138— 1969 Steam-Electrie Plant Factor

1022

1041

1042

1085

1086

1087

INDEX

Areas” .

DX 145— Map entitled “Service Area, Dairyland Power

Cooperative”

DX 146— 1966 Annual Report, Union Electric Company __

DX 147— 1967 Annual Report, Union Electric Company __

DX 148— 1968 Annual Report, Union Electric Company __

Dx 149— Tne gen pre Sap, arrearage

DX 150~ “Fuels and Fuel Transport for Electric Energy,”

DX 144— Map entitled “Investor-Owned Electric Utility |

Service :

“Chicago's

Peril,” Chicago Sun Times, October 19, 1967_

DX 152— Article entitled “Antipollution, Antitrust Bills

Are Signed by Gov. Ogilvie,” Chicago Sun Times,

June 26, 1969

DX 153— Article entitled “Crackdown on Air Pollution!”

Chicago Sun Times, July 14, 1969

DX 154— Article entitled “Edison Cuts Use Of Coal, Re-

duces Air Pollution,” Chicago Sun Times, Novem-

ber 11, 1969

‘DX 155— Article entitled “8 Utilities Face Pollution Probe,”

Chicago Sun Times, November 13, 1969...

DX 156— Article entitled “Clean-Air Edicts Offered In

Council; Dimout Suggested,” Chicago Sun Times,

November 18, 1969

DX 157— Article entitled “Mikva Bill Would Make Air

Pollution A Federal Offense,” Chicago Sun Times,

November 20, 1969

DX 158— Article entitled “Pollution Fight—Edison Tells

Coal Doubts,” Chicago Daily News, December 1,

1969

DX 159— Article entitled “‘Black Diamond’ Boom: Kleen-

burn Coal Mines Enjoy Demand Surge,” The Wall

Street Journal, January 7, 1970

DX 160— Article entitled “Business Bulletin—A Special

Background Report On Trends In Industry And

Finance,” The Wall Street Journal, March 19,

1970

DX 161— Letter entitled “The News That Nobody Prints,”

" Mid-West Coal Producers Institute, Inc.

DX 162— Article entitled “New Ruckus On Foreign-Oil

Imports To Pin Nixon Between Pollution Issue,

Coal Groups,” The Wall Street Journal, March

5, 1970

1141

xii | INDEX

Defense Exhibits :—Continued

DX \N68— Article

Allowed

$1 Approval

ed,” The Wall Street Journal, April 1, 1969—___

DX 169— Article entitled “People Gas Unit Plans To Buy

Canada,” The

INDEX

Defense Exhibits :—Continued

DX 178— Article entitled “Geophysics,” Time Magazine,

July 26, 1968 ___

DX 179— Article entitled “Earth’s Own Power Source,”

Chicago Daily News, January 9, 1969... ___

DX 180— Article entitled “Burning Refuse To Be Used

In ‘Total Energy’ Concept,” The Wall Street

the

Journal, June 28, 1969

DX 181— Excerpt from transcript of Hearings before

: Joint Committee on Atomic Energy,

;

i i

;

gir j

aft

itt

;

Wall Street Journal, January 22, 1969 =...

DX 186— Article entitled “Metal Climax, Ayrshire Sign

Merger Accord—<Acquisition Of Coal Producer

By Metals Firm Valued At Minimum Of $62.6

Million—Boards And Holders To Vote,” The Wall

Street Journal, April 24, 1969

1158

1159

1164

1165

1166

1167

” Philadelphia Inquirer, December 4, 1967_

Heat 1 House With Electricity!”

Dx ee ee entitled “We're Helping Main

Street To Nuclear Power.”

DX 191— Advertisement entitled “This Pollution Was

Caused By Burning Money. How Much Of It Was

Yours?” Fortune, March 1, 1968

DX 192— Advertisement entitled “What’s Gas Energy

Doing To Make Industry Nice To Be Near?”

American Gas Association, Inc.

DX 198— Advertisement entitled “How Nuclear Science

For Complete Chicagoland Plant Site Informa-

tion,” The Peoples Gas Light And Coke Company

And North Shore Gas Company

DX 197— Advertisement entitled “The Perfect Salt Substi-

tute,” American Natural Gas Company

Electrifier—Pretty

Your Own Electricity From Natural Gas.”

1169

1170

1171

1172

1173

1174

1175

1176

1177

1178

1179

1180

1181

1182

1187

1188

1189

1190

1191

1192

1194

1196

. 1197

1198

1199

xvi INDEX

Defense Exhibits ;—Continued

BE = rs ee eee ae ee

Association,

DX 215— “Nuclear Steam-Generation of Electricity: Its

Implication for the Future of Coal Transport by

Railway and Water,” by John C. Spychalski, ICC

Practitioners’ Journal, (July-August, 1967) ___.

DX 216— “The Story of Coal,” The Petroleum Situation

(October 27, 1969 and November 28, 1969) __

DX 218— Chart “The Prime Interest Rate, 1928-

1968,” Daily News, December 18, 1968 _

DF i ee ee eee 1970 from V. H. Clark,

DX 220— Letter dated June 29, 1942 from Frank F. Kolbe

to B. L. Slack

DX 221— Letter dated July 23, 1954 from Frank F. Kolbe

to Herman G. Schenck

Dx 286 tales aaad Tone aa. ade ees Drak © Kolbe

to Nye F. Morehouse

OR Se eee et oot

Pumped—Storage

DX 224 Press release, University of Chicago, January 18,

1970

DX 225— Letter dated May 25, 1960 from Ward B. Cham-

ttorney General, Division,

Department of Justice and exhibit C thereto. __

DX 227— November 1, 1963 Memorandum from R. H. In-

man to R. J. Hepburn re Freeman analysis of

Kerr Mine

DX 228— Excerpts from the Minutes of the Board of Di-

ee eee eee

Corporation ad

DX 230— April 13, 1970 letter from Mr. Allen Van Wyck,

Chairman of the Board of Illinois Power Company,

to Donald G. Kempf, Jr.

Dx ae ae oe ae Bowen, President

Dependability . . . Through MAPP” _

DX 2383— Brochure entitled “Mid-America Interpool Net-

work—MAIN”

Eee 8

INDEX

ela “Shara of Low

mr from Marvin.

i He

jl etn}

a i Rd

vet nie i

idl dni ,

Dx mE

DX 2438— Letter

it HA

xviii INDEX

Deposition Exhibits:

Abrahamson Deposition Exhibit 1—Front Cover of 1967

Annual Report of Wisconsin Power & Light Company

Deposition Exhibit 1A—Back page of 1967

Annual Report of Wisconsin Power & Light Company__

Beck Deposition Exhibit 1—Letter to Antitrust a

Department of Justice, Chicago, Illinois, from C.

Beck dated November 14, 1968

Brazzale Deposition Exhibit 1—Document entitled “Heat-

Burton Deposition‘ Exhibit 1—Document entitled “Solicita-

tion, Offer, and Award Contract GS-05S-4945” issued

August 1, 1967

Camicia Deposition Exhibit 1—Keystone’s Map of the Coal

Fields of the United States

Gallagher Deposition Exhibit 3—Mineral Industry Surveys,

—— Coal and Lignite Distribution, Calendar

ear 1

Griswold Deposition Exhibit 3—Report of the Secretary of

Griswold Deposition Exhibit 4—Second Report of the Secre-

tary of Health, Education, and Welfare to the United

States Congress entitled “Air Pollution Abatement by

Federal Facilities” and dated January 1969 ..._.__-»_-_

Griswold Deposition Exhibit 5—Document entitled “Oper-

ating Experience with Wet-Dolomite Scrubbing” by

J. F. McLaughlin, Executive Assistant, Union Electric

Co., St. Louis, Missouri, and J. Jonakin, Products Man-

ager, Air Pollution Control Systems, Combustion Engi-

neering, Inc., Windsor, Connecticut, presented at the Air

Pollution Control Association Annual Meeting in New

York City on June 22-26, 1969

Jensen Deposition Exhibit 12—Memorandum from Burl C.

Jensen to Mr. R. H. Inman dated June 7, 1965 _...__._

Jensen Deposition Exhibit 13—Memorandum from D. H.

Emling and B. C. Jensen to Mr. R. H. Inman dated June

7, 1966

Kolbe Deposition Exhibit 2—Annual Report of The United

Kolbe Deposition Exhibit 7—Annual Report of The United

Electric Coal Companies 1961

Kolbe Deposition Exhibit 12—Letter to Mr. W. B. Hillery,

unsigned, by the President dated February 27, 1957 ___

1411

1412

1418

1415

1416

1456

1470

1502

1519

1521

1526

1530

1582

1533

Deposition Exhibit from R. H. In-

man to Mr. R. J. Hepburn dated May 10, 1961

Kolbe Deposition Exhibit Report of The United

Kolbe Deposition Exhibit 67—Annual Report of The United

Electric Coal 1954

“Regarding

Need For Additional Stripping Equipment at Fidelity

Mine” dated June 17, 1966 and signed by J. M. Morris.

Kolbe Deposition Exhibit 61—Contract and agreement be-

tween Alcoa and UEC dated September 5, 1956

Kolbe Deposition Exhibit A—Comparison between -

Traer Coal Company and The United Electric Coal Com.

panies

Kolbe Deposition Exhibit E—Notebook entitled “Report on

Froposed Merged Illinois Operations, Truax-Traer Coal

Kolbe Deposition Exhibit L—Letter dated September 12,

Kolbe Deposition Exhibit T—Letter from Mr. LeRoy Keane,

Assistant General Manager of Hercules Powder Com-

pany, to The United Electric Coal Companies dated

June 27, 1956

Kolbe Deposition Exhibit W-1—Letter from Frank Kolbe to

Harry LaViers dated February 25, 1958

1571

=x INDEX

Deposition Exhibits :—Continued

Kolbe Deposition Exhibit W-2—Letter from Harry LaViers

to Frank Kolbe dated March 6, 1958

Deposition

Latimer to R. J. Hepburn dated November 25, 1957 __

Kolbe Deposition Exhibit Y—Memorandum from T. H. Lati-

mer to R. Js dated November 7, 1955

Kurtz Deposition 8—Steam-Electric Plant Factors,

1968 Edition

Kurtz Deposition Exhibit 9—Bituminous Coal Facts 1966 __

Kurtz Deposition Exhibit 10—Bituminous Coal Facts 1968 __

Latimer Deposition Exhibit 25—Memorandum from T. H.

Latimer to Mr. R. J. Hepburn dated September 25,

1964

Latimer Deposition Exhibit 38—Memorandum from T. H.

Latimer ‘to Mr. R. H. Inman dated July 19, 1966 _.__

Statement and Agreement and Plan of Merger with

respect to Material Service Corporation dated November

24, !

17, 1959 from R. J. Hepburn to Mr. J. M. Morris .__.

Morris Deposition Exhibit 4—Letter from Mr. John M.

Morris to Mr. Frank Nugent dated January 10, 1966 __

Morris Deposition Exhibit 5—Letter from J. M. Morris to

Mr. Frank Nugent dated March 14, 1966 _.__ ___ 4

Morris Deposition Exhibit 14—Letter dated May 3,

Deposition

burn to Mr. J. M. Morris dated January 24, 1961 _____

Morris Deposition Exhibit 832—Memorandum from R. J.

Hepburn to Mr. T. J. Tarzy and Mr. J. M. Morris dated

February 24, 1960

1676

Morris Deposition Exhibit 85—-Memorandum from R. J. Hep-

burn to Mr. J. M. Morris dated July 17, 1962

1689

1959 <1

Nugent Deposition Exhibit 2—Financial : Freeman

Coal Mining Corporation; Year Ended 81,

sat Dalai Exhibit 8—Financial Reports: Freeman

Nugent iS

Coal Mining Corporation; Year Ended December 81,

1961

N t Exhibit 4—Financial Reports: Freeman

anna a ~s

1962

Nugent Deposition Exhibit 5—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December $1,

1963 __

Nugent Deposition Exhibit 6—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December 31,

1964

1691

1753

xxii INDEX

Deposition Exhibits :—Continued

Nugent Deposition Exhiibt 7—Financial Reports: Freeman

a RR TESTE Dy Year Ended December 31,

Nugent Deposition Exhibit 8—Financial Reports: Freeman

Po i ENT Year Ended December 31,

itdipeap- Dereibiieds Saal 9_iinadee Kadota: Freeman

ee te ee Year Ended December 31,

Nugent Deposition Exhibit 11—Annual] Report of the Chi-

OR ee ee

Nugent on Exhibit 16—Advertisement of Freeman

someday Pretec emt Row PE reso giao andes

Nugent Deposition Exhibit 17—Advertisement of The United

Electric Coal Companies in the 1967 Keystone Coal

Buyers Manual

Nugent Deposition Exhibit 19—Advertisement of The United

Electric Coal Companies in the 1968 Keystone Coal

Buyers Manual

Nugent Deposition Exhibit 20—Advertisement of The United

Electric Coal Companies in February 1968 issue of The

Black Diamond

Nugent Deposition Exhibit 22—Letter dated February 13,

‘1968 from Reuben L. Hedlund to John T. Cusack re

Dividends Paid to MSC, Freeman, GD on the Stock of

UEC, January 1, 1959 to December 27, 1967 _

Nugent Deposition 29—Annual Report of The United

Electric Coal 1964

Nugent Deposition Exhibit 35—Invitation for Tenders of

Common Stock of The United Electric Coal Companies

by General Dynamics Corporation dated October 5, 1966..

Nugent Deposition Exhibit 88—Map entitled “Shipping Coal

mn Sagal nee ager He. Reon Eo ee a

Illinois, Department of Registration and Education,

State Geological Survey, dated January 1, 1966

Nugent Deposition Exhibit 39—Letter from Tom Tarzy to

Frank Nugent dated December 11, 1964 and Chart Show-

Sane Coal Consumption by Utility Plants,

Companies Meeting

held October 28, 1960 re Capital Appropriation for UEC_.

Nugent Deposition Exhibit A—Letter from Frank Kolbe to

Henry Crown dated October 9, 1956

1772

1774

1776

1786

1793

1794

1796

1797

INDEX

Deposition Exhibits :—Continued

Pedersen Deposition Exhibit 5—United Electric Coal Com-

panies Computation of Provision for Federal Income

Taxes, Month of October 1966 and Ten Months Ended

October 31, 1966

Redard Deposition Exhibit 1—Keystone Steel and Wire Com-

ee ee ee

Simon Deposition Exhibit 1—Simon, J.A., An Evaluation of

Illinois Coal Reserve Estimates, 1968

Sloane Deposition Exhibit 1—Unsigned letter from the Sec-

retary of the United Coal Companies to Mr. Robert 8.

Overbeck dated January 21, 1963

Steiner Deposition Exhibit 1—VITA, Peter O. Steiner dated

August, 1969 ‘i

Steiner Deposition Exhibit 2—U.S. v. General Dynamics,

et al., Memorandum of Expected Testimony of Peter O.

Steiner, Professor of Economics and Law, University of

Michigan dated August 14, 1969

Terleke Deposition Exhibit 2—Mid-West Coal Producers

Institute, Inc. Report of Mine Performance, 1957-1958__

Terleke Deposition Exhibit 11—Mid-West Coal Producers

Institute, Inc. Report of Mine Performance, 1966-1967__.

Weir Deposition Exhibit 1—Shipping Coal Mines (Map),

Illinois, Indiana, West Kentucky. ___

Weir Deposition Exhibit 8—Memorandum from R. H. In-

man to Mr. R. J. Hepburn dated August 5, 1959 .._._.__

Weir Deposition Exhibit 19—Brochure entitled “Paul Weir

1887

— a

Gx 1 Annual Report of General Dynamics Corporation 1960

GENERAL DYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET

Assets : 1960 1954

CURRENT ASSETS:

OOD os cen Ns has vines ines clbcccedeseseecescdnnkne $ 51,009,386 $ 66,301,747

Marketable securities, at cost ....... 2.2... 0 cccccccccecccccccccnce 2,173,470 3,348,683

Accounts receivable—United States and Canadian Governments ..... 24,583,768 30,103,321

Other trade receivables, less reserves ............--eeccecceceeeee 72,850,254 51,618,615

Refundable United States income taxes ................--.0e0e0e0e 25,300,000 -

Principally on aircraft and ship contracts in process’............... 283,850,589 279,635,448

Inventories, at the lower of cost or market,

less advance pues cid subi 210,951,625 205,599,099

Prepaid ON as ope SAMBA | 859852

Total current e660. ...... 0... .ccccccceevcccccccccccecececce $626,165,733 $640, 145,435

OTHER ASSETS:

Investments and advances, including unconsolidated ,

cubeldtaries of S407RA18 ts 1000 oat ABE eovevccvece $ 15,396,525 $ 14,519,193

Receivables not currently due and other assets including

used aircraft (at cost less reserves) ...........06.cccccececcccece __ 963,979 23,716,878

$ 24,762,504 $ 38,226,071

PROPERTY, PLANT AND EQUIPMENT, at cost:

Land and buildings ...........scersecsseee $ethduwenvccroccessbis $129,999,721 $13,890,642

Machinery and equipment ................ccceccccccccccecceccees 232,228,643 _ 204,053,238 :

. $362,228,364 $327,943,880

Less—Depreciation, amortization and depletion ........ seesceeeecee 170,768,853 145,031,137

$191 450,511 $182,912.74 *

fase | eee

The accompanying notes are an integral part of the above statement.

STATEMENT OF CONSOLIDATED INCOME

FOR THE YEARS ENDED DECEMBER 31, 1860 AND 1958

omg MOteS AW ee tere pe oO Owe adore Piatemen(

STATEMENT OF CONSOLIDATED INCOME

POR THE YEARS ENDED DECEMBER 31, 1961 AND 1960

The scoomperying notes are an integra! pert of the above sta omen

zee

Assets 1962

CURRENT ASSETS:

Cash $ 35,423,469

Marketable securities, at ccost 9,620,912

Accounts receivable — Unifted States and Canadian

Governments 21,193,807

Other trade receivables, lesss reserves ______. 66,697,118

Refundable United States jincome taxes __. =

Unreimbursed expendituress and estimated

cost reimbursement amd long-term *

process

Inventories, at the lower of ccost or market, less advence

and progress payments___. 138,040,674

ee eal cent el aRATES

Investments (at cost) and | advances, uncon

solidated subsidiaries cof $4,536,370 in and

$4,616,370 in 1961 $ 12916212

Receivables not currently due and other assets, less

_ * feserves

Land and buildings, at cosst. $141,638,816

The sccompanying notes sre an integra pert of the shows stete ~ert

$ 13,007,639

Gx 4 Annual Report of oe Corporation 1963

bd ee

CONSOLIDATED BALANCE SHEET ocecemeen 31, 1963 AND 1902

ng notes are on integra! pert of the shows statement

eee

GX 5 Annual Report of General Dynamics Corporation 1964

CONSOLIDATED BALANCE SHEET December 31, 1964 and 1963

Unreimbursed expenditures and estimated profits on cost reimbursement

and long-term contracts in process (Note 1)

Inventories, at the lower of cost or market, less advance and progress payments

Investments (at cost) and advances, including unconsolidated subsidiaries of

$4,981,250 in 1964 and $4,902,153 in 1963 (Note 6)

Receivables not currently due and other assets, less reserves

‘The sccompanymg notes are an micgrai pari of the sbove statement.

Gx 6 Annual Report of General Dynamics Corporation 1965

Consolidated Balance Sheet December 31, 1965 and 196

Assets ‘ 1965 1964

Current Assets: ‘

Cash $ 14,553,533 $ 33,849,501

Marketable securities, at cost 8,415,627 28,917,406

Accounts receivable — United States and Canadian Governments .....................--- -- 22,562,514 12,082,289

Other trade receivables, less reserves 85,770,215 74,959,608

Unreimbursed expenditures and estimated profits on cost reimbursement

and long-term contracts in process (Note 1) — 136,700,014 136,408,996

Inventories, at the lower of cost or market, less advance and progress payments... 155,460,411 116,610,178

Prepaid expenses : 5,920,741 4

Total current assets $429,383,055 $407,141,178

Other Assets:

investments in and advances to unconsolidated subsidiaries (Note 5) ................-... $ 12,371,487 $ 4,981,250

Receivables not currently due and other assets 18,511,400 18,047,301

$ 30,882,887 $ 23,028,551

Property, Plant and Equipment (Note 6):

Land and buildings, at cost $155,960,368 $154,524,777

Machinery and equipment, at cost 386,159,006 350,501,808

$542,119,374 $505,026,585

Less — Reserves for depreciation, etc. 331,959,343 312,140,466

$210,160,031 $192,886,119

$670,425,973 $623,055,848

—— _—_—_—_—_—_4

The accompanying notes are an integrai part of the above statement.

Gx 5 Annual Report of General Dynamics Corporation 1964

annual Report of General Dynamics Corporation 1966

eee

Balance Sreot December 31, 1966 and 1965

ind long sare consteces ia peooees (Blows 1) 181,192,092

ntoris onetrrsemyeT fe. ste re 137,565,138

$ 13,018,123

24,459,928

$ 37,478,051

$167,616,215

ABBR TAA

3597514959

359,760,529

$237,754,430

$733. 535,045

The accompanying notes are aa invegral part of the above statement.

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VOX TROT YA

MET SALES, EARBINGS BEFORE INCOME TAXES, NET EARNINGS,

AED HET EARNINGS AS A PERCENTAGE OF MET SALES

Net Earnings as a

$ 17,432

3s, BH

TH, 596

M2,133

837,208

904, 790

566,571

928 , 605

3,183,445

2,537, 73

1,137,511

2,076, 38

1,529,170

1,470, 562

706,182

684, 932

1,661,556

2,048 , 006

1,548, 66%

1,821, 313

1,862,472

2,629,853

2,455,236

2,6r4, ko2

3,476,676

Year

19k0

ighkl

1gk2

1943

1geh

1965

1946

1947

1948

1949

1950

1951

1952

1953

195%

1955

1956

1957

1958

1959

1960

1962

1963

190

1965

1966

1967

1968

—Basic Analysis—

_ Apsil 28, 1966 (Section 2)

Discard Basic Analysis dated Apsil 29, 1965.

Standard & Peor’s

INDUSTRY SURVEYS

™~

Page C 66 4 Coal

Uiilities Provide Growing Market for Bitumincus

ee aeak ceniion COAL PRODUCTION VS. INDUSTRIAL PRODUCTION |

progress, even though :

fom ether fuels and changing technologics have [7*\— ry

reduced or practically climinated demand in some ~ %

formerly important markets and current output is % a8

some 19% the record high achieved shortly pas —\ Pas

after World War II. In recent years, demand has

been trending upward. Production in 1965 was the. (0°

mendous quantities of low-cost electric $0 [80 hag aha ee

for ‘, commerce, and a high stan- SOURCE OF OATA FEDERAL MESEOVE

dard of personal living. It is an indispensable Table ~

in large-scale economic steel, cement, INDUSTRIAL PRODUCTION VS. COAL PRODUCTION

and chemicals. It is one of the few natural re- In Relatives, 1597-59100

growing

power industry, where the fuel is burned to produce | — :

steam that in turn drives electrical generators. Elec- portation costs diminish coal’s competitive advantage.

ne oe eee supplement coal, rather than Cisplace it entirely.

demand for electric power projected through 1980 is The impact of growing usage of coal in the utility

expected to result im substantial further growth in field has been lessened by losses in other markets,

coal usage, despite competition in some areas from parcicularly railroads and

. y home heating where coal

oil, natural gas, and atomic power. usage has to such an extent that future de~

The longer-range threat to soft coal posed by lines will be relatively small. The steel industry is

nuclear power generation is to be greatest expected to remain 2 major consumer, but gains in

in areas remote from mine where heavy trans- blast furnace efficiency may offset the effects of

Tavle 2

STEAM-ELECTRIC PLANT FUEL CONSUMPTION, BY REGIONS _

SExst West East Wes Total Coma Tota 8 Cun

{ett Drona! of Teus— -,

ee ee a ee ee ee

a Ht re ae om = Bee Re

Sts ae te af i: oe ee

(oe am eae =z mw - 6m ot 450% 8 0 SOS

sow F Be fe ££ Bee EE

fas oe 6 3 a aad ey b & ts im iiss Hs Set

bi 8 $$ & G 8 & Gah He & &

i aman <a 2 iS 1 3 om sir SD a5 233 xe

Be. mw. Ss 2239 Hist S062 3 1

f & i i is Oe ee aa a Hf

Ss f. ei ei BB mR EH

en, Ree tee ae AS ee hy, teas a “ a>. om 5

*Conn. be A . ry Wire ‘Iowa,

fees Se tee ee BEES Uk hs Mace ek ee ae ae es dee

[

ren ny pn

Page C 67

Heddon (GPC) HEAATE, Sdgbaggets qgayes ah ui

tte | ut ath nil | Hal | ein

i mies Hig he Hilti u

it TS Hee Bt Huy cut at ; i

mon ELT TE RIM

eon nn ae fll

ale STL cael

abba te ge! geet TE Usnsaneasan Gf8?

Hig in Hue i} He ere

HAH dint TLE | Pie

aia baby avy lee 3 isSscasesaa

ry et ata HELP) tsa

alt ite flail ermal im

HEHE fei Sut! Muu

a ee ee

Coal

Pise € 6S

—

79045 and 1949, whea strikes cut supplies, and 1958,

when the recession and stiff competition from resi-

dual oil caussd a moderate decline.

‘This national average conceals wide geographical

differences. As indicated in Table 2, growth in clec-

tric utility usage in recent years was greatest in

Mountain district. it ws

Costs of fossil fuels per kilowatt hour

mills nationally, with coal slightly less,

gas roughly the same, and oil at 3.5 mills. Hycro-

when available, is generally some-

i costs

down

Table 6

COAL SHIPMENTS IN 1961 BY TYPES OF MANKETS

y 2 negy Se SRABNEN

Seed Liaties Cohling ak. —— Bal Mise.

Tadusigy, onan mus 6 lS 4

pale is in Set att

iiGeko we 2 & 3 re ae

FPenhody o-- SOO 3 a ne ma

Pittston ......... 3261 2 3 n 10 ws ~

United Flectric .. 535 3 =e 423 = «- 4

tincture Sees ¥ in th a hang which are

* KEL, S

empans SSip Tidadeee NS for 1962; latest re-

for the company

ported. Includes coking. *Great Lakes bunker fuel.

‘Source: Company

edly increase competition from oil, particularly on the

eastern scaboard.

Increases in steam boiler efficiency contributed to

ay rbrersctodhcaa Reed see

over the past ten years, along with i mining

and, more recently, reductions in freight

rates. The amount of coal ‘required to gencrate one

KWH stood at 0.86 pounds in 1965, unchanged.

since 1961 but down from 0.95 pounds in 1955 and

2 in a. the absence of any appre

jable change in thi in regi years, eventua

zmption of the down-trend is expected

with the addition new most of which

Quan aye :

plying 269 and oil 79. Relative to oil

coal’s market position seems likely to be well main-

tained at least through 1980. Of the three fossil fuels,

coal has the most favorable price trend and there is

room for some doubt that reserves of and oil

are sufficient to fill the anticipated si rise in

utility fuel demand. However, after 1970, markets

for all fossil fuels will be subject to some

erosion from nuclear power

its

alth the possible importation

Seti oni could prove in part offsectir:

CONSUM?TION OF BITUMINOUS CO!

In Thoasands

MI, & LIGNITE BY CONSUMER CLASS

as of Ke: ony ot ;

anufactur a ing

ker Fuel ——— - Coke & Sie Nills ——

‘Ebctric’ «Foreign shive « on St Other Retril

Bad Lake tRailread Coke’ Coke & Molling ‘erment Mis. & ler Grand

tikities wevcls (CiasD Plants Plants Mills Total Mitts Minigs Tots! Deliveries Tora!

39s... ri MIT SS RA 2599 92.004 Tae yt S595 $5.64 18.541 319.053 + 3.976

a Po reel NA. 265 \ is re] 15st 8.79 tess IST.T58 19.615 sts

Ide... wae ete NA 16% 20 re! Sou 128 S2.087 173.9 $ VS 409

Ios a XA 12 T2923 730 $1.58: Tie ie 163.053 38.285 SS..774

ISX... 173.69 Tid NA 1.43; T2385 T4385 8.36 7.615 Ti2o 163.27 7.735 7S

Ts... tas oy: is? Ts 338 siser Ms T6487 IT. 35 3,

ee: ie ie i fe HS BE Mf ge Ba fe

Nowe : T.c88 . w= T2475 3.62 7

107... a) Le 8.401 473 304 47 e-4 114.958 6.638 22 86<mais 3.72 412.083

-2 5a.se3 La Le. 4053 301.S70 189 113.162 Ae 3 45.067 422.55:

onected by the Federal Power Cummixsion. tCollest-d by the Associa American uminous coal

: ewbroads uses: included in other mainufcturing and m. after ¥ TIncludcs some coal truck mine to

@rstination. Note: ‘Current Iniustry Surveys for later data. NA—) y

ee S'S. Deparuscat o: Interior, Bureau ef Mines. SSS

Basic Analysis

The Federal Power Commission has estimated

that output of electricity in 1980 will be slightly

more than three times that of 1960. The consumption °

of conl by clectric utilitics is not expected to rise as

rapidly, largely because of the increasing importance

of nuclear power generation, as well as some furthe?

gains in steam plant efficiency. These factors are ex-

pected to reduce coal’s market share to 47% in 1980,

~_sompared with 549 in 1965, Despite this crrosion,

it is evident that the potential for absolute

growth is sizable. Utility coal usage is thus projected

at 500 million tons in 1980, ting an annual

increase of almost 5% from the 243 million'tons of

1965. Current and planned additions e parng :

capacity reinforce this longer-range projection

cabin atahsigen jpreapaliy Mew’ taotanbanal diam

generating capacity totaling 11 million kilowatts was

added in 1965, and current plans call for the installa-

tion of an additional 37.6 million KW by 1969; the

latter is equal to about 16% of the total installed

generating capacity at the end of 1965.

Nuclear Power Generation

Nuclear power at present is not a significant fac-

tor in the total power generation iaontry, i

accounted for slightly less than 1% of the installed

steam capacity at the end of 1965. Nor is it ex-

than power transmitted to the area froma a Penn-

sylvania_mine-mouth station. Similarly, Commox-

pected to seriously affect coal’s growth in this marker~ Steel Industry Demand

through the end of the present decade. However,

recent projections of total ing costs for nuclear

power installations indicate that,

power may become competitive at

tions with fossil fuels (coal, gas and oil) in

eration of electric power.

ain

would contribute to air pollution.

Of the nuclear plants in jon now, the most

successful is the Rowe, Mass., plant of the Yanxee

Atomic Exscraic Co., which has net power costs

of slightly under 10 mills per kilowatt hour, above

the cost obtainable from new conventional ity

in the same area. However, costs of the pms + ag

ter Creek-plant of Jersey Cerrar Power (to begin

operation in 1968) are projected at 3.79 mills per

at operation, well below the costs of a

coal-fired plant at the same location and slightly

2 fe

Phas

Bs ae.

gis]

}

fl x}

ised

qnongnaugey

sa - 4? dea

zaegaazagane

ihe

ad Etseezeaney

a peOmrana

2 iis

Table $

U. S, EXPORTS OF BITUMINOUS COAL

Te Thotsands of Net Tons

MS,

iV.

‘e

relative to scrap than do

Oa a longer-ran,

of coking coal although additional quan-

steam grades might be needed for the lige

soelictaapinaeads aliditensdhenivarguatses

hearth furnaces.

In producing one ton of pig iron in a blast furnace,

direct reduction of iron ore may become cconomical- xe & Cental

about 1,310 pounds of coke are used, which is

ly feasible. This would further curtail steel industry

steelmaking faciices which utilize a larger propor-

alent to around 1,900 pounds of coking coal. Coal is

tion of pig iron

Senet steel companies

_ Open

14st

wiih

Hite

EP gt

ME Ht

44%

apt

since 1960.

in home heating

decline in retail consumption

ite

* 4%

945 to 1965;

of coal consump-

tion in the more recent year, down from 21% in 1945.

: Export Markets

the retail market amounted to 4%

tof the Japanese

hile lower

extensive reserves

fluctuations in coal prices. The

‘price structure is based on the grade and quality as

ustralia increasingly attractive.

Prices; Contracts

in demand, labor disturbances, and the availability

_ The level of business activity, seasonal

Ea: |

62° of

or on

abour 106¢ of output in 1965.

Meta

is)

LYS SUPPLY or

aeddacag TEGHEEY

Agsailag Aazasag

PEP ED REE mee HE Oy |

aa PRCHE RE

BEEP EE At aed

rina PCE EY

Sagusce

agzanss

RocuereR

Suuruea

RI8u8E8

Suuckns

tigi :

il tai cr

Table 10

., STESAS, AND Dé

TSUMINCUS COAL

mm ot eo Net Dors

Basic Analysis

aaa BAU gaeY suntan

REEP ET ggd7a4y cites

tidddada sgeaigg "ae

BEEF EE rp] EEL ee) cree

afiasaas aoadgay eotuana i

AGgagsya 2999393 waves j

kidddan dadddnd aie

HIE Ht : rE

| ie a Haat

it HLM

i! Hi

vet Hines

Coal is often sold to utilities under Jo-

CHA TAS Hea uy

iH Hy u itt Helin at Uf

Wl Une eal te

Ht fia HUF i Aa

a8 tye ; 3 ia4i

litte rH He HE a BE

Hl i

Hig

u co Bh

in 3q33499334 G : :

i me i |

42 99899355589 as

Essiuazomiea da

” —, Hi

dull fly

Page C 7:

Productivity

Daily output per man amounted to 16.8 tons in

1964, and was probably in excess of 17 tons for all

of 1965. Expanded utilization of continuous mining

and loading machines has increased output per man-

day by more than 11 tons since the end of World

War II; in the period from 1900 to 1945, only 2.8

tons were added to daily productivity.

High wage rates are a strong incentive for in-

creased usage of power cutters a drills, loading

machines, and all types of conveyors and shuttle

cars. The number of continuous mining machines in

operation increased markedly in recent years; these

now account for about 399% of total underground pro»

duction and further increases are expected. Pick-and

shovel mining has virtually disappeared from under-

mines (except for small non-union opera-

tions) and now only about 496 of coal is cut by hand

and only 12.59 is loaded non-mechanically.

Mechanization of mines has resulted in more for-

eign matter being mixed with coal. When most opera-

tions were performed by hand, miners separated non-

coal elements. To overcome this problem, preparation

plants now clean over 63% of total coal produced,

compared with 28% in 1947 and 8% in 1930.

Productivity has always been high in strip mines

because of the size of the equipment and the rela-

tively few men needed for operations. rose

from 15.5 tons per man day in 1945 to 29.3 tons in

1964, while underground productivity increased from

§ tons daily to 14 tons. Some strip mines have 2 pro-

duction rate of above 50 tons per man. These mines

are mostly in the Midwest, where lower grade coal

requires higher productivity for profitable operations.

Underground Blines Vs. Strip Mines

Underground mines supplied 66% of total out-

pet in 1965, with strip and mines accounti

31% and 3%, respectively. In und

fo Table 11

/ ZONNAGE OF COAL

HANDLED OR TREATED MECHANICALLY

Goal

Table 12

SIGNIFICANT STATISTICS OF THE BITUMINOUS

COAL INDUSTRY

Oy BS mee ipril

tive on April 1, 1964, and January 1,

“Source: U.S. Bureau of Mines.

’ Table 13

ACTIVE BITUMINOUS COAL MINES

*Based on 280 days a year.

Source: U.S. Bureau of Mines.

mining, coal is cut, blasted loose with explosives or

compressed air, loaded on conveyors or cars and car-

ried up to the surface. Continuous mining machines

and accessory equipment consolidate these operations

and allow 2 more uninterrupted flow of coal from the

ining faces as well as much higher productivity.

In underground production, generally about 50% of

the coal is left to support mine roofs; in some areas,

better roof conditions allow removal of more than

80% of the coal. e

Strip (open pit) mining consists of removing over-

burden from coal seams ielativaly close to es tardans

with huge electric shovels capable of i to

140 cubic yards of dirt and rock in one bite. ler

power shovels load the coal (which is usually loos-

ened by explosives) on trucks for removal to prep-

aration plants or customers. Output of strip mines

was relatively small until World War I. During

the past decade stripping production, while some-

what erratic, displayed 2 moderate upward trend.

Coal obtained by this method is generally a cheaper ©

grade but nearly 100% of the seams can be recovered.

When the overburden in a strip mine gets too

thick to be removed economically, augur methods

are used. These consist of drilling large holes into

coal beds with augurs. It is relatively i ive and

permits recovery of up to 65% of the coal.

Basie Analysis Page C 73

Transporiation Costs : . rable

Because of its bulk, costs of delivering coal to cus- ae ny wy oeiey

tomers are an important part of total costs to the a ee ees

consumer. In 1965, the average value of coal at the nwa So Re,

mines was $4.45 a ton, but the average railroad — p.uwwem Steet... con eee “7 so Re

freight charge added to the delivered cost was abou: “fenrolidayion Goal =. S38 3282 441 24 |

two-thirds of this. Thus, a company could produce a "Hiland, Creek 3813 33 an 4 28 3

higher ‘grade of coal at a cheaper price than a com- —. ———— -B8 BB BS HBS #

petitor, nearness to the ultimate consumer could “includes output ef jointiy-cwned mines

allow the competitor to deliver his coal at a lower

price per B.t.u., which is the chief determinant of fuel

economy for a utility.

Close to 729% of the coal produced is moved from

mines by rail. Shipments by water total only 12% of

original movements but a substantial portion of coal

is transferred to barges and other vessels before it

reaches the ultimate user. Barge tows carrying up to

25,000 tons of coal ply the inland waterways, par-

‘ticularly the M ela, heny, Kanawaha,

Ohio, and Mississippi Rivers, In addition, substantial

are shipped over the Great Lakes and coast-

wise the Atlantic seaboard. Over 13% of mine

output is carried by trucks, particularly from strip

and augur mines.

New Transporiation Methods

To reduce or eliminate the sizable competitive dis-

advantage posed by the high costs of transporting coal

irom Oe saloon Wo che producers are

striving to find cheaper methods of getting coal to its

markets. At present, the most notable example is

the reduced rail freight rates offered on whole train

loads of coal moving from a single or small number

of mines to a single utility. First used in 1962, train

ca nathads provids cas eusingn af ep te AEH ond

their use has been accelerating. More recently, the

“unit” train concept has been initiated, wherein 2

train made up of cars owned by a utility or a coal

seedy sewcper ty anne sp

t. ra) un-

hnelugand vpnensini tee aaaee totes tee

- amount to 509%. Even greater economies are expected

from the- “{ntegral train”, which will use

permanently coupled large cars, heated and insulated

and equipped for rapid loading and unloading. Plan-

ned train loads of up to 35,000 tons compare with the

7,000 to 10,000 ton capacities currently in use.

To avoid the cost of carrying coal in bulk form,

some utilities are locating generating stations near

tances. Power losses are a problem, but technological

improvements often allow sizable savings. Such

“mine-mouth” power plants are now coming into use

in connection with regional power grids, which con-

nect a-number of utilities and allow power inter-

changes as well as the distribution of the power from

the mine-mouth plants. ’

Another method of coal transportation that has

aroused considerable interest is the movement of .2

coal slurry (made

pipeline. One such pipeline was in successful

Leading Producers

Despite the concentration of mining in a few states,

smal] companies operating only one or two mines

are typical. Peasopy Coat Co. and Coxsoripatiox

Coax Co., the largest

159 is produced by “captive” mines

U. S. Sreex’s mines produced 18 million

tons in 1965, or 3.59% of total production.

mines turned 100,000 tons to 500,000 tons for

239 of national output; 379% produced 10,000 to

100,000 tons for 1996; and 5396 of the mines dug

less than 10,000 tons for 3% of overall production.

Increased capital needs for opening and mechan-

izing mines plus rising wage rates have resulted in a

trend consolidations. With — economies of-

fered by large-scale operations, further concentra-

r . The number of operating mines de-

clined from a high of 9,400 in 1950 to 7,600 in 1965.

Coal 3

Reserves

Recoverable coal reserves in the U. S. were esti-

mated at $30 billion tons in 1960, consisting of 455

billion tons of bituminous, 365 billion of subbitumi-

nous and lignite, and 10 billion anthracite. At the

present rate of consumption, bituminous reserves

would be sufficient for over 1,500 years and anthra-

cite deposits for over $00 years. About 200 billion

tons of total reserves are as economically

Practically all U.S. anthracite is located in Penp-

sylvania. Principal bisuminous reserves ranked by size

management a::d

(led by John L. Lewis until 1960) have been quite

harmonious. No industry-wide strike has occurred

mercial coal companies, since these mines (usually

small and marginal operations) have grown to ac-

count for roughly a quarter of toxal output and con-

tribute considerably to price weakness, particularly

in the East and South.

The labor agreement signed in 196+ calls

for payment of a double welfare and retirement

fund royalty by major coal companies for any non-

union coal marketed by them. The 1959 labor con-

tract prohibited marketing of non-union coal, but

little success was acheived as chronically unemployed

miners are willing to accept low wages or work as

independent contractors at non-union properties.

These mines could not operate if they paid the union

scale wage rates and the $0.40 2 ton royalty charge

(this payment is larger than most companies’ profit

per ton and has led to omission or reduction in fund

payments by some union mines under so<alled

“sweet-heart” contracts).

A new contract was being sought by union leaders

in early 1966, but no settlement had been reached

at the date of this writing. Union demands indicated

a emphasis on fringe benefits and a total

somewhat in excess of the $2 a day granted

in the 1964 pact.

As over-all markets for soft coal contracted and

companies stepped up mechanization to offset higher

wages and thus maintain coal’s competitive posi-

tion, employment at the mines dropped drastically.

Even with the resumption of the uptrend in output

in recent years employment figures ae continued

to decline. 1964, the working a

128,700 in soft coal, compared with a erin

(1948) of 442,000. In the anthracite region, em-

cause of the i “3 problems. Actually, non-union nt in 1964 was down to about 13,000, or a de-

coal miners are now a major concern of the large com- cline of about 60% from that of 1955.

Anthracite :

Markets / space heating purposes in its main marketing area

tons. The total was 269 of 1926 output, only 15%

of the record 199 milion tons of 1917, and was

roughly the same as anthracite production in 1866.

The majority o£ anthracite output is still used for

north of the Potomac and Ohio rivers and east of

In 1964, some 14% of total output was used

ee ee Part of the anthracite is

ined from dredging

Basic Analysis

Page C 75

Holtwood steam station of Pennsyivania Power &

Licur, where dredged coal tosts the company a

proximately $2.70 2 ton. Asa result, fuel costs of this

station are Jess than half those of the average Penn-

sylvania plant and are among the lowest of any of

the nation’s major steam plants.

Utilities offer licle. hope for the commercial coal

producers, however, since the fine sizes used in

boilers are not profitable except 2s a by-product or

<o-product of the higher-priced large sizes. The same

is true of other industrial markets for fine anthracite,

except where it can be obtained at little cost, as in

dredging or recovery from waste banks.

A small amount of anthracite is added to bitumi-

nous in some ovens in making coke. Increased usage

of anthracite is expected in pelletizing taconite but

this market agzin requires the: fine and least prof-

itable sizes. Exports of anthracite have become more

important, reflecting shipments to. U.S. military forces

in Europe, but fluctuated widely in recent years.

Foreign demand seems likely to continue to be ir-

regular. Canada is still an important though declin-

ing market.

Production; Costs

Anthracite deposits generally are not level as are

bituminous seams but run at angles which sometimes

are over 60%. These pitched seams preclude utili-

zation of continuous mining machines and other me-

chanical improvements that have contributed so

tly to the marked gains in productivity in soft

Seal tatant Average output per-man day in the hard

coal fields is about 6.1 tons, compared with more

than 1% tons in bituminous mines. This compares

with ‘B79 tons at the end of World War II; much

of the-improvement stems from a higher portion of

production from strip mines as wel] as closing of

high-cost u properties. Strip mines now

account for about 42% of output, mines

wl 34%, waste banks for 206¢, and river dredging

4%. .

Hourly wages at anthracite mines ax about

a half dollar less than at soft coal mines but the

union welfare and retitement fund payment is $0.70 ,

a toh, against $0.40. Non-union production of an-

thracite is sizable.

or washerics which remove foreign matter and size

the coal. The large sizes ranging 3 inch broken

grades to 15-inch chestnut y sell for over

$12 a ton at the mines. Pea and the buckwheat

sizes are priced between $9 and $11 a ton, and the

finest buckwheat sizes sell for less than $3 a ton.

Composite Indusiry Daia

*Per Share Data in Terms of Standard & Poor’s Stock Price Index

Bituminous Coal Companies ‘The five companies uscd for series of Gata are:

, Seal Go, Peabody Cosi’ Go. and Binssten Go”

1958 1859 3960 «= * 1881 1962 1963 ‘sea 1965

Sales 88.58 70.67 87. 100.

°. Tacome .

Beg Became, ie ie BE Re ES 88 Ee Bs

Depreciation 458 40a 419 47

Panes 1. 179

pee fe 8 is i

Zaraings as a S Sales E is Hee4 te 69s

pathees "SEY BS Ee ge HE Be BE os

merrnemins Eas Be fh Be ie hE

Dividead Yield % —High 436 4«-399°”~=ié«*S; 14 91 3.08 if

pertain ah at de an as 38

cay a ee eee ee ee

e: 10.

Sa dea ae ea ge ate sary gS 7 Set pe ate tt 3 pa pv eed a

tho fotat dividend pafmurate, So sf tial ssies Srorant of Yictoes’ thet iie'teeal aided ea, week per sare

at the indicated por share sales will bo (15 x 2.00) 52.50 ia terms of the S & Por coz: >t?-

most mouthe fa Fiscal grace coding Tene Se wt eenear saleadee yerr th whice Gee fol nese cake ence ae

less current abilities, without allowstee for long-term debt "Peabody Goal added; Unites Denteis Gast arsed,

Page C 76 Coal

erative Company Anaiysis

Reveniue Record

BITUMINOUS COAL—Mergers distort the sales producers (mainly eastern) are below peaks attained

records of major producers, but the Midwestern steam during the Suez crisis, but 2 recent uptrend has been

coal producers (Peasopy, UNirep Execrric, and Ayr- sparked by sharply higher demand in utility and export

orp

Cems

sing)” have outstanding records, Current sales of other markets, :

Sales (1957-59=16)) a

Composite Data SMINOL

Caal— ‘Istend $=Mamt Noch Gd Dee *Pecbody Pit:ton Rech & United “West Bicker X

Tndwsi-ils Bitcminews Col GEF Creek Col Amr Cal Coal Co. Pitts, Etec. wereld Cool Cox.

ny roe 103 133 102 it $1 ao rd 194 28 6133 s 137 **33.65 wa

) _, SEeREEER § ix ° m1 83 Re 73 s? 185 310 79 14 **30.33 3? =

, EES 123 a 13 # 8 NA 7S & 156 1:2 $1 125 **22.99 a

SE camecnimennthinnesion é 7 120 $0 & x. 7 73 130 135 73 120 one ST pea

|. , a Ww? re! 10S $s 8? 84 s» 73 7 11? $7 &9 peti =. %1 —

SE ntinetenpeiainen 10. Ss we 83 3 : 7 s si 868 cs) SS Be ax | eee

ill ni aieiangeblanatinibies 104 = 100 91 Si 101 s 167 33 89 $3 =e >. om

erasers s 90 oi 3 — Wm 5 3 33 $$ bid rs [a

Lo iencitemlimaimeniditedl ™ bf Wi pt lic <= ns 3§9 16 102 ili 14 163 oo 107 ooo

}; EES $s 10 oe 1238 nr 616 ss 15 ue be — ns oo

pa ‘ 66 4 89 en 16 806 100 bo SS , a. we

Average Wet Sales In 1957-59 Daso Pexiod, in Millions of Dollsr3; Bien’ fadicate whea fiscal year ends.

452 S100 2594 18547 302 333 233 1023 22 406 «159 oe

Jan> Dec Deo, Dec. Mer. "Deo Dee. Doe. Deo. Dye. '* Dec — Dee ...

tBased on Stand- Lewy HW = . Years ented Apr. 30 of foll. calendar te 1957; 1958-40100. *Eight

ard & Poor's In- moa * tas Fuel Co. efter 1955 and Traux-Traer Cos! for 2800, "Heel opera, of Sicelain Gon

eotey Group after 1954_ *1959=100. “Deqroeat pro-forma acets. of Island Creek Coal & Coal in 1963 and

rice In- pr. yrs. *Comb. accts. of Westmoreland Coal and Stonega Coke & Corl Co. **In millions of dollars; other

> comparable. **Y¥r. end. July 31 prior to 1965. N.A—Not Available.

nd 7 4

Profit Jiargins

reduction moves by most eastern producers have countered

BITUMINOUS COAL — Peasopy and Unitrep

increases in labor costs and some price weakness, with

tectric Coat have the widest profit margins in the

, refiecting operations of low-cost strip mines

and the firm price structure for utility steam coal in

midwestern markets (heavy development and other no:

recurring costs were responsible for the 1965 decline

have attractive records, the lower margins of the former

reflecting the smaller return on sales of its non-coal

in the latter's spreads). MI[cchanization and other cost operations. . |

Profit Margins (Se)

*Gperating Income 23 a Peroent=re of

a ae Consol. Eastern SIsland Maust rene eS SPervodg Pittston Roch. & United “West- Zeller X

‘ Tndustrils Bituzinous Co. GER Cree Col Amc. Cool Cool Ca. Pitta Elec. moreland (Coal Corp.

, — 35 116 wa i113 a 129 «618.9 25.4 las 38 794 184 $9 —

SE Reeemensmeneninn 3.9 86167 113 20 86165060| 321 4 2s 27S 10.1 32 «8S 171 11.2 =<

). , - ROSES 135.7 338 07 #171) «6140 aA ay ne 368 2.0 Ss BE 47 $2 —_

} _ _ ESRNSEENEReEES 2 5. 103 166 129 10 : eee: © ie 7 Re Se — me ane

pI M47 16.0 ne 37.0 ne 18 oy M4 = 86201 374 103 — 23 -— Md -—

Seapbinlnsannemanns 147 & 13, 34% 4 my U7 3S det. = 7 =e

Dcadiindaeaniin = aan 3} 133°) 14. 7. 36 i 239 = ry one

p) | aS 54 #8 ny Pe _ a ; 3 <4 4 ooo v4 =

TRwusinoncenmais is 8s wi i? in = & 132 8668 a ie. to

Diinwan Se. eet ee ee 8.0 — - a3 6178 54 73 184 =< 39 -—

- Based consolidated *Based on bined forma tn 1955 and mo3.

BESTE anecsned® Stand an Setnesd das “Opemting Tacoma Ws tovaily Che basacs lek om reremieg att

Sf on me bad debts and pensions: hat betes other ee ‘and before eedueting depreciation Sharpen asbs cervice charg

7 es, if any, Federal taxes, and any special reserves. N.A. Not ‘ .

Net Income Ratios

BITUMINOUS COAL—Pitrstox has an above financial and reserve positions of both.

average long-term record of profits growth, reflecting

increased trucking, and oil distribution profits through

internal expansion and acquisitions, and more recently,

the marked improvement jn coal profits. Returns of

the two largest producers, PEaBopy and CoNSOLIDATION,

have shown the greatest gains, reflecting the superior profit margins,

The 1963 drop in net of Eastern Gas & Fue re-

flects the exchange of its investment in Norfolk & West-

ern R.R. for a nearly commensurate portion of its equity.

The Unrrep Evectric decline in 1965 was due largely

to the non-recurring factors that adversely affected its

Basic Analysis Page C77.

$s A bs

err 7 —— BITUMINOUS COAL i

7 os et 8 y -— INDUSTRIAL STOCK COMPOSITE By

esfaay ai 1 32133 34] 35 (3637/38 “38/40/44 42143) G4) 45 | 26) 47] 48.4950) S152" 53] 54) SS] SO] SIT SO) 99, BOlBI fb2 1b; be BS)

+Composite Data MI

33 Col A Consol Fastem *Isisnd Mast North @id Den’ Peabody Pittston Roch & United West- Zeuier X

Ina Bassin ‘Git™ “Ca EL “Ge nk — a Bie cesind Cal’ Oo.

~ a re eee ae = x a) Get. 137 re

Po, meee) We ty ee i ee ee oy it def. 38 a> a

195: 128 (102s 7% «86133 Bs«8BG is ies 117 41 ix ae

> 115 96 $ i 102 ee | % 172 «= «36 338 , en =

e pe + Peer Re ee eB = w=

1 ey 16 ui 100 = a Fk 2 So m z=

ee ee ee ae eS eS 225 4 330 328 . foo 2 pan

) ATES .: We te kL OR 131 576 Seer pon

Wane chtnen ae $2 52 eh 0 — «— 6 3109 6 5S. det. oe ee

Avg. Net Income in 1957-59 Bose Period, in Mills. of $; Mos. indicate when fiscal yr. ends.

318 2189 883 ‘317 OM 093 102% 657 0.29 ct Off {.

3 June Dec. Dec. Dec. ‘Mar. Dee. F Dec. Dec. "Dec. sda. Deo. Dew

tBased on Stand- 10f foll. calendar year, "Years ended Ape, 30 of fall. calendar year prior to 1957: *Eight mos.

r & Poor's *1936-39=100. ‘Based on combined data. * 100. *Bofore spec. credit. *In PF bt S228. other years

eater serene not comparable. **July 31 prior to 1535. def.—Dedicit.

= DEFINIZION—Net Income is simply the net profit after all charges as reported by the compeny.

Net Income As a Percentage of Hevem:es (%)

$Composite Data Novs

425 Cosl— Avrshite Consol. Eastern ‘Istund North Peabody Pittston Rech. & United West- Zeisler X

Tndustrisl# Giti:mineus Coll. Coal GLP. Crk — Coal 7 cr Coal = Go, Patts. «Elec. moreland Coal Gorm.

oe he ee a ae | 42 A RR BS Oe ee ae ee

PE erinnccmmsnaien: | OB - 8S. O68. BS 68 42. EB 10.7 113 aS: O88. “MA On. EBS Co

$ 62 70 58S WO 42 -~ ot -& 98 10! ° os 114 82 dh

262 oe 686: (USS OS BS a SS. She OR: Se 129 wen ies

31 oS 67 8a € $2 29 5 $3 113 15 tee denies

7. 68: 34 4 28 7 303 ef. —-; & Sint

> Be ° Sees See} Sees S Pre C . $8 4 Gt a pra

as. €Y Se ab ee 33 $3 05 lien cate

: HREBERBER=HaS HH R#BS= gH

Cie ee Ee Ph SS He we ee Be ee

combined

MBased Stand- *Based on consolidated revenues. *Based on pro-forma figures im 1955 *$ mos. “Based

ora +7 Poor's n- Gata. ‘After spec. chgs. ‘Not im this and prior years.

dustr

Stock In- .

exes. _— ‘ DEFINITION—Net Income is simply the net profit after all charges as reported by the company.

‘

Dividend Policies

Coal producers as a group have followed fairly con- have limited the payouts of some companies. Eastsrx

servative policies, although maintenance of payments in Gas & Fuex eliminated cash Payments in 1963, but

periods of cyclically reduced earnings resulted in high pay- has followed a policy of steadily reducing its number

outs in some years. Capital needs for expanding capacity of shares outstanding through purchases.

Coal

Page C 78

)

hesaaaat aes

eugnaanage Fe

ie $ $4

ine tis?

Dadaehea Me 4

Crt

Eek, & United = West-

49.3

— = os

143

rivttea

Ce,

sai

ve Retios and Yields

awe

522

z va

mich aaa ty

Vraaaaaaaa fy

aaaaiaaama as

o-Narn

for the group have been close to those

Plus

Excludes

pricr years.

1565.

3Ss1....

SR.

eed

tBased

ard &

dustr

eos

“6 g-

Ba2

git

fis |

phie

eet :

eB i

3 ¥

£|

most years, reflec

sensitivity to business activity. The overall

composite in

t years appears to st@m fro»: concern

over the loagér-range eftects of competition from other

Multiples

the 425 Industrials

the industry's

decline in recen

‘

Ioeh

18.5

° 149

“4 SS

He ise

7 ins

10.6

yaez03 mescraf

ean

aa if ee yietidl

esol Wilt

bhi)

it, es a

suesaagaagas3

Fi soasas sa3taa

iu! wsaanasagsns

sengnazegsaa

Rasadeicietsdee

Ream

ge araaeaa

als iczsaocaaet

Ebr beteberite et

oles ssea3i ert

Pteeecrereca

“hy aaanemaaany

—-

amas! &

SHUiiibilldly:

§ 2

“RUTTEN ig

agar’

fe oem

ganaanasn IF

ghesielsies 338

Syeememeascs

gasancesaa |

1 pi au |

AATSARER REE |

gqUscaEEO

SS9SS99099

BY] sy ijimansesgs

i, jj sassunesz

ian 2558

Brcreceae S353

ets rth t te]

fl cxmasess

fe Prev a

Bis igegagzgage

jermanecaaesl

B oaasaaassssae

5 mangraasaay

f aseasssss8

weil

MIXOUS:

sosusassayase

Siti

TT:

Adliecigeie Baas,

SBo MMH

Baas pitt

Kentucky Coal In

Sad Rei SIIGS

qusesnascus

€3

n@ 2% in 1964 and 1965. *Excludes

paid, divided by calendar year price ranges of common stocks.

tpa 22% in stk in 1962 «

this and prior years.

: Fiseal year dividends

*Paid 2% in

hile in

DEFINITION

avast

Basic Analysis Page C79

(ice: j mam) fj eee] ee

ed agdj cuss) semen! fo speemens fj game

job fcemed | arms i use

6 '

E poles) i cere Be ecii

Fil oy dl : boat

3 ea Fa menses. j Siew!

gstsenssay 2; Satesmees «Sansa

fa coat; joan (eee 1 ee

C saiesad | Womack ivusse j gems

it pence isms {t Ujcremee 6! memer

Bt i se aaa i seas Pear

i oe ee

if ae ¢ Higa 2 ae

jaqeemes, | ame

| wmweme! © reset

Hel bisdtaat j 2 Seseetisae tl

7] asaassasaas gj Mateteem fe

e | y susaasases § {meme f;

i he

bi SegeSaeees | Sd REA Fs

Hf lneomet és coareseace jes

di naa! leer:

pipes gest pti Be

a | Pree

*¥r. ond. Jul, 1

113 She,

= Common,

Dire

3 ms Sin, 6

Py « +

: Bs

’ Lo

*y-

" % OF

S-tor-1 ‘Bet. a

mh, In 1063, 9045 in 1964, & 90.63 in

cy |

Information has been sbiained from sources believed to be reliable, but is seewracy and completeness, and that of

KIRKLAND, E.cis, HOoSON, CHaFFETz & MASTERS

PRUOCENTIAL PLAZA

CHICAGO. ILLINOIS 6060)

TELEPRONE ManoOL mn 6-2828

March 26, 1968

John T. Cusack, Esquire

Attorney, Midwest Office

Antitrust Division

Department of Justice

Room 2534 United States Courthouse

219 South Dearborn Street

Chicago, Illinois 60604

Re: United States v. General Dynamics, et al.

Dear Mr. Cusack:

In connection with paragraph four of my letter

to you of March 20, 1968, I enclose herewith the additional

information requested with respect to payment of dividends

by UEC. I am advised that UEC neither declared nor paid

any dividends in 1967.

In connection with paragraph seven of my letter,

I also enclose a copy of the proxy statement issued in con-

nection with the acquisition of Material Service Corporation

by General Dynamics.

RLE: ew

Enclosures

x ;

SEF .RTRENT oF wsnies <

| MAR 27 196g

| BIYISIGN op Seow f

Ze]

” ~~!

a titi

( @ nn |

z gen Lnvonprmnennenmneneeemgmeeaasaaasaafaaaas

g fg fe fg @

Rie Gas ac ee ;

i hiteduaidillclt

“

@ Fi, Mt, fe 4 8

oy wie ae a Me allathat ot eile

i na Riles

sak :

Date Paid

Dividends Declared & Paid By

THS UNITED ELECTRIC COAL COMPANIES

DURING THE PERIOD JANUARY 1, 1950

TO DECEMBER 31, 1967

- Date Paid Dividend Pe

ikiiikkhhibkkkhbett

Ma>ch 10, 366 «

June 10, 1966 °

KIRKLAND, Ectis, Hopson, Cuarret2 & MASTERS

PRUDENTIAL PLAZA

‘Smibaso, nLUINOIS GOGO:

WASHIMNATON ornee VELEPHONE RAMOOL PH © -2020

May 3, 1968

John T. Cusack, Esquire

Attorney, Midwest Office

Antitrust Division

‘Department of Justice

Room 2634 United States Courthouse

.219 South Dearborn Street | ~

Chicago, Illinois 60604. ~-

Re: United States v. General

Dynamics, et al.

Dear Mr. Cusack:

> Pursuant to paragraph 18 of the Government's draft

MOtion to Produce and paragraph 4‘of my letter to you of

March 20, 1968, this is to advise you that the following

loans were made by UEC to General Dynamics between January i,

1950 and present time: (1) on September 22, 1566 a loan in

the amount of $1 million at 6 per cent interest due Decen-

ber 30, 1966; and (2) a loan in the amount of $1 million on

October 31, 1966 at 6 per cent interest due December 30, 1966.

Both loans were repaid on December 29, 1966. UEC .

has never made any loans to either Freeman or Material Service.

“ I must correct information transmitted to you with

my letter of March 26, 1968. I am now advised that UEC de-

clared and paid, on January 24 and 25, 1968, respectively, a

Gividend in the amount of $1,500,000 to General —

No other dividends were declared or paid during 1967.

I apologize for the error, which was caused by the

failure to include dividends: paid by the “new” UEC as well as

those by "old" UEC. aoe

Gx 29

EXECUTIVE OFFICE OF THE PRESIDENT/BUREAU OF THE BUDGET

STANDARD INDUSTRIAL

CLASSIFICATION

= MANUAL

1967

RED BY THE OFFICE OF STATISTICAL STANDARDS

18 STANDARD INDUSTRIAL CLASSIFICATION

Major Group 12——BITUMINOUS COAL AND LIGNITE

MINING

The Major Group as a Whole

121 BITUMINOUS COAL AND LIGNITE MINING

1211 Bituminous Coal

< ‘ Establishments primarily engaged in producing bituminous coai or in devel-

auger mining, strip mining, and coal cleaning, crushing, screening, and sizing

plants, whether or not operated in conjunction with the mines served.

oS = ae Sethe wins

bituminous coal except om a contract, fee, or other

Hard mining, except Pennsyl- basis ioe

Screeing plants, bituminous coal Washerten, Siteatenne et

1212: Lignite

Establishments primarily engaged in producing lignite or in developing

lignite mines.

Brown coal mining Lignite mining

mine tunneling.

for bi

Nor gata en a contract, fee, or ee wor te A

on a contract, fee, or other basis Sand lignite mining on a contssce

Draining or Hey or other ie

tract, fee, or other basis @ contract, fee, or other basis

Dees. fe bituminous coal and Stripping services, lignite: on a

lignite mining: on a contract, contract, fee, or other basis

fee. or other basis bitumineus coal and lig-

ee ee ee on a con- nite : om @ contract, fea,

fee, or other basis “or other basis

and 3 om @ contract, fea, or

Appendix D

Criteria for Recognizing Industries in the

Standard Industrial Classification

General Comments 4

This may have the effect of reducing the specialization ratio of the industry with

which this line of activity is combined, but euch a procedure may be preferable

oo )

CRITERIA FOR RECOGNIZING INDUSTRIES _ 613

to including the line of activity in a “miscellaneous” or “not elsewhere classified”

category for that particular three digit group. Each case must be evaluated

on its own merits. It may be better to allow a small element of impurity to be

introduced into a given four digit industry by associating it with a line of ac-

tivity which is quite closely related rather than to increase the size of the “mis-

cellaneous” category for the three digit group by adding another line of activity,

of any specific industry.

Standards for Criteria :

_ Sveraged with a system of weights to secure the final score for an industry. The

score determines whether the industry is to be considered sizable or not.

Size -Criteria:

Size was measured by a comparison of four items as follows :

1. Number of

2. Value added by manufacture :

3. Value of shipments

4. Number of establishments ;

Number of employees and value added are recognized as being more significant

and reliable measures of industry size than are value of shipments and number

of establishments. Value of shipments includes the value created in other in-

dustries or other economic divisions such as Agriculture, etc., and does not ~

measure value of income produced in the specific manufacturing industry. In

some instances, the large duplication of value of shipments within an industry

makes publication of the figure meaningless. A count of establishments ineach .

industry is of limited significance as it treats both large and small establishments

as of equal importance. In addition, the derivation of an “average” number of

establishments per industry reflects, to a large extent, the very numerous plants

in a relatively few industries. : For example, five industries (Bakeries, Sawmills,

is considered as sizable if it attains a point score of 10 or higher. The point .

zee

The Consumption of Fuel by Steam-Electric Plants

in the Eastern Interior Province Sales Area

for the Years 1960-1967

Per Cent of Consumption

Notes Goal —onl * Gas

93.8 00.2 06.0

90.5 00.1 09.4

90.2 00.1 09.7

90.4 00.1 09.5

89.9 00.1 10.0

91.4 00.1 08.5

93.1 00.2 06.7

92.2 00.2 07.7

te, Me Se

In Kurtz Deposition Exhibits 1 and 2, which cover

the years 1960 and 1961, the BTU values for gas and

oil are not shown for each generating station as is

done in Kurtz Dep. Ex. 3-8. In the “Explanation of

Tables" in Kurtz Dep. Ex. 1 and 2 appears this

statement: ‘

“The BTU of fuel oil and of natural gas

are not shown as the values in the great

majority of cases were fairly well

standardized, i.e., at between 147 and

153 thousand BTU per gallon of oil, and

950 to 1,050 BIU per cubic foot of

natural gas."

GX 32

CONSUMPTION OF FUEL (SHOWN IN MILLIONS OF BTU'S)

BY PORTLAND CEMENT PLANTS IN ILLINOIS IN 1967

Fach Fuel

Number of BTU's as Per Cent

Fuel (In Miliions) of Total

Coal : 11,338,430 94.6

Oi2 134,365 1.1

Gas 517,710 4.3

Total 11,990,505 100.0

Source: Letters from cement companies and answers to

questionnaires,

Revised

CONSUMPTION OF FUEL (SHOWN IN MILLIONS OF BTU'S)BY

PORTLAND CEMENT PLANTS IN EASTERN INTERIOR COAL

PROVINCE SALES AREA IN 1967

: Each Fuel

Number of BTU's as Per Cent

Fuel (in Millions) of Total

Coal 48,025,650 74.1

Oil ; 324,544 5

Gas 16,424,242 */ 25.4

Total 64,774,436 100.0

*/ Approximately 96.3 per cent of gas consumption was on

am interruptible basis.

Source: Letters from cement companies and answers to

questionnaires,

778

029.

ze [al

£36 _| 040)

415

651

Seesessuenr

INCOME ( EXPENSE)

sam

INCOME (

TAXES

INCOME STATEMENT

GENERAL DYNAMICS CORPORATION

¢ [OTHER mcome (OPDSsO

® | CosT OF SALES

22 | 940 | 876

100,

eccr.c

Coal ies

AMORTIZATION. ETC.

. a

. GENERAL DYNAMICS CORPORATION ThelOntee wiecrrie—

BALANCE SHEET rei Companies

(OOLLARS) 12/31/68

Line “CLASSIFICATION AMOUKT

1 |casn Tie ven

2 KETABLE SECURITIES ; .

< 1] 274 lies

‘ 2) 797 | 102

: 21.797 | 102

iki eaal : 013

—10__| INTERCOMPANY RECEIVABLES _ 72/919 | 1

ae .

22. ; : °

13 » TOTAL CURRENT 22 | 532 | Sid”

“

750 as

: 35 [906 | 801

RESERVE FOR DEPRECIATION AND AMORTIZATION 401 44) | 86]

a PROPERTY. PLANT AND EQUIPMENT — NET 15 940

ar) TOTAL ASSETS Lao | ae

25__| NOTES PAYABLE TO U.S. BANKS

26 _| NOTES PAYABLE TO CANADIAN BANKS

7) |COMMERCIAL PAPER

"~W_|orarts Pavasie

7” T INSTA Ti

—__36__| ACCOUNTS PAYABLE AND ACCRUED EXPENSES . 1] 231 [426

— ST _[ PRODUCTION PAYMENTS - NET OF TAXES

__32 [ACCRUED SALARIES ano waGead 416 |i

33 ear ant CANADIAN WCONE FAKES 160 | 459

34 | CusTOmeRs’ Deposits

~3S__| Divioenos Pavasle j

3s | biTeRcomPany Pay,

PAYABLES :

* Li 816

TOTAL CURRENT UABILITIES

39 | LONG-TERM DEST (LESS CURRENT PORTION) ‘

———} EARNED SURPLUS, BEGINNING OF YEAR 18 | 974 2.

NET INCOME (LOSs) 2. 283.

DIVIDENDS ~ CAPITAL STOCK

21 656 955.

a Oe 9311432.

Ss yy

REPORT FROM p i F

‘ hd aves : 3 PREAH 12/31/68

March 21, 1968

Department of Justice

Room 2634 United States Courthouse

Chicago, Illinois 60604

Attention: Mr. John T. Cusack

° RE: United States v. General Dynamics

: Corporation et al., Civil Mo.

67 C 1632 (N. D. Illinois)

Dear Sir:

As our Lakeside Generating Station is a coal burning

plant we have no answers for paragraphs 2, 3 and 4. Data for

our answer to paragraph 1 is attached herewith.

We buy coal from several suppliers under contracts for

terms from one to three years. Bach contract has the following:

1. Guaranteed cost in dollars per ton F.O.B. mine.

2. Cost of haulage in dollars per ton - mine to Lakeside.

3. Guaranteed BTU's per pound. .

4. Guaranteed moisture content.

5. Guaranteed ash content

6. Guaranteed sulphur content.

from item 1 and 3 the guaranteed cost P.0.B. | ¢ .in dollars

per million BTU can be calculated. 2 3

| MAR 22 1968 rnc

» Seca > gece

t..

;

Department of Justice

All coal is sampled as received at Lakeside, analyzed by

a commercial testing firm for BTU, moisture, ash and sulphur.

of each value of the analysis the cost of that Shipment of coal

is determined to be: (a) contract price, (b) contract price

plus a bonus, or (c) contract Price minus a Penalty. If either

party is not satisfied with the Pricing because of a bonus or

penalty a referee sample is sent to another commercial firm and

the pricing is then recalculated.

Our experience has been for all suppliers that there are

few bonuses and Many penalties. As an example for 1967 only

on the semi-monthly coal shipments and billings:

Peabody had 3 bonuses and 4 lties,

Freeman had no bonuses and 1 penalties,

Little Dog had no bonuses 2 lties,

Royal Fuel had no bonuses 4 penalties.

are based on BTU, moisture, ash and sulphur, hence the existence

Of a penalty does not always indicate a low BTU content as many

After the coal is received and tested it goes into either

the active coal storage or the reserve coal storage. As the coal

is used it is taken from either pile, but mostly from active storage,

the KWH generated from each coal supplier, and the B.T.U. supplied

by each supplier for these KWH.

Hence the attached data gives the tons bought from each

supplier, the cost of coal including bonuses and penalties and

the gross generation for the year in KWH. It should be noted

We have no data as referred to in paragraph 5. Without

Surveys Or memoranda as supporting evidence we can say that we

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GENERAL OFFICES 2

MUNICIPAL BUILDING I 9

SPRINGFIELD, LINOIS 62701 tr My ght & pean 0 muemen

as power COMMISSIONER OF PUBUC PROPERTY

uf i : Telephone 44-5791, Aree Code 217

“Me

COAL PURCHASES

Coal Supplier 1964 1965

Tons Cost Tons Cost

Preeman Coal Mng. Co. 95,192.86 $515,930.37 118,537.02 $606,909.51

Coal Supplier 1966 1967 :

Tons Cost Tons Cost

‘reeman Coal Mng. Co. 133,396.47 $692,864.87 135,676.91 $715,831.36

Peabody Coal Co. 104,183.00 550,562.67 101,578.59 554,184.72

Cc. V. Beck & Co. 84,441.64 456,334.63 82,552.88 449,141.05

Royal Fuel Corp. 16,841.96 85,937.81 - 15,911.96 82,360.30

Total for year 338,863.07 $1.785,699.98 335,720.34 $1,791,517.43

Gross Generated KWH 581 679 200 KwH 568 871 200 KwH

Note: C. V. Beck & Co. name changed October 1967 to st. Louis Industrial

Coal Sales

Eddy Coal Co. Cantrall, Illinois out of operation. Mined out.

R&S Coal Co. Cantrall, Illinois out of operation. Mined out.

CPH: jn

3/21/68

44LINQIS PQWER COMPANY .~ 3} U ee 4

March 12, 1968

Mr. Donald F. Turner *

Assistant Attorney General *

Department of Justice

Room 2634, United States Courthouse

Chicago, Illinois 60604

Attention: Mr. John T. Cusack

Attorney, Midwest Office

ae Antitrust Division

Re: United States v. General Dynamics

Corporation et al., Civil No.

$7 C 1632 (8. D. Illinois)

Dear Mr. Turner:

In response to your letter of February 26, 1968,

we are enclosing information as you have asked relating to

our fuel purchases.

At this writing we have not completed calculating

the information to give the BTU and Kilowatt Hour output de-

rived from each supplier, etc., as asked for in Paragraph (1)

one of your letter. We hope to send this to you within the

next couple of days.

Very truly yours,

” i

Mote Q.

Vice President <a =

AK/g a ee ws

Encl. BERARTMERT of RISTICS ae

HAR 13 1968 Ler

amy at)

cm ue abet

\¢ .

Coal -- with the exception of interruptible gas at one

generating station -- has an economic advantage over other energy

Year Cost 's 107 = Total KWH Qo~3) x Total

1964 $478,527 2,370,072 4.1 215,000 3.9

1965 212,339 1,051,635 2.S 94,000 1.4

1966 92,425 425,541 0.6 39,000 -6

1967 375,879 1,789,798 2.5 167,000 2.4

*Gas when available and when economically advantageous is normally used

coincidentally with coal. Therefore, the kilowatt hour output produced

by gas must be approximated.

thereof and kilowatt hours produced therefrom during the years 1964

through 1967 were as follows:

Year t “s_(20°S) & Total «= wm 09) otal

1964 $ 533 707 -001 53 -001

1965 519 657 -001 57 -001

1966 1,844 2,278 -003 194 -003

1967 9,656 12,617 .018 657 -009

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DAIRYLAND POWER COM.

La Crosse, Wisconsin

54601

April.23, 1968 APR ?91968

Mr. John T. Cusack

Attorney, Midwest Office

Antitrust Division

Department of Justice

Room 2634 United States Courthouse

Chicago, Illinois 60604

Dear Mr. Cusack:

In answer to your letter of April 9 concerning the acquisition of

United Electric Coal Companies by General Dynamics Corporation, we

have assembled as much information as is immediately available.

In answer to question 1, the coal shipped by Freeman Coal Company

and United Electric Coal Company was delivered to our plants at

Alma and Cassville, Wisconsin. Tabulation "A" on the attached sheet

shows the tonnage and the dollar amoutits to each station for the

years 1964-1967, All of the United Electric Coal Company's ship-

ments came from their Fidelity Mine. ‘The Freeman Coal Company has

the option of shipping similar coals from various mines and we do

not have the information as to the mine from which the coal was

shipped. The dollar amount shown in Table "A" of course includes

freight.

In answer to question 2, we only supply electric power and therefore

do not have a BTU output. The estimated kilowatt hour output from

each station by coal supplied by the two coal companies in question

are shown on Table "B". Also, shown in Table "B” is the percentage

of this power to our total generation.

In answer to question 3, we have two generating stations utilizing

oil and gas for generation. One of these is a dual fuel diesel

station - the other is a diesel station using oil only as fuel.

Table "C" shows the fuel costs, KWH output, and the percentage that

the output of these two plants is to the total output. The pur-]

chases of oil and gas are as seasonal as we can possibly make them

because of the unrealistic high price of gas and oil.

‘There is a 50 megawatt second round demonstration nuclear power plant

on our system that was scheduled for operation in 1965. The nuclear

reactor of this power plant is owned by AEC. The turbine generator

of this plant is owned by Dairyland Power Cooperative, and has been

ready for operation since 1965; however, the nuclear reactor is still

not in operation. As to whether our utilization of the atomic energy

is seasonal, it will be used when and if it is operable.

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Attention: John T. Cusack, Esq.

Re: United States vy. General

Corporation et al., Civil

No. 67 C 1682 (N.D. Ill.)

Gentlemen:

T enclose herewith the material requested in your letter

of April 15, concerning the above matter. I trust that it

supplies you with all the information that you require.

Very sincerely yours,

WSA :ed

Moffett Technical Center

April 26, 1968

A. S. Wells

New York

to the Department Justice’s request

x PEKIN COAL CONSUMED

United Electric Cuba Mine 15380 Tons @ $4.00

15302 ' 4.05

20802 4.07

Total 51484

Peabody Vulcan * 55245 4.00

6401 4.05

Total 61646

Republic Flamingo 61114 4.00

4909 4.05

Total 66023

Pittsburg Midway Allendale Total 1464 4.05

19665 - Total 230073 Tons

United Electric Cuba 16803 4.07

80166 4.10

Total 96969

Peabody Vulcan 18272 4.07

Bright Star 20215 4.10

Pittsburg Midway Allendale 2089 4.07

1965 4.10

Total 4054

Republic Flamingo 14761 4.07

18406 4.10

Sunspot 57396 447

Total 90563

1966 - Total 230801

United Electric Cuba 58772 Tons @ $4.10

172029 4.15

Total 230801

1967 - Total 238292

United Electric Cuba Total 233292 416

(2) No other energy fuel is used at the Pekin Plant.

(3) See number (2)

(4) Attached are copies of Franzen’s letters of February

12, 18, and 23, 1968 which substantiate the use of coal

as the most economical fuel that we can use. Gas during

the year of 1967 would have cost $845,000 more than

coal, less savings of $273,000.

J/V/ D. E. W.

DEWall:mm

ec: R. F. Brainard

Enclosures

UNION CARBIDE CORPORATION

270 PARK AVENUE

NEW YORK, N. ¥. 10017

Law D=PaRTMENT-

August 2 1968

Department of Justice oat

Room 2634

United States Courthouse

Chicago, Illinois 60604

Attention: John T. Cusack, Esquire

Midwest Office - Antitrust Division

» Re United States v. General Dynamics

¥ Corporation, et al., Civil Action

No. 67 C 1632 (N.D. 111.)

Gentlemen:

This letter is written in response to yours of

July 29, 1968.

As stated in my letter of May 8, 1968, our East

Chicago, Indiana, plant burns coal, coke and natural gas.

The natural gas is purchased on an interruptible basis for

economic reasons. On a firm or full-time basis the cost

of the gas would approach the cost of purchased electrical

energy and the primary use of the boilers in which these

fuels are consumed is to generate electricity.

The only specification put on the coal presently

being purchased for this plant is its B.t.u. content.

The plant, which was first put in service in 1951,

was originally designed to burn coal. However, when econo-

mically priced gas became available in the Chicago area it

was modified so that it can now burn either coal or gas.

Coke is frequently available on a spot basis at attractive

prices similar to the interruptible gas supply but the coke

must be blended with coal or gas to burn efficiently so

that it could not be used as a sole source of energy.

Storage and handling costs of coal and coke are not signi-

ficant and, of course, there are virtually no such costs

related to gas.

Lon]

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DUNDEE CGGNGNT CUNMERNY

SCUNDEE MICHIGAN TELEPHONE: DETROIT - wOOOWARD 3-e<6es.

TOLEDO - CHERRY 4-7458, ANH ARBOR - NORMANDY 2-25-47, UNDER - Lawnence o-ser

August 22, 1968

Dear Mr. Cusack:

Responding to your letter of August 7, 1968, I shall try to

answer the questions in the order in which they were asked.

1. Enclosed please find a schedule which provides the

information regarding our coal purchases for the

periods requested,

2. Neither the Dundee plant nor the Clarksville plant

consumed any other energy fuel for the purposes

for which coal is required: In both plants we use

oil in connection with the start-up of kilns, because

of the lower ignition point for oil, Once the coal is

ignited, the fuel oil feed is stopped. The oil usage

is not significant, and in no case has it been substituted

as a running fuel, the purpose for which coal has been

used by us, :

3. Not applicable in light of the response to question 2.

4. lam advised that we do not specifically place a ceiling

on the sulphur content of the coal we buy. However,

we do seek to obtain the lowest sulphur content coal

available at competitive prices. Economics play the

most important role. Ifa high sulphur coal is offered

at @ substantially lower cost per million BTU than lower

sulphur coal, we would use the high sulphur coal, provided Ki

the measures to compensate for the high sulphur content art /

are not such as to erase the purchase cost advantage. __

“+?

* Wo -o- - a * Se

DEPARTMENT OF JUSTICE »

Mr. John T. Cusack -2- August 22, 1968

The present sulphur content of the coals

for the Dundee plant ranges from 0. 80% to 1. 25%

with the average in the area of 1. 10%,

The present sulphur content of the coals purchased for

the Clarksville plant ranges from a low of 1.50% to a

high of 3. 0% with the average in the area of 2. 6%.

We have not set an absolute maximum on sulphur content.

I believe that this particular question has not been raised

in a practical way in our experience, that is to say that

extremely high sulphur coals have not been offered to us

at 4 sufficiently low price to warrant our investigating the

adjustments which we could or would be willing to make.

Obviously adjustment can be made and has been made within

limits to the raw mix to compensate for changes in sulphur

content of the coal,

5. General knowledge of the availability and economics of the

various energy fuels known to be usable in the manufacture

of cement clinker have made it unnecessary to make formalized

surveys or studies as to the merits of one fuel versus another.

Hence our information is fragmentary. At both Dundee and

Clarksville only cursory investigations were made, and it

was a relatively simple matter to decide to use coal at both

locations for the main running fuel. The cost of fuel has _

been dramatically less for coal than for natural gas or fuel

oil. However, from previous experience, our chief executive

was reluctant to consider using a fuel whose supply could be

interrupted,

Feasibility studies for the immediate conversion from coal

to gas or oil have never been made at either location. It is

possible to envision circumstances in which such would be

considered, for example if another were to be in abundant

supply for a reasonably assured long period.

We trust that this answers all of the questions which you raised.

Very truly yours,

Boyd W. Yard

BWY:jr Secretary-Treasurer

cc: M/O/Richard G. Ferguson DUNDEE

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FEDERAL POWER COMMISSION

STAFF REPORT

NATIONAL

GAS SUPPLY AND DEMAND

BUREAU OF NATURAL GAS

Washington, D.C.

September 1969

Veh mes ane

Evidence is mounting that the supply of natural gas is diminish-

ing to critical levels in relation to demand. There is a compelling

need for accurate and current analysis and interpretation of this

trend. Prior studies of future natural gas availability have proven

to be overly optimistic. The purpose of this report is to provide

a realistic and objective outlook on the natural gas supply-demand

relationship as a guide to effective regulatory and management de-

cisions.

On the basis of current trends, only a few years remain before

demand will outrun supply. During this period decisions of increas-

ing urgency will confront industry and government policy makers with

respect to gas prices, market expansions, exports and imports, and

substitute fuel technology and availability. Timely action can ex-

tend the usefulness of the natural gas resource base and ease the in-

evitable transition to a gas economy in which imported and sub-

stitute gas fuels will play an increasingly important role. Figure

1, a hypothetical gas supply-demand balance case, is illustrative of

the timing problem and the value of purposeful planning for future

gas supply. The dashed supply line represents a continuation of

present trends. The dotted supply line represents a program which

would optimize the usefulness of our remaining natural gas resources

and provide the needed additional time for economic and technologi-

cal developments to furnish the required volumes of substitute fuels

at reasonable costs. .

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GX 61 ~~ ‘TOTAL COAL CONSUMPTTON IN TORS IN 1967 BY

-. SEAM ELECTRIC PLANES IN THE EASTERN INTERIOR

——___ EEE. SALES AREA

ae 7k 2 2

Coal Sales From Mines

States and Portions of States. Iocated Within the

Comprising the Eastern Interior . fotal Coal -. Eastern Interior

Coal Province Sales Area . * Gal Province

= in Tons) . {in Tons)

Western one half of Kentucky a 10,649,000 12,051,000

Western one-third to one half .

of the State of Tennessee 6,050,000 5,210,000

Near the Mississippi River 3,042,000 3,492,000

Eastern one half of Iowa * 2,267,200 2,042,000

. _— } a - defined es : »

to the Mississippi River 2,298,000 2,092, 2h2

Wisconsin, Except for that Portion

Contiguous to Lake Superior end that

Portion Contiguous to Lake Michican

above Milvaukee : at: 5,689,000 5,699,000

Indiana 19,120,000 18,697,000

Dlinois > 3 28, 295,000~ : 26, 324,000

Agreed to by Defendants

° 81 Not agreed to by Plaintiff

PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPARIES

AND THEIR SUBSIDIARIES 1/ FOR THE.1957 CALENDAR YEAR

Production - Percentage

of Coal . ef Total

ope of, Comper : —in_Tons_ Rank = Production

y Coal Company - 10,736,482 2 23.0

Coal Co. 2/ "1,072,758 ( 2.3)

fraer Coal Company 4 170,363 3 8.9

United Electric Coal Companies 3,619,243 . 7.7

i Ben coal Corporation 3,519,263 5 7.5

T Coal & Coke Co. 2,787,035 -- 6 5.9

Collieries Corporation 2,420,301 7 5.2

a Electric Coal Corporation 2,367 ,206 8 5.0

Coal Co., Inc. | 1,599,358 9 3.4

Colliery Co. 1,156,065 10 2.5

Corporation 1,144 ,39% n 2.5

wn Illinois Coal Corporation 812,911 12 1.7

Continent Coal Corporation 72,399 3 1.6

hi Coal Company 572,559 db 1.2

Coal Corporation ' $WT 280 1s 1.2

nm Coal Company : ye 4OT 297 16 9

per Dog Coal Company - 360,708 17 8

remaining companies a 2,88 .555 6.2

Pe2s mea Mca am

Production in excess of 300,000 tons. =

See Deposition Transcript of Frank M. Mugent, p. 62.

82 Agreed to by Defendants

Not agreed to by Plaintirr

[ene

1 ieeeat

PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES

AND THEIR SUBSIDIARIES 1/ FOR THE 1958 CALENDAR YEAR

Production Percentage

of Coal of Total

Kame of Company in Tons Renk © Production

Peabody Coal Company 8,714,059 2 19.9

“preeman Coal Mining Corpertion «SEE SS,

eee cc oe 1,071,377 ( 2.4)

Truax-Traer Coal Company 3h6 ATA 9.9

Old Ben Coal Corporation 3,580,078 4 8.2

~~ -ane United Electric Coal Companies 3,334,478 5 7.6

Zeigler Coal & Coke Co, 3,076,732 6 7.0

Ayrshire Collieries Corporation 2,343,786 7 54

Midland Electric Coal Corporation 2,340,470 e: 5.3

Sahara Coal Co., Inc. 1,565,160 on 3.6

Stonefort Corporation 1,088,962 10 2.5

Southwestern Illinois Coal Corporation 956,347 1 2.2

Mid-Continent Coal Corporation 823,966 12 1.9

Saxton Coal Corporation 637,262 13 1.5

Union Colliery Co.. “ : 517,332 as 2.3

Morgan Coal Company 573,232 15 2.3

Lumaghi Coal Company : 522,368 ws 1.2

“ttle Dog Coal Company 375,59% 17 9

116 remaining companies 23049 296 4.7

TOTAL 1958 Production .

of Coal in Illinois 43,777,130 100.0

2/ Production in excess of 300,000 tons.

2/ See Deposition Transeript of Frank M. Bugent, p. 62.

PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES

The United Electric Coal Companies

Zeigler Coal & Coke Co.

Midland Electric Coal Corporation

Ayrshire Collieries Corporation

Sahara Coal Co., Inc.

Southwestern Illinois Coal Corporation

Stonefort Corporation

Mid-Continent Coal Corporation

Morgan Coal Company

Saxton Coal Corporation

Lumaghi Coal Company

Little Dog Coal Company

106 remaining companies

4 76h 482

3,757,366

3,661,202

3,275,092

2,482,668

2,393,452

1,637,452.

1,138,132

941,807

' 917,139

669,672

564 ,289

505,458

327 ,830

2 ,891..433

" 45,374,626

i/ Production in excess of 300,000 tons.

2/ See Deposition Transcript of Frank M. Nugent, p. 62.

Not agreed to by Plaint

oo @eort Aw & w

Source: Coal Report of Illinois, 1959, Department of Mines and Minerals,

State of Illinois, Table 10, pages 34-5k,

Gx 65

PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES

AND THEIR SUBSIDIARIES 1/ FOR THE 1960 CALENDAR YEAR

Production Percentage

of Coal of Total

Hame of Company in_ Tons Rank =ss- Production.

Peabody Coal Company 9,418,967 1 20.5

General Dynamics Corporation 6,833,842 2 14.9

Freeman Coal Mining Corporation , (3.6)

Orient No, 2 Coal Company 599,714 ( 1.3)

Truax-Traer Coal Company 4,927,195 3 10.8

The United Electric Coal Companies 4,232,072 4 9.2

Old Ben Coal Corporation 3,512,214 5 ToT

Zeigler Coal & Coke Co, 3,429,098 6 7.5

Midland Electric Coal Corporation 2,557,304 1 5.6

Ayrshire Collieries Corporation 2,165,026 8 4,7

Sahara Coal Co,, Inc. 1,722,557 9 3.8

Mid-Continent Coal Corporation 936,468 10 2.0

Southwestern Illinois Coal Corporation 933,759 1 2.0

Stonefort Coal Mining Co., Inc. 882,755 12 1.9

Saxton Coal Corporation 711,733 13 1.6

Morgan Coal Company 668 ,019 14 : £53: *

Lumaghi Coal Company 563,963 15 1.2

Little Dog Coal Company 358,171 16 8

82 remaining companies 1,968 493 4.3

TOTAL 1960 Production

of Coal in Illinois 45,820,632 100.0

1/ Production in excess of 300,000 tons.

Source: Coal Report of Illinois, 196), Department of Mines and Minerals,

State of Illinois, Table 10, pages 34-55.

Peabody Coal Company 9,732,236

Freeman Cosl Mining Corporation,

subsidiary of General Dynamics

Corporation 6,610,362

Truax-Traer Coal Company 4 454 663

The United Electric Coal Companies 4,420,690

Old Ben Coal Corporation 3,453,795

Zeigler Coal & Coke Co, 3,390,770

Midland Electric Coal Corporation 2,367 ,667

Ayrshire Collieries Corporation 2,270,004

Sehara Coal Co., Inc. 1,769,638

6 @ a2 GQ @ FF we ©

Southwestern Illinois Coal Corporation 939,455

Stonefort Coal Mining Co., Inc. 909,769

Mid-Continent Coal Corporation 822,111

Saxton Coal Corporation 700,002

Morgan Coal Company 4 556,207

Lumaghi Coal Company 536,071

Little Dog Coal Company 312,192

TT remaining companies 1,886 895

TOTAL 1961 Production

of Coal’ in Illinois 45,132,526

"/ Production in excess of 300,000 tons.

Source: Coal Report of Illinois, 1961, Department of Mines and Minerals,

State of Illinois, Table 10, pages 34-53.

Gx 67

PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES

AND THEIR SUBSIDIARIES */ FOR THE 1962 CALENDAR YEAR

of Coal of Total

Name of Company -intons. Rank Production

Peabody Coal Company 10,495,479 << 21.7

Freeman Coal Mining Corporation,

ov Ay iene ate 6,841,632 3 2 1k,2

Or yiea-tease invention 5,021,377 3 10.4

- The United Electric Coal Companies & 846 ,926 4 10.0

014 Ben Coal Corporation 3,804 ,213 5 T.9

Zeigler Coal & Coke Co. 3,435,225 6 Tol

Midland Electric Coai Corporation 35379 443 7 7.0

Ayrshire Collieries Corporation 2,432,261 8 5.0

Sahara Coal Co., Inc. 1,929,781 9 4.0

Stonefort Coal Mining Co., Inc. 1,160,576 20 2.4

Southvestern Illinois Coal Corporation 1,062,503 bi 2.2

Saxton Coal Corporation 656,757 12 1.4

Morgen Coal Company 505 ,698 13 1.0

Lumaghi Coal Company 486,582 us 1.0

Little Dog Coal Company 318 ,096 15 °T

63 remaining companies 5977384 4.1

TOTAL 1962 Production

of Coal in Illinois 48,353,913 100.0

*/ Production in excess of 300,000 tons.

Source: Coal Report of Illinois, 1962, Department of Mines and Minerals,

State of Illinois, Table 10, pages 30-47.

PRODUCTION OF COAL Is ILLINOIS BY THE LEADING COMPANIES

AND THEIR SUBSIDIARIES */ FOR THE 1963 CALENDAR YEAR

Hame of Company

Peabody Coal Company 15,110,212

Freeman Coal Mining Corporation,

subsidiary of General Dynamics

Corporation 6,928,804

Consolidation Coal Co.,

Truax-Traer Division 5,296,352

The United Electric Coal Companies 4 944 .935

Ola Ben Coal Corporation . 4,120,778

Zeigler Coal & Coke Co. 34339199

Ayrshire Collieries Gergeeetian 2,957,497

Sahera Coal Co., Inc. » 2,137,753

Storefort Coal Mining Co., Inc. 1,322,879

Southwestern Illinois Cosl Corporation 985,730

Young's Coal Corporation ! 640,660

Lumaghi Coal Company 528 ,864

Morgan Coal Company 352,968

Crab Orchard Cooperative Coal Co. 308 , 642

J. W. Coal Company, Inc. 300,132

63 remaining companies -24377.026_

.. TOTAL 1963 Production

of Coal in Illinois 51,642,431

®/ Production in excess of 300,000 tons.

Source: Coal Report of Illinois, 1963, Department of Minds and Minerals,

State of Illinois, Table 10, pages 30-k7.

GX 69

Production Percentage

of Coal of Total

Name of Company in Tons Rank Production

Freeman Coal Mining Corporation, ‘

subsidiary of General Dynamics

Corporation 7,017,031 2 12.8

The United Electric Coal Companies 5,793,936 ig 10.6.

Consolidation Coal Co.,

Truax-Traer Division 5,736,485 4 10.4

Old Ben Coal Corporation 4 540,879 5 8.3

Ayrshire Collieries Corporation 2,888 ,888 7 5.3

Sahara Coal Co., Ince 2,262,351 — 8 4.2

Southwestern Illinois Coli’ Gorporation 1,824 449 9 3.3

Stonefort Coal Mining Co., Inc, 1,242,306 10 2.3

Young's Coal Corporation ; 609 ,656 11 1.1

Little Dog Coal Company 373,937 12 oT

J. W. Coal Company, Inc. 338,732 poe 6

58 remaining companies . 2.216.535 4.0

TOTAL 1964 Production

of Coal in Illinois 54,834 ,488 100.0

*/ Production in excess of 300,000 tons.

Source: Coal Report of Illinois, 1964, Department of Mines and Minerals,

" State of Illinois, Table 10, pages 30-47.

‘

Gx 70

, PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES

AND THEIR SUBSIDIARIES */ FOR THE 1965 CALENDAR YEAR

v Production Percentage

: of Coal of Total

Rame_of Co=vany —~ntoms_ Rank Production

Peabody Coal Company 17,111,524 1 29.4

Freeman Coal Mining .

subsidiary of General Dynamics

Corporation 7,257 ,856 2 12.5

Consolidation Coal Con,

. Trwex-Traer Division 5,471,467 3 9.4 .

The United Electric Coal Companies 5,348,641 ‘ 9.2

Southwestern Illinois Coal Corporation 5,130,198 5 8.8

Old Ben Coal Corporation 4,720,256 6 8.1

Zeigler Coal & Coke Co, 3,500,132 T 6.0

Ayrshire Collieries Corporation 2,693,198 8 4.6

Sahara Coal Cons Ine. 2,379,692 9 4.1

Stonefort Coal Mining Co., Inc. 1,386,169 10 2.4

Little Dog Coal Company 378,980 u ~ 6

J. ¥. Coal Company, Inc. 378,419 12 6

New Gallatin Coal Co. 328,765 13 6

Youngs" Coal Corporstion 327,640 1 6

Big Muddy Coal Company 319,105 is 5

bk rexzaining companies w29500.238 2.6

TOTAL 1965 Production

of Coal in Illinois 58,232,480 100.0

®/ Production in excess of 300,000 tons.

Source: Coal Report of Illinois, 1965, Department of Mines and Minerals,

State of Illinois, Table 10, pages 30-45.

*/ Production in excess of 300,000 tons,

Source: Coal Report of Tlliscis, 1966, Dapartuent ef Mines and Minerals,

State of Illinois, Table 10, pages 30-43.

20,158,264 2/

General Dynamics Corporetion & .787

Freeman Coal Mining Corporation ¥

The United Flectric Coal Companies 5,743,292

Southvestern Illinois Coal Corporation 7,526,586

Consolidation Coal Co. (a subsidiary

ef Continental Oil Co.), ,

Truax-Traer Division 6,906,346

Old Ben Coal Corporatior 5,989,539

Zeigler Coal & Coke Co. 2,898,399

Sahara Coal Co., Inc. 2,550,507

Ayrshire Collieries Corporation 2,367,963

_ Main Line Coal Corporation 587,784

Little Dog Coal Company 416,049

29 remaining companies ond 9289.507

TOTAL 1967 Production

ef Coal in Illinois 64 614.772

1/ Production in.excess of 300,000 tons.

2/ Pursuant to Final Judgment dated October 23, 1967 in United States v.

Peabody Coal Company et al., Civil Action Mo. 67 €-1621 (".D. Illinois),

1967 Trade Cases Sec. 72,213, Peabody is to divest itself on or before

October 23, 1969 of mines having annual production of 6,000,000 tons of coal.

In compliance with this judgment, Peabody is in the process of selling its

Mecco, Allendale, and Elm (a combination of the Bright Star, Middle Grove,

and Elwood [not in production in 1967] mines) Mines, all of which are

located in*Illinois. In 1967 these mines produced a total of 2,495,297

tons of coal. .

Source: Coal Report of Illinois, 1967, Department of Mines and Minerals,

State of Illinois, Table 10, pages 30-43.

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SALES OF COAL IN ILLINOIS BY THE LEADING COMPANIES

AND THEIR SUBSIDIARIES IN 1967

(From Mines Located in Eastern Interior Coal Province)

Sales Percentage

of Coal of ‘Total

Name of Company infons_ = Rank =_Sales,

Peabody Coal Company 13,320,890 1 28.5

General Dynamics Corporation a 2 16.1

Freeman Coal Mining Corporation pe ( 8.4)

The United Electric Coal Companies 3,598,585 ( 7.7)

Southwestern Illinois Coal Corporation ~ 5,535,700 3 11.9

Consolidation Coal Co. (a subsidiary

of Continental Oil Co.),

Truax-Traer Division & 363,324 4 9.3

Ayrshire Collieries Corporation 1,998,329 5 4.3

Old Ben Coal Corporation 1,970,377 6 h,2

Sahara Coal Co., Inc. 1,520,214 T 3.3

Zeigler Coal & Coke Co, 1,092,481 8 2.3

The Pittsburg & Midway Coal Mining Co.,

subsidiary of Gulf 0il Corporation TkO,515 1.6

Island Creek Coal Co., z

West Kentucky Division bk2 737 10 1.0

TOTAL of Leading Companies 38,516, &7% 82.5

TOTAL SALES of coal in Illinois 46,710,000

ree: Ansvers to Government's questionnaire of July 15, 1968 and

Deposition Exhibit No. 3.

Ayrshire Collieries Corporation

The United Electric Coal Companies

Truax-Traer Coal Company 3/

Zeigler Coal & Coke Co, 4/

014 Ben Coal Corporation ¥

The Pittsburg & Midway Coal Mining

Co.

Midland Electric Coal Corporation 6/

Sahara Coal Co,, Inc. J/

Snow Hill Coal Corporation

The Maumee Collieries Company

Fnos Coal Corporation

Stonefort Corporation 8/

TOTAL of Leading Companies

TOTAL PRODUCTION in Illinois,

Indiana and Western Kentucky

See footnotes un page 2,

6,905,475

6,531,986 3

5,778,910 5

& ,512,096 5 4.9

& 162,618 6

3,611,108 © T

3,500,262 8

2,514,432 9

2,410,088 10

1,797,438 pel 2.0

1,795,801 12

1,626,542 13

1,576,476 1a 1.6

24153,538 8915 1.3

68,029,632 Th.

91,839,000

Agreed to by Pleiatiff

Not, Agreed to by Defendants

‘L) «Production in excess of 1,000,000 tons.

= 1957 Coal Report of Illinois shows 6,251 tons less for Peabody Coal

3/ 195T Coal Report of Illinois shows 7,745 tons more for Truex-Traer

Company.

4/ 1957 Coal Report of Illinois shows 59557 tons more for Zeigler Coal

& Coke Co,

S/ 1957 Coal Report of Illinois shows 19,001 tons more for Old Ben Coal

Corporation, ue

&/ 1957 Coal Report of Illinois shows 42,842 tons less for Midland

Electric Coal Corporation.

7/ 1957 Coal Report of Illinois shows 208,084 tons less for Sahara Coal

Co., Inc.

8/ 1957 Coal Report of Illinois shows 9,l4h tons less for Stonefort

Corporation,

Source: "Report of Mine Performance . . . January through December,

1957 and 1958, for Illinois, Indiana and Western Kentucky,

by districts" published by Mid-West Coal Producers Institute,

Inc.; and Bituminous Coal Facts, 1964, published by National

Coal Association.

014 Ben Coal Corporation 6/

The Pittsburg & Midway Coal Mining

Co.

Midland Electric Coal Corporation 1/

Sahara Coal Co., Inc. 8/

Snow Hill Coal Corporation

Enos Coal Corporation

Southvestern Illinois Coal Corporation 9/ 2,155,388

TOTAL of Leading Companies

TOTAL PRODUCTION in Illinois,

Indiana and Western Kentucky

See footnotes on page 2.

22,936,841

6,858 695

6,135,629

6,000,488

4, 76h, 483

4,338,544

4,227,866

3,757 ,367

3,177,063

2,441,212

1,787,293

1,471,166

1,403,958

70,45, 489

89,886,000

“1/ Production in excess of 1,000,000 tons,

2/ 1959 Coal Report of Tlinais shove 5,329 tons more for Peabody Coal

3/ 1959 Coal Report of Illinois shows 2 tons less for Truax-Traer Coal

Company . - ;

4/ 1959 Coal Report of Illinois shows 5,516 t¢ for The United

Be po ee nl eB

7T/ 1959 Coal Report of Illinois shovs 41,556 tons more for Midland Electric

Coal Corporation.

8/ 1959 Coal Report of Illinois shows 149,842 tons less for Sahara Coal

Co., Inc.

9 1959 Coal Report of Illinois shows 17,252 tons léss for Southwestern

Coal Corporation.

Inc.; and Bituminous Coal Facts, 1968, published by National

Coal Association. p

Name of Company

Peabody Coal Company 2/

General Dynamics Corporation

The United Hleceris Coat Consentes 4/

Old Ben Coal Corporation

Island Creek Coal Co.,

West Kentucky Division

Ayrshire Collieries Corporation

Southwestern Illinois Coal Corporation

The Pittsburg & Midway Coal Mining Co.,

subsidiary of Gulf 011 Corporation

Consolidation Coal Co. (a subsidiary

of Continental 011 Co.),

Truax-Traer Division 5/

Zeigler Coal & Coke Co. &/

Sahara Coal Co., Inc. 7/

‘TOTAL of Leading Companies

TOTAL PRODUCTION in Illinois,

Indiana and Western Kentucky

See footnotes on page 2.

48,808,013 3/

14,123,596

8, 380,496

5, 743,098

9,457,647

9,060,961

8,606,021

7,526,586

7,051, 786

6,906,344

- 3,940,921

2,823,526

118,303,399

129,500,000

* + If Production in excess of 1,000,000 tons.

2/ 1967 Coal Report of Illinois shows 15,832 tons less for Peabody Coal

Compaay. <

3/ Pursuant to Final Judgment dated October 23, 1967 in United States v.

Peabody Coal Company et al., Civil Action No. 67 C 1621 (N.D. Illinois),

1967 Trade Cases Sec. 72,213, Peabody is to divest itself on or before

October 23, 1969 of mines having annual production of 6,000,000 tons of

coal. In compliance with this judgmeat, Peabody is in the process of:

selling its Mecco, Allendale, and Elm (a combination of the Bright Star,

le Grove, and Elmwood [not in production in 1967] mines) Mines, all

of which are located in Illinois. In 1967 these mines produced a total

of 2,495,297 tons of coal.

This figure includes 1,436,358 tons sold by Squaw Creek Mine and

4,625,455 tons sold by Sinclair Mine during 1965 since production figures

for these two mines were not available. The Squaw Creek Mine is operated

pursuant to a joint veature between Peabody and Aluminum Company of America.

The entire production of the mine is consumed by Alcoa and is aot available

for sale on the open market. Peabody receives 40 per cent of the operating

profits from this mine.

4/ 1967 Coal Report of Illinois shows 193 tons more for The United

Electric Coal Companies.

5/ 1967 Coal Report of Illinois shows 2 tons more for Truax-Traer

, Division of Consolidation Coal Co.

$&/ 1967 Coal Report of Illinois shows 1 ton less for Zeigler Coal &

Coke Co.

Z/ 1967 Coal Report of Illiacis shows 273,019 tons less for Sahara

Coal Co., Inc. .

tea

Source: "Report of Mine Performaace . . . January through December,

1966 and 1967, for Ilbinois, Indiana and Western Keatucky,

by districts" published by Mid-West Coal Producers Iastitute,

Inc.; Bituminous Coal Facts, 1968, published by National

Coal Association; and Peabody's Answers to Government's

Questionnaire of July i5, 1968.

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Acs

The United Electric

Coal Companies

Source: Ansvers to Government's Questionnaire of July 15, 1968;

Letter with attachment from John P, t, Dairyland Power

Cooperative, to the Department of Justi ted April 23, 1968;

Letter with attachments from V. H, Wood, Northern States Power

Co., to the Department of Justice dated May 31, 1968; Letter

from Stewart W, Smith, Jr., Union Electric Company, to the

Department of Justice dated March 5, 1969; Letter with attachment

from William R. Engelhardt of Norman, Engelhardt, Holland, Billick,

Franke & Lauritzen to the Department of Justice dated July 19, 1968;

and Letter with attachments from A, Kraakevik, Illinois Power

Company, to Department of Justice dated March 12, 1968.

CENTRAL ILLINOIS Pusuic Szrvicz Company

——

SPRINGFIELD, ILLINOIS 62701

October 28, 1986

of Justice

Room 2634 United States Courthouse

Chicago, Illinois 60604

The*names of all coal suppliers for the years 196i,

and 1965 are included on the attached tabulation.

Amount of coal in dollars and tons purchased is

included in tabulation with 1.

Purchases of coal mined out-of-State by tons is

included in tabulation with 1.

For many years it has been our practice to

negotiate on an individual basis the terms of our

coal purchases from our several coal suppliers,

Several factors are considered in our coal

purchasing decisions. Among these factors are:

type of product (dust, screenings, carbon, etc,),

BTU content, cost per million BTU (P.0.B.

plant), sulfur and other impurities content,

moisture content, amount of resulting ash,

Based upon the application of such factors, our coal

purchases from Freeman Coal Mining Corporation and

' The United Electric Coal Companies have resulted in

j ~ : Py = ; ie ;

; GEPARTMENT OF JUSTICE | se two companies being among the principal

OCT $1 1966cEN

liers of coal to two of our four electric

‘

DWVISIGS «2 RECOREDS erating stations (no coal is purchased from either

' for use at our other two generating stations).

Fae In 196k Freeman provided 2.8 percent and United

us" = Electric 2.9 percent of the total coal

at one of the generating stations,

generating station the amounts

and 23.8 percent, respectively. Similarly, in 1965,

Page 2

October 28, 1966

The Honorable Donald F, Turner

Assistant Attorney General

United States Department of Justice

the relationships were 22.2 percent for Freeman and

3.0 percent for United Electric at the first station

and 12.1 percent and 26.5 B ee secy respectively, for

the second station. All factors considered, we have

found the two companies to be competitive.

S. We do not know what effect, if any, there would be

upon this company or other public utilities if

General

Dynamics tion were to be successful

in acquiring all of stock of The United Electric

Coal Companies.

We trust that the above information is sufficiently complete for

your purposes.

Yours very truly,

019°9

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S96 9 9961 - Sasvaouna TVOD ,

ILLINOIS PON ER COMPANY

Sie South Weh Ssreet ;

Decatur, Hlinois 62525

October 17, 1966

Mr. Sertram MN. Long

Assistant Chiet, Midwest Office

Antitrust Division

Unitec States Department of Justice

Room 2634 United States Courthouse

Chicago, Illinois 60604

Dear Mr. Long:

Both United Electric Coal Companies and

Freeman Coal Mining Corporation have bid

on supplying coal to our company. Other

area coal suppliers also havifig bid for

these requirements has satisficd us that

the two named companies you have questioncd

have in fact held themselves out to be conm-

petitors.

I regret that due to my absence from the office for a

few days that there has been a delay in ey to your

letter.

Very truly yours,

Illinois Power Company

Mee bed

A. Kraakevik *

Vice President

122

mo uors YORER OG.

Zeas oF oo} Purchased 1965

‘ ; * ‘Tocai ”

Bavana = Hesnevin Versilion Wood River _ Tons: Total Dolla

sowvevy

Pssctiss Son) Mag Est -" . 215,331» 116,960 “332,271 1,539,568.02

See : Oey OF NE ee Stace sy le Sita i ewe pete te ereey

waseS Elec. = (Banner) ‘ > 66 ,606 - Hp -

wa-sue Blas. = (. Moore) - - 875 °

: . 28.00

Ld > ~20,176 80,526.00

Veowy Csar Ss.

Tots. Toms Received 329.710 796,656 = 472,238 1,555,569 3,142,171 $14,217 856.33

(#1 ,489 848.60)

($3 990,698.60)

($2,227 »223.41)

(96 ,510,085.72)

($14 ,217 ,856.33)

Ba Setumerrmyen

‘ ; 10-11-66

——

Seats _PISSR CO.

- - 33.605 285.277 163,785 660,468.93 |

)

“ Re 3

apc aemees Ce iat 6 eer ee ee PCy

say : : 8,789 : 8.789 _ 26,367.00

wish Dane Joveiwed 360,581 «-782,576 485,784 942,818 2,570,759 $11,981,610.96

($1,683,118. 10)

($3 906,312.46)

($2,295 819.62)

($4 ,096 360.78)

($11,981 610.96)

124

Centra I”umvors Exectric anp Gas Co.

United States Department of Justice

Room 2634, United States Courthouse

Chicago, Illinois, 60604

Attention: Mr. Donald F. Turner,

Assistant Attorney General

Dear Mr. Turner:

This is in reply to your letter of October 14, 1966, in which you ask a

series of questions relative to our coal purchases:

1. The names of the firms which supplied us with coal

during the years 1964 and 1965 are the Old Ben

Coal Corporation, 10 South Riverside Plaza, Chicago;

Republic Coal & Coke Co., 8 South Michigan Avenue,

Chicago; Truax-Traer Coal Company, Division of Con-

solidation Coal Company, 524 Commercial National Bank

Building, Peoria, Illinois; The United Electric Coal

Companies, 307 North Michigan Avenue, Chicago; and

Peabody Coal Company, 122 West Washington Avenue, Madi-

son, Wisconsin.

2. The amount of coal in dollars and tonnage is as

follows:

1264

as tienen eet ——— Toms ____Dollars __

United —31.688 = _189,520

212,095 $798,263

" 1265

United

38.804 143,692

217,715 $835, 505 yasery

; DEPARTMENT OF JUSTICE

OCT 24 1966 gH

RYisiOR cr GECORDS g;

-_f

125 \

3. During the years 1964 and 1965, the coal purchased from

Republic was mined in Indiana. All other coal was mined

in the state of Illinois. : :

4. Our present contracts with the abovementioned coal com-

panies were entered into in 1961 for a period of five

years. Our records do not show whether Freeman Coal entered

a bid at that time. We are at present inviting bids from the

abovementioned companies and others, including Freeman, for

our future coal supplies. At the present time we have had no

formal bid from either United or Freeman.

5. We do not feel that the elimination of United Electric as

an independent coal supplier would in any way affect our

operation.

a ’

I trust that I have answered these questions to your satisfaction.

Commonwealth Edison

Sephseatien for

COMMENMEALIN EDSON bape Aeteacon mais toe

adhe Bison is an Tilinois corporation, with its principal

office at One First National Plaza, Chicago, Illinois. It is

_, Sngaged in the business of supplying electricity to the public in:

__ Suen oity and 4m the northern part of the State of Iiiinois, and

-4is a public utility subject to the ‘Jurisdiction of this Commission.

we § price of fuel, principally coal and nuclear

BAison is required to and does purchase large quantities of

such fuels and is required to and does make forward comaitmenta

for the purchase of such fuels for supply to its generating stations.

3. Fossil fuel procurement has become increasingly

difficult. The growth of nuclear power has had the effect of making

coal mine operators reluctant to open new coal mines in and near

Edison's service territory. Restrictions on the use of coal with

sulfur contents characteristic of the major reserves in the areas

in or near Biison's service territory have had a sinilar effect.

wn addition, large quantities of"ccal reserves in such areas are

being acquired by petrochemical and other companies which have

potential uscs for such reserves other than their exploitation for

"fuels for electric Grraenting stations.

127

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ae “he "iid “tina‘Ab) ie etaddup short-inas siehten 40, ths

“acquisition of yellowoake, Which contains the natural uranium

Fequired as the rav'material for miclear fuel, the extent of ;

- uranium reserves is uncertain. Indeed, the Atomic Energy Comis-—

“Sion has indicated that the reserves recoverable at $8.00 per pound

“Of yellowoake (a price somewhat above the current market) are

_ Sufficient to satisfy the demands for such fuel only through about

1979. Baison has purchased sufficient yellowcake, for future

‘delivery, to meet its nuclear fuel requirements through 1975, but _

how has under consideration the construction of additional niiclear

Units for which additional supplies of uranium must be arranged.

ae “Bs | Bison was one of the first companies to enter the

fiel4 of electric generation with nuclear power. Its Dresden —

“Unit 1, which went into service in 1960, was the first large-scale

entirely privately financed nuclear power plant. It has now operated _

Successfully for ten years. Bitson has also contracted for more 5

nuclear capecity than any other ‘Anvestor-omed utility. Its ates

809,000 kilowatt Dresden Unit 2 is now in preparation for commercial

"operation, which is expected to begin before the sumer of 1970.

At that time, it will be'the largest nuclear unit in comercial

service in the United States. Dresden tait 2/will be foLiowed by

’ Dresden Unit 3 and Quad-Cities Mits 1 and 2, par with a capability

of 809,000 kilowatts, and Zion Units 1 and 2, each with a capability

of 1,100,000 kilowatts. “Through extensive experience with the

operation of Dresden 1 and its procurement activities for the

subsequent units, Edison has developed specialized technological

capabilities in the proourenent and managenent of nuclear fuels.

6. A critical factor in the operation of nuclear plants

is computer technology. ‘Without ‘highly developed computer skil1s,

it is impossible to operate a nuclear plant; the utilization of

such skills has an important effect on the efficiency of fuel

Management and, consequently, on the cost of power from nuclear

oe am fe

power, 1t has applied these sktlls to the problens of nuclear fuel

management. 4A subsidiary to provide computer services both to

Bitson and to others, primarily utilities, would reinforce Riison's

own capabilities and be of advantage to other utilities.

Y a

mall number for several years. Edison believes that by making

available to such companies the advantages of its experience and

"background in nuclear fuel procurement, nuclear fuel technology and

computer applications, it can benefit them while improving at the

fame tine the security of its oun fuel supply, its ability to

Purchase nuclear fuels| advantageously, and the utilization of fuel

in its own reactors, — see

8. Accordingly, Edison proposes to establish a subsidiary

for the purposes, ancillary to its electric utility business, of:

. : (a) the acquisition and development of fuel reserves,

. both nuclear and fossil, capable of providing coenenseut and

" reliable supplies of fuel for electric generation, tie’ output

129

e&s

from such reserves to be made available to others when con

Bistent with Biison's own requirements, and the conduct of

such other fuel supply activities as may be reasonably related

; (b) provision to itself and others of nuclear fuel

Bison, therefore, requests the consent, authority and approval

‘Of this Comaission to and for the formation of a subsidiary, all

of the capital stock of which would be owned by Bison, and for the

investment in such capitel stock, without further order of the

Commission, of up to $10,000, 000. Ra

9. In connection with the establishment of such sub-

sidiary, Biison would propose to transfer thereto, at its cost,

certain contractual rights to land with associated coal reserves,

the nature and extent of which will be described in the testimony

herein, These reserves, however, will not be developed until

satisfactory means become available for limiting the aul fur

by-products in the stack effluents produced by burning coal of

the character contained in the reserves. Since no such means are

mow available, the subsidiary will initially simply hold and manage

ee ee ee ee ee

Gevelopment for coal mining.

Ses 10. Also, in the initial stages of the organization

and operation of the subsidiary, certain administrative, accounting

and other services to the subsidiary will be provided by Biison

at the cost to Biison of such services. Such costs to be incurred

by Bdison and reimbursed by the subsidiary will be limited to

$100,000 until further application to the Comission for approval

Of the terms of any arrangements between Biison and the subsidiary. |

al. Transactions other than those transactions above

- deverided between Bilson and its affiliated interest, the proposed.

‘Subsidiary, will be presented to the Comission for approval at —

“@uch times and in the manner required by law.

130

-5-

: Raison proposes to record its investment in the

cubsidiary and any profits or losses resulting therefros in

accordance Danae thee Umifora System of Accounts for

| Public utilities. ; RAID 28 eter girs rman

—% vamaeen: Edison requests consent, authority and

a eet forth an paragraph (8) above and to engage in transactinss

| sa ee nn emma tebaen an

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‘upon oath, depose and say that I am 47

Of COMMONWEALTH EDISON COMPANY, an Illinois corporation; that I

Ihave read the above and foregoing petition by me subscribed and

know the contents thereof; that said contents are true in substance

and in fact, sittin an: tn Chess. andere ctated pen ’nfoenaticn

mat Welaed, Gat aarte: Anetiny/ 3 eshtone. thn :sene:te bo twos.

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GOVERNMENT EXHIBIT 200

THE UNITED ELECTRIC COAL COMPANIES

Special Meeting of the Board of Directors

October 9, 1959

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GOVERNMENT EXHIBIT 201

THE UNITED ELECTRIC COAL COMPANIES

DIRECTORS’ MEETING

chase 2,529.10 acres

184

GOVERNMENT EXHIBIT 210

Information Testimony for

Illinois Commerce Commission Docket #55321

Comments on Fuel Resources and Pollution

in the Power Generation Industry

By Jack A. Simon

2/24/1970

et i o .

Table 1

Reported Uses of Coal Received by Consumers in Illinois

1944 and 1968

(Thousands of Tons)

Use 1944 1968 % Change

Electric utilities 10,242 28,221 +175.5

Coke and gas plants 4,198 8,069 — 26.9

Retail 14,595 3,312 — 773

Other? 12,941 8,863 — $1.5

Total 41,976 43,465 + 35

*Includes general industrial, railroad, and miscellaneous uses.

Source: U.S. Bureau of Mines Coal Distribution Reports.

Q. Will you comment on coal production in Illinois?

Exhibits 4a, 5a, 6a, 7a, 8a, and 9a present statis-

tical data on Illinois coal and certain relationships

to national statistics.

Is any part of the Illinois coal with relatively low-

sulfur content used for generating electric energy?

Yes, although I do not have data on quantity and

quality of coal shipments from the mines to specific

markets. From the principal low-sulfur coal areas,

premium coal for blending for use in metallurgical

coke production is now produced at an annual rate

of about 4 million tons per year. This coal is pre-

pared from naturally. a g low-sulfur coal, and

if some of the coal produced does not meet standards

for metallurgical coke production, primarily because

of higher ash and sulfur content, it is sold in other

markets. This less-than-premium-quality coal is, of

course, still relatively low in sulfur content com-

pared with most Illinois coal produced.

A steadily increasing use of Illinois coal in blends

to produce metallurgical coke in recent years is one

of the reasons for the extensive development of min-

ing activity in the low-sulfur coal area in Franklin

and Jefferson Counties, and, on a more modest scale,

for some expansion of activity in the relatively low-

sulfur coal area in Saline County.

Are there techniques of coal desulfurization other

than washing?

Yes. The coal can be converted to other fuels with

by-product recovery of sulfur. Of greatest long-term

interest is the possibility of producing liquid and

gaseous fuels from coal. Development of technology

to accomplish this conversion is well advanced and

pilot-scale plants are now in operation, although no

commercial] plants have been announced.

A report by H. E. Risser, entitled “Gasification

and Liquefaction—Their Potential Impact on Various

Aspects of the Coal Industry,” was published by the

Illinois State Geological Survey as Circular 430

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