This study is an estimate of the major units of work equipment which would be released or would not have to be purchased as a result of the proposed merger. The estimated savings may be summarized as follows:
W O R K E Q U I P M E N T
Maintenance
of Way and
Structures Operating Total
Net Cash Realized from Merger -
Estimated cost of new equipment,
the purchase of which would be
avoided as a result of merger $90,000 $ --- $ 90,000
Estimated salvage of equipment
released as a result of merger 7,697 22,046 29,743
Total Net Cash Realized from $97,697 $22,046 $119,743
Merger
Estimated Savings in Expenses
Estimated normalized maintenance $14,963 $ 4,003 $ 18,966
Annual depreciation on equipment
not purchased or released 4,347 2,483 6,830
Total maintenance and depreciation $19,310 $ 6,486 $ 25,796
Estimated cost of keeping wreckers
hot in winter --- 907 907
Annual interest at 5% -
on 50% of cost of new equipment
not purchased 2,250 --- 2,250
on 100% of salvage value of
equipment released 385 1,102 1,487
Total Interest $2,635 $1,102 $3,737
Estimated Total Annual Savings $21,945 $8,495 $30,440
A complete listing of all major units of work equipment presently owned, on order, approved for order, or scheduled for retirement as of December 31, 1956 was prepared by both roads. A "major unit" was defined as one costing $10,000 or more at current cost levels. These statements were analyzed by the Engineering and Operating Departments and by the Steering Committee on the basis of the following assumptions:
1. Approximately 100 miles of line and 327 miles of track would be retired. Approximately 696,miles of main track would be retired or downgraded to branch line standards, including about 75 miles of double track between Binghamton and Coming. The track between Binghamton and Coming may be retired under coordination prior to merger, but the surplus DL&W,equipment released thereby could only be used to best advantage after merger.
2. None of the remaining main track mileage would be downgraded to the extent that the cycle of tamping, bankwidening and other maintenance would be lengthened.
3. None of the remaining secondary track mileage would be upgraded.
4. Maintenance cycles for the merged company would be,the shortest time basis of any of the individual roads studied for comparable lines.
5. Where a road required more maintenance of way work equipment than was now owned, the study assumed that such road would purchase the units required for its own use separately and that savings from merger would be estimated by comparing the total eventual ownership of the two companies separately with the total, requirements of the merged company.
On the above basis, it was determined that the following units of work equipment would be released by the new company:
Maintenance of Way and Structures
1 File Driver
1 Scale Test Car
1 Spreader Car
2 Locomotive Cranes
Operating Department
2 Wrecking Derricks
1 Flanger
1 Business Car
In addition, it was determined that under merger conditions, it would be unnecessary to purchase two Power Tampers which would otherwise be required.
