22 THECUBAREVIEW 



REPORT (ABRIDGED) OF CUBAN TELEPHONE CO. 



The last annual reijort dated April 12 1916, covered in part the operations of the com- 

 pany up to March 31, 1916, with statements of assets and liabilities and revenue account to 

 December 31, 1915. The present report covers, as to figures, exclusively the operations of 

 the company for the year enciing December 31, 1916, and statements of assets and liabilities, 

 revenue account and statistical information are submitted accordingly. 



The net income for 1916 was $438,305.15 as against .$349,454.92 for 1915, a gain of 

 $88,850.23. 



During the year the sum of $392,236.94 was applied out of revenue to current niaintenance 

 and depreciation, showing an increase of $89,45/. 60 over 1915. 



The amount set aside for depreciation alone, during the year, was $234,262.00 , or $57,- 

 443.64 more than in 1915. This incease is principally due to a charge of $46,516.86 to prop- 

 erly adjust the value of material, equipment, tools, etc., which were carefully inventoried in 

 December last. 



All accumulated dividends on the preferred shares were paid on September 15, 1916, and 

 regular quarterly dividends of 1K% on these shares have been declared and paid on the 15th 

 day of October, 1916, and January 15, 1917. The board has also declared and paid on October 

 15, 1916, and January 15, 1917, dividends of 1 1^2% on the common shares 



The net earnings for 1917 should show a material increase over 1916 as the gross income is 

 increasing from month to month and rigid economy in operation, consistent with good service, 

 is being practiced. Without deducting the special depreciation on material, equipment, etc., 

 the earnings, after deducting the 6% dividend for the preferred shares, were equivalent to a 

 little over 6 6/10% on the common stock, on which 3% was paid from the earnings of 1916. 

 Subject to the continuance of satisfactory business conditions, there is every reason to expect 

 in 1917 net earnings, after preferred dividend, equal to 8% on the common stock. 



Plans are being prepared for three standard types of buildings which it is proposed to 

 build in the various towns where there are local plants and the company is now occupying 

 leased buildings. About twenty of these buildings, which will cost from three to five thousand 

 dollars, could be advantageously built within the next two to three years. 



The sale and delivery of $2,500,000 Collateral Trust Convertible 5% bonds was com- 

 pleted and from the proceeds of this issue all outstanding obligations of the company have been 

 paid, notably the loan of $1,000,000 from Messrs. Drexel and Company, of Philadelphia. 



The authorized capital stock of the company, was, as previously approved, increased to 

 $16,000,000, to wit, $2,000,000 in preferred shares and $14,000,000 common shares. The pres- 

 ent outstanding and issued shares remain the same as at Dec. 31, 1915, to wit: $2,000,000 

 preferred shares and $5,000,000 common shares. 



The following increases in plant value are of particular interest: Havana local plant, $280,- 

 197.68; other local plants, $121,523.93; real estate and buildings, $12,867.38. 



The number of exchanges operated by the company on December 31, 1916, was 36, of which 

 eight were automatic, and a total of 230 cities and towns were connected to the system. 



On December 31, 1916, there were 23,652 telephones in operation throughout ttie com- 

 pany's system as against 19,876 on December 31, 1915, an increase of 3,776 telephones during 

 1916. Undoubtedly an equal increase could be secured in 1917, but as it is very necessary to 

 rearrange and reconstruct our cable and wire distribution systems in Havana and some of the 

 other cities, which are now up to capacity, it is quite possible that we will have a smaller in- 

 crease in 1917 and a large increase in 1918. 



Since the last report the following Sugar Centrals have been connected with our system, 

 viz., Socorro, Algodones, Occidente, Triunvirato and Lhnones, making a total of 65 mills thus 

 far connected. 



An active campaign has been started to add as many more of the sugar mills as are within 

 reasonable distance of our lines and stations. Due, however, to the present high cost of all 

 material, the construction of several lines has been deferred, but it is expected that a number 

 of new mills will be connected during this year. 



The board has been actively co-operating with other interests towards the placing of a 



