Northeast Airlines Annual Report 1968
Cover Photo:
Nassau, the fashionable tropical
resort in the Bahamas, at dusk,
with the harbor and Paradise
Islanrl in the foreground.
Authorization to serve the
Bahamas from New York and
Boston was the highlight of the
year for Northeast.
Northeast's fl eet of 38 Y ellowbirds is one of th e industry's most modern.
To the Stockholders of Northeast Airlines
The operations of your company during 1968 reflect a continued pattern of growth which
is characteristically expensive, yet we are encouraged by the long range outlook.
The Civil Aeronautics Board has granted an increase in fares effective February 20, 1969,
for which we are most grateful.
Unfortunately, these fare increases do not cover our increased cost of operations in spite
of all the strenuous efforts on the part of our management to hold same in check,
but we hope for further relief in this soon.
More specific and detailed comments on our operations and growth are contained in
our President's report.
Thinking personally, I am deeply appreciative of the fine efforts of all our employees.
Sincerely,
~k
George B. Storer
1968 at a Glance
HIGHLIGHTS
Northeast traffic and revenues reach all-time highs; unit costs reduced 20%.
Civil Aeronautics Board awards Northeast Boston/ New York-Bahamas, Boston-Bermuda
and Northern New England-Great Lakes routes.
Northeast, with Prime Minister Lynden 0. Pindling as its guest, inaugurates service
to the Bahamas.
Northeast institutes service in additional East Coast-Florida markets; jet service
inaugurated to Portland, Maine and Hyannis and Nantucket, Massachusetts.
Northeast successfully launches "all-steak airline" advertising campaign and dramatically
increases penetration of highly competitive Florida markets.
Northeast agrees to purchase eight Lockheed L-1011 Tri-Star jumbo jets; five new
Boeing 727-200 "stretch" jets placed in service.
Northeast orders computerized reservations and electronic flight information systems.
Northeast adopts more efficient "phase maintenance" program; expands pilot training.
PER CENT
OPERATIONS 1968 1967 CHANGE
Operating Revenues $111,705,289 $75,757,301 * +47.5
Opera ting Expenses $110,845,685 $81,600,742 +35.8
Net Loss $ 2,422,389 $ 9,336,659* -74.1
Revenue Passengers Carried 3,114,239 2,399,015 +29.8
Available Seat Miles 3,832,475,000 2,234,209,000 +n.5
Revenue Passenger Miles 1,805,669,000 1,186,321,000 +52.2
Passenger Load Factor 47.1% 53.1%
* A Civil Aeronautics Board order placed North east on a subsidy-free basis beginning January 1, 1968. For comparative
purposes, operating revenues and net Jo ss for 1967 have been restated to exclude subsidy of $2,823,000. The year 1967
included a provis ion of $1,300,000 for loss on disposal of aircraft and parts .
1
To our Stockholders
James 0 . Leet, President, left, with George B. Storer, Chairman of the Board.
2
It is with deep regret that we note the
passing of two of our Board members,
James F. Fitzgerald in June 1968, and
Eugene L. Vidal in February 1969.
During the long years of their devoted
service, they made significant contri-
butions to the growth and development
of our company.
The year 1968 marked the thirty-fifth
anniversary of our company registering
it as one of the founding institutions
of our nation's air transport system.
With the passing of this significant
milestone, it is gratifying to observe the
progress that has been made in bringing
our "Yellowbird" service to a record
number of customers.
The keynote of 1968 was the out-
standing record of market expansion
registered by your company. The ability
to produce a fully competitive product
is essential to survival in the industry.
The men and women of Northeast
Airlines demonstrated their capacity for
significant market penetration and the
result was an important advance in our
market share in the highly competitive
Florida and Commuter Markets.
During 1968 the airline achieved
record gains in traffic and revenues. The
company carried more than 3 million
passengers and recorded a 47% gain in
revenues to $112 million from the $76
million (excluding subsidy) in the prior
year. In achieving this level of revenues,
the airline also increased its cargo and
charter revenues as well as its passenger
revenues.
For 1968, the company experienced
a net loss of $2.4 million. While achieve-
ment of a reasonable profit can be our
only goal, we are pleased to note our
progress over 1967. The loss of $2.4
million is an improvement of $6.9
million of the restated loss (to exclude
subsidy) of $9.3 million in 1967. This
improvement occurred in a year when
most of our nation's airlines suffered a
deterioration in profits.
Our financial performance was ad-
versely affected by the industry-wide
general cost-price squeeze. Under in-
flationary pressures, operating costs
continued to rise against fixed fare
levels. In addition, the company in-
curred unexpected costs arising from the
air traffic congestion crisis. Northeast's
concentrated dependence on operations
to and from the high density Northeast
Corridor made our airline particularly
sensi tive to the adverse impact of the
onges tion.
Increased costs for the use of scarce
airport facilities contributed significant-
ly to our loss during the year.
Our revenue yield continued to trend
downward during the year to 5.96
compared to 6.11 in the previous year.
The greater customer use of industry-
wide promotional fares and a shift in
the mix of long haul to short haul busi-
ness travel, produced the decline. On
February 20, 1969, the industry received
partial relief through a fare increase
granted by the Civil Aeronautics Board.
This increase should help to arrest the
declining yield trend. However, it is
essential that we obtain authority to
further increase our fare levels in order
to meet our expense levels which are
continuing to rise.
The substantial increase in revenues,
in spite of the decline in yields, was
accompanied by an essential decrease
in operating cost per available seat mile.
The reduction of 21% from 3.65 in
1967 to 2.89 in 1968, was the result
of continued cost control pressure-and
the availability for the first time of a
fully modern fleet of efficent Boeing
727, Douglas DC-9-30, and Fairchild
227 aircraft.
The fleet expansion program, so
active in prior years, continued
through 1968 with the integration into
our service of nine stretched Boeing
727-200 aircraft by the end of 1968.
This aircraft has been a most com-
petitive vehicle and the airline, during
1968, ordered an additional four
aircraft for delivery during 1969.
In response to our obligation to
maintain our competitive capability
and, in recognition of the operating
economics of advanced technology air-
craft, Northeast Airlines became one
of the first purchasers of the Lockheed
L-1011 Tri Star aircraft. Four of the 268
passenger aircraft have been ordered for
delivery in 1972. An additional com-
mitment was made to acquire a "second
buy" of four aircraft for delivery in
1973 and 1974. The exciting L-1011
will provide Northeast with high
capacity aircraft for use in its high
density medium and long haul markets,
and will enable the company to meet
the competitive challenge of the Boeing
747. The L-1011 brings to Northeast
an opportunity to withstand the grow-
ing congestion threat and, at the same
time, place into service an aircraft with
a lower noise level than most of to-
day's aircraft.
In addition to our aircraft plans,
the airline readied itself for the 1970
era of transportation by acquiring
other new equipment and facilities.
Construction is nearing completion
on the airline's new $2 million reser-
vations building located at Logan
International Airport in Boston.
Scheduled for completion in mid-1969,
the building will provide a central
headquarters for our new "Minuteman"
reservations system. The new facility
will also house training facilities for
our Customer Services and other
departments.
Expansion of facilities was also
undertaken at Andover, Massachusetts,
to house the additional IBM 360-65
computers and supporting equipment
required for the new reservations
system. Installation of the equipment
began in late 1968 and is scheduled
to be initially operational in mid-1969.
A full operational status will be reached
in 1970.
A programmed expansion of the
airline's route opportunity continued
to be a primary corporate goal during
the year. The highlight of the year was
the award o-f Northeast's second inter-
national route from Boston and New
York to the Bahamas. This route showed
rapid growth following our inaugu-
ration in May, 1968 and by the end
of the year our confidence in its profit
potential was confirmed.
Late in the year the company was
awarded two additional new route
segments which will be implemented
during 1969. On November 6, the com-
pany was certificated to provide
service between Maine, New Hampshire
and Vermont and the Great Lakes cities
of Detroit, Cleveland and Chicago. A
month later, the airline was selected
to become the second competitor on
another international route-Boston
to Bermuda. These routes are important
additions to Northeast's recovery pro-
gram. Although the three new routes
are relatively small by comparison
with the basic airline (the combination
is expected to produce approximately
9% of our revenue passenger miles
in the current year) they bring to our
system better seasonality and growth
characteristics than some existing
routes, and provide us with another
opportunity to demonstrate our
capability to take on expanded respon-
sibility in our nation's transport system.
The airline is continuing, in 1969, its
effort to expand its route opportunity
and is an active participant in a number
of current CAB proceedings where
the routes under consideration would
dilute the impact of seasonality, im-
prove the length of haul, grant us
increased access to traffic to and from
cities in which we operate, and improve
our profit potential. The company
believes it must acquire a major east-
west long haul route if it is to be a
viable member of the trunk line
industry in the future.
A number of appointments and
promotions were made during the year
as part of our continued commitment
to expand the excutive capability of
your company. In August, 1968 the
3
number of members of the company's
Board of Directors was increased to
twenty-one and Paul J. Dunphy, Vice
President of Finance and Treasurer, and
Lewis E. Lyle, Senior Vice President
of Operations, were elected members
of the Board and its Executive Com-
mittee. Other appointments during
the year were Dan A. Colussy, Vice
President-Marketing; Robert E. Griffin,
Vice President-Planning; G. Ward
Hobbs, Vice President-Public Affairs;
Edward E. Swofford, Vice President-
Sales; N. Ralph Tipaldi, Vice President-
Customer Services; and T. Bernard
Slattery, Vice President-Middle Atlantic
Region. Also, in January 1969, Dan D.
Chandler was appointed Vice President-
Flight.
As we look to the future, we see 1969
and subsequent years offering long-
term traffic growth and the opportunity
to participate fully in the exciting
process of entering a new era of air
transportation. We also see, however,
the threat inherent in the initial phases
of the industry's equipment expansion
programs, and in the continuing trend
of rising costs. No one challenge is
insurmountable, but we are commiting
ourselves to an arduous task before us.
On September 30, 1968, I became
President of your company. At that
time your management expressed its
personal dedication to accomplish the
tasks which are ahead. I am constantly
aware that this achievement will require
the combined efforts of all our em-
ployees, our stockholders, and our
directors and officers. With your con-
tinued support, loyalty, and enthusiasm,
our goals can be achieved.
Sincerely,
o~~~
President
Operations
The task of keeping our "Yellowbirds"
flying is the responsibility of Opera-
tions. With the introduction into service
of five new aircraft in late 1968 and
early 1969, our scheduled operations
activity was accelerated in preparation
for this expansion.
An extensive pilot training program
was launched at Bangor, Maine. The
company selected this site, away from
its home base, to insure the program's
safety and operational efficiency. The
fleet expansion required the addition of
144 pilots and 204 stewardesses. In the
relatively short span of three months,
230 pilots received initial or upgrading
indoctrination in one of the three types
of Northeast aircraft. To facilitate
their training, the company used a B-727
simulator, along with DC-9 and B-727
cockpit procedures trainers. Such train-
ing aids reduced in-flight training time,
minimizing the requirements and costs
of removing aircraft from revenue
service. The company's extensive jet
training program and advance planning,
made the assimilation of additional
aircraft an efficient one. In the mean-
time, peak performance was maintained
throughout the Northeast system.
In April 1968, Northeast became
one of the first airlines to order the
Lockheed L-1011 Tri-Star. Delivery
of eight Tri-Stars are scheduled to be-
gin in early 1972. In order to obtain
the benefits of standardization of the
L-1011, Northeast coordinated changes
in the aircraft's technical specifications,
with other airline representatives.
As a result of this special effort, manu-
facturing costs were reduced, resulting
in a lower aircraft cost for the com-
pany.
In support of the expanding jet fleet
the Company enlarged and modernized
its maintenance shop facilities. New
tools and test equipment were purchased
to provide the economy of in-house
repair and overhaul, as well as to im-
prove our quality standards. A new
jet engine maintenance repair shop was
opened at our hanger facility in Miami,
Florida. This shop, with the parts
overhaul support of our outside
overhaul agency, will perform the
majority of repairs and scheduled
maintenance actions on our engines.
Only those engines requiring the most
extensive repair, modification or over-
haul will continue to go to our outside
agency. We are achieving an overall
reduction in our projected engine
maintenance costs and the advantages
of a shorter elapsed time for the repair
cycle.
During the year, the block overhaul
maintenance program for our jet aircraft
was abandoned and replaced with a
progressive maintenance program
designated as "Phase Maintenance"
by the company. The concept and
achieved purpose of this program is to
provide more efficient use of aircraft,
manpower, parts, facilities and equip-
ment with attendant lower maintenance
costs and capital investment. The new
program will enable us to maintain a
relative constancy in shop workload
and a flexibility to accommodate the
unusual maintenance requirements of
individual airplanes. Instead of calling
4
in each aircraft after several thousand
hours of operation, the individual
maintenance needs of the specific
aircraft's structural areas, components,
and parts are incrementally time-
scheduled with maximum down times
of one, two or three days instead of
two to three weeks of massive disas-
sembly and overhaul. By the use of
careful inspection and statistical
methods, historical audits of mainte-
nance performance are made, to
determine when specific components
should be repaired or replaced. The
Federal Aviation Administration has
approved this "phase check" and
"reliability" concept and has allowed
the Company to establish many of its
own maintenance time intervals. The
new "Progressive Maintenance"
program improves our flight equipment
reliability, safety, and operational
performance.
The year 1968 was a period of great
change and achievement for Opera-
tions. The year 1969, will be devoted
to consolidating and refining our 1968
gains toward providing a dependable
scheduled airline service within the
highest standards of safety.
An extensive pilot training program was launched to keep pace with fleet expansion.
Maintenance shop facilities were enlarged and modernized.
5
New flight information display system provides up-to-date flight arrival and departure information for our passengers.
6
Customer Services
In 1968 the Customer Services Division
developed several major programs
aimed at providing our passengers
with the finest service available in the
airline industry.
The highlight of this program was
the Company's announcement of a
new IBM-developed reservations
system to be installed by mid-1969.
The high-speed electronic equipment
will permit the servicing of passengers'
requests for reservations in seconds.
The system also has a capacity to store
other airline schedules and availability
which permits faster, more efficient
handling of passenger requests.
In connection with the installation of
our new reservations system, we found
that it would be necessary to occupy
a new $2 million building to house our
reservations operations and to provide
training facilities for our Customer
Services division. Construction upon
the new building, which will adjoin the
Company's headquarters at Logan
International Airport, is scheduled
to be completed in late 1969.
A second major project of Customer
Services in 1968 was the design and
installation of a new flight information
display system. The new system con-
sists of television monitoring units
strategically located at passenger
service areas and selected gate areas
designed to provide our customers with
a visual display of up-to-date flight
arrival and departure information.
Installation of the system, on a pilot
project basis, has already begun at the
Company's terminal area at Logan
International Airport, and similar
installations are planned for Kennedy,
LaGuardia, Washington National,
Philadelphia, and Miami terminals.
When the system is fully operational
in late 1969, all Northeast stations will
receive flight information from its
Boston flight control center.
Customer Services also undertook
to modernize its internal procedures
so as to enable the Company to serve
its customers on a more efficient basis.
First in the airline industry, the
Company consolidated reservations and
ground services operations in the
Customer Services division, bringing
the benefits of computer technology
to airline passenger handling. Customer
Services also monitored closely the
airline's performance during periods
of peak traffic congestion and, as a
result, instituted procedures to reduce
controllable station delays. Up-to-date
new station facilities were acquired at
the Washington, Jacksonville, Portland
and Bangor airports.
With passenger traffic expected to
increase greatly in the years ahead,
Customer Services will aggressively
pursue its planned improvement pro-
grams for providing our "Yellowbird"
customers with a quality of service
unsurpassed in the industry.
7
Above:
Typical reservation agent's
position in new IBM reservation
system to be installed in
mid-1969.
Below:
New reservation building under
construction adjoining company
headquarters at Logan Inter-
national Airport.
In 1968 our Marketing effort achieved
another year of substantial growth in
all major markets. Total revenue in-
creased 47.5 per cent; revenue
passenger miles increased 52.2 per
cent and passenger traffic increased
29.8 per cent, surpassing the three
million mark.
Improvements and new programs in
a number of areas of Marketing activity
contributed to this impressive rate of
growth. While passenger revenue was
44.2 per cent greater than in 1967,
even more sizeable gains were made
in cargo and charter sales, two im-
portant sources of business that
received increased attention in 1968.
Cargo revenue in 1968 was 70 per cent
above that achieved in 1967, reflecting
a sales campaign directed at airfreight
forwarders and the addition of late-
night, cargo/passenger flights serving
Boston, New York, Philadelphia,
Baltimore and Miami. Charter revenue
more than quadrupled. 626 charter
flights carried 66,000 passengers to
numerous points both within and
outside the United States.
Much of the growth experienced in
1968 was the result of Northeast's
success in entering new markets. In
1968 Northeast began serving 13 new
markets, which contributed over
289,000 passengers and more than
$16 million in revenue.
Attention to specific market segments
was a key element of the 1968 market-
ing strategy. A special roadshow
introducing Northeast's new inflight
services was presented to 3,200 travel
agency personnel in 12 cities during
January. This program was followed
during the year by fourteen familiariza-
tion trips that enabled 500 travel agents
to personally experience Northeast's
new service. Special sales activities were
directed at tour operators, youth,
military, and convention markets. The
efforts of the sales force were further
supported by building or remodeling
Northeast's district sales offices and
city ticket offices in 13 locations, in-
cluding the Northeast ticket office on
5th Avenue, New York City.
In addition, four pre-inaugural
flights were used to publicize North-
east's new Bahamas service; as part of
the inaugural, Lynden 0. Pindling,
Prime Minister of the Bahamas, visited
Boston and addressed the Massachusetts
legislature.
In January of 1968, Northeast began
a bold and aggressive advertising cam-
paign that captivated the traveling
public, and impressed the entire travel
industry. Northeast's Yellowbird
identity was enhanced by its association
with a full complement of new services
for the passenger's comfort and con-
venience. These services included an all
steak food service broiled on board the
aircraft, full sized utensils, large pillows,
an expanded selection of magazines,
and furry lap robes. We became known
as " the all steak airline."
In 1968 a new Marketing Planning
Group was created within the Adver-
tising and Marketing Services De-
partment. Among other activities, this
group developed new sales and
marketing concepts and conducted
significant marketing research studies
in the areas of passenger characteristics
and attitudes, advertising and passenger
satisfaction with Northeast's service.
The Public Relations Department
made substantial contributions to
increasing public and employee aware-
ness of Northeast's operations. Over
300 press releases were issued in 1968,
8
with the travel industry press receiving
special attention for the first time.
Among the special efforts of this
department were an extensive program
for the Children's Foundation for
Cancer Research and a fashion show
in Vietnam staged by Northeast
stewardesses. The quarterly employee
magazine was converted to a monthly
publication, and company meetings
were arranged to inform employees
of Northeast's progress and activities.
The Flight Services Department
initiated a new system which helped
to improve quality control, develop
better qualified supervisors, and assure
better trained stewardesses. A new
research program developed a less
costly but improved food and beverage
service. New stewardess wardrobes
were designed and introduced in
January 1969.
In short, the Marketing effort made
a significant contribution to last year's
growth. The corning year of 1969
promises to be a challenging one, since
the industry will have "more to sell
to more air travelers". To attract the
discretionary passenger and widen
our corporate image, we have adopted
9
New modern City Ticket Office at 580 Fifth Avenue, N ew York City.
10
the new sales theme of providing
comforts for the "whole man". The
1969 campaign will show that we are
not concerned just with food, but with
all the needs of a traveler from slippers
for tired feet to a special closet in the
main cabin to hold wig boxes. Our
first ad summed up the campaign by
saying, "As of January 1, 1969, North-
east Airlines addresses itself to the
whole man".
While moving up to a "whole man"
theme, we will continue to build the
longevity of our very successful
"Yellowbird" concept by insuring
that our consumers have a positive
and meaningful reason to fly the
Yellowbird fleet.
INDUSTRIAL RELATIONS
1968 was the year of growth for
Northeast as far as personnel and
employee relations were concerned.
The number of the Company's
employees increased more than 20% to
a total of 4,504 employees. Fleet ex-
pansion required the addition of 144
Pilots and 204 Stewardesses. In order
to facilitate our hiring program, a new
employment office was opened at our
downtown location, 500 Boylston
Street, Boston.
Employees' salaries and related
benefits totalled more than $46 million
at year-end, up 34% from last year.
A new variable pension plan was made
available to all ground employees to
supplement the existing fixed benefit
plan. The group insurance plan was
reviewed and improved to keep pace
with the needs of our employees.
In labor relations, new agreements
were successfully negotiated with the
Station, Stores, Clerical and Radio
employees as well as the Stewardesses.
In addition, active negotiations were
being conducted at the end of the year
to bring about agreements with the
Pilots (which were concluded in early
1969) and the Mechanics.
Northeast employees are known
for their dedication to service. The
future growth of the company depends
upon each individual's loyalty and
support.
11
New stewardess wardrobes were designed
and introduced to the public in January 1969.
12
Efficient data processing at the new computer center at Andover, Ma ss. speeds the flow
of information essential to fast and effective management decisions.
Finances and Management Controls
On May 23, 1968, the stockholders
voted to amend the Article of Organi-
zation to increase the authorized shares
of Common Stock from 7,500,000 to
8,500,000 shares.
The company sold 311,122 shares of
Common Stock through a rights
offering to its stockholders. The
stock was offered at the rate of one
new share per each twenty shares of
stock held. The net proceeds from
the sale, amounting to $6,302,000, were
applied to the company's working
capital after repayment of advances
from Storer Broadcasting Company,
made in anticipation of the offering.
Early in 1968, we borrowed
$7,701,000 remaining under our 1967
Credit Agreement with Insurance
Companies. This cash was applied
towards the unpaid balance due on
three of our DC-9 aircraft, which were
delivered in January and February,
1968.
The company successfully negotiated
two investment tax credit lease agree-
ments for five Boeing 727-200 "stretch"
model Tri-Jets for thirteen year terms
with the Greyhound Leasing &
Financial Corporation and the GATX/
Boothe Corporation. Before year-end,
we obtained a letter of commitment
from the First National City Bank to
lease, on an equipment trust arrange-
ment, two additional Boeing 727-200
aircraft scheduled for delivery in
November 1969.
The Financial Division is continuing
its program of installing management
controls and information systems.
In the fall of 1968, as a result of a
special survey, a Clerical System and
Work Measurement Program was
implemented in the Finance Division.
Significant progress is being made in the
installation of individual productivity,
uniform batching procedures and work
load reports. The new system will pro-
vide more effective control of clerical
operations by supervision and
management.
The company's profit improvement
and cost control programs originally
started in 1967 have continued to show
favorable trends in 1968 and will
continue to receive top management
attention in fiscal 1969.
FACILITIES PLANS
Modern new terminals at Portland,
Maine and Jacksonville, Florida were
occupied during 1968 continuing the
airline's effort to improve the facilities
serving our customers.
Construction was started at Logan
International Airport in Boston on a
new Reservations building and
modernization of the passenger termi-
nal. This terminal program will involve
completion of the second level and
provide additional space for gates, hold
rooms and support operational areas
including passenger loading bridges.
Plans have also been approved for the
construction of a new service hangar
and a fuel storage and dispensing
facility including a pipeline and
hydrant system.
Planning is also underway on new
terminal facilities at Philadelphia,
Miami, Tampa, Newark, Washington
National Airport and Baltimore.
When completed in the early 1970's,
our facility projects will significantly
enhance the corporation's competitive
capability in serving customers at
these airports.
FLIGHT EQUIPMENT PLAN
/I
Above:
Modern new terminal at Portland.
Below:
268 passenger Lockheed L-1011.
Northeast's jet powered fleet and its pattern of deliveries for all aircraft on order
and on option, is illustrated in the following table:
Fleet Deliveries in Fiscal Year Fleet
Total Total
Type of Aircraft Seats 12/31/68 1969 1972 1973 1974 12/31/74
Boeing 727-100 105 8 8
Boeing 727-200 136 9 4 13
Douglas DC-9-30 90 14 14
Fairchild Hiller FH-227 44 7 7
Lockheed L-1011 268 4 2 2 8
Total 38 4 4 2 2 50
13
Route Development
Northeast's efforts to achieve a route
structure that will enable it to attain
profitability and withstand adverse eco-
nomic trends made significant and
encouraging success in 1968.
The Company received three new
route awards in 1968. The Boston/New
York-Bahamas award has already been
implemented, to ours and the public's
advantage, and service over the two
new routes awarded in late 1968 - the
Northern New England-Great Lakes
route (which embraces service between
points in Maine, New Hampshire and
Vermont, on the one hand, and Cleve-
land, Detroit and Chicago, on the other)
and the Boston-Bermuda route - is
programmed to begin in early 1969.
Northeast is an applicant in six route
proceedings pending before the Civil
Aeronautics Board:
In the Southern Tier Competitive
Nonstop Investigation, the Company
seeks transcontinental authority from
Miami across the southern part of the
United States via major intermediate
cities. In late February, 1969, an ex-
aminer recommended other carriers for
the authority sought by the Company,
but we intend to press our application
vigorously before the full Board on
review.
In the Twin Cities/Milwaukee Long-
Haul Investigation, the Company seeks
authority from its East Coast points
across the northern tier of states to
Milwaukee and Minneapolis/ St. Paul
and beyond to Seattle and Portland. The
case is currently under consideration
by an examiner.
In the Service to Omaha and Des
Moines Case, the Company has prose-
cuted an application for authority from
New York and Chicago, on its present
system, to Omaha and beyond to Seattle
and Portland, a route which would inte-
grate well with its northern tier pro-
posal. This case is also currently under
consideration by an examiner.
Hearings were concluded in mid-
March, 1969 in the North Carolina
Points Service Investigation in which
Northeast seeks authority from New
York, Chicago and Miami, on its exist-
ing system, to the major cities of North
Carolina.
The Company has also filed applica-
tions in two cases which have not yet
proceeded to hearing. In the Service to
Salt Lake City Investigation, Northeast
has filed an application for authority
to serve between New York, Washing-
ton/ Baltimore and Chicago, on its
existing system, and Salt Lake City and
beyond to San Francisco, a route which
integrates with the Company's southern
tier proposal.
In the Twin Cities/Milwaukee-South-
east Points Investigation, the Company
seeks a route between Minneapolis/
St. Paul and Milwaukee, on the one
hand, and Tampa and Miami, on its
existing system.
The Company has also petitioned
the Civil Aeronautics Board to consider
new route authority for it in certain
instances unrelated to any pending
hearing proceeding:
14
Florida expansion: Northeast seeks
the addition of Orlando, West Palm
Beach, Cape Kennedy, Fort Myers and
Sarasota in Florida to its existing route
system.
Caribbean services: The Company
seeks authority to serve the major
Caribbean resort areas (Jamaica, Puerto
Rico, Virgin Islands) from East Coast
gateway cities.
Boston-Toronto: Northeast seeks
nonstop Boston-Toronto authority.
The route awards which the Com-
pany received in 1968 will contribute
to its overall route strength. Nonethe-
less, an "opportunity gap" continues to
exist between Northeast and the other
carriers in the trunkline industry. A
major continuing goal of the company
is closing this gap and securing
a route system that will assure its ability
to meet its service responsibilities in
an effective and profitable manner.
15
Northeast Airlines, Inc.
Balance Sheet
December 31, 1968 n11d 1967
ASSETS
Current assets:
Cash
Short-term securities at cost
Accounts receivable less allowance for
doubtful accounts of $638,000
in 1968 and $437,000 in 1967
Inventories of aircraft parts and
supplies, at average cost, and items
held for sale (note A)
Prepaid expenses
Total current assets
Deposits under equipment program
Funds on deposit with trustee under long-term
debt agreement (note A)
Property and equipment, at cost (notes A and B) :
Flight equipment and related spare parts
Ground property and equipment
Less allowances for depreciation and
amortization (note C)
Leased flight equipment (note A)
Deferred charges and other assets (note C):
Jet aircraft integration costs
Route development costs
Unamortized debt expenses
Other
The accompanying notes are an integral part of the financial statements .
16
1968
$ 8,702,185
1,975,174
9,448,191
5,110,922
2,037,743
27,274,215
1,907,301
1,606,600
36,976,048
9,476,095
46,452,143
9,147,994
37,304,149
7,216,312
955,832
838,008
628,079
9,638,231
$77,730,496
1967
$ 7,443,301
8,809,803
4,247,514
1,492,557
21,993,175
2,239,701
26,713,300
8,055,031
34,768,331
6,228,759
28,539,572
6,443,289
471,799
865,450
445,198
8,225,736
$60,998,184 -
LIABILITIES
Current liabilities :
Current maturities of long-term debt
Accounts payable
Accrued salaries and wages
Accrued vacation pay
Contributions to employee pension plans
Unearned transportation
Collections as agent
Total current liabilities
Estimated employee termination liability (note I)
Convertible subordinated debentures and long-term
debt, less current maturities (note B)
Commitments and contingencies (notes A and H)
STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share
Authorized 8,500,000 shares (notes B, E and F)
Issued 6,685,155 shares and 6,369,283 shares
including 500 treasury shares in 1967
Additional paid-in capital
Retained earnings (deficit) since January 1, 1966 (note B)
Total stockholders' equity
17
$
1968
2,737,358
9,440,774
1,989,163
2,131,956
1,168,764
3,171,366
3,617,564
24,256,945
1,358,701
45,228,442
6,685,155
9,135,950
(8,934,697)
6,886,408
$77,730,496
$
1967
2,556,155
7,024,039
973,319
1,448,598
885,349
2,851,600
2,692,522
18,431,582
1,198,479
38,439,323
6,369,283
3,071,825
(6,512,308)
2,928,800
$60,998,184
Source and Use of Funds (Working Capital)
YEARS ENDED DECEMBER 31
Source of funds :
Operations:
Net loss
Charges not requiring funds currently:
Depreciation and amortization
Other
Disposal of property and equipment and, in 1967,
transfer to current assets of certain items
held for sale
Issuance of:
Long-term debt, net
Common stock
Use of funds:
Property and equipment :
Aircraft and parts, including deposits
Ground property and equipment
Jet aircraft integration costs
Route development costs
Other, net
Decrease in working capital
18
1968 1967
($ 2,422,389) ($ 6,513,659)
3,996,028 2,625,733
364,825 930,437
1,938,464 (2,957,489)
940,568 2,650,800
6,1760,773 15,055,732
6,379,997 44,633
16,019,802 14,793,676
11,557,284 13,337,879
2,305,647 1,696,324
1,760,388 4,575,937
463,528 146,368
477,278 10,871
16,564,125 19,767,379
$ 544,323 $ 4,973,703
Statement of Income
YEARS ENDED DECEMBER 31 1968 1967
Operating revenues:
Passenger $103,111,649 $71,491,586
Express, freight and baggage 3,369,720 1,918,059
Mail 936,792 597,916
Charter and other 4,287,128 1,749,740
Total operating revenues 111,705,289 75,757,301
Operating expenses:
Flying operations, including direct maintenance
of flight equipment 45,032,190 34,030,772
Other maintenance and repairs 8,124,400 7,312,074
Aircraft and traffic servicing 19,489,891 14,363,634
Promotion and sales 16,882,466 11,546,101
Depreciation and amortization (note C) 3,996,028 2,625,733
Passenger service 11,822,213 7,217,308
General and administrative 5,498,497 4,505,120
Total operating expenses 110,845,685 81,600,742
Operating income (loss) (note G) 859,604 (5,843,441)
Other income (charges) :
Federal subsidy (note G) 2,823,000
Interest expense (3,235,596) (1,778,729)
Other, net (46,397) (414,489)
Income (loss) before extraordinary item (2,422,389) (5,213,659)
Estimated loss on disposal of aircraft and parts (note A) 1,300,000
Net income (loss) ($ 2,422,389) ($ 6,513,659)
Statement of Retained Earnings
Balance at beginning of year ($ 6,399,139) $ 127,402
Prior period adjustment (note I) (113,169) (126,051)
Restated balance at beginning of year (6,512,308) 1,351
Net income (loss) per statement of income (2,422,389) (6,513,659)
Balance at end of year (since January 1, 1966) ($ 8,934,697) ($ 6,512,308)
Statement of Additional Paid-in Capital
Balance at beginning of year $ 3,462,926 $ 3,422,793
Prior period adjustment (note I) (391,101) (391,101)
Restated balance at beginning of year 3,071,825 3,031,692
Amount applicable to stock issued under
employee stock option plans (note E) 17,031 16,250
Amount applicable to removal of restrictions
on stock previously sold to an officer 55,995 23,780
Excess of proceeds over par value and issue expenses
on stock subscribed in rights offering (Note F) 5,991,099
Other 103
Balance at end of year $ 9,135,950 $ 3,071,825
The accompanying notes are an integral part of the financial statements.
19
Northeast Airlines, Inc., Notes to Financial Statements
A. Equipment program and lease commitments:
On December 31, 1968 Northeast's aircraft operating fleet was as
follows:
Model of aircraft Owned Leased Total
Boeing 727-100 2 6 8
Boeing 727-200 9 9
Douglas DC 9-30 4 10 14
Fairchild Hiller FH-227 6 1 7
12 26 38
Of the leased aircraft, all except three Boeing 727-200's and the
Fairchild Hiller FH-227 are being leased from Storer Leasing Cor-
poration (a subsidiary of Storer Broadcasting Company, majority
owner of Northeast's stock) from whom Northeast is also leasing
certain related spare parts. The FH-227 lease is for a fifteen-month
period and the other leases are for thirteen-year periods from the
dates the equipment was delivered. Lease rental expense on the
foregoing flight equipment approximated $10,000,000 in 1968 and
will approximate $12,000,000 annually thereafter.
On December 30, 1968 Northeast entered into a lease agreement for
two additional Boeing Model 727-200 aircraft for respective terms
of thirteen and thirteen and one-half years from the dates of
delivery, at an aggregate annual rent of approximately $1,400,000.
Both aircraft were delivered early in 1969.
Northeast has contracts to purchase two Boeing Model 727-200 jet
aircraft and a spare engine scheduled for delivery in November
1969 at an approximate cost of $13,000,000. As of December 31,
1968 Northeast had made progress payments of approximately
$1,700,000. Northeast has commitments from financial institutions
for financing the purchase and for leasing these aircraft to
Northeast for thirteen-year periods at an aggregate annual rental
of about $1,400,000.
Northeast has also agreed to purchase eight Lockheed Model
L-1011 jet aircraft, four of which are scheduled for delivery in 1972
and four in 1973 and early 1974. The estimated total cost of these
aircraft, together with related equipment and spare parts, is ap-
proximately $128,000,000 (subject to labor and other cost escalation
provisions). The agreements with Lockheed Aircraft Corporation
provide that Northeast may cancel its order as to the first four
aircraft on or before February 28, 1970, if it is unable to obtain
satisfactory financing for the acquisition of such aircraft, and may
cancel its order as to the other four aircraft on or before October
31, 1970 for any reason. Upon any such cancellation, Northeast's
obligation to Lockheed will be limited to 5% of the airplane pur-
chase price in the case of the first four aircraft (approximately
$2,900,000) and a total of $160,000 in the case of the second four
aircraft. Pending the arrangement of permanent financing, with
approval of the Civil Aeronautics Board, Northeast assigned the
contract for the first four aircraft (with an agreed purchase price
approximating $58,000,000) to Storer Broadcasting Company and
was reimbursed by Storer for advance payments made under the
contract to the date of assignment. Prior to the delivery of the
aircraft or cancellation of the contract, Northeast is committed to
require reassignment of the contract to Northeast and to reimburse
Storer for payments made by it with interest at % over the
prime rate from the date of each such payment. Payments made by
Storer under the contract, including the reimbursement to North-
east, approximated $2,900,000 to December 31, 1968.
In 1967, Northeast disposed of five Douglas DC-6B aircraft, and in
1968 disposed of an additional such aircraft and terminated its
lease for four Convair 880 aircraft. The remaining DC-6B aircraft
with its related spare engines and parts and an inventory of Con-
vair 880 engines and parts have been included in current assets at
their estimated realizable value, except for an amount of $350,000
which has been included in other assets.
One Northeast-owned Fairchild Hiller FH-227 aircraft was lost
in an accident on October 25, 1968. Under the terms of the
Indenture of Mortgage relating to the aircraft, the insurance
proceeds of $1,606,600 including interest to date are on deposit
with the Mortgage Trustee but are available at Northeast's option
20
for application toward the purchase price of a replacement aircraft
or reduction of the mortgage debt.
In 1968, the Company entered into a lease for an IBM PARS elec-
tronic reservations system for a term of eight years from the date
the eq uipment is installed and deemed operational. A central IBM
360/65 computer was installed in late 1968. The balance of equip-
ment, consisting of terminal facilities, will be delivered and in-
stalled in 1969 and 1970. Annual rental will amount to approxi-
mately $860,000.
Rentals under long-term leases in effect at December 31, 1968 for
hangar, terminal and reservations facilities (excluding the PARS
equipment) approxima te $2,300,000 on an annual basis with lease
periods extending from 1972 to 1987.
B. Convertible subordinated debentures and long-term debt:
Long-term debt at December 31, 1968 was as follows:
Series A Secured Notes, 6 % , due quarterly
through 1973
Series B Secured Notes, 7%, due semi-annually
from 1974 through 1979
Subordinated Notes to Aircraft Manufacturers,
6 % and 6 % , due quarterly through 1979
Convertible subordinated debentures, 6 % ,
due 1986
Equipment installment contract, 5%, due
monthly through 1974
Total debt
Less installments due in 1969
Long-term portion
$11,647,771
10,000,000
4,123,211
22,000,000
194,818
$47,965,800
2,737,358
$45,228,442
The 6 % convertible subordina ted debentures due August 1, 1986
are convertible into common stock at $25 per share, subject to
adjus tment in certain events, and 880,000 shares of common stock
are reserved for such conversion. The debentures are redeemable
in whole or in part at 105 % during the year beginning August 1,
1968 and at decreasing prices thereafter. Northeast is required to
provide $1,100,000 annually from 1976 to 1985 for sinking fund
redemptions. The debentures impose certain restrictions on cash
dividends and stock repurchases, but these are less restrictive than
those provided under certain loan agreements, which are noted
below.
So long as certain indebtedness (with maturities extending to 1979)
is outstanding under loan agreements between Storer Broadcasting
Company and Northeast Airlines, respectively, and certain banks
and institutional investors in conjunction with financing the
acquisitions of jet flight equipment leased to or purchased by
Northeast, the Broadcasting Company and Northeast have respec-
tively warranted that, without prior consent of the lenders, North-
east will not pay dividends in excess of 50% of net earnings
subsequent to January 1, 1966 and will maintain a certain amount
of current assets in excess of current liabilities (as such terms are
defined in the loan agreements). Northeast has also agreed to
maintain a certain level of net worth as defined in the appropriate_
loan agreements.
Substantially all of Northeast's owned flight equipment and related
spare parts are pledged as collateral for the secured notes and the
subordinated notes to aircraft manufacturers.
C. Depreciation, amortization and maintenance:
Northeast charges depreciation expense on a straight-line basis in
amounts sufficient to cover the cost of property and equipment,
less estimated residual values, by the end of their estimated useful
lives. Costs of improvements to leased property are amortized
over the lease period or over the useful life of the property, which-
ever is less. Fairchild Hiller FH-227 turboprop aircraft and parts
are depreciated over ten years and owned Douglas DC-9 and
Boeing 727 aircraft and parts are depreciated over fifteen years.
Ground properties and equipment have, for the most part, useful
lives of five years. Depreciation plus amortization of leasehold
improvements charged against income approximated $3,200,000 in
1968 and $2,100,000 in 1967.
Overhauls of owned and leased Boeing 727 and Douglas DC-9
airframes and engines are charged to expense when the overhauls
are performed. Overhauls of Fairchild Hiller FH-227 airframes and
engines are performed on a periodic basis and provisions for such
overhauls are charged to expense based on hours flown. Expendi-
tures extending materially the life of property and those for
additional equipmen~ are capitalized.
Training and other aircraft integration costs incurred in conjunc-
tion with Northeast's major re-equipment program in 1966 and
1967 are being amortized over ten years. Similar costs incurred
after 1967 for expansion of the aircraft fleet are being amortized
over five years. Amortization charged against income approximated
$700,000 in 1968 and $500,000 in 1967.
Costs incurred to acquire certification to fly new routes are deferred
in the accounts and capitalized upon receipt of certification or
expensed if the route application is denied or abandoned.
Debenture and long-term debt issuance expenses are being amor-
tized over the life of the related debt.
D . Retirement plans:
The company has a noncontributory trusteed retirement plan for
employees, a supplementary contributory retirement plan for
pilots, and a supplemental (voluntary savings) retirement plan for
non-pilot employees. The total pension expense for 1968 was
approximately $1,965,000. The Company's policy is to fund cur-
rently the normal cost plus interest on unfunded past-service
costs. The unfunded past-service liability is approximately
$1,400,000 at December 31, 1968. The amounts funded and accrued
exceed the actuarially estimated present value of vested benefits.
E. Employee stock option plan:
At December 31, 1968, 106,250 shares of authorized and unissued
common stock were reserved under Northeast's Qualified Stock
Option Plan for key employees adopted in 1964 under which op-
tions were granted at prices not less than fair market value on date
granted. At December 31, 1968, options were outstanding and
exercisable to purchase 10,000 shares at $18.0625, 2,500 shares at
$18.50, 15,000 shares at $18.6875, 22,500 shares at $20.1875, 17,500
shares at $26.125 and 12,500 shares (of which 10,000 shares ter-
minated on January 15, 1969) at $32.875 aggregating 80,000 shares
and $1,829,531.25; and options were outstanding exercisable in
1969 to purchase 25,000 shares at $20.4375 aggregating $510,937.50.
During 1968, options were granted for 10,000 shares at $18.0625
and 25,000 shares at $20.4375, aggregating $691,563 and were exer-
cised for 4,750 shares at $4.125 per share and 500 treasury shares
at $4.375 per share, aggregating $21,781.25.
F. Capital stock:
On May 23, 1968 the stockholders approved an increase in the
authorized Common Stock of the Company from 7,500,000 shares
to 8,500,000 shares. Pursuant to a rights offering to its common
stockholders, on the basis of one new share for each twenty shares
held, the Company sold 311,122 shares of its common stock.
G. Federal subsidy:
The Civil Aeronautics Board had established a federal subsidy of
$5,023,000 for the two-year period ended December 31, 1967, of
which $2,823,000 is reflected in the 1967 income statement. Effec-
tive.January 1, 1968, the Board placed Northeast on a subsidy-free
basis, and accordingly, for comparative purposes, federal subsidy
payments for 1967 are included under Other Income rather than
under Operating Revenues as previously reported.
H. Contingencies:
In December, 1964, Northeast instituted proceedings to enjoin cer-
tain alleged illegal charter flights. The injunctions were upon
review later affirmed in all material respects, certain of which de-
cisions are now under appeal. There are pending counterclaims
alleging anti-trust violations and interference with contractual
relations and seeking substantial damages. However, the District
Court has ruled that damages for interference with enjoined flights
can be recovered, if at all, only to the amount of $200,000 previ-
21
ously on deposit with the Court as security, and that, in any event,
there can be no recovery for interference with illegal flights. In
view of the decisions in favor of Northeast in the case to date, that
defendants' charter program was illegal, counsel for the Company
has advised that, in their opinion, the counterclaims are without
merit, but that the outcome of the litigation cannot be predicted.
Available tax loss carryforwards from periods prior to July 31,
1965, which aggregate approximately $17 million (subject to
Internal Revenue Service examination) at January 1, 1969, expire
approximately $11 million, $4 million and $2 million in the calen-
dar years 1969 to 1971, respectively.
I. Estimated employee termination liability:
Estimated employee termination liability at December 31, 1968
consists of $130,458 under deferred compensation contracts and
$2,376,997 termination sick leave accruals less $1,148,754 reduction
to actuarially estimated present value of future payments. In 1968
Northeast increased prior accruals to eliminate a reduction for
estimated future income tax benefits. This restatement had the
effect of decreasing the net loss previously reported for 1967 by
$12,882, decreasing net income previously reported for 1966 by
$126,051 and decreasing additional paid-in capital by $391,101 as
at December 31, 1965, the date on which Northeast effected a
restatement of surplus accounts through a quasi-reorganization
under which the additional paid-in capital account was reduced by
the accumulated deficit in the retained earnings account.
Auditors' Report
Lybrand, Ross Bros. & Montgomery
Certified Public Accountants
Northeast Airlines, Inc.
Boston, Massachusetts
We have examined the accompanying balance sheet
of Northeast Airlines, Inc. as at December 31, 1968
and the related statements of income, retained earn-
ings and additional paid-in capital and the statement
of source and use of funds (working capital) for the
year then ended. Our examination was made in
accordance with generally accepted auditing stan-
dards, and accordingly included such tests of the
accounting records and such other auditing pro-
cedures as we considered necessary in the circum-
stances. We previously examined and reported upon
the financial statements of the company for the year
ended December 31, 1967 which have been restated
with our concurrence, as explained in Note I of notes
to financial statements.
In our opinion, the aforementioned financial state-
ments present fairly the financial position of
Northeast Airlines, Inc. at December 31, 1968 and
1967 and the results of its operations and source and
use of funds (working capital) for the years then
ended, in conformity with generally accepted
accounting principles applied on a consistent basis.
Boston, Massachusetts
February 18, 1969
S Years of Northeast Airlines, Inc. Growth
YEARS ENDED DECEMBER 31
(Dollars expressed in thousands)
Operating revenues
Passenger
Express, freight and baggage
Mail
Charter and other
Total operating revenues
Operating expenses
Operating income (loss)
Other income (charges)*
Income (loss) before extraordinary item
Estimated loss or disposal of aircraft and parts
Net income (loss)
Revenue passengers carried
Revenue plane miles (000)
Available seat miles (000)
Load factor
Revenue passenger miles (000)
Average passengers per mile
Available ton miles (000)
Revenue ton miles (000)
Operating cost for available ton mile
Operating cost per available seat mile**
Payroll total-wages and salaries (000)
Number of personnel
" Including federal subsidy tl1rough 1967
"" Includes charter
22
1968 1967
$103,112 $71,492
3,370 1,918
937 598
4,287 1,749
111,706 75,757
110,846 81,601
860 ( 5,844)
(3,282) 630
- - -
(2,422) ( 5,214)
1,300
($ 2,422) ($ 6,514)
3,114,239 2,399,015
36,346 23,536
3,832,475 2,234,209
47.11% 53.09%
1,805,669 1,186,321
49.68 50.40
501,127 287,920
186,398 120,375
22.12 28.34
2.89 3.65
$39,354 $31,515
4,504 3,629
1966 1965 1964
$56,376 $41,708 $36,819
1,902 1,624 1,489
763 490 416
1,031 759 544
60,072 44,581 39,268
61,969 48,415 43,691
( 1,897) ( 3,834) ( 4,423)
1,898 3,363 3,150
1 471) ( 1,273)
571
$ 1 ($ 471) ($ 1,844)
2,047,384 1,648,788 1,411,783
19,546 15,857 14,290
1,614,615 1,235,933 1,128,659
58.23% 54.50% 52.77%
940,337 673,648 595,634
48.10 42.48 41.68
206,632 155,544 142,771
96,634 69,034 61,194
29.93 31.1017' 30.60
3.83 3.92 3.87
$24,429 $18,766 $16,283
3,077 2,341 2,062
Distribution of 1968 Expense Dollar
Labor
Fixed Aircraft Costs
- Fuel
Mai11tena11ce Material/Outside Repairs
- Passe11ger Costs
Advertising
- Landing Fees
I'll Rents, Services and Other
- Interest and Non-Operating
120
110
100
90
80
70
60
50
40
30
20
In
Millions
3.7
3.4
3.1
2.8
2.5
2.2
1.9
1.6
1.3
1.0
.7
In
Operating Revenue (Exel. Subsidy) vs. Operating Expenses
Operating Revenue Operating Expenses
Revenue Passengers Carried
-
.,._
-
-
- - -
n
l I
~ r==. ;:::; 1'""::::. ... ---, ~
~ ;::=- ~;.:::;
Millions 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
63%
61%
59%
57%
55%
53%
51%
49%
47%
45%
43%
Passenger Load Factor vs. Breakeven Load Factor
n
I~ I
;, I
. ""'
n . !:::I I [l (! I n a !:] I [)
.
,., I t1
1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
Passenger Load Factor Breakeven Load Factor
23
4.4
4.0
3.6
3.2
2.8
2.4
2.0
1.6
1.2
.8
.4
In
Billions
Available Seat Miles vs. Revenue Passenger Miles
.
n n
n n n fl n n n n I]
uu ti u LI [t u u
1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
Available Seat Miles Revenue Passenger Miles
DIRECTORS
OFFICERS
EXECUTIVE COMMITTEE
REGISTRARS
TRANSFER AGENTS
GENERAL COUNSEL
24
George B. Storer .............. Chairman of th e Board
James W . Austin .. . . .. ........ Consultant
Jacqueline Cochran ............ Rancher
Leonard Dalsemer ............. Executive Vice Pres iden t, International Pnp er Co.
A. D. Davis ...... .. ........... Vice Chairman, Winn-Dixie Stores, Inc.
Paul J. Dunphy ............... Vice President-Finance and Treasurer
Robert C. Hill .. .. ............. Executive, Hillwood Corp.
Curtis M. Hutchins ............ Clrnirman, Dead River Company
Stanton P. Kettler ............. Vice Chairman, Storer Broadcasting Co.
James 0 . Leet ................. President nnd Chief Executive Officer
Lewis E. Lyle ................. Senior Vice President-Op erations
Bill Michaels ......... .... ... . President, Storer Broadcasting Co.
Stuart W. Patton .............. Vice President-Law
Harry M. Stevens, II ...... ..... Vice Pres ident and Treasurer, H. M. Stevens, In c.
George B. Storer, Jr. ........... President, Storer Yacht
Peter Storer ...... ........ .. .. Executive Vice President, Storer Broadcasting Co.
David A. Stretch ... . ... ... .... Chnirma11
1
Executive Committee, T exas Industries, In c
Franci s W. Sullivan ............ Attorney at Law
Eugene L. Vidal ............... Consultant
George 8. Storer ........... ... Chairman of Bonrd of Directors
James 0. Leet ................. President nnd Chief Executive Officer
Lewis E. Lyle ................. Senior Vice President-Operations
Arthur A. Brennan ............ Vice President-Industrial Relations
D. A. Colussy ..... . ........... Vice Presiden t-Marketing
Paul J. Dunphy .... ..... ... ... Vice President-Finance and Treasurer
Robert E. Griffin .... . ...... ... Vice President-Planning
G. Ward Hobbs ............. . . Vice President-Public Affairs
Roger J. Hoy .......... ....... 'vice President-Op erntio11al Standards
Wheaton W. Mies ............. Vice Pres ident-Technical Services
Stuart W. Patton .............. Vice Pres ident-Law
Edward E. Swofford ........... Vice President-Sales
N. Ralph Tipaldi .............. Vice President-Customer Services
Edwin H. Bishop . . . . . . ...... Vice President-Southern Region
Arthur E. Fairbanks ........... Vice President-Northern Region
T. Bernard Slattery ............ Vice Presiden t-Middle Atlantic Region
Henry E. Foley ............... . Clerk
Clarence I. Peterson ........... Assistant Clerk
George B. Storer, Chairman
James 0. Leet
Leonard Dalsemer
A. D. Davis
Paul J. Dunphy
Lewis E. Lyle
Bill Michaels
Stuart W. Patton
The First Na tional Bank of Boston, Boston, Mass.
The Chase Manha ttan Bank, New York, N. Y.
Old Colony Trust Company, Boston, Mass.
The Chase Manha ttan Bank, New York, N. Y.
Foley, Hoag & Eliot, Boston, Mass.
Printed 1n U. S A
DETROIT
Presque Isle/ Houlton
Augu
MONTREAL
BurlJ,
Monlpelie
Hanover7?/lc
SPRINGFIELD/ H
N
CHICAGO CLEVELAND PHI
WAS
BA
BERMUDA