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Mr. Charles Adams 2 * April 22, 1943 His second argument was that under this annual re­port we showed a net profit for 1942 of $7,600 in round figures. He feels that the Railroad is charging the Wa­ter Company an excessive amount for water and states that the Railroad Company should not be allowed to charge the Water Company any interest whatsoever on the investment of the Railroad Company in the producing facilities. I refer you again to page 2, Exhibit 2, where such interest is shown as $14,000. He states that if that were deducted, the net return this year would be around $21,000. He also critlzes the item of Reserve of 4$ of the valuation of $9,"000, which item, incidentally, is depre­ciation, stating that such reserve includes a concrete reservoir valued at $65,000 and that 4$ is entirely too high for depreciation on such a structure. These are items which he discussed, his apparent thought being that the actual profits of the Water Com­pany should be considerably higher than shown in the an­nual report and that under the complicated practice of assessing public utilities, based on the value of tang­ible assets, the net income, etc., it is difficult for him to conceive that the net income for 1942 was only $7,000. I am passing this information to you, as he intends to work you over when you go to Carson City, fend I think "you would be prepared on these matters. I am attaching for your information a copy of the annual report of the Water Company together with copies of Form 7, which, incidentally are not available to Mr. Sexton for the years ending December, 1941, and December, 19S2, and which I hope you will return to me, as they are the only copies available. E. E. Bennett EEBjMS Ends.