<PAGE> COVER
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 11, 1996
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UNION PACIFIC CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Utah 1-6075 13-2626465
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Eighth and Eaton Avenues, Bethlehem, Pennsylvania 18018
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (610) 861-3200
N/A
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 1
The Current Report on Form 8-K of Union Pacific Corporation dated
September 11, 1996 as filed with the Securities and Exchange Commission on
September 16, 1996 is hereby amended to include the following:
Item 7. Pro Forma Financial Information and Exhibit
(b) Pro Forma Financial Information The unaudited pro forma
financial statements of Union Pacific Corporation (UP) include
the following: i) the acquisition of 100 percent of Southern
Pacific Rail Corporation's common stock; ii) the initial public
offering and distribution to UP's stockholders of Union Pacific
Resources Group Inc.'s common stock and iii) the pro forma full
year effect of the April 1995 acquisition of Chicago and North
Western Transportation Company. Such pro forma financial
statements are required to be reported in this Current Report on
Form 8-K, as amended, and are attached as Exhibit 99.5,
incorporated by reference herein.
(c) Exhibit
99.5 The pro forma financial statements of Union Pacific Corporation for
the year ended December 31, 1995 and as of and for the six months
ended June 30, 1996.
<PAGE> 2
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 17, 1996
UNION PACIFIC CORPORATION
By: /s/Joseph E. O'Connor, Jr.
-----------------------------
Joseph E. O'Connor, Jr.
Vice President and Controller
<PAGE> INDEX
EXHIBIT INDEX
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Exhibit Description
- ------- -----------
99.5 The pro forma financial statements of Union Pacific
Corporation for the year ended December 31, 1995 and as of
and for the six months ended June 30, 1996.
<PAGE> P1
Exhibit 99.5
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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS OF
UNION PACIFIC CORPORATION (UP)
The unaudited pro forma combined financial statements of UP included
herein have been prepared by UP to reflect four events: (i) the September 15,
1995 purchase of 25 percent of the outstanding shares of Southern Pacific Rail
Corporation (SP) at $25.00 per share; (ii) the September 11, 1996 purchase of
the remaining 75 percent of the outstanding shares of SP (15 percent at $25.00
per share in cash and the exchange of the remaining 60 percent of the
outstanding shares of SP for UP common stock at a conversion ratio of 0.4065
shares of UP common stock per share of SP common stock); (iii) the October 15,
1996 distribution to UP stockholders of UP's remaining interest in Union
Pacific Resources Group Inc. (Resources) common stock (the Spin-Off), and (iv)
the pro forma full year effect on 1995 of UP's acquisition of Chicago and North
Western Transportation Company (CNW) in April 1995. The SP and Spin-Off
transactions are reflected in the pro forma combined balance sheet as if they
occurred on June 30, 1996 and the SP, CNW and Spin-Off transactions are
reflected in the pro forma combined statements of income as if they each
occurred at the beginning of the earliest period presented with the pro forma
affects rolled forward through the subsequent period.
The acquisition of SP has been accounted for under the purchase method.
The pro forma combined adjustments do not reflect synergies, and accordingly,
do not account for any potential increases in revenue or operating income, any
estimated cost savings or adjustments to conform accounting practices or any
one-time UP costs associated with the elimination of its duplicate facilities
and payments to employees (see notes to pro forma combined financial
statements).
The unaudited pro forma combined financial statements are prepared for
illustrative purposes only and are based on the assumptions set forth in the
notes to such statements. The unaudited pro forma financial statements are not
necessarily indicative of the financial position or results of operations that
might have occurred had the applicable transactions actually taken place on the
dates indicated, or of future results of operations or financial position of
the combined entities.
The unaudited pro forma combined financial statements are based on the
historical consolidated financial statements of UP, SP and CNW and should be
read in conjunction with such historical financial statements and the notes
thereto.
<PAGE> P2
<TABLE>
<CAPTION>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1995
(In millions, except per share amounts)
CNW SP
UP Acquisition Spin-Off UP SP Acquisition UP/SP
Historical Adjustments(A) Adjustments Pro Forma Historical Adjustments Pro Forma
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $7,486 $395 $ $7,881 $3,151 $ $11,032
_____________________________________________________________________________________
Operating Expenses:
Salaries, wages and
benefits 2,826 151 (7)(N) 2,970 1,120 4,090
Equipment and other
rents 769 51 820 324 1,144
Depreciation and
amortization 642 38 680 161 101 (H) 942
Fuel and utilities 574 28 602 262 864
Materials and
supplies 377 28 405 174 579
Special charge -- -- -- 65 65
Other costs 957 28 985 896 1,881
_____________________________________________________________________________________
Total 6,145 324 (7) 6,462 3,002 101 9,565
_____________________________________________________________________________________
Operating Income 1,341 71 7 1,419 149 (101) 1,467
_____________________________________________________________________________________
Gains from Sale
of Property 76 -- 76 31 (31)(I) 76
Other Income, Net 65 (11) (12)(D) 42 (34) 8
Interest Expense (450) (61) 82 (E) (429) (145) (89)(J)
17 (K) (646)
Corporate Expenses (99) -- 5 (F) (94) -- (94)
_____________________________________________________________________________________
Income before
Income Taxes 933 (1) 82 1,014 1 (204) 811
Income Taxes (314) 2 (31)(G) (343) (4) 77 (G) (270)
_____________________________________________________________________________________
Income (Loss) from
Continuing
Operations $ 619 $ 1 $ 51 $ 671 $ (3) $(127) $ 541
=====================================================================================
Earnings Per Share:
Income (loss) from
continuing operations $ 3.01 $ 3.26 $(0.02) $ 2.22
Number of shares used in
the computation of
earnings per share 205.8 205.8 156.1 243.9 (L)
See Notes to the Pro Forma Combined Financial Statements of UP.
</TABLE>
<PAGE> P3
<TABLE>
<CAPTION>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1996
(In millions, except per share amounts)
SP
UP Spin-Off UP SP Acquisition UP/SP
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $3,980 $ $3,980 $1,614 $ (9)(Q) $5,585
________________________________________________________________________
Operating Expenses:
Salaries, wages and benefits 1,517 (4)(N) 1,513 564 2,077
Equipment and other rents 441 441 166 607
Depreciation and amortization 346 346 87 50(H) 483
Fuel and utilities 344 344 146 490
Materials and supplies 227 227 67 294
Other costs 451 451 475 926
________________________________________________________________________
Total 3,326 (4) 3,322 1,505 50 4,877
________________________________________________________________________
Operating Income 654 4 658 109 (59) 708
________________________________________________________________________
Gain on the Sale of Property 12 12 42 (42)(I) 12
Other Income, Net 38 (25)(D) 13 (24) (11)
Interest Expense (231) 18 (M) (213) (88) (25)(J)
9 (K) (317)
Corporate Expenses (51) (51) (51)
________________________________________________________________________
Income before Income Taxes 422 (3) 419 39 (117) 341
Income Taxes (129) 1 (G) (128) (15) 41 (G) (102)
________________________________________________________________________
Income from Continuing
Operations $ 293 $ (2) $ 291 $ 24 $ (76) $ 239
========================================================================
Earnings Per Share:
Income from continuing
operations $ 1.42 $ 1.41 $ 0.15 $ 0.98
Number of shares used in
the computation of
earnings per share 206.4 206.4 156.2 244.5 (L)
See Notes to the Pro Forma Combined Financial Statements of UP.
</TABLE>
<PAGE> P4
<TABLE>
<CAPTION>
PRO FORMA COMBINED BALANCE SHEET
As of June 30, 1996
(In millions, unaudited)
SP
Purchase Price UP/SP Spin-Off Combined
Historical UP Historical SP Allocation Pro Forma Adjustment Pro Forma
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 73 $ 130 $ $ 203 $ $ 203
Notes receivable 653 7 660 (650)(M) 10
Other current assets 867 393 1,260 1,260
_______________________________________________________________________________
Total current assets 1,593 530 2,123 (650) 1,473
Investments, net 1,421 -- (985)(O) 436 436
Properties, net 14,339 4,103 5,707 (O) 24,149 24,149
Net assets of discontinued
operations (D) 1,419 -- 1,419 (1,419)(P) --
Excess acquisition costs 712 -- 712 712
Other assets 265 164 429 429
_______________________________________________________________________________
Total assets $19,749 $4,797 $4,722 $29,268 $(2,069) $27,199
_______________________________________________________________________________
Liabilities and Stockholders' Equity
Current liabilities:
Other current liabilities $ 1,782 $ 930 $ 484 (O) $ 3,196 $ 3,196
Debt due within one year 232 57 289 289
_______________________________________________________________________________
Total current liabilities 2,014 987 484 3,485 3,485
Debt due after one year 5,923 1,777 586 (O)
37 (O)
201 (K) 8,524 (650)(M) 7,874
Deferred income taxes 3,712 237 1,842 (O) 5,791 34 (N) 5,825
Minority interest - Resources 236 -- 236 (236)(P) --
Other liabilities 1,268 711 162 (O)
19 (K) 2,160 (89)(N) 2,071
Stockholders' equity 6,596 1,085 (1,085)(O)
2,476 (O) 9,072 (1,128)(P) 7,944
______________________________________________________________________________
Total liabilities and
stockholders'equity $19,749 $4,797 $4,722 $29,268 $(2,069) $27,199
==============================================================================
See Notes to the Pro Forma Combined Financial Statements of UP.
</TABLE>
<PAGE> P5
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
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(A) On April 24, 1995, Union Pacific Corporation (UP) acquired the remaining
71.6 percent of Chicago and North Western Transportation Company's (CNW)
outstanding common stock not previously owned by UP for $1,170 million. The
acquisition of CNW has been accounted for as a purchase and CNW's results have
been consolidated into UP's historical 1995 results as of May 1, 1995.
The following shows CNW's historically reported amounts plus pro forma
adjustments for the period January 1, 1995 through April 30, 1995, which are
included in the pro forma combined financial statements as an adjustment to
reflect the annualization of the impact the CNW acquisition would have had on
UP's 1995 operating results:
For the Period January 1, 1995 through April 30, 1995
-----------------------------------------------------
(In Millions)
Historical Consolidation Pro
CNW Adjustments Forma CNW
--------- ----------- ----------
Operating Revenues $407 ($12) (B) $395
Operating Expenses 319 11 (C)
(6) (B) 324
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Operating Income 88 (17) 71
Other Income, Net (5) (6) (B) (11)
Interest Expense (33) (28) (C) (61)
--------- ---------- ----------
Income before Income
Taxes 50 (51) (1)
Income Taxes (17) 19 (G) 2
--------- ---------- -----------
Income from Continuing
Operations $ 33 ($32) $ 1
========= ========== ===========
(B) The pro forma combined statement of income as of December 31, 1995 has
been adjusted to include CNW's historical results as if the CNW acquisition
had occurred as of January 1, 1995 and includes a reduction of operating
revenues to eliminate UP's recognition of CNW's equity earnings of $12 million,
reductions of CNW's operating costs and UP's other income of $6 million each to
reflect the elimination of intercompany leasing activity.
(C) As a result of the revaluation of CNW's assets to fair market value as
part of the allocation of the purchase price of CNW, annual depreciation
expense increased $33 million. In addition, annual interest expense increased
by $85 million, reflecting UP's borrowings of $1,170 million at an average
interest rate of 7.3 percent per annum (the actual average interest rate of the
debt securities used to finance the CNW acquisition).
(D) In July 1995, UP's Board of Directors approved a formal plan to exit its
natural resources business. The plan included an initial public offering (IPO)
of 17.1 percent of Union Pacific Resources Group Inc. (Resources) common stock,
which occurred on October 12, 1995 and the October 15, 1996 distribution of
UP's remaining investment in Resources on a pro rata, tax-free basis to UP's
stockholders (the Spin-Off). The pro forma financial statements include an
adjustment to eliminate interest income recorded for Resources' $650 million,
8.5 percent note to UP that was repaid on October 16, 1996 (see Note M below).
As a result of the plan of disposal, Resources has been presented as a
discontinued operation in UP's historical financial statements.
(E) Represents the repayment of outstanding commercial paper balances at the
weighted average commercial paper interest rate for 1995 of 6 percent with the
proceeds from Resources' $1,562 million dividend ($912 million received in
October 1995 and $650 million repaid on October 16, 1996).
<PAGE> P6
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
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(F) Represents administrative savings UP will recognize as a result of the
Resources' IPO and Spin-Off. These savings include the pension expense
reduction discussed in Note N below, lower stock-based compensation costs for
executives and lower administrative costs.
(G) Tax-effected pro forma adjustments have been determined using a marginal
tax rate of 38 percent.
(H) On September 11, 1996, UP completed the acquisition of Southern Pacific
Rail Corporation (SP). The purchase price has been allocated to the assets and
liabilities acquired on a preliminary basis based on their estimated fair
market value. The initial purchase price allocation (see Note O below)
resulted in an annual increase in depreciation expense of $101 million ($62
million after tax). The purchase price was allocated at the consummation of
the acquisition and may be revised for a period of up to one year. As a
result, the final purchase price allocation may be different from the amounts
included in Note O below. Nevertheless, management believes the final impact
on its operating results will not be materially different from the amounts
included in the pro forma combined financial statements because the majority of
the purchase price will be allocated to certain real estate, land used for
transportation purposes and/or goodwill.
The increase in annual depreciation reflects a $2,666 million increase in the
book value of track, grading and other roadway assets depreciated over an
average life of 27 years and a $30 million increase in the book value of
equipment depreciated over an average life of 15 years. The remaining purchase
price is allocated to land used for transportation purposes and certain real
estate.
(I) Gains on property sales recorded by SP have been eliminated as a result of
the revaluation of real estate to fair market value as part of the SP purchase
price allocation.
(J) The $976 million first-step cash tender offer (see Note O below), which
occurred on September 15, 1995, was financed by UP's credit facilities of which
$2.5 billion are currently available. The December 31, 1995 pro forma
financial statements have been adjusted to reflect a full year of interest for
the first-step cash tender offer based on the credit facilities' 1995 weighted
average interest rate of 5.7 percent per annum. The cash portion of the
second-step tender offer of $586 million was also financed by UP's existing
credit facilities. However, it is management's intent to refinance such
amounts on a long-term basis. As a result, the pro forma financial statements
at December 31, 1995 and June 30, 1996 reflect interest costs for this latter
amount based upon a current long-term market interest rate of 8.5 percent per
annum.
A portion of the actual interest rate may be LIBOR-based and; therefore, would
be variable rather than fixed. If all of the interest rates were variable, a
0.125 percent change in the market interest rate would cause total annual
interest to change by approximately $2 million.
(K) In conjunction with the allocation of the SP purchase price, SP's debt and
preference shares were revalued to fair market value. A debt premium of $190
million was created and an $11 million discount that existed in SP's historical
debt valuation was eliminated as a result of this revaluation. The premium is
being amortized over the average remaining life of the debt of 11 years. As a
result, interest expense was reduced on a pro forma basis by $9 million for the
six months ended June 30, 1996 and $17 million for the twelve months ended
December 31, 1995.
(L) The number of shares of outstanding UP common stock used in the
determination of pro forma earnings per share include the 206.4 million
weighted average shares of UP common stock outstanding as of June 30, 1996 plus
38.1 million additional shares of UP common stock issued in conjunction with
the SP acquisition and 205.8 million weighted average shares of UP common stock
as of December 31, 1995 plus 38.1 million additional shares of UP common stock
issued in conjunction with the SP acquisition.
<PAGE> P7
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
----------------------------------------------------------
(M) In conjunction with the IPO, Resources declared a $1,562 million dividend
to UP consisting of $912 million in cash and a $650 million note bearing
interest at 8.5 percent per annum that was repaid on October 16, 1996. The pro
forma financial statements reflect the final distribution of Resources
including the repayment of Resources' $650 million note. Such proceeds were
used to repay outstanding commercial paper balances of UP which had a weighted
average annual interest rate of 5.5 percent for the six months ended June 30,
1996.
(N) The pro forma financial statements reflect a contractual reallocation of
pension assets between UP and Resources that differs from historical December
31, 1995 pension asset allocations between UP and Resources under the UP
Pension Plan. As a result of the spin-off of Resources from the UP Pension
Plan and the resulting reallocation of pension assets, UP will receive
additional pension assets estimated at $89 million and will realize annual
estimated pension expense savings of $7 million.
(O) On September 15, 1995, UP acquired SP shares in a first-step cash tender
offer representing 25 percent of the outstanding SP shares at $25.00 per share.
On September 11, 1996, UP acquired the remaining SP shares for cash and UP
common stock so that 40 percent of the consideration for the SP shares was paid
in cash, including the shares previously acquired in September 1995, and 60
percent in UP common stock.
The purchase price for SP was determined as follows and was based upon a market
value of each share of UP common stock of $65.00, the value at August 3, 1995
(the date the acquisition was announced), and an aggregate amount of SP shares
outstanding of 156.2 million:
(In millions)
Initial Investment on September 15, 1995 plus Equity
Income (see Note Q) $ 985
Cash Purchase (23.4 million SP shares at $25.00 per share) on
September 11, 1996 586
Exchange of Common Shares (93.7 million SP shares converted into
UP common stock at a conversion ratio of 0.4065 UP common shares
for each SP share based upon UP's market price of $65.00 per share) 2,476
Transactions Costs 37
------
Pro Forma Purchase Price $4,084
======
The acquisition of SP has been accounted for as a purchase. The initial
allocation of the Pro Forma Purchase Price is based upon a preliminary
appraisal of assets and liabilities acquired, as follows:
June 30, 1996
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Purchase price $4,084
Pre-tax merger costs 646
Equity acquired (1,085)
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Unallocated purchase price $3,645
=======
Purchase Price Allocation:
Property and equipment $5,707
Debt revaluation (see Note K) (201)
Preference share revaluation (see Note K) (19)
Deferred income taxes, including the
effect of merger costs (1,842)
-------
Total $3,645
=======
<PAGE> P8
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
----------------------------------------------------------
In connection with the SP acquisition and subsequent consolidation of UP's and
SP's railroad operations, UP plans to relocate or eliminate duplicate
positions, relocate certain functions, merge or dispose of redundant
facilities and dispose of certain rail lines. Relocation and severance plans
for unionized employees and for employees not covered by collective bargaining
agreements are expected to be completed by mid-1997. Other merger-related
costs include debt and lease prepayment penalties, duplicate facility
abandonment expenses and contract cancellation fees. UP has recognized an
estimated $646 million liability for costs attributable to a preliminary
assessment of SP employees and facilities in purchase accounting. Expenses
for severing or relocating UP employees and disposing of UP facilities will be
charged to operating expense as definitive plans are determined and
communicated.
Because UP was precluded by the Interstate Commerce Act from obtaining certain
non-public information regarding SP, and was thus unable to perform a
substantive analysis of SP's business activities prior to September 1996, the
determination of merger costs attributable to SP employees and facilities and
the determination of fair market values is preliminary and subject to further
refinement. Final amounts could differ from the original estimate, although
any such revisions are not expected to be material to the UP's results of
operations.
(P) Reflects the distribution of UP's remaining ownership interest in
Resources to UP stockholders by dividend on October 15, 1996.
(Q) Reflects the elimination of $9 million of equity income recognized on the
original 25 percent investment in SP for the six months ended June 30, 1996.
No equity income was recorded in 1995.
