FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from________________________ to ___________________
Commission file number 1-7817
MISSOURI PACIFIC RAILROAD COMPANY
(Exact name of Registrant as specified in its charter)
DELAWARE 43-1118635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1416 DODGE STREET, OMAHA, NEBRASKA
(Address of principal executive offices)
68179
(Zip Code)
(402) 271-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
------- -------
On April 29, 1994, the Registrant had outstanding 920 shares of its
Common Stock, $1 par value, and 80 shares of its Class A Stock, $1 par value.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>
MISSOURI PACIFIC RAILROAD COMPANY
INDEX
PART I. FINANCIAL INFORMATION
------------------------------
Page Number
-----------
ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
STATEMENT OF CONDENSED CONSOLIDATED FINANCIAL POSITION -
At March 31, 1994 and December 31, 1993 . . . . . . . . 1 - 2
STATEMENT OF CONDENSED CONSOLIDATED INCOME AND
RETAINED EARNINGS - For the Three Months Ended
March 31, 1994 and 1993 . . . . . . . . . . . . . . . . 3
STATEMENT OF CONDENSED CONSOLIDATED CASH FLOWS - For
the Three Months Ended March 31, 1994 and 1993 . . . . 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS . . . . 5
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF
OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
---------------------------
ITEM 1: LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . 7
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . 7
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE> 1
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
STATEMENT OF CONDENSED CONSOLIDATED FINANCIAL POSITION
----------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
ASSETS 1994 1993
- ------ ----------- --------------
<S> <C> <C>
Current Assets:
Cash and temporary investments. . . . . . $ 7,788 $ 7,131
Accounts receivable - Net . . . . . . . . 96,249 84,425
Materials and supplies. . . . . . . . . . 92,670 83,563
Deferred income taxes . . . . . . . . . . 63,823 63,823
Other current assets . . . . . . . . . . 73,789 72,293
----------- -----------
Total Current Assets. . . . . . . . . 334,319 311,235
----------- -----------
Investments:
Investments in and advances to
affiliated companies. . . . . . . . . . 42,257 42,588
Other investments . . . . . . . . . . . . 14,910 12,743
----------- -----------
Total Investments . . . . . . . . . . . 57,167 55,331
----------- -----------
Properties:
Road 4,072,916 4,021,672
Equipment . . . . . . . . . . . . . . . . 1,751,117 1,760,363
Other 75,949 76,050
----------- -----------
Total Properties. . . . . . . . . . . . 5,899,982 5,858,085
Accumulated depreciation and
amortization. . . . . . . . . . . . . (1,776,083) (1,752,358)
----------- -----------
Properties - Net. . . . . . . . . . . . 4,123,899 4,105,727
----------- -----------
Intangible and Other Assets. . . . . . . . . . 75,889 82,787
----------- -----------
Total Assets. . . . . . . . . . . . . . . $ 4,591,274 $ 4,555,080
=========== ===========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
STATEMENT OF CONDENSED CONSOLIDATED FINANCIAL POSITION
----------------------------------------------------------
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
March 31, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1994 1993
- ------------------------------------ ----------- -------------
<S> <C> <C>
Current Liabilities:
Accounts payable. . . . . . . . . . . . . $ 18,016 $ 26,266
Accrued wages and vacation. . . . . . . . 126,497 125,974
Income and other taxes payable. . . . . . 108,930 86,541
Interest payable. . . . . . . . . . . . . 18,443 17,525
Restructuring reserve . . . . . . . . . . 67,000 67,000
Debt due within one year. . . . . . . . . 48,531 53,253
Due to affiliated companies - Net . . . . 819,884 796,523
Casualty and other reserves . . . . . . . 108,532 109,769
Other current liabilities . . . . . . . . 104,365 93,669
---------- ----------
Total Current Liabilities . . . . . . . . 1,420,198 1,376,520
---------- ----------
Debt Due After One Year. . . . . . . . . . . . 422,664 433,438
---------- ----------
Deferred Income Taxes . . . . . . . . . . . . 1,214,527 1,209,390
---------- ----------
Retiree Benefits Obligation . . . . . . . . . 160,872 160,564
---------- ----------
Restructuring Reserve. . . . . . . . . . . . . 23,510 44,432
---------- ----------
Other Liabilities. . . . . . . . . . . . . . . 178,743 183,830
---------- ----------
Stockholder's Equity:
Common stock - $1.00 par value; 920
shares authorized and outstanding in
1994 and 1993 . . . . . . . . . . . . . 1 1
Class A stock - $1.00 par value; 80
shares authorized and outstanding . . . - -
Capital surplus . . . . . . . . . . . . . 205,342 205,342
Retained earnings . . . . . . . . . . . . 965,417 941,563
---------- ----------
Total Stockholder's Equity. . . . . . 1,170,760 1,146,906
---------- ----------
Total Liabilities and
Stockholder's Equity. . . . . . . . $4,591,274 $4,555,080
========== ==========
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
STATEMENT OF CONDENSED CONSOLIDATED INCOME AND RETAINED EARNINGS
For The Three Months Ended March 31, 1994 and 1993
----------------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1994 1993
-------- --------
<S> <C> <C>
Operating Revenues . . . . . . . . . . . . . . . . $568,216 $527,474
-------- --------
Operating Expenses:
Salaries, wages and
employee benefits . . . . . . . . . . . . . 200,597 197,252
Equipment and other rents . . . . . . . . . . 71,598 55,168
Depreciation and amortization . . . . . . . . 52,794 51,209
Fuel and utilities. . . . . . . . . . . . . . 40,082 36,487
Materials and supplies. . . . . . . . . . . . 32,906 31,142
Other costs . . . . . . . . . . . . . . . . . 75,729 71,325
-------- --------
Total . . . . . . . . . . . . . . . . . . . 473,706 442,583
-------- --------
Operating Income . . . . . . . . . . . . . . . . . 94,510 84,891
Other Income - Net . . . . . . . . . . . . . . . . 9,872 5,705
Interest Expense . . . . . . . . . . . . . . . . . (24,643) (25,992)
-------- --------
Income Before Income Taxes and the
Cumulative Effect of Accounting Changes . . . 79,739 64,604
Income Taxes . . . . . . . . . . . . . . . . . . . (28,945) (23,957)
-------- --------
Income Before Cumulative Effect of Changes
in Accounting Principles. . . . . . . . . . . 50,794 40,647
Cumulative Effect to January 1, 1993 of
Changes in Accounting Principles (Note 2) . . - (125,168)
-------- --------
Net Income (Loss) . . . . . . . . . . . . . $ 50,794 $(84,521)
======== ========
Reained Earnings:
Beginning of period . . . . . . . . . . . . . $941,563 $957,796
Net Income (Loss) . . . . . . . . . . . . . . 50,794 (84,521)
Dividends to parent . . . . . . . . . . . . . (26,940) (22,500)
-------- --------
End of period . . . . . . . . . . . . . . . . $965,417 $850,775
======== ========
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
STATEMENT OF CONDENSED CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
----------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1994 1993
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) . . . . . . . . . . . . . . $ 50,794 $(84,521)
Non-Cash Charges to Income:
Depreciation and amortization . . . . . . . 52,794 51,209
Deferred income taxes . . . . . . . . . . . 4,977 3,389
Cumulative effect of changes in
accounting principles (Note 2). . . . . . - 125,168
Other - Net . . . . . . . . . . . . . . . . 3,149 (12,895)
Changes in Current Assets and Liabilities . . (2,110) (5,703)
Cash Used for Special Charge. . . . . . . . . (20,922) (8,445)
--------- --------
Cash from Operations. . . . . . . . . . . . 88,682 68,202
--------- --------
Investing Activities:
Capital investments . . . . . . . . . . . . . (61,933) (57,666)
Other - Net . . . . . . . . . . . . . . . . . (6,895) (6,172)
-------- --------
Cash Used in Investing
Activities. . . . . . . . . . . . . . . . (68,828) (63,838)
-------- --------
Financing Activities:
Debt repaid (Note 3). . . . . . . . . . . . . (15,618) (42,294)
Dividends paid to parent. . . . . . . . . . . (26,940) (22,500)
Advances from (to) affiliated
companies - Net . . . . . . . . . . . . . . 23,361 64,918
-------- --------
Cash Generated (Used) in
Financing Activities. . . . . . . . . . . (19,197) 124
-------- --------
Net Change in Cash and Temporary
Investments . . . . . . . . . . . . . . . $ 657 $ 4,488
======== ========
</TABLE>
<PAGE> 5
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------------
(Unaudited)
1. RESPONSIBILITIES FOR FINANCIAL STATEMENTS - The condensed consolidated
financial statements of the Registrant, a wholly-owned indirect
subsidiary of Union Pacific Corporation (the "Corporation"), are
unaudited and reflect all adjustments (consisting only of normal and
recurring adjustments) that are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results
for the interim periods. The Statement of Condensed Consolidated
Financial Position at December 31, 1993 is derived from audited
financial statements. The condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto contained in the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993. The results of
operations for the three months ended March 31, 1994 are not necessarily
indicative of the results for the year ending December 31, 1994.
2. ACCOUNTING CHANGES - In January 1993, the Registrant adopted the Financial
Accounting Standards Board's pronouncements covering the recognition of
postretirement benefits other than pensions and accounting for income
taxes, as well as a pro-rata method of recognizing transportation
revenues and expenses. The cumulative effect of adopting these
accounting changes was a one-time, after-tax charge to earnings of
$125 million. Prior years' financial statements were not restated.
3. PRICE RISK MANAGEMENT - The Registrant utilizes futures contracts, option
contracts and swap agreements as hedges to manage variability of diesel
fuel costs. Gains and losses on these contracts are recognized upon
delivery of the commodity. The Registrant has purchased fixed price
contracts to hedge approximately 30 percent of its remaining 1994 diesel
fuel consumption at $0.44 per gallon. Credit risk related to these
activities is minimal.
4. CONTINGENCIES - There are various lawsuits pending against the
Registrant and certain of its subsidiaries. The Registrant is also
subject to Federal, state and local environmental laws and regulations
and is currently participating in the investigation and remediation of
numerous sites. Where the remediation costs can be reasonably
determined, and where such remediation is probable, the Registrant has
recorded a liability. The Registrant does not expect that the lawsuits
or environmental costs, will have a material adverse effect on its
consolidated financial position or its results of operations.
<PAGE> 6
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMP
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
Three Months Ended March 31, 1994 Compared to March 31, 1993
------------------------------------------------------------
Operating Revenues
- ------------------
Operating revenues grew $41 million (8%) primarily reflecting a 10% gain in
carloadings, partially offset by a 2% decline in average revenue per car.
Commodity groups showing year-over-year carloadings improvement included energy
(25%), automotive (17%), intermodal (15%) and chemicals (8%), while declines
occurred in grain (4%) and food/consumer/government (3%).
Operating Expenses
- ------------------
Operating expenses totaled $474 million, $31 million (7%) higher than a
year ago. Growing volumes accounted for an increase of $16 million in
equipment and other rents. Employee injury expense rose $8 million, as
continuing declines in the number of injuries were more than offset by higher
settlement costs. Fuel costs increased $4 million, as a 10% increase in gross
ton-miles was partially offset by a 5% decrease in fuel price. Salaries, wages
and employee benefits increased $3 million, as higher volumes and benefits
inflation were largely offset by continued improvements in labor productivity.
Material and supply costs also rose $2 million and depreciation expense
increased $2 million because of continued investment in capacity.
Operating Income
- ----------------
Operating income increased $10 million (11%), as a result of the volume
improvements.
Other Changes
- --------------
Interest expense decreased $1 million as a result of lower interest on
equipment trust obligations. Other income increased $4 million, primarily the
result of increased real estate activity.
<PAGE> 7
PART II. OTHER INFORMATION
- ---------------------------
Item 1. LEGAL PROCEEDINGS
-----------------
As previously reported in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1993 (the 1993 10-K Report), the Registrant and its
affiliate, Union Pacific Railroad Company (UPRR), received Complaints and
Notices of Opportunity for Hearing from Region VIII of the Environmental
Protection Agency (EPA) alleging various violations of the Toxic Substances
Control Act at USPCI, Inc.'s Clive, Utah and Timpe, Utah transfer facilities,
including the failure to properly mark railcars containing polychlorinated
biphenyls (PCBs), failure to properly dispose of PCB waste, failure to properly
contain or store PCB waste and failure to properly manifest PCB waste. The
Complaints included proposed penalties totalling $95,000 and $295,000, for UPRR
and the Registrant, respectively. UPRR and the Registrant have agreed to settle
these alleged violations with the EPA for a total penalty payment of $20,000.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended
March 31, 1994.
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized, on this 12th day of May, 1994.
MISSOURI PACIFIC RAILROAD COMPANY
By /s/ C. E. Billingsley
--------------------------------------
C. E. Billingsley,
Chief Accounting Officer
By /s/ D. C. Lewis
--------------------------------------
D. C. Lewis,
Assistant Vice President - Finance
