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 June 30, 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 July 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:
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION -
At June 30, 1994 and December 31, 1993............... 1 - 2
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND
RETAINED EARNINGS - For the Three Months and Six Months
Ended June 30, 1994 and 1993......................... 3
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS - For
the Six Months Ended June 30, 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 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
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
June 30, December 31,
ASSETS 1994 1993
- ------ ---------- -----------
<S> <C> <C>
Current Assets:
Cash and temporary investments. . . . . . $ 6,819 $ 7,131
Accounts receivable - Net . . . . . . . . 84,114 84,425
Materials and supplies. . . . . . . . . . 95,220 83,563
Deferred income taxes . . . . . . . . . . 63,823 63,823
Other current assets . . . . . . . . . . 75,850 72,293
---------- -----------
TotaL Current Assets. . . . . . . . . . . 325,826 311,235
---------- -----------
Investments:
Investments in and advances to
affiliated companies. . . . . . . . . . 45,219 42,588
Other investments . . . . . . . . . . . . 13,280 12,743
---------- -----------
Total Investments . . . . . . . . . . . . 58,499 55,331
---------- -----------
Properties:
Road. . . . . . . . . . . . . . . . . . . 4,112,828 4,021,672
Equipment . . . . . . . . . . . . . . . . 1,753,583 1,760,363
Other . . . . . . . . . . . . . . . . . . 75,965 76,050
---------- ----------
Total Properties. . . . . . . . . . 5,942,376 5,858,085
Accumulated depreciation and
amortization. . . . . . . . . . . (1,789,225) (1,752,358)
---------- ----------
Properties - Net. . . . . . . . . . . . . 4,153,151 4,105,727
---------- ----------
Intangible and Other Assets. . . . . . . . . . 72,615 82,787
---------- ----------
Total Assets. . . . . . . . . . . . . . . $4,610,091 $4,555,080
========== ==========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
------------------------------------------------------
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
June 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1994 1993
- ------------------------------------ ---------- ------------
<S> <C> <C>
Current Liabilities:
Accounts payable. . . . . . . . . . . . . $ 18,597 $ 26,266
Accrued wages and vacation. . . . . . . . 123,320 125,974
Income and other taxes payable. . . . . . 137,846 86,541
Interest payable. . . . . . . . . . . . . 11,845 17,525
Restructuring reserve . . . . . . . . . . 67,000 67,000
Debt due within one year. . . . . . . . . 45,869 53,253
Due to affiliated companies - Net . . . . 780,100 796,523
Casualty and other reserves . . . . . . . 108,305 109,769
Other current liabilities . . . . . . . . 103,141 93,669
---------- ----------
Total Current Liabilities . . . . . 1,396,023 1,376,520
---------- ----------
Debt Due After One Year. . . . . . . . . . . . 412,773 433,438
---------- ----------
Deferred Income Taxes . . . . . . . . . . . . 1,221,482 1,209,390
---------- ----------
Retiree Benefits Obligation . . . . . . . . . 161,172 160,564
---------- ----------
Restructuring Reserve. . . . . . . . . . . . . 10,795 44,432
---------- ----------
Other Liabilities. . . . . . . . . . . . . . . 184,587 183,830
---------- ----------
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 . . . . . . . . . . . . 1,017,916 941,563
---------- ----------
Total Stockholder's Equity. . . . . . . 1,223,259 1,146,906
---------- ----------
Total Liabilities and
Stockholder's Equity. . . . . . . . . . $4,610,091 $4,555,080
========== ==========
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
For The Three Months and Six Months Ended June 30, 1994 and 1993
----------------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
------------------ ----------------
<S> <C> <C> <C> <C>
Operating Revenues . . . . . . . . . . . . $ 588,670 $ 541,647 $1,156,886 $1,069,121
---------- ---------- ---------- ----------
Operating Expenses:
Salaries, wages and employee benefits . 191,650 192,877 392,247 390,129
Equipment and other rents . . . . . . . 66,746 49,900 138,344 105,068
Depreciation and amortization . . . . . 53,813 51,424 106,607 102,633
Fuel and utilities (Note 3) . . . . . . 38,120 39,273 78,202 75,760
Materials and supplies. . . . . . . . . 34,527 31,823 67,433 62,965
Other costs . . . . . . . . . . . . . . 72,123 61,822 147,852 133,147
---------- ---------- ---------- ----------
Total . . . . . . . . . . . . . . . . 456,979 427,119 930,685 869,702
Operating Income . . . . . . . . . . . . . 131,691 114,528 226,201 199,419
Other Income - Net . . . . . . . . . . . . 8,153 7,571 18,025 13,276
Interest Expense . . . . . . . . . . . . . (24,466) (26,261) (49,109) (52,253)
---------- ---------- ---------- ----------
Income Before Income Taxes and the
Cumulative Effect of Accounting Changes 115,378 95,838 195,117 160,442
Income Taxes . . . . . . . . . . . . . . . (42,819) (34,194) (71,764) (58,151)
---------- --------- ---------- ----------
Income Before Cumulative Effect of Changes
in Accounting Principles. . . . . . . 72,559 61,644 123,353 102,291
Cumulative Effect to January 1, 1993 of
Changes in Accounting Principles -- -- -- (125,168)
(Note 2) ---------- ---------- ---------- -----------
Net Income (Loss) . . . . . . . . . . $ 72,559 $ 61,644 $ 123,353 $ (22,877)
========== ========== ========== ===========
Retained Earnings:
Beginning of period . . . . . . . . $ 965,417 $ 850,775 $ 941,563 $ 957,796
Net Income (Loss) . . . . . . . . . 72,559 61,644 123,353 (22,877)
Dividends to parent . . . . . . . . (20,060) (22,500) (47,000) (45,000)
---------- ---------- ---------- -----------
End of Period . . . . . . . . . . . $1,017,916 $ 889,919 $1,017,916 $ 889,919
========== ========== ========== ===========
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
For the Six Months Ended June 30, 1994 and 1993
--------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1994 1993
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) . . . . . . . . . . . . $ 123,353 $ (22,877)
Non-Cash Charges to Income:
Depreciation and amortization . . . . . 106,607 102,633
Deferred income taxes . . . . . . . . . 11,411 4,899
Cumulative effect of changes in
accounting principles (Note 2). . . . -- 125,168
Other - Net . . . . . . . . . . . . . . 13,931 48,634
Changes in Current Assets and Liabilities 21,023 (61,253)
Cash Used for Special Charge. . . . . . . (33,637) (14,890)
----------- ----------
Cash from Operations. . . . . . . . . . . 242,688 182,314
----------- ----------
Investing Activities:
Capital . . . . . . . . . . . . . . . . . (138,520) (125,730)
Other - Net . . . . . . . . . . . . . . . (12,764) (12,834)
----------- ----------
Cash Used in Investing
Activities. . . . . . . . . . . . . (151,284) (138,564)
----------- ----------
Financing Activities:
Debt repaid . . . . . . . . . . . . . . . (28,293) (57,331)
Dividends paid to parent. . . . . . . . . (47,000) (45,000)
Advances from (to) affiliated
companies - Net. . . . . . . . . . . (16,423) 62,687
----------- ----------
Cash Used in
Financing Activities. . . . . . . . (91,716) (39,644)
----------- ----------
Net Change in Cash and Temporary
Investments . . . . . . . . . . . . $ (312) $ 4,106
=========== ==========
</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 Condensed Statement of 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 and six months ended June 30, 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 pension 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 COMPANIES
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
Six Months Ended June 30, 1994 Compared to June 30, 1993
- -------------------------------------------------------------------------------
Operating Revenues
- ------------------
Operating revenues grew $88 million (8%), primarily reflecting an 11%
gain in carloadings. Commodity groups showing year-over-year carloadings
improvement included energy (26%), automotive (19%), intermodal (25%),
chemicals (6%) and food/consumer/government (2%). Metals, minerals and
forest traffic was unchanged, while grain volumes declined 9%. Higher volumes
were partially offset by a 2% decline in average revenue per car.
Operating Expenses
- ------------------
Operating expenses totaled $931 million, $61 million (7%) higher than a
year ago. Growing volumes accounted for an increase of $33 million in
equipment and other rents. Personal injury expense rose $16 million, as
continuing declines in the number of injuries were more than offset by higher
settlement costs. Fuel costs increased $2 million, the result of an 11%
increase in gross ton-miles, which was partially offset by a 8% decrease
in fuel price. Salaries, wages and employee benefits increased $2 million,
as higher volumes and benefits inflation were largely offset by continued
improvements in labor productivity. Material and supply costs also rose
$4 million and depreciation expense increased $4 million because of continued
investment in capacity.
Operating Income
- ----------------
Operating income increased $27 million (13%), as a result of the volume
improvements.
Other Changes
- -------------
Interest expense decreased $3 million as a result of lower interest on
equipment trust obligations. Other income increased $5 million, primarily the
result of increased real estate activity and income on the settlement of
an insurance claim. Income taxes increased $14 million as a result of
increased earnings and a 1% increase in the federal income tax rate.
<PAGE> 7
PART II. OTHER INFORMATION
- ----------------------------
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 June 30,
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 August, 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
