<PAGE> COVER
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, 1995
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 28, 1995, 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 March 31, 1995 and December 31, 1994................. 1 - 2
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND
RETAINED EARNINGS - For the Three Months Ended
March 31, 1995 and 1994................................. 3
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS - For
the Three Months Ended March 31, 1995 and 1994.......... 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.... 5
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF
OPERATIONS.............................................. 6
PART II. OTHER INFORMATION
---------------------------
ITEM 5: OTHER INFORMATION....................................... 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
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
ASSETS 1995 1994
- ------ --------- ------------
<S> <C> <C>
Current Assets:
Cash and temporary investments....... $ 7,335 $ 7,640
Accounts receivable - net............ 69,829 75,678
Inventories.......................... 103,624 102,936
Deferred income taxes................ 68,529 68,529
Other current assets................. 78,023 75,555
---------- ----------
Total Current Assets.............. 327,340 330,338
---------- ----------
Investments:
Investments in and advances to
affiliated companies.............. 48,913 49,158
Other investments.................... 12,957 13,020
---------- ----------
Total Investments................. 61,870 62,178
---------- ----------
Properties:
Road................................. 4,275,512 4,220,652
Equipment............................ 1,708,976 1,717,873
Other................................ 72,983 73,416
---------- ----------
Total Properties.................. 6,057,471 6,011,941
Accumulated depreciation and
amortization.................... (1,839,265) (1,808,772)
---------- ----------
Properties - Net.................. 4,218,206 4,203,169
---------- ----------
Intangible and Other Assets............ 70,064 76,069
---------- ----------
Total Assets........................ $4,677,480 $4,671,754
========== ==========
</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)
March 31, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1995 1994
- ------------------------------------ ----------- ------------
<S> <C> <C>
Current Liabilities:
Accounts payable ......................... $ 17,610 $ 26,220
Accrued wages and vacation................ 116,653 107,580
Income and other taxes payable............ 119,230 91,206
Interest payable.......................... 17,824 14,012
Debt due within one year.................. 37,012 38,664
Due to affiliated companies - net......... 774,217 816,795
Casualty and other reserves............... 116,733 118,029
Other current liabilities................. 173,593 173,086
----------- -----------
Total Current Liabilities.............. 1,372,872 1,385,592
----------- -----------
Debt Due After One Year..................... 379,888 389,429
----------- -----------
Deferred Income Taxes ...................... 1,248,881 1,250,141
----------- -----------
Retiree Benefits Obligation................. 162,003 161,198
----------- -----------
Other Liabilities (Note 3).................. 194,663 184,964
----------- -----------
Stockholder's Equity:
Common stock - $1.00 par value; 920
shares authorized and outstanding in
1995 and 1994.......................... 1 1
Class A stock - $1.00 par value; 80
shares authorized and outstanding...... - -
Capital surplus........................... 205,342 205,342
Retained earnings......................... 1,113,830 1,095,087
----------- -----------
Total Stockholder's Equity............. 1,319,173 1,300,430
----------- -----------
Total Liabilities and
Stockholder's Equity................. $ 4,677,480 $ 4,671,754
=========== ===========
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
For The Three Months Ended March 31, 1995 and 1994
--------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1995 1994
----------- -----------
<S> <C> <C>
Operating Revenues........................ $ 584,925 $ 568,216
----------- -----------
Operating Expenses:
Salaries, wages and employee benefits... 199,232 200,597
Equipment and other rents............... 65,487 71,598
Depreciation and amortization........... 54,702 52,794
Fuel and utilities (Note 2)............ 41,183 40,082
Materials and supplies.................. 32,182 32,906
Other costs............................. 87,499 75,729
----------- -----------
Total................................ 480,285 473,706
----------- -----------
Operating Income.......................... 104,640 94,510
Other Income - Net........................ 5,356 9,872
Interest Expense.......................... (22,574) (24,643)
----------- -----------
Income Before Income Taxes................ 87,422 79,739
Income Taxes.............................. (32,520) (28,945)
----------- -----------
Net Income........................... $ 54,902 $ 50,794
=========== ===========
Retained Earnings:
Beginning of period..................... $ 1,095,087 $ 941,563
Net income.............................. 54,902 50,794
Dividends to parent..................... (36,159) (26,940)
----------- -----------
End of Period........................ $ 1,113,830 $ 965,417
=========== ===========
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1995 and 1994
--------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1995 1994
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income................................. $ 54,902 $ 50,794
Non-Cash Charges to Income:
Depreciation and amortization........... 54,702 52,794
Deferred income taxes................... 402 4,977
Other - net............................. 17,340 3,149
Changes in Current Assets and Liabilities.. 32,551 (2,110)
Cash Used for Special Charge............... (2,090) (20,922)
--------- ---------
Cash from Operations.................... 157,807 88,682
--------- ---------
Investing Activities:
Capital Investments........................ (59,254) (61,933)
Other - Net................................ (8,770) (6,895)
--------- ---------
Cash Used in Investing
Activities............................ (68,024) (68,828)
--------- ---------
Financing Activities:
Debt Repaid................................ (11,351) (15,618)
Dividends Paid to Parent................... (36,159) (26,940)
Advances from (to) Affiliated
Companies - Net....................... (42,578) 23,361
--------- ---------
Cash Used in Financing Activities....... (90,088) (19,197)
--------- ---------
Net Change in Cash and Temporary
Investments........................... $ (305) $ 657
========= =========
</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, 1994 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, 1994. The results of operations
for the three months ended March 31, 1995 are not necessarily indicative
of the results for the year ending December 31, 1995.
2. PRICE RISK MANAGEMENT - The Registrant utilizes 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
4 percent of its remaining 1995 diesel fuel consumption at approximately
$0.46 per gallon. Credit risk related to these activities is minimal.
3. 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 condition or its results of operations.
<PAGE> 6
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 Compared to March 31, 1994
------------------------------------------------------------
Operating Revenues
- ------------------
Operating revenues grew $17 million (3%), primarily reflecting a 6% gain in
carloadings, partially offset by a 3% decline in average revenue per car.
Commodity groups showing year-over-year carloadings improvement included
energy (14%), automotive (9%), intermodal (7%), chemicals (6%) and
food/consumer/government (4%), while declines occurred in grain (5%) and
metals/minerals/forest (2%).
Operating Expenses
- ------------------
Operating expenses totaled $480 million, $7 million (1%) higher than a year
ago. Growing volumes and inflation accounted for increased contracted
maintenance and drayage ($4 million) and fuel and utilities costs ($1 million).
Employee injury expense rose $3 million, as continuing declines in the number
of injuries were more than offset by higher settlement costs. Depreciation
expense increased $2 million because of continued investment in capacity.
Other components contributing to higher operating costs included maintenance
and repairs ($2 million) and insurance ($1 million). Equipment and other
rents decreased $6 million, as higher volumes were more than offset by car
hire receipts. Salaries, wages and employee benefits decreased $1
million, as higher volumes and benefits inflation were offset by continued
improvements in labor productivity.
Operating Income
- ----------------
Operating income increased $10 million (11%) during the quarter to
$105 million. Volume improvements accounted for the rise in operating income.
Other Changes
- -------------
Interest expense decreased $2 million as a result of lower interest on
equipment trust obligations. Other income decreased $5 million, primarily the
result of lower real estate sales activity.
<PAGE> 7
PART II. OTHER INFORMATION
- ---------------------------
Item 5. OTHER INFORMATION
-----------------
As previously reported on the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994, on March 16, 1995 Union Pacific
Corporation (the Corporation or UPC) executed a definitive merger
agreement to acquire the remaining 71.6% of the outstanding common
stock of Chicago and North Western Transportation Company (CNW) not
previously owned by UPC for $1.2 billion. Under this agreement, UPC
initiated a cash tender offer, through its indirectly wholly-owned
subsidiary, UP Rail, Inc. (UP Rail), on March 23, 1995 at $35 per share
which was completed on April 25, 1995. A total of 31,529,846 shares was
tendered pursuant to the offer and accepted by UPC for payment, bringing
UPC's ownership of CNW to approximately 99.5%.
The Corporation, UP Rail, CNW and CNW's directors were named as
defendants in five lawsuits, purportedly filed on behalf of all public
stockholders of CNW, which were commenced on March 10 and 13, 1995 in
the Court of Chancery in New Castle County, Delaware, with respect to the
Corporation's acquisition of CNW. The suits alleged, among other things,
that (i) the directors of CNW breached their fiduciary duties to the CNW
stockholders in considering and approving the acquisition of CNW by UPC
and (ii) as the controlling stockholder of CNW, the Corporation and UP
Rail breached their fiduciary duties to other stockholders of CNW in
agreeing to enter into the acquisition. As relief, the suits requested,
among other things, an injunction against consummation of the transaction
and damages in an unspecified amount.
On April 13, 1995, counsel for CNW, the Corporation and the plaintiffs
entered into a Memorandum of Understanding (the Memorandum of
Understanding) proposing to settle all of the pending class action
lawsuits relating to the acquisition. Pursuant to the Memorandum of
Understanding, the Corporation and CNW agreed, among other things, (i) to
disseminate certain supplemental disclosures to CNW's stockholders, (ii)
to modify a Stock Option Agreement pursuant to which UP Rail would be
permitted to acquire additional shares of CNW common stock from CNW if
UP Rail acquired more than 87.5% (85% before such amendment) but less
than 90% of the CNW shares in the Corporation's tender offer for CNW
shares, (iii) to extend the expiration date of the CNW tender offer
until April 24, 1995 and (iv) to pay certain fees and expenses of
plaintiffs' counsel, subject to approval of the Delaware Court of
Chancery. The parties to the Memorandum of Understanding have prepared
and submitted to the Delaware Court of Chancery for its approval
a Stipulation of Settlement of the pending class action lawsuits. If such
Stipulation of Settlement is not approved by the Court, the proposed
settlement will be null and void and will not prejudice the rights of any
party with respect to such litigation.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
27 - Financial data schedule.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended
March 31, 1995.
<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 15th day of May, 1995.
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
<PAGE>
MISSOURI PACIFIC RAILROAD COMPANY
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial data schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
FINANCIAL DATA SCHEDULE - EXHIBIT 27
($ in thousands)
Schedule contains summary financial information extracted from
the Statements of Consolidated Income and Consolidated Financial
Position and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 7,335
<SECURITIES> 0
<RECEIVABLES> 69,829
<ALLOWANCES> 0
<INVENTORY> 103,624
<CURRENT-ASSETS> 327,340
<PP&E> 6,057,471
<DEPRECIATION> 1,839,265
<TOTAL-ASSETS> 4,677,480
<CURRENT-LIABILITIES> 1,372,872
<BONDS> 379,888
<COMMON> 1
0
0
<OTHER-SE> 1,319,172
<TOTAL-LIABILITY-AND-EQUITY> 4,677,480
<SALES> 0
<TOTAL-REVENUES> 584,925
<CGS> 0
<TOTAL-COSTS> 480,285
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,574
<INCOME-PRETAX> 87,422
<INCOME-TAX> 32,520
<INCOME-CONTINUING> 54,902
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,902
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
