<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 June 30, 1996
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 31, 1996, 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> INDEX
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, 1996 and December 31, 1995 . . . . . . . . . 1 - 2
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND
RETAINED EARNINGS - For the Three Months and Six
Months Ended June 30, 1996 and 1995. . . . . . . . . . . 3
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS - For
the Six Months Ended June 30, 1996 and 1995 . . . . . . 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. . . . 5 - 6
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
----------------------------
ITEM 1: LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . 8 - 9
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . 9 - 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<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 1996 1995
- ------ ---------- -------------
<S> <C> <C>
Current Assets:
Cash and temporary investments . . . . . $ 7,846 $ 7,648
Accounts receivable - net. . . . . . . . 74,843 64,311
Materials and supplies . . . . . . . . . 95,871 98,920
Deferred income taxes. . . . . . . . . . 47,755 47,755
Other current assets . . . . . . . . . . 17,635 21,551
---------- ----------
Total Current Assets. . . . . . . . . 243,950 240,185
---------- ----------
Investments:
Investments in and advances to
affiliated companies. . . . . . . . . 49,383 49,806
Other investments. . . . . . . . . . . . 13,070 44,017
---------- ----------
Total Investments . . . . . . . . . . 62,453 93,823
---------- ----------
Properties:
Road . . . . . . . . . . . . . . . . . . 4,557,502 4,428,724
Equipment. . . . . . . . . . . . . . . . 1,707,533 1,724,598
Other. . . . . . . . . . . . . . . . . . 66,608 68,936
---------- ----------
Total Properties. . . . . . . . . . . 6,331,643 6,222,258
Accumulated Depreciation. . . . . . . (1,951,176) (1,898,640)
---------- ----------
Properties - Net. . . . . . . . . . . 4,380,467 4,323,618
---------- ----------
Other Assets . . . . . . . . . . . . . . . 55,179 39,370
---------- ----------
Total Assets . . . . . . . . . . . . . . $4,742,049 $4,696,996
========== ==========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
-----------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
June 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
- ------------------------------------ ---------- ------------
<S> <C> <C>
Current Liabilities:
Accounts payable . . . . . . . . . . . . . $ 16,817 $ 30,654
Accrued wages and vacation . . . . . . . . 127,306 109,215
Income and other taxes payable . . . . . . 92,998 75,060
Interest payable . . . . . . . . . . . . . 10,747 15,982
Debt due within one year . . . . . . . . . 19,967 23,957
Due to affiliated companies - net. . . . . 748,982 786,309
Casualty and other reserves. . . . . . . . 111,682 112,698
Other current liabilities. . . . . . . . . 119,450 108,200
---------- ----------
Total Current Liabilities . . . . . . . 1,247,949 1,262,075
---------- ----------
Debt Due After One Year. . . . . . . . . . . 354,138 363,917
Deferred Income Taxes . . . . . . . . . . . 1,224,916 1,243,719
Retiree Benefits Obligation . . . . . . . . 162,476 163,280
Other Liabilities (Note 5) . . . . . . . . . 217,040 202,534
Stockholder's Equity:
Common stock - $1.00 par value; 920
shares authorized and outstanding in
1996 and 1995 . . . . . . . . . . . . . 1 1
Class A stock - $1.00 par value; 80
shares authorized and outstanding in
1996 and 1995 . . . . . . . . . . . . . -- --
Capital surplus. . . . . . . . . . . . . . 205,342 205,342
Retained earnings. . . . . . . . . . . . . 1,330,187 1,256,128
---------- ----------
Total Stockholder's Equity. . . . . . . 1,535,530 1,461,471
---------- ----------
Total Liabilities and
Stockholder's Equity. . . . . . . . . $4,742,049 $4,696,996
========== ==========
</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, 1996 and 1995
-----------------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---------------------- ----------------------
<S> <C> <C> <C> <C>
Operating Revenues . . . . . . . $ 608,718 $ 592,771 $1,206,131 $1,177,696
---------- ---------- ---------- ----------
Operating Expenses:
Salaries, wages and
employee benefits . . . . . 190,240 197,885 395,322 397,117
Equipment and other rents. . . 75,164 62,865 156,966 128,352
Depreciation and amortization. 54,995 54,982 109,638 109,684
Fuel and utilities (Note 3). . 46,756 40,318 93,249 81,501
Materials and supplies . . . . 32,613 31,813 67,851 63,995
Other costs. . . . . . . . . . 70,329 60,699 152,911 148,198
---------- ---------- ---------- ----------
Total . . . . . . . . . . . 470,097 448,562 975,937 928,847
---------- ---------- ---------- ----------
Operating Income . . . . . . . . 138,621 144,209 230,194 248,849
Other Income - Net . . . . . . . 5,532 21,506 7,835 26,862
Interest Expense . . . . . . . . (21,417) (21,913) (44,209) (44,487)
---------- ---------- ---------- ----------
Income Before Income Taxes . . . 122,736 143,802 193,820 231,224
Income Taxes . . . . . . . . . . (44,721) (52,949) (51,761) (85,469)
---------- ---------- ---------- ----------
Net Income . . . . . . . . $ 78,015 $ 90,853 $ 142,059 $ 145,755
========== ========== ========== ==========
Retained Earnings:
Beginning of period. . . . . . $1,286,172 $1,113,830 $1,256,128 $1,095,087
Net income . . . . . . . . . . 78,015 90,853 142,059 145,755
Dividends to parent. . . . . . (34,000) (23,541) (68,000) (59,700)
---------- ---------- ---------- ----------
End of Period. . . . . . . . . $1,330,187 $1,181,142 $1,330,187 $1,181,142
========== ========== ========== ==========
</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, 1996 and 1995
-------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1996 1995
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income . . . . . . . . . . . . . . . . $142,059 $145,755
Non-Cash Charges to Income:
Depreciation and amortization. . . . . . 109,638 109,684
Deferred income taxes. . . . . . . . . . (18,770) (8,679)
Other - net. . . . . . . . . . . . . . . (3,761) 44,598
Changes in Current Assets and Liabilities . 19,634 (30,721)
-------- --------
Cash from Operations . . . . . . . . . . 248,800 260,637
-------- --------
Investing Activities:
Capital Investments . . . . . . . . . . . . (142,648) (125,218)
Other - Net . . . . . . . . . . . . . . . . 13,759 (50,684)
-------- --------
Cash Used in Investing Activities. . . . (128,889) (175,902)
-------- --------
Financing Activities:
Debt Repaid . . . . . . . . . . . . . . . . (14,386) (20,693)
Dividends Paid to Parent. . . . . . . . . . (68,000) (59,700)
Advances to Affiliated Companies - Net. . . (37,327) (4,370)
-------- --------
Cash Used in Financing Activities. . . . (119,713) (84,763)
-------- --------
Net Change in Cash and Temporary
Investments. . . . . . . . . . . . . . $ 198 $ (28)
======== ========
</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 Missouri Pacific Railroad Company (the Registrant)
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, 1995 is derived from audited financial statements.
The condensed consolidated financial statements should be read in conjunct-
ion 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, 1995. The results of operations for the six months ended June 30,
1996 are not necessarily indicative of the results for the year ending
December 31, 1996.
2. ACQUISITIONS - The operations of the Registrant, a wholly-owned, indirect
subsidiary of Union Pacific Corporation (the Corporation), have been
coordinated with those of its affiliate, Union Pacific Railroad Company
(UPRR), and with Chicago and North Western Transportation Company (CNW),
whose financial results were consolidated with UPRR effective May 1, 1995.
These railroads operate as a unified system which is hereafter referred to
as the "Railroad." The Corporation currently plans a reorganization of the
Railroad, either by merging the Registrant with UPRR or by making the
Registrant a subsidiary of UPRR. These events are expected to occur in
1997.
Southern Pacific Rail Corporation (Southern Pacific): In August 1995, the
Corporation and Southern Pacific entered into a definitive merger agreement
providing for the acquisition of Southern Pacific by the Corporation.
On July 3, 1996, the Surface Transportation Board (STB) of the Department
of Transportation--the successor to the Interstate Commerce Commission--
unanimously approved the acquisition of Southern Pacific by the Corporation
with certain conditions. The Corporation expects to receive a final
written decision by the STB regarding the acquisition of Southern Pacific
by August 12, 1996 and expects to consummate the Southern Pacific
acquisition in September 1996. The conditions announced at the STB's
July 3, 1996 voting conference are not expected to materially reduce the
economic benefits projected from the Southern Pacific acquisition. The
total cost of the acquisition will be approximately $4.1 billion (comprised
of $1.6 billion in cash and $2.5 billion in the Corporation's common stock)
plus the assumption of all Southern Pacific debt.
The business combination with Southern Pacific will be accounted for as a
purchase. The rail operations of Southern Pacific are expected to be
coordinated with the Railroad until the consolidation of Southern Pacific's
rail subsidiaries with UPRR, which is expected to occur in 1997.
CNW: In April 1995, the Corporation acquired the remaining 71.6% of CNW's
outstanding common stock not previously owned by the Corporation for
approximately $1.2 billion. Prior to the acquisition, CNW was the nation's
eighth largest railroad.
3. FINANCIAL INSTRUMENTS - During 1996, fuel costs approximated 10% of the
Railroad's total operating expenses. As a result of the significance of
fuel costs and the historical volatility of fuel prices, the Registrant
periodically uses swaps, futures and forward contracts to mitigate the
impact of fuel price volatility. The intent of this program is to
protect the Registrant's operating margins and overall profitability from
adverse fuel price changes. Where the Registrant has fixed fuel prices
through the use of swaps, futures or forward contracts, the Registrant
has mitigated the downside risk of adverse price movements; however, it
has also limited future
<PAGE> 6
gains from favorable movements. The Registrant addresses market risk
related to these instruments by selecting instruments whose value
fluctuations highly correlate with the underlying item being hedged.
Credit risk related to derivative financial instruments, which is
minimal, is managed by requiring minimum credit standards for counter-
parties and monthly settlements. The fair market value of the
Registrant's derivative financial instrument positions was determined
based upon current fair market values as quoted by recognized dealers.
At June 30, 1996, the Registrant--as a participant in the Railroad's
hedging program--had hedged 33% of its remaining 1996 fuel consumption at
$0.46 per gallon based on a Gulf Coast market and had outstanding swap
agreements covering its fuel purchases of $63 million with a gross and net
fair market value asset position of $12 million. Fuel hedging lowered the
Railroad's second quarter 1996 fuel costs by $5 million and lowered fuel
costs for the six months ended June 30, 1996 by $10 million.
4. INCOME TAXES - In the first quarter of 1996, the Registrant reached a
settlement with the Internal Revenue Service for tax years 1978 through
1982. The settlement resulted in a tax refund due of $20 million.
5. CONTINGENCIES - There are various lawsuits pending against the Registrant.
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.
6. ACCOUNTING PRONOUNCEMENTS - The Financial Accounting Standards Board issued
Statement No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities," which provides consistent
standards for distinguishing transfers of financial assets that are sales
from transfers that are secured borrowings and which revises the accounting
rules for liabilities extinguished by an in-substance defeasance. This
statement is effective for transfers of financial assets and extinguish-
ments of liabilities occurring after December 31, 1996 and is not expected
to have a material impact on the Registrant's operating results or
financial condition.
<PAGE> 7
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
Six Months Ended June 30, 1996 Compared to June 30, 1995
---------------------------------------------------------------
Operating Revenues
- ------------------
Operating revenues grew $28 million (2%) to $1.21 billion, reflecting a
2% increase in carloadings and a 1% increase in average revenue per car.
Carloadings growth reflected year-over-year increased volumes in the automotive
(14%), agricultural products (7%), industrial products (4%) and energy (2%)
commodity groups, slightly offset by reduced volumes in the intermodal (6%) and
chemicals (1%) commodity groups. Improved average revenue per car was driven by
an increase in agricultural products prices (11%) offset by a decline in energy
prices (4%). Average revenue per car for other commodity groups remained
unchanged from 1995.
Operating Expenses
- ------------------
Operating expenses increased $47 million (5%) to $976 million. Increased
volumes and inflation resulted in higher equipment and other rents ($29
million) and materials and supplies ($4 million). Fuel and utilities rose $12
million, principally the result of a 16% increase in fuel prices, while other
costs advanced $5 million--reflecting the absence of a favorable 1995 tax
settlement. Partially offsetting these increases was a $2 million decrease in
salaries, wages and employees benefits, primarily the result of productivity
gains.
Operating Income
- ----------------
Operating income decreased $19 million (7%), reflecting increased
equipment and other rents and higher fuel costs.
Other Changes
- -------------
Other income decreased $19 million reflecting reduced real estate sales
and the absence of a favorable insurance settlement in 1995. Income taxes
decreased $34 million to $52 million, the result of an Internal Revenue
Service settlement for tax years 1978 through 1982 (see Note 4 to the
Condensed Consolidated Financial Statements) and lower income before taxes.
Other Matters
- -------------
Labor: As is true with employees of all principal railroads in the
country, the majority of Missouri Pacific Railroad Company's (the Registrant)
employees are organized along craft lines and are represented by national
labor unions. The major freight railroads and the United Transportation Union
(representing approximately 25% of the Registrant and its affiliate Union
Pacific Railroad Company's (collectively the Railroad) unionized workforce)
and the Brotherhood of Locomotive Engineers (representing 15% of the
Railroad's unionized workforce) have reached a five-year settlement, which
includes a combination of general wage increases and lump-sum payments from
3% to 3.5% annually, as well as increased work rule flexibility. In July
1996, the leadership of the remaining major rail unions (including the
Transportation Communications Union, the Brotherhood of Maintenance of Way
Employees and three shop-craft unions) reached tentative labor agreements
with the major freight railroads. Ratification votes on these agreements are
expected in the third quarter of 1996. These events greatly reduce the
possibility of rail strikes during this round of negotiations. The
terms of the ratified and tentative agreements are not expected to have a
significant impact on the Registrant's future operating results.
<PAGE> 8
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Southern Pacific Acquisition: On November 30, 1995, Union Pacific Corporation
("UP"), Southern Pacific Rail Corporation ("SP") and various of their
affiliates (including the Registrant) filed an application (the "STB
Application") seeking approval of the Interstate Commerce Commission (which was
succeeded by the Surface Transportation Board (the "STB")) for the acquisition
of control over SP and its affiliates by UP and its affiliates, the proposed
merger of SP with an affiliate of UP (the "Merger"), and related transactions.
After the filing of the STB Application, the STB received evidentiary
submissions and briefs in connection with the proposed Merger. The STB heard
oral arguments on the proposed Merger on July 1, 1996 and held a voting
conference on the proposed Merger on July 3, 1996. At the voting conference,
the STB decided to approve the Merger subject to a number of conditions,
principally (a) the settlement agreement (as described below) between UP/SP and
Burlington Northern Railroad Company and the Atchison, Topeka and Santa Fe
Railroad Company (collectively, "BNSF") under which BNSF will receive trackage
rights over more than 4,100 miles of UP/SP track and will purchase over 335
miles of UP/SP lines, augmented in a number of ways to expand BNSF's ability to
gain access to traffic (e.g., through transloading facilities (facilities where
goods are transferred between truck and railcars) and build-ins of rail lines
to exclusively-served customers, through serving new shipper facilities on the
lines over which it will have trackage rights, and opening to BNSF of 50% of
all traffic now committed under contracts to UP or SP by shippers served by UP
and SP and no other railroad), (b) the settlement agreement between UP/SP and
the Chemical Manufacturers Association which provides certain additional
protections to shippers, (c) the settlement agreement between UP/SP and Utah
Railway Company ("Utah Railway") under which Utah Railway will receive access
to certain coal mines and loading facilities in Utah and trackage rights over
SP from Utah Railway's line in Utah to Grand Junction, Colorado, (d) the grant
of trackage rights to the Texas Mexican Railway ("Tex Mex") over UP/SP lines
between Corpus Christi/Robstown, Texas, and Beaumont, Texas, via Houston,
Texas, restricted to traffic moving on Tex Mex's Laredo-Corpus Christi/Robstown
line, including terminal-area trackage rights in Houston, (e) environmental
mitigation conditions, including a condition restricting increases in train
volumes through Reno, Nevada, and Wichita, Kansas, for 18 months following the
Merger while a consultant conducts a study of possible measures to reduce the
potential adverse impact of increased rail traffic through those communities
and the STB decides upon such measures, (f) standard labor protective
conditions, and (g) a 5-year oversight process, pursuant to which the STB will
review whether the conditions imposed on the Merger have effectively addressed
competitive issues. A final written STB decision regarding the proposed Merger
is expected by August 12, 1996.
The obligations of UP and certain of its affiliates to consummate the Merger
are conditioned upon, among other things, the issuance by the STB of a decision
(which decision shall not have been stayed or enjoined) that (A) constitutes a
final order approving, exempting or otherwise authorizing consummation of the
Merger and all other transactions contemplated by the related merger agreement
(as such agreement has been amended, the "Merger Agreement") and other
ancillary agreements (or subsequently presented to the STB by agreement of UP
and SP) as may require such authorization and (B) does not (1) change or
disapprove of the merger consideration or other material provisions of the
Merger Agreement or (2) impose on UP, SP or any of their respective
subsidiaries any other terms or conditions (including, without limitation,
labor protective provisions but excluding conditions heretofore imposed in New
York Dock Railway-Control-Brooklyn Eastern District, 360 I.C.C. 60 (1979)) that
materially and adversely affect the long-term benefits expected to be received
by UP from the transactions contemplated by the Merger Agreement. If, as
expected, the final written decision of the STB does not contain terms
materially different from those voted upon by the STB on July 3, 1996, UP has
indicated that it expects to proceed with the transaction in accordance with
and subject to the terms and conditions of the Merger Agreement.
<PAGE> 9
Although the final written decision of the STB is expected by August 12, 1996,
there is no assurance that STB approval will be obtained by such date. In
addition, any appeals from the STB final order might not be resolved for a
substantial period of time after the entry of such order by the STB.
On September 25, 1995, UP and certain of its subsidiaries, SP and certain of
its subsidiaries, and BNSF entered into an agreement (the "BNSF Agreement")
pursuant to which, among other things, UP and SP, on the one hand, and BNSF, on
the other hand, agreed to grant each other various trackage rights and UP and
SP agreed to sell certain lines to BNSF following the Merger, and BNSF agreed
not to oppose UP's application to control SP in UP's case before the STB, not
to seek any conditions in such case, not to support any requests for conditions
filed by other parties and not to assist other parties in pursuing their
requests. Among other things, these rights will allow BNSF to serve shippers
who would otherwise lose a choice of two railroads as a result of the Merger.
The trackage rights and line sales pursuant to the BNSF Agreement will be
effective only upon UP's acquisition of control of SP. UP and SP agreed to ask
the STB to impose the BNSF Agreement as a condition to approval of UP's
application for control of SP. During the pendency of UP's case before the STB,
UP and SP agreed not to enter into agreements with other parties, without
BNSF's written consent, which would grant rights to other parties granted to
BNSF or inconsistent with those granted to BNSF which would substantially
impair the overall economic value of the rights granted to BNSF under the BNSF
Agreement. The BNSF Agreement was amended on June 27, 1996 to confer certain
additional rights on BNSF.
Pursuant to the BNSF Agreement, UP and SP will share more than 4,100 miles of
track with BNSF under trackage rights and will sell more than 335 miles of
track to BNSF. The sale of track will total approximately $150 million. As
part of the BNSF Agreement, UP will also obtain certain trackage and access
rights from BNSF. Trackage rights are a contractual arrangement between
railroads which generally allow one railroad to operate its trains with its own
crew over the tracks of another railroad for a fee.
On July 12, 1996, the City of Reno, Nevada filed a complaint against the STB in
the U.S. District Court for the District of Nevada, seeking a writ of mandamus
directing the STB to prepare, with regard to alleged impacts of the Merger on
Reno and the surrounding area, an environmental impact statement pursuant to
the National Environmental Policy Act and a conformity determination pursuant
to the Clean Air Act. The STB would also be required to order UP/SP to
maintain the status quo with respect to rail operations in the Reno area
pending environmental review. UP believes the suit is without merit because,
among other things, the District Court lacks jurisdiction, mandamus is
inappropriate under the circumstances, and neither an environmental impact
statement nor a conformity determination is required. UP and SP intervened as
parties and will seek the suit's dismissal. UP anticipates that the STB will
also seek dismissal of the suit.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2 Amended and Restated Agreement and Plan of Merger, dated as of
July 12, 1996, among the Union Pacific Corporation ("UPC"), Union
Pacific Railroad Company ("UPRR"), Southern Pacific Rail
Corporation ("SP"), UP Holding Company, Inc. ("UP Holding") and
Union Pacific Merger Co. ("UP Merger"), is incorporated herein by
reference to Annex B to the Joint Proxy Statement/Prospectus
included in Post-Effective Amendment No. 2 to Union Pacific's
Registration Statement on Form S-4 (No. 33-64707).
<PAGE> 10
10(a) Amended and Restated Anschutz Shareholders Agreement, dated as
of July 12, 1996, among UPC, UPRR, The Anschutz Corporation
("TAC"), Anschutz Foundation (the "Foundation"), and Mr. Philip
F. Anschutz ("Mr. Anschutz"), is incorporated herein by
referenced to Annex D to the Joint Proxy Statement/Prospectus
included in Post-Effective Amendment No. 2 to Union Pacific's
Registration Statement on Form S-4 (No. 33-64707).
10(b) Amended and Restated MSLEF Shareholder Agreement, dated as of
July 12, 1996, between UPC and The Morgan Stanley Leveraged
Equity Fund II, L.P., is incorporated herein by reference to
Annex E to the Joint Proxy Statement/Prospectus included in
Post-Effective Amendment No. 2 to Union Pacific's Registration
Statement on Form S-4 (No. 33-64707).
10(c) Amended and Restated Parent Shareholders Agreement, dated as of
July 12, 1996, among UPC, UP Merger and SP, is incorporated
herein by reference to Annex F to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment No. 2
to Union Pacific's Registration Statement on Form S-4 (No.
33-64707).
10(d) Amended and Restated Anschutz/Spinco Shareholders Agreement,
dated as of July 12, 1996, among Union Pacific Resources Group
Inc. ("Resources"), TAC, the Foundation and Mr. Anschutz, is
incorporated herein by reference to Annex G to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment No. 2
to Union Pacific's Registration Statement on Form S-4 (No.
33-64707).
10(e) Amended and Restated Registration Rights Agreement, dated as of
July 12, 1996, among UPC, TAC and the Foundation, is
incorporated herein by reference to Annex H to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment No. 2
to Union Pacific's Registration Statement on Form S-4 (No.
33-64707).
10(f) Amended and Restated Registration Rights Agreement, dated as of
July 12, 1996, among Resources, TAC and the Foundation, is
incorporated herein by reference to Annex I to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment No. 2
to Union Pacific's Registration Statement on Form S-4 (No.
33-64707).
10(g) Amended and Restated Registration Rights Agreement, dated as of
July 12, 1996, among UPC, UP Holding, UP Merger and SP, is
incorporated herein by reference to Annex J to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment No. 2
to Union Pacific's Registration Statement on Form S-4 (No.
33-64707).
27 Financial data schedule.
(b) Reports on Form 8-K
None.
<PAGE> 11
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 ninth day of August, 1996.
MISSOURI PACIFIC RAILROAD COMPANY
By /s/ L. White Matthews, III
------------------------------
L. White Matthews, III
Chief Financial Officer
By /s/ John J. Koraleski
-------------------------------
John J. Koraleski
Executive Vice President -
Finance & Information Technologies
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
FINANCIAL DATA SCHEDULE - EXHIBIT 27
($ in thousands)
(unaudited)
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,846
<SECURITIES> 0
<RECEIVABLES> 74,843
<ALLOWANCES> 0
<INVENTORY> 95,871
<CURRENT-ASSETS> 243,950
<PP&E> 6,331,643
<DEPRECIATION> 1,951,176
<TOTAL-ASSETS> 4,742,049
<CURRENT-LIABILITIES> 1,247,949
<BONDS> 354,138
<COMMON> 1
0
0
<OTHER-SE> 1,535,529
<TOTAL-LIABILITY-AND-EQUITY> 4,742,049
<SALES> 0
<TOTAL-REVENUES> 1,206,131
<CGS> 0
<TOTAL-COSTS> 975,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,209
<INCOME-PRETAX> 193,820
<INCOME-TAX> 51,761
<INCOME-CONTINUING> 142,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 142,059
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
