<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 September 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 October 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 September 30, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . . . . 1 - 2
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND
RETAINED EARNINGS - For the Three Months
and Nine Months Ended September 30, 1996 and 1995 . . . 3
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS - For
the Nine Months Ended September 30, 1996 and 1995 . . . 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. . . 5 - 6
ITEM 2: MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF
OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . 7 - 8
PART II. OTHER INFORMATION
---------------------------
ITEM 1: LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . 9 - 10
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . 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)
September 30, December 31,
ASSETS 1996 1995
------ -------------- --------------
<S> <C> <C>
Current Assets:
Cash and temporary investments . . $ 8,552 $ 7,648
Accounts receivable - net. . . . . 68,535 64,311
Inventories . . . . . . . . . . . 94,746 98,920
Deferred income taxes. . . . . . . 47,755 47,755
Other current assets . . . . . . . 17,993 21,551
----------- -----------
Total Current Assets . . . . . . 237,581 240,185
----------- -----------
Investments:
Investments in and advances to
affiliated companies . . . . . . 49,362 49,806
Other investments. . . . . . . . . 12,990 44,017
----------- -----------
Total Investments. . . . . . . . 62,352 93,823
----------- -----------
Properties:
Road . . . . . . . . . . . . . . . 4,623,838 4,428,724
Equipment. . . . . . . . . . . . . 1,712,801 1,724,598
Other. . . . . . . . . . . . . . . 66,636 68,936
----------- -----------
Total Properties . . . . . . . . 6,403,275 6,222,258
Accumulated depreciation
and amortization . . . . . . (1,990,780) (1,898,640)
----------- -----------
Properties - Net . . . . . . . . 4,412,495 4,323,618
----------- -----------
Intangible and Other Assets . . . . . 44,828 39,370
----------- -----------
Total Assets . . . . . . . . . . . $ 4,757,256 $ 4,696,996
=========== ===========
</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)
September 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
------------------------------------ ------------- --------------
<S> <C> <C>
Current Liabilities:
Accounts payable . . . . . . . . . $ 21,243 $ 30,654
Accrued wages and vacation . . . . 128,123 109,215
Income and other taxes payable . . 97,213 75,060
Interest payable . . . . . . . . . 12,211 15,982
Debt due within one year . . . . . 17,227 23,957
Due to affiliated
companies - net. . . . . . . . . 729,457 786,309
Casualty and other reserves. . . . 113,008 112,698
Other current liabilities. . . . . 101,143 108,200
---------- ----------
Total Current Liabilities. . . . 1,219,625 1,262,075
---------- ----------
Debt Due After One Year . . . . . . . 350,769 363,917
---------- ----------
Deferred Income Taxes . . . . . . . . 1,228,004 1,243,719
---------- ----------
Retiree Benefits Obligation . . . . . 158,059 163,280
---------- ----------
Other Liabilities . . . . . . . . . . 217,032 202,534
---------- ----------
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 . . . . . . . . . . -- --
Capital surplus. . . . . . . . . . 205,342 205,342
Retained earnings. . . . . . . . . 1,378,424 1,256,128
---------- ----------
Total Stockholder's Equity . . . 1,583,767 1,461,471
---------- ----------
Total Liabilities and
Stockholder's Equity. . . . . . $4,757,256 $4,696,996
========== ==========
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
For The Three Months and Nine Months Ended September 30, 1996 and 1995
----------------------------------------------------------------------
(Thousands of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
----------------------- ----------------------
<S> <C> <C> <C> <C>
Operating Revenues. . .$ 596,354 $ 585,846 $1,802,485 $1,763,542
---------- ---------- ---------- ----------
Operating Expenses:
Salaries, wages and
employee benefits . 182,340 182,655 577,662 579,772
Equipment and other
rents . . . . . . . 80,728 75,963 237,694 204,315
Depreciation and
amortization. . . . 55,329 55,321 164,967 165,005
Fuel and utilities
(Note 2). . . . . . 41,820 39,855 135,069 121,356
Materials and
supplies. . . . . . 32,922 30,450 100,773 94,445
Other costs . . . . . 79,409 82,159 232,320 230,357
---------- ---------- ---------- ----------
Total . . . . . . . 472,548 466,403 1,448,485 1,395,250
---------- ---------- ---------- ----------
Operating Income. . . . 123,806 119,443 354,000 368,292
Other Income - Net. . . 24,509 15,912 32,344 42,774
Interest Expense. . . . (20,268) (22,537) (64,477) (67,024)
---------- ---------- ---------- ----------
Income Before
Income Taxes . . . . 128,047 112,818 321,867 344,042
Income Taxes. . . . . . (45,810) (41,544) (97,571) (127,013)
---------- ---------- ---------- ----------
Net Income . . . . . .$ 82,237 $ 71,274 $ 224,296 $ 217,029
========== ========== ========== ==========
Retained Earnings:
Beginning of period .$1,330,187 $1,181,142 $1,256,128 $1,095,087
Net income . . . . . 82,237 71,274 224,296 217,029
Dividends . . . . . . (34,000) (29,850) (102,000) (89,550)
---------- ---------- ---------- ----------
End of Period . . . . .$1,378,424 $1,222,566 $1,378,424 $1,222,566
========== ========== ========== ==========
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
-----------------------------------------------------
(Thousands of Dollars)
(Unaudited)
1996 1995
------- -------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income . . . . . . . . . . . . . . . . . $ 224,296 $ 217,029
Non-Cash Charges to Income:
Depreciation and amortization . . . . . . . 164,967 165,005
Deferred income taxes . . . . . . . . . . . (15,711) 18
Other - net . . . . . . . . . . . . . . . . (9,539) 35,151
Changes in Current Assets
and Liabilities. . . . . . . . . . . . . 17,910 (7,762)
--------- ---------
Cash from Operations. . . . . . . . . . . . 381,923 409,441
--------- ---------
Investing Activities:
Capital Investment. . . . . . . . . . . . . . (226,752) (196,690)
Other - Net . . . . . . . . . . . . . . . . . 25,278 (73,403)
--------- ---------
Cash Used in Investing Activities . . . . . (201,474) (270,093)
--------- ---------
Financing Activities:
Debt Repaid . . . . . . . . . . . . . . . . . (20,693) (31,777)
Dividends Paid. . . . . . . . . . . . . . . . (102,000) (89,550)
Advances to Affiliated Companies - Net. . . . (56,852) (18,831)
--------- ---------
Cash Used in Financing Activities . . . . . (179,545) (140,158)
--------- ---------
Net Change in Cash and Temporary
Investments. . . . . . . . . . . . . . . $ 904 $ (810)
========= =========
</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 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, 1995. The results of
operations for the nine months ended September 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 the rail operations of 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 intends to merge the Registrant with UPRR in January 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 August 12, 1996, the Surface Transportation Board (STB)
of the U.S. Department of Transportation issued a written decision
approving the acquisition of Southern Pacific by the Corporation with
certain conditions. The Corporation consummated the acquisition of
Southern Pacific on September 11, 1996 by acquiring the remaining 75% of
Southern Pacific common shares not previously owned by the Corporation for
a combination of cash and the Corporation's common stock.
The business combination with Southern Pacific has been 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 begin 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.
3. FINANCIAL INSTRUMENTS - During 1996, fuel costs approximated 10% of the
Railroad's total operating expenses. As a result of the significance of
the 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 gains from favorable movements. The
Registrant addresses market risk related to these instruments by selecting
instruments whose value fluctuations highly correlate with the underlying
<PAGE> 6
item being hedged. Credit risk related to derivative financial
instruments, which is minimal, is managed by requiring minimum credit
standards for counterparties 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 September 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 $32 million with a gross and net
fair market value asset position of $19 million. Fuel hedging lowered the
Railroad's third quarter 1996 fuel costs by $9 million and lowered fuel
costs for the nine months ended September 30, 1996 by $19 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 has
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 extinguishments 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
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
------------------------------------------------------------
MISSOURI PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
Nine Months Ended September 30, 1996 Compared to September 30, 1995
-------------------------------------------------------------------
Operating Revenues
------------------
Operating revenues grew $39 million (2%) to $1.80 billion, principally the
result of a 3% increase in carloadings. Average revenue per car was
essentially unchanged. Carloadings growth reflected year-over-year increased
volumes in the automotive (18%), energy (7%) and industrial products (2%)
commodity groups, slightly offset by reduced intermodal (5%) and agriculture
products (1%) volumes. Chemicals volumes were unchanged. Average revenue per
car resulted from an increase in agricultural products (7%) and industrial
products (1%) prices offset by a decline in energy (4%), automotive (3%),
chemicals (1%) and intermodal (1%) prices.
Operating Expenses
------------------
Operating expenses increased $53 million (4%) to $1.45 billion. Increased
volumes and inflation resulted in higher equipment and other rents ($33
million) and materials and supplies ($6 million). Fuel and utilities rose
$14 million, principally the result of a 10% increase in fuel prices, while
other costs advanced $2 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 $14 million (4%), primarily reflecting
increased equipment and other rents and higher fuel costs partially offset
by a volume-related increase in operating revenues.
Other Changes
-------------
Other income decreased $10 million, primarily reflecting reduced real
estate sales and the absence of a second quarter 1995 favorable insurance
settlement. Income taxes decreased $29 million to $98 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 income taxes.
Other Matters
-------------
Labor: As is true with employees of all principal U.S. railroads, the
majority of Missouri Pacific Railroad Company's ("MPRR" or the "Registrant")
employees are organized along craft lines and are represented by national
labor unions. To date, nine of the twelve labor unions representing these
employees (representing approximately 93% of the combined unionized workforce
of MPRR and its affiliate Union Pacific Railroad Company) have either
ratified or are in the process of voting on national agreements. The terms
of these five-year agreements include a combination of general wage increases
and lump-sum payments ranging from 3% to 3.5% annually, as well as increased
work rule flexibility. 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 material adverse affect on
MPRR's future operating results.
<PAGE> 8
Management: In November 1996, Ronald J. Burns resigned as President and
Chief Executive Officer of the Registrant. Jerry Davis, former President,
Southern Pacific Rail Operations, was named President and Chief Operating
Officer of the Registrant, replacing Mr. Burns. Richard Davidson, President
and Chief Operating Officer of Union Pacific Corporation and Chairman of the
Registrant, was named Chief Executive Officer of the Registrant.
Cautionary Information: Certain information included in this report
contains, and other materials filed or to be filed by the Registrant with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Registrant)
contain or will contain, forward looking statements within the meaning of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Such forward looking information may include, without
limitation, statements that the Registrant does not expect that lawsuits,
environmental costs, commitments, guarantees, labor negotiations or other
matters will have a material adverse effect on its consolidated financial
condition, results of operations or liquidity and other similar expressions
concerning matters that are not historical facts, and projections as to the
Registrant's financial results. Such forward looking information is or will
be based on information available at that time and is or will be subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed in the statements. Important factors that could cause
such differences include but are not limited to industry competition and
regulatory developments, natural events such as floods and earthquakes, the
effects of adverse general economic conditions and the ultimate outcome of
environmental investigations or proceedings and other types of claims and
litigation.
<PAGE> 9
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
Southern Pacific Acquisition: As previously reported in the Registrant's 10-Q
Report for the quarterly period ended June 30, 1996, the Surface
Transportation Board (the "STB") announced at a July 3, 1996 voting
conference its approval of the proposed acquisition of control of Southern
Pacific Rail Corporation ("SPR") and its rail affiliates by Union Pacific
Corporation (the "Corporation") and its affiliates, the merger of SPR with
an affiliate of the Corporation and certain related transactions, subject to
various conditions. On August 12, 1996, the STB issued its written decision
(the "Final Decision"), which contained terms substantially consistent with
those voted on at the STB's voting conference. The Final Decision became
effective on September 11, 1996.
On August 29, 1996, the Corporation and its affiliates filed a petition
requesting that the STB clarify certain conditions set forth in the Final
Decision which would allow the Burlington Northern Railway Company and the
Atchison, Topeka and Santa Fe Railroad Company (collectively, "BNSF") to
serve new transloading facilities and other new facilities on Union Pacific
Railroad Company ("UPRR"), Missouri Pacific Railroad Company or SPR rail
lines over which BNSF has received trackage rights. In addition, various
other parties have requested that the STB (i) clarify certain aspects of the
condition requiring that the Corporation and its affiliates modify contracts
with shippers at "2-to-1" points to allow BNSF access to at least 50% of the
volume and determine whether the facilities of certain shippers constitute
"2-to-1" points for purposes of this condition, (ii) remove the restriction
imposed by the STB on traffic that the Texas Mexican Railway Company ("Tex
Mex") can transport over trackage rights granted to Tex Mex under the Final
Decision, (iii) expand the trackage rights that the STB made available to Dow
Chemical Company for use in connection with a possible build-out from its
Freeport, Texas facility, (iv) allow the Utah Railway Company access to the
facility of Railco, Inc. in Carbon City, Utah, (v) reconsider the STB's
decision not to impose labor protective conditions on the settlement
agreement between certain rail affiliates of the Corporation and the Gateway
Western Railway Company, (vi) reconsider its approval of the merger on the
grounds it is not in the public interest and (vii) reconsider its decision
to grant BNSF access to shippers in Lake Charles, Louisiana, as a condition
to the merger. The Corporation and its affiliates have opposed the requests
described in (i) through (vi) above and did not respond to the request
described in (vii).
As previously reported in the Registrant's 10-Q Report for the quarterly
period ended June 30, 1996, the City of Reno, Nevada (the "City"), filed a
complaint on July 12, 1996 in the U.S. District Court for the District of
Nevada seeking a writ of mandamus directing the STB to prepare, with regard
to the 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
District Court dismissed the complaint for lack of jurisdiction and denied
the City's petition to transfer the suit to the U.S. Court of Appeals for the
Ninth Circuit. The City is seeking reconsideration of its motion to
transfer.
The City subsequently filed a petition for review of the Final Decision
in the U.S. Court of Appeals for the Ninth Circuit on August 21, 1996. The
City's petition was ordered consolidated in the U.S. Court of Appeals for the
District of Columbia Circuit with the petition for review of the City of
Wichita and Sedgwick County, Kansas, described below. The City did not state
the grounds on which it seeks review of the Final Decision.
<PAGE> 10
A number of judicial appeals with respect to the Final Decision were also
filed in the U.S. Court of Appeals for the District of Columbia Circuit by
various other parties. The Corporation and its affiliates filed a petition
for review principally to preserve their right to judicial review in the
event that the STB adversely resolves any of the pending requests for
clarification or reconsideration of the Final Decision described above. BNSF
filed a petition for review challenging the STB's decision to grant certain
trackage rights and overhead trackage rights to Tex Mex. The City of Wichita
and Sedgwick County, Kansas filed a petition seeking review of the Final
Decision insofar as it may require parties other than the Corporation and its
affiliates to contribute to the costs of mitigating the effects of increased
rail traffic in those locations. Finally, Enterprise Products Company filed
a petition for review of the Final Decision without stating the basis for
review or the relief sought, and the Western Coal Traffic League filed a
petition for review on the grounds that the Final Decision was arbitrary and
capricious and based on a misapplication of the facts and law.
Bottleneck Proceedings: On August 27, 1996, the STB initiated a proceeding
asking for arguments and evidence on the issue of whether it should modify
its existing regulations regarding the prescription of, and challenge to,
rates for rail service involving a segment that is served by only one
railroad between an interchange point and an exclusively-served shipper
facility (i.e., a bottleneck segment). The Association of American
Railroads, certain railroads, including UPRR and Southern Pacific
Transportation Company, and several major shipper groups have opposed this
suggestion, arguing that such a change in regulation is contrary to existing
STB precedent as well as the public policy adopted by Congress with the
passage of the Staggers Act in 1980 and the ICC Termination Act in December
1995. The STB is expected to rule on whether it is going to modify its
current regulatory scheme in the near future. After that decision the STB
will rule on pending Motions to Dismiss in three complaint proceedings filed
by shippers challenging a class rate charged for the movement of coal, two
of which named a rail affiliate of the Corporation as a party thereto.
Neither case individually involves significant exposure for reparations.
However, if existing regulation of bottleneck movements is changed, future
revenue from such movements, including those covered by the complaint
proceedings, could be substantially reduced.
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
September 30, 1996.
<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 13th day of November, 1996.
MISSOURI PACIFIC RAILROAD COMPANY
By: /s/ Joseph E. O'Connor, Jr.
----------------------------
Joseph E. O'Connor, Jr.
Chief Accounting Officer
By:/s/ James R. Young
----------------------------
James R. Young,
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)
(unaudited)
Schedule contains summary financial information extracted from the
Condensed 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,552
<SECURITIES> 0
<RECEIVABLES> 68,535
<ALLOWANCES> 0
<INVENTORY> 94,746
<CURRENT-ASSETS> 237,581
<PP&E> 6,403,275
<DEPRECIATION> 1,990,780
<TOTAL-ASSETS> 4,757,256
<CURRENT-LIABILITIES> 1,219,625
<BONDS> 350,769
0
0
<COMMON> 1
<OTHER-SE> 1,583,766
<TOTAL-LIABILITY-AND-EQUITY> 4,757,256
<SALES> 0
<TOTAL-REVENUES> 1,802,485
<CGS> 0
<TOTAL-COSTS> 1,448,485
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,477
<INCOME-PRETAX> 321,867
<INCOME-TAX> 97,571
<INCOME-CONTINUING> 224,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 224,296
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
