FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 26, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-896
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ALLEGHENY AND WESTERN RAILWAY COMPANY
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(Exact name of registrant as specified in its charter)
Pennsylvania 52-0790328
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Water Street, Jacksonville, FL 32202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 359-3100
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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First Mortgage 4% Bonds due October 1, 1998 The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
<PAGE>
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. The aggregate market value of the voting stock at March 6, 1998,
was $1,139,093, excluding the voting stock held by affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. The registrant has 32,000
shares of common stock, par value $100, outstanding at March 6, 1998.
The following listed document has been incorporated herein by reference:
Form 10-K filed by CSX Transportation, Inc., on March 3, 1998 - Item 8 of Part
II.
PART I
Item 1. Business.
and
Item 2. Properties.
Allegheny and Western Railway Company (the "company") is a railroad
incorporated in the Commonwealth of Pennsylvania on January 22, 1898. It owns a
line of railroad 62 miles long which lies between Punxsutawney and Butler
Junction, Pennsylvania. Pursuant to leases dated October 1, 1898, and January
15, 1900, between the company and Buffalo, Rochester and Pittsburgh Railway
Company ("BR&P") the company leased its railroad to BR&P for the duration of the
company's corporate existence, at an annual rental equal to 4% on its bonded
debt and 6% on its common stock ($100 par value). The principal and interest on
the company's bonds are guaranteed by BR&P.
Under an agreement dated December 15, 1931, as amended, CSX
Transportation, Inc. ("CSXT"), as successor by merger to The Baltimore and Ohio
Railroad Company, operated the properties of BR&P, and incident thereto also
operated the properties of the company in the name and for the account of CSXT
without separation or segregation of the results of such operations. Under such
agreement CSXT agreed to pay all leased line rentals but did not assume or
guarantee payment of the principal on the bonds. In addition to the rental paid
by CSXT for the payment of the company's dividends and bond interest, CSXT paid
all the expenses of the company, including all taxes assessed against it.
On July 18, 1988, CSXT, BR&P and Buffalo & Pittsburgh Railroad, Inc.
("B&P") entered into certain agreements collectively referred to as the
"Purchase and Sale Agreement" and closed in escrow. The B&P took possession and
control of operations of the line of railroad of BR&P on July 19, 1988. The
purchase and sale agreement provided that BR&P and CSXT shall assign, transfer,
and convey to B&P all their obligations and duties arising under the lease
agreements. On October 7, 1991, CSXT, BR&P and B&P executed an Assignment and
Assumption Agreement which concluded the escrow and B&P assumed all of the terms
and conditions of the Purchase and Sale Agreement with the exception that CSXT
would retain its right, title and interest in the 16,159 shares of common stock
of the company, being all the stock of the company owned by CSXT at that time.
As of March 6, 1998, CSXT owned 16,234 shares of common stock of the company, or
50.7%.
Since the interest and dividends on the company's bonds and common
stock are paid from moneys obtained from the lessee, reference is made to CSXT's
Form 10-K for the year ended December 26, 1997, a copy of which is available
from Patricia J. Aftoora, Vice President and Corporate Secretary of CSXT, S/C
J-160, 500 Water Street, Jacksonville, FL 32202
<PAGE>
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder
Matters.
There is no market in which the common stock of the company is
traded. As of March 6, 1998, there were approximately 149 stockholders of $100
par value capital stock. The terms of the lease agreement referred to in Items 1
and 2, Business and Properties, provide a full and unconditional guarantee of
dividends on the company's capital stock at an annual dividend rate of $6.00 per
common share.
<PAGE>
Item 6. Selected Financial Data.
and
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Five year selected data:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Rental income $ 328,730 $ 328,730 $ 328,730 $ 328,730 $ 326,290
Interest on funded debt 78,600 78,600 78,600 78,600 75,920
Federal income taxes 58,130 58,130 58,130 58,130 58,130
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Earnings for the year $ 192,000 $ 192,000 $ 192,000 $ 192,000 $ 192,240
=========== ========== ========== ========== ----------
Weighted average number
of common shares (a) 32,000 32,000 32,000 32,000 32,040
=========== ========== ========== ========== ==========
Earnings per common share (a)$ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00
=========== ========== =========== ========== ===========
Dividends per common
share (a) $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00
=========== ========== =========== ========== ===========
Total assets $ 6,834,324 $6,834,324 $6,834,324 $6,834,324 $6,834,324
=========== ========== ========== ========== ==========
Long term debt $ 1,965,000 $1,965,000 $1,965,000 $1,965,000 $1,965,000
=========== ========== ========== ========== ==========
</TABLE>
(a) Calculations include shares held directly by CSXT.
Item 8. Financial Statements and Supplementary Data.
Due to the nature of CSXT's obligations under the lease agreement
referred to in Items 1 and 2, Business and Properties, financial statements and
notes thereto in response to this item are not included herein. In lieu thereof,
the financial statements and notes included in the Form 10-K filed on behalf of
CSXT on March 2, 1998, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on the Accounting
and Financial Disclosures.
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant:
The following sets forth certain information relating to the
company's directors and executive officers as of March 6, 1998. Directors are
elected annually and serve until the next annual meeting of stockholders or
until their successors are elected. Officers are elected annually at the annual
meeting of the Board and hold office until the next annual meeting of the Board
or until their successors are elected. There are no arrangements or
understandings between any director or executive officer and any other person
pursuant to which the director or officer was selected. There are no family
relationships among these officers and directors.
Name, Age, Present
Position with the Business Experience during last 5 Years,
Company Company Directorships in Public Corporations
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GERALD L. NICHOLS, 62 President of the company since 1995 and
President and Director Senior Vice President of the company prior
thereto. Mr. Nichols has served in various
executive capacities for certain CSXT
affiliates during the past five years and is
currently Vice Chairman of the Board of
CSXT.
P. MICHAEL GIFTOS, 51 Senior Vice President of the company since
Senior Vice President 1990. During the past five years, Mr.Giftos
has served as an executive officer of
certain CSXT affiliates and is currently
Senior Vice President-Law and General
Counsel of CSXT.
CARL N. TAYLOR, 58 Senior Vice President of the company since
Senior Vice President 1995. Mr. Taylor has been an officer of
and Director certain CSXT affiliates during the past five
years and is currently Executive Vice
President-Operations and a Director of CSXT.
MICHAEL J. WARD, 47 Executive Vice President of the company
Executive Vice President since June 6, 1996. During the past five
and Director years, Mr. Ward has served as an officer of
certain CSXT affiliates and is currently
Executive Vice President-Finance, Chief
Financial Officer, and a Director of CSXT.
PATRICIA J. AFTOORA, 58 Vice President of the company since 1990 and
Vice President, Corporate Secretary of the company prior
Corporate Secretary prior thereto. Mrs. Aftoora has served as
and Director an officer of certain CSXT affiliates during
the past five years and is currently Vice
President and Corporate Secretary of CSXT.
<PAGE>
Name, Age, Present
Position with the Business Experience during last 5 Years,
Company Company Directorships in Public Corporations
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C.J.O. WODEHOUSE, JR., 50 Vice President and Controller of the company
Vice President and Controller since 1995. Mr. Wodehouse has served as an
officer of CSX Corporation ("CSX") and
certain of its affiliates during the past
five years and is currently Vice President
and Controller of CSXT.
M. MAURICE LAZENBY, III, 54 Assistant Vice President and Treasurer of
Assistant Vice President the company since 1995. Mr. Lazenby has
and Treasurer served as an officer of certain CSXT
affiliates during the past five years and
is currently Assistant Vice President and
Treasurer of CSXT.
There have been no events under any bankruptcy act, no criminal
proceedings, orders, judgments, decrees or injunctions material to the
evaluation of the ability and integrity of any director or executive officer
during the past five years.
Item 11. Executive Compensation
All directors and officers of the company are also officers and
employees of CSXT, and serve without compensation from the company.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 6, 1998, 50.7% of the voting securities of the company
(16,234 shares of $100 par value capital stock) were beneficially held by CSXT,
which, in turn, is beneficially owned by CSX Corporation (CSX), Richmond, VA,
through ownership of 100% of CSXT's outstanding voting securities.
As of March 6, 1998, all directors and officers of the company as a
group (7 persons) beneficially owned 1,518,317 shares of $1 par value common
stock of CSX, (including 635,067 shares exercisable under option within 60
days), representing less than 1% of the outstanding shares. The number of CSX
shares owned by each director as of March 6, 1998, is set forth below:
Number of
Number of shares of CSX
shares of CSX exercisable within
beneficially owned 60 days under stock
Name as of March 6, 1998 (1)(2) option plans
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P. J. Aftoora 31,126 41,182
G. L. Nichols 230,755 170,000
M. J. Ward 154,336 120,400
(1) Includes shares pledged to secure loans under the CSX Stock
Purchase and Loan Plan, which shares were acquired under that
plan.
(2) Includes shares held in trust under certain deferred compensation
plans.
Item 13. Certain Relationships and Related Transactions.
None.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements.
Refer to response to Item 8 on page 4.
2. Financial Statement Schedules
Refer to response to Item 8 on page 4.
3. Exhibits
(3.1) Articles of Incorporation (incorporated by
reference to Form 12 Application for Registration
dated May 13, 1935)
(3.2) By-laws of the company restated as of May 10, 1996
(incorporated by reference to Exhibit 3.2 to Form
10-K dated March 27, 1997)
(10.1) Indenture dated October 1, 1898, between the
Registrant and Buffalo, Rochester and Pittsburgh
Railway Company (incorporated by reference to
Exhibit 10.1 to Form 10-K dated March 27, 1997)
(10.2) Contract dated January 15, 1900, supplementing the
original Indenture of October 1, 1898 (incorporated
by reference to Exhibit 10.2 to Form 10-K dated
March 27, 1997)
(10.3) Agreement dated December 15, 1931, between CSX
Transportation, Inc. (successor by merger to The
Baltimore and Ohio Railroad Company) and Buffalo,
Rochester and Pittsburgh Railway Company
(incorporated by reference to Exhibit 10.3 to Form
10-K dated March 27, 1997)
(10.4) Agreement dated January 1, 1940, modifying the
Agreement dated December 15, 1931 (incorporated by
reference to Exhibit 10.4 to Form 10-K dated March
27, 1997)
(10.5) Agreement dated December 29, 1943, amending and
modifying the Agreements of December 15, 1931, and
January 1, 1940 (incorporated by reference to
Exhibit 10.5 to Form 10-K dated March 27, 1997)
(23) Consent of Independent Auditors (See page I-1).
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the year ended
December 26, 1997.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 20th day of
March, 1998.
ALLEGHENY AND WESTERN RAILWAY COMPANY
/s/ JAMES L. ROSS
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James L. Ross
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/Gerald L. Nichols President and Director
- --------------------- (Principal Executive Officer)
Gerald L. Nichols*
/s/Michael J. Ward Executive Vice President and Director
- ------------------- (Principal Finance Officer)
Michael J. Ward*
/s/Patricia J. Aftoora Vice President, Corporate Secretary
- ----------------------- and Director
Patricia J. Aftoora*
/s/ Patricia J. Aftoora
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Patricia J. Aftoora March 20, 1998
*(Attorney-in-Fact)
EXHIBIT 23
Consent of Ernst & Young LLP, Independent Auditors
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We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Allegheny and Western Railway Company of our report dated January
30, 1998, with respect to the consolidated financial statements of CSX
Transportation, Inc. included in its Annual Report (Form 10-K) for the year
ended December 26, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
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Ernst & Young LLP
Richmond, Virginia
March 16, 1998
