SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 15, 1996
Illinois Central Railroad Company
Exact name of Registrant as specified in its charter
Delaware 1-7092 36-2728842
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
455 North Cityfront Plaza Drive, Chicago, Illinois 60611-5504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 755-7500
Item 5. Other Events
This Amendment to Form 8-K dated May 15, 1996 is being
filed to amend the Pro Forma Statements included in the original
filing. See Item 7 and page P-1.
Item 7. Financial Statements and Exhibits
(a) Pro Forma financial information
See Index at page 4
(c) Exhibits
See Exhibit Index at E-1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereto duly authorized.
ILLINOIS CENTRAL RAILROAD COMPANY
John V. Mulvaney
Controller
Date: July 15, 1996
ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
INDEX TO PRO FORMA FINANCIAL INFORMATION
Pro Forma Financial Information . . . . . . . . P-1
Pro Forma Condensed Consolidated Statement of Income for
the Three Months Ended March 31, 1996. . . . . P-2
Notes to Pro Forma Condensed Consolidated Statements of
Income for the Three Months Ended March 31, 1996 . . P-3
Pro Forma Condensed Consolidated Balance Sheet at
March 31, 1996. . . . . . . . . . .. . . . . . . . . P-4
Notes to Pro Forma Condensed Consolidated Balance
Sheet at March 31, 1996 . . . . . . . . . . . P-5
Pro Forma Condensed Consolidated Statement of Income for
the year Ended December 31, 1995 . . . . . . . P-6
Notes to Pro Forma Condensed Consolidated Statement of
Income for the year Ended December 31, 1995 . P-7
PRO FORMA FINANCIAL INFORMATION
General
The following unaudited pro forma condensed consolidated
statements of income of Illinois Central Corporation and
Subsidiaries ("IC") for the twelve months ended December 31, 1995
and the three months ended March 31, 1996 (the "Pro Forma Income
Statements") and the pro forma condensed consolidated balance sheet
of IC as of March 31, 1996 (the "Pro Forma Balance Sheet") (together
the "Pro Forma Statements") were prepared to illustrate the
estimated effects of the acquisition of CCP Holdings, Inc. ("CCPH")
by IC (the "Acquisition")(See Below). The Pro Forma Statements
reflect the use of the purchase method of accounting. The Pro Forma
Income Statements assume that the Acquisition occurred as of January
1, 1995 and January 1, 1996, respectively. The Pro Forma Balance
Sheet assumes that the Acquisition occurred on March 31, 1996. The
total purchase cost, including fees and expenses, has been allocated
to the assets and liabilities of CCPH based on their book values as
no studies, evaluations or other investigations have occurred or
will be conducted until closing.
The unaudited Pro Forma Statements have been presented
for informational purposes only, are not indicative of what IC's
actual results of operations or financial conditions would have been
had the Acquisition occurred as of January 1,1995 or January 1,
1996, respectively or at March 31, 1996 and do not purport to
indicate IC's consolidated results of operations for any future date
or period or financial position at any future date. In accordance
with recent interpretations of Article 11 of Regulation S-X, no
adjustments have been made to reflect revised operating policies and
procedures, reduced employment levels and lower materials expense as
a result of IC's intended operating plan for CCPH. Management
believes that this plan would have lowered operating expenses
approximately $1.7 million for the three months ended March 31, 1996
and approximately $6.9 million for the year ended December 31, 1995.
Additionally, the pro forma information presented does not include
$4.5 million in one-time severance costs. Likewise, anticipated
revenue synergies have not been quantified and are not included.
The unaudited pro forma adjustments are based upon
available information and upon certain assumptions. The unaudited
Pro Forma Statements and the accompanying notes should be read in
conjunction with the selected historical consolidated financial
statements of IC and CCPH, including the notes thereto. IC's
financial statements are contained in its Form 10-Q for the three
months ended March 31, 1996 (File No. 1-10720) filed with the
Commission on May 10, 1996 and its Annual Report on Form 10-K for
the year ended December 31, 1995 (File No. 1-10720) filed with the
Commission on March 11, 1996. The historical audited consolidated
financial statements of CCPH as of December 31, 1995 and 1994 and
for each of the three years ended December 31, 1995 and the
unaudited consolidated financial statements of CCPH as of March 31,
1996 and for the three months ended March 31, 1996 and 1995 are
contained in the IC's Form 8-K dated as of May 15, 1996 (SEC File
No. 1-10720).<PAGE>
The Acquisition
On January 17, 1996, IC announced a definitive agreement
for the acquisition of CCPH. The announced purchase price was
approximately $125 million in cash, and the assumption of
approximately $14 million in net debt, and approximately $18 million
of capitalized lease obligations. The cash price is adjusted for
any unscheduled prepayments of long-term debt prior to closing.
Additionally, the actual purchase price is subject to various
potential adjustments for up to one year after the closing date.
The application for the required approval of the Surface
Transportation Board (the "STB") was filed January 31, 1996. On
April 30, 1996, the STB announced they had voted in favor of the
acquisition. Formal written approval was issued May 13, 1996, and
is effective June 13, 1996. The transaction actually closed on that
date.
IC is purchasing the stock of CCPH from CCPH's three
stockholders and will account for the acquisition using the purchase
method of accounting. CCPH has two principal operating subsidiaries
- - the Chicago Central and Pacific Railroad (CCPR") and the Cedar
River Railroad ("CRR") - which together comprise a Class II Railroad
system operating 850 miles of road. CCPR operates from Chicago west
to Omaha, Nebraska, with connecting lines to Cedar Rapids and Sioux
City, Iowa. CRR runs from Waterloo, Iowa north to Albert Lea,
Minnesota.
The Pro Forma Statements herein are based on the
announced purchase price and historical information referred to
above which was the only information available at May 15, 1996. Pro
Forma financial statements based on the actual purchase price (see
below) will be filed by IC upon the completion of an audit and
appraisal of CCPH as of June 13, 1996.
The actual purchase price was $144.5 million in cash
(including $1.6 million of Seller's expenses), the assumption of
approximately $5 million in debt, and approximately $18 million of
capitalized lease obligations.
IC used its existing bank credit lines and funds
received from its operating subsidiary, the Illinois Central
Railroad Company (the "Railroad") to fund the acquisition. The
Railroad used proceeds from its issuance of commercial paper to
provide the monies needed to make a dividend of $50.0 million and
$59.9 million loan to IC.
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Income
Three Months Ended March 31, 1996
($ in millions)
(Unaudited)
ADJUSTMENTS/
IC CCPH ELIMINATIONS Pro Forma
Revenues $ 162.3 $ 21.6 $ $ 183.9
Operating expenses 102.0 12.2 0.8 (1) 115.0
Operating income 60.3 9.4 (0.8) 68.9
Interest expense, net (7.7) (0.8) 0.3 (2)
(1.9)(3) (10.1)
Other income, net 0.3 0.2 0.5
Income before income
taxes 52.9 8.8 (2.4) 59.3
Provision for income
taxes 19.8 3.5 (0.9)(4) 22.4
Net income $ 33.1 $ 5.3 $ (1.5) $ 36.9
Income per share $ 0.54 $ 0.60
Weighted average
number of shares of
common stock and
common stock
equivalents
outstanding 61,742,614 61,742,614
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Income
P-2
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
The following is a summary of the adjustments/eliminations reflected in
the unaudited Pro Forma Condensed Consolidated Statement of Income for
the three months ended March 31, 1996.
1) Amortization of Goodwill calculated on the difference between the
price of $125 million and the book value of stockholders' equity
($54.1 million) on January 1, 1996 as adjusted for the
amortization of acquisition liability for severance and amortized
over 25 years. Actual Goodwill will be determined following the
closing of the acquisition and the complete valuation of the
assets and liabilities existing upon closing. The amortization
period of 25 years is based on preliminary evaluation of asset
lives and could change.
2) Elimination of CCPH's interest expense on the portion of the
beginning debt balance assumed paid off with cash available on
January 1, 1996, of approximately $15.8 million.
3) Increased interest expense caused by the additional borrowings
required to finance the acquisition. Approximately $100 million
will be financed at IC's subsidiary, Illinois Central Railroad
Company. Approximately $25 million will be financed by IC using
its bank lines.
4) Reflects the tax effects of Pro Forma adjustments.
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 1996
($ in millions)
(Unaudited)
ADJUSTMENTS /
Assets: IC CCPH ELIMINATIONS Pro Forma
Cash and cash equivalents $ 11.1 $ 6.8 (5.0)(2) $ 12.9
Other current assets 102.9 21.0 (0.2)(4) 123.7
Investments 13.3 - 13.3
Properties, net 1,292.6 114.3 1,406.9
Goodwill 77.1 (1)
4.5 (3) 81.6
Other assets 15.3 0.4 15.7
Total assets $1,435.2 $ 142.5 76.4 $1,654.1
Liabilities and Stockholders' Equity:
Current liabilities $ 189.1 $ 26.7 4.5 (3) $
(1.3)(2)
(0.2)(4) 218.8
Long-term debt 387.4 21.9 136.5 (1)
(3.7)(2) 542.1
Deferred taxes 252.7 25.8 278.5
Other liabilities 114.9 8.7 123.6
Stockholders' equity 491.1 59.4 (59.4)(1) 491.1
Total liabilities and stock-
holders' equity $1,435.2 $ 142.5 76.4 $1,654.1
See accompanying Notes to the Unaudited Pro Forma Condensed
Consolidated Balance Sheet.
P-4
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
The following is a summary of the adjustments/eliminations reflected
in the unaudited Pro Forma Condensed Consolidated Statement of Financial
Position as of March 31, 1996.
1) Reflects the acquisition of 100% of the stock of CCP.
2) Assumes CCP's cash is used to reduce acquired bank debt.
3) Reflects anticipated severance costs of $4.5 million.
4) Eliminates intercompany car hire balances at March 31, 1996.
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 1995
($ in millions)
(Unaudited)
ADJUSTMENTS/
IC Corp CCPH ELIMINATIONS Pro Forma
Revenues $ 643.8 $ 76.0 $ $ 719.8
Operating expenses 413.3 53.0 3.4 (1) 469.7
Operating income 230.5 23.0 (3.4) 250.1
Interest expense, net (29.5) (4.1) 0.3 (2)
(7.4)(3) (40.7)
Other income, net (0.2) 0.9 0.7
Income before income taxes 200.8 19.8 (10.5) 210.1
Provision for income taxes 71.0 7.9 (3.9)(4) 75.0
Income before extraordinary
item, net $ 129.8 $ 11.9 $ (6.6) $ 135.1
Income per share before
extraordinary item $ 2.06 $ 2.15
Weighted average number
of shares of common
stock and common stock
equivalents
outstanding 62,885,121 62,885,121
See accompanying Notes to the Unaudited Pro Forma Condensed
Consolidated Statement of Income
P-6
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
The following is a summary of the adjustments/eliminations reflected in
the unaudited Pro Forma Condensed Consolidated Statement of Income for
the year ended December 31, 1995.
1) Amortization of Goodwill calculated on the difference between the
price of $125 million and the book value of stockholders' equity
($43.9 million) on January 1, 1995 as adjusted for amortization
of acquisition liability for severances and amortized over 25
years. Actual Goodwill will be determined following the closing
of the acquisition and the complete valuation of the assets and
liabilities existing upon closing. The amortization period of 25
years is based on preliminary evaluation of asset lives and could
change.
2) Elimination of CCPH's interest expense on the portion of the
beginning debt balance assumed paid off with cash available on
January 1, 1995, of approximately $3.8 million.
3) Increased interest expense caused by the additional borrowings
required to finance the acquisition. Approximately $100 million
will be financed at IC's subsidiary, Illinois Central Railroad
Company. Approximately $25 million will be financed by IC using
its bank lines.
4) Reflects the tax effects of Pro Forma adjustments.
ILLINOIS CENTRAL RAILROAD COMPANY & SUBSIDIARIES
EXHIBIT INDEX
Exhibit Index Description Sequential Page No.
23.1 Consent of Arthur Andersen LLP (A)
(A) Included herein but not reproduced
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
ILLINOIS CENTRAL RAILROAD COMPANY
As independent public accountants, we hereby consent to the
use of our report dated January 19, 1996 on the consolidated financial
statements of CCP Holdings, Inc. and its subsidiaries (the "Company")
as of December 31, 1995 and 1994 and for each of the years in the three
year period ended December 31, 1995 in this Amendment No. 1 to Current
Report on Form 8-K.
/s/Arthur Andersen LLP
Chicago, Illinois
July 12, 1996
