SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________________ to ___________________
Commission file number 1-7092
ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
455 North Cityfront Plaza Drive
Chicago, Illinois 60611-5504
(Title and Address of the Plan)
ILLINOIS CENTRAL CORPORATION
455 North Cityfront Plaza Drive
Chicago, Illinois 60611-5504
(Issuer and Address of Principal Executive Offices)
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SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES SAVINGS PLAN
/s/ Dale W. Phillips
Dale W. Phillips
Member Administrative Committee
Date: June 26, 1997
2
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
FORM 11-K
Financial Statements and Schedules
Year Ended December 31, 1996 and 1995
F1
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ILLINOIS CENTRAL RAILROAD
UNION EMPLOYEES' SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
Financial Statements and Schedules:
Independent Auditors' Report............................F-3
Statements of Financial Position as of
December 31, 1996 and 1995.............................F-4
Statements of Income and Changes in Plan Equity for
the year ended December 31, 1996 and the period
June 26, 1995 to December 31, 1995.....................F-6
Notes to Financial Statements...........................F-8
Schedule I - Schedule of Assets Held For Investment
Purposes at December 31, 1996..........................F-13
Schedule II - Schedule ofReportable Transactions for the
year ended December 31, 1996...........................F-14
Exhibit:
Exhibit 23: Independent Auditors' Consent...............E-1
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Independent Auditors' Report
The Administrative Committee
Illinois Central Railroad
Union Employees' Savings Plan:
We have audited the accompanying statements of financial position of Illinois
Central Railroad Company Union Employees' Savings Plan as of December 31, 1996
and 1995, and the related statements of income and changes in plan equity for
the year ended December 31, 1996 and the period June 26, 1995 to December 31,
1995. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Plan's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Illinois Central Railroad Union
Employees' Savings Plan as of December 31, 1996 and 1995, and the results of its
operations and the changes in its plan equity for the periods then ended in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes and reportable transactions as of and for the year ended
December 31, 1996 are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of financial position and the
statements of income and changes in plan equity is presented for purposes of
additional analysis rather than to present the financial position and results of
operations and changes in plan equity of each fund. The supplemental schedules
and fund information have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KPMG PEAT MARWICK LLP
Chicago, Illinois
June 13, 1997
F3
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1996
Investment Funds
Illinois
Central
Corp. Target Target
Total Stock Fund Income 2025 2005 Balanced
Assets:
Investments at
fair value $1,635,746 291,840 251,544 235,284 269,647 587,431
Dividends
receivable 2,136 2,136
Accrued interest
receivable 24 2 2 2 18
Cash and cash
equivalents 22,404 21,357 40 68 48 891
Total assets $1,660,310 315,333 251,586 235,354 269,697 588,340
Liabilities and Plan Equity:
Liabilities:
Payable for unsettled
trades $ 0 0
Total liabilities 0 0 0 0 0 0
Plan equity 1,660,310 315,333 251,586 235,354 269,697 588,340
Total liabilities
and plan equity $1,660,310 315,333 251,586 235,354 269,697 588,340
See accompanying Notes to Financial Statements.
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1995
Investment Funds
Illinois
Central
Corp. Target Target
Total Stock Fund Income 2025 2005 Balanced
Assets:
Investments at fair
value $ 365,854 63,089 71,982 49,252 71,530 110,001
Accrued receivable 475 475
Cash and cash
equivalelent 6,490 6,490
Total assets $ 372,819 70,054 71,982 49,252 71,530 110,001
Liabilities and Plan Equity:
Liabilities:
Payable for
unsettled trades $ 1,118 184 227 187 226 294
Total liabilities 1,118 184 227 187 226 294
Plan equity 371,701 69,870 71,755 49,065 71,304 109,707
Total liabilities and
plan equity $ 372,819 70,054 71,982 49,252 71,530 110,001
See accompanying Notes to Financial Statements .
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
Investment Funds
Illinois
Central
Corp. Target Target
Total Stock Fund Income 2025 2005 Balanced
Investment Income:
Dividends $ 5,264 5,264
Interest 1,512 1,143 20 27 13 309
Net realized gain
(loss) 11,123 558 1,966 1,853 1,923 4,823
Net unrealized gain
(loss) 153,294 30,867 8,019 22,326 16,864 75,218
171,193 37,832 10,005 24,206 18,800 80,350
Contributions:
Participants 992,438 198,484 162,915 134,814 169,283 326,942
Employer 147,938 28,476 25,943 20,798 25,681 47,040
Rollover 37,224 2,239 3,604 9,410 3,359 18,612
1,177,600 229,199 192,462 165,022 198,323 392,594
Total Additions 1,348,793 267,031 202,467 189,228 217,123 472,944
Deductions:
Participants'
distribution 41,583 41,583
Administrative
expense 18,601 18,601
Total deductions 60,184 0 0 0 0 60,184
Interfund transfers:
in (out) 0 (21,568) (22,636) (2,939) (18,730) 65,873
Net Changes During
Period 1,288,609 245,463 179,831 186,289 198,393 478,633
Plan Equity:
At December 31,
1995 371,701 69,870 71,755 49,065 71,304 109,707
At December 31,
1996 $1,660,310 315,333 251,586 235,354 269,697 588,340
See accompanying Notes to Financial Statements.
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE PERIOD JUNE 26, 1995 TO DECEMBER 31, 1995
Investment Funds
Illinois
Central
Corp. Target Target
Total Stock Fund Income 2025 2005 Balanced
Investment Income:
Dividends $ 614 614
Interest 140 139 1
Net realized gain
(loss) 56 (72) 6 78 12 32
Net unrealized gain
(loss) 9,440 (1,749) 1,045 1,971 2,205 5,968
10,250 (1,068) 1,051 2,050 2,217 6,000
Contributions:
Participants 320,479 64,723 61,843 43,076 60,708 90,129
Employer 44,610 8,878 9,182 6,156 8,686 11,708
Rollover 0
365,089 73,601 71,025 49,232 69,394 101,837
Total Additions 375,339 72,533 72,076 51,282 71,611 107,837
Deductions:
Participants'
distribution 0
Administrative expenses 3,638 3,638
Total deductions 3,638 0 0 0 0 3,638
Interfund transfers:
in (out) 0 (2,663) (321) (2,217) (307) 5,508
Net Changes During
Period 371,701 69,870 71,755 49,065 71,304 109,707
Plan Equity:
At December 31, 1994 0 0 0 0 0 0
At December 31, 1995 $ 371,701 69,870 71,755 49,065 71,304 109,707
See accompanying Notes to Financial Statements.
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) THE COMPANY
Illinois Central Corporation ("IC"), a holding company, was incorporated
under the laws of Delaware. IC, through its wholly-owned subsidiaries,
including the Illinois Central Railroad Company (the "Company"), is
principally engaged in the rail freight transportation business. The
Company operates 2,700 miles of main line track between Chicago and the
Gulf of Mexico, primarily transporting chemicals, grain and milled grain,
coal, paper and intermodal commodities.
(2) DESCRIPTION OF PLAN
The following brief description of the Illinois Central Railroad Company
Union Employees' Savings Plan (the "Plan") provides only general
information. Participants should refer to the summary plan description for
a more complete description of the Plan's provisions.
GENERAL
The Plan was established effective June 26, 1995 for the benefit of
eligible employees of Illinois Central Railroad Company (the Company). The
Plan covers most full-time, union employees of the Company. Eligible
employees may participate on the first day of the calendar month
coinciding with or next following the first day of employment. To be
eligible, part-time employees must complete certain employment
requirements. This Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Participants may elect to make contributions to the Plan through periodic
payroll deductions in amounts ranging from 2% to 15% of each participant's
base salary, in 1% increments. The total pre-tax contributions by a
participant are limited to the lesser of $9,500 in 1996 and $9,240 in 1995
(subject to adjustments to reflect changes in the cost of living pursuant
to Section 402(g) of the Internal Revenue Code) or 15% of the
participant's salary during any calendar year. Contributions to the Plan
on behalf of the participants are made by the Company in lieu of an equal
amount of salary.
The Company contributes an amount equal to 25% of each participant's
contributions up to the first 4% of salary (a maximum Company contribution
of 1% of salary).
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
INVESTMENT OF CONTRIBUTIONS
The Plan permits participants to invest their own contributions
and the Company's matching contributions in the following
investment funds: the Illinois Central Corporation Stock Fund, the Income
Fund, the Target 2025 Fund, the Target 2005, and the Balanced Fund.
Participants may choose to invest in one or more funds in multiples of 10%
upon initial participation. Subsequent changes in funds may be in 1%
increments. The funds, excluding the Illinois Central Corporation Stock
Fund, are collective trust funds established by Bank of America Illinois.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, all of the Company's contributions, and an allocation of
earnings and expenses. Allocation of each is based on the participant's
account balances at the time of allocation. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
VESTING
Participants are immediately vested 100% in the entire amount in their
account.
PAYMENT OF BENEFITS
On termination of service, a participant may elect to receive the value of
his or her account in either a lump-sum payment, in annual installments
over a period of up to 15 years, or in the form of an immediate or
deferred annuity.
EXPENSES
Administrative expenses for maintenance of Plan financial records,
participant statements, service fees on insurance contracts, trustee fees,
and accounting fees are paid from Plan assets. All other administrative
expenses of the Plan are paid by the Company.
WITHDRAWALS
In accordance with generally accepted accounting principles, withdrawals
are recorded in the period in which they are paid to participants.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statements of the Plan are prepared using the accrual basis of
accounting.
Investment are stated at fair value. Quoted market prices are used to
value the stock and mutual funds.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
The Plan considers all highly liquid debt instruments purchased with a
maturity of 3 months or less to be cash equivalents.
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and
the reported amounts of income and expense during the reporting period.
Actual results could differ from those estimates.
(4) FEDERAL INCOME TAXES
The Plan has received a favorable determination letter from the Internal
Revenue Service (IRS), dated March 11, 1996, indicating that it is
qualified under Section 401(a) of the Internal Revenue Code and therefore
the related trust is exempt from tax under Section 501(a) of the Code. The
Plan Administrator is not aware of any activity or transactions that may
adversely affect the qualified status of the Plan.
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ILLINOIS CENTRAL RAILROAD COMPANY
UNION EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(5) INVESTMENTS
The following table presents the fair value of the Plan investments.
December 31, 1996 December 31, 1995
----------------- -----------------
Number Fair Number Fair
of Shares Value of Shares Value
Investments at Fair Value as
Determined by Quoted Market Price:
Illinois Central Railroad
Stock Fund................ 9,120 $291,840 1,644 $63,089
Target 2025 Fund.......... 15,652 235,284 3,851 49,252
Target 2005 Fund.......... 22,927 269,647 6,773 71,530
Income Fund............... 14,169 251,544 4,315 71,982
Investments at Fair Value as
Determined by Estimated Market
Price:
Balanced Fund......... 18,313 587,431 4,299 110,001
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SCHEDULE I
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
PAR VALUE MARKET
ASSET DESCRPTION /SHARE COST VALUE
B of A EB TARGET 2025 FUND $ 15.032 $ 210,987.12 $ 235,284.17
B of A EB EQUITY FUND 32.078 506,245.04 587,431.07
B of A EB GIC FUND 17.753 242,480.01 251,544.44
B of A EB TARGET 2005 FUND 11.761 250,577.78 269,646.73
ILLINOIS CENTRAL CORP COMMON 32.000 262,723.00 291,840.00
TOTAL INVESTMENTS 1,473,012.95 1,635,746.41
TEMPORARY CASH INVESTMENTS 22,402.92 22,402.92
$1,495,415.87 1,658,149.33
SEE ACCOMPANYING INDEPENDENT AUDITORS' REPORT.
SCHEDULE II
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
Series of Transactions in excess of 5% of Plan assets
Sales/Purchase Net/Gain Current
Security Description Price Expenses Cost Loss Value
Sales
Target 2005 $ 20,254 0 20,254 1,923 22,177
Balanced Fund 26,082 0 26,082 4,823 30,905
Income Fund 22,887 0 22,887 1,966 24,853
Cash & cash equivalent 503,485 0 503,485 0 503,485
Purchases
Illinois Central Corporation
Stock $ 207,832 123 207,955 0 207,955
Target 2025 177,601 0 177,601 0 177,601
Target 2005 201,507 0 201,507 0 201,507
Balanced Fund 428,294 0 428,294 0 428,294
Income Fund 194,431 0 194,431 0 194,431
Cash & cash equivalent 525,840 0 525,840 0 525,840
Individual Transactions in excess of 5% of Plan assets
Sales
Cash & cash equivalent 24,451 0 24,451 0 24,451
Cash & cash equivalent 39,683 0 39,683 0 39,683
Purchases
Cash & cash equivalent 22,394 0 22,394 0 22,394
Cash & cash equivalent 37,183 0 37,183 0 37,183
See accompanying independent auditors' report.
Exhibit 23
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Independent Auditors' Consent
The Board of Directors
Illinois Central Corporation:
We consent to incorporation by reference in Registration Statement No. 33-36765
on Form S-8 of Illinois Central Corporation of our report dated June 13, 1997,
relating to the statements of financial position of Illinois Central Railroad
Company Union Employees' Savings Plan as of December 31, 1996 and 1995, and the
related statements of income and changes in plan equity for the year ended
December 31,1996 and the period June 26, 1995 to December 31, 1995, and all
related statements, which report, appears in the December 31,
1996 annual report on Form 11-K of Illinois Central Railroad Company
Union Employees' Savings Plan.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
June 26, 1997
