SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1998
[ ] 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 1-10720
ILLINOIS CENTRAL RAILROAD COMPANY
(Exact name of registrant as specified in its charter)
Illinois 36-2728842
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
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
As of June 30, 1998 100 common shares were outstanding.
THE REGISTRANT IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF CANADIAN NATIONAL
RAILWAY COMPANY AND MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
H(1)(a) AND (b) OF THE FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
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ILLINOIS CENTRAL RAILROAD COMPANY
AND SUBSIDIARIES
FORM 10-Q
Quarter Ended June 30, 1998
CONTENTS
Part I - Financial Information: Page
Item 1. Financial Statements:
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
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ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
($ in millions)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
Revenues $ 162.4 $ 147.9 $ 325.4 $ 302.1
Operating expenses:
Labor and fringe benefits 48.8 43.3 95.3 86.8
Leases and car hire 13.4 11.8 26.7 26.3
Diesel fuel 6.9 7.7 14.6 17.1
Materials and supplies 8.2 6.3 17.3 15.5
Depreciation and amortization 8.9 8.2 17.5 16.4
Casualty, insurance and losses 3.4 3.1 6.2 7.3
Other taxes 5.2 5.2 10.5 10.5
Other 8.2 6.2 16.4 8.4
Special Charge - - 16.4 -
Operating expenses 103.0 91.8 220.9 188.3
Operating income 59.4 56.1 104.5 113.8
Other income (expense), net 4.1 1.7 6.3 2.2
Interest expense, net (7.1) (7.3) (14.0) (14.5)
Income before income taxes 56.4 50.5 96.8 101.5
Provision for income taxes 21.1 17.6 32.5 36.7
Net income $ 35.3 $ 32.9 $ 64.3 $ 64.8
The following notes are an integral part of the consolidated financial
statements.
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ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in millions)
(Unaudited)
ASSETS June 30, 1998 December 31, 1997
Current assets:
Cash and temporary cash investment $ 13.4 $ 28.2
Receivables, net of allowance for doubtful
accounts of $1.0 in 1998 and $.9 in 1997 142.7 100.6
Loans to affiliates - 4.9
Materials and supplies, at average cost 18.5 15.3
Assets held for disposition 0.3 -
Deferred income taxes - current 17.5 17.5
Other current assets 6.4 5.0
Total current assets 198.8 171.5
Investments 12.6 12.1
Loans to affiliates 197.5 160.9
Properties:
Transportation:
Road and structures, including land 1,217.1 1,193.7
Equipment 181.5 173.7
Other, principally land 41.3 41.3
Total properties 1,439.9 1,408.7
Accumulated depreciation (47.9) (45.8)
Net properties 1,390.0 1,362.9
Other assets 25.4 23.6
Total assets $1,826.3 $1,731.0
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 2.5 $ 22.7
Accounts payable 45.5 53.1
Income taxes payable 2.1 -
Casualty and freight claims 12.7 12.7
Employee compensation and vacations 26.2 19.1
Taxes other than income taxes 13.1 16.4
Accrued redundancy reserves 3.8 3.9
Other accrued expenses 80.8 80.1
Total current liabilities 186.7 208.0
Long-term debt 629.2 552.4
Deferred income taxes 316.8 302.9
Other liabilities and reserves 107.8 111.7
Contingencies and commitments
Stockholder's equity:
Common stock authorized, issued and
outstanding 100 shares, $1 par value - -
Additional paid-in capital 129.7 129.6
Retained income 456.1 426.4
Total stockholder's equity 585.8 556.0
Total liabilities and
stockholder's equity $1,826.3 $1,731.0
The following notes are an integral part of the consolidated financial
statements.
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ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in millions)
(Unaudited)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities :
Net income $ 64.3 $ 64.8
Reconciliation of net income to net cash
provided by (used for) operating activities :
Depreciation and amortization 17.5 16.4
Deferred income taxes 13.9 15.1
Equity in undistributed earnings of
affiliates, net of dividends received (0.6) (0.4)
Net gains on sales of real estate (1.3) (0.9)
Cash changes in working capital (47.8) (0.1)
Changes in other assets (1.8) (1.8)
Changes in other liabilities and reserves (3.9) (7.2)
Net cash provided by (used for)
operating activities 40.3 85.9
Cash flows from investing activities :
Additions to properties (43.9) (43.7)
Proceeds from real estate sales 1.5 1.7
Proceeds from equipment sales 1.0 3.1
Proceeds from sales of investments - 0.4
Loans to affiliated companies (31.7) 14.9
Other (3.9) (4.3)
Net cash provided by (used for)
investing activities (77.0) (27.9)
Cash flows from financing activities :
Proceeds from issuance of debt 20.0 -
Principal payments on debt (21.3) (1.9)
Net proceeds (payments) in commercial paper 57.8 (20.0)
Dividends paid (34.6) (33.3)
Net cash provided by (used for)
financing activities 21.9 (55.2)
Changes in cash and temporary cash investments (14.8) 2.8
Cash and temporary cash investments at
beginning of period 28.2 46.3
Cash and temporary cash investments at end of
of period $ 13.4 $ 49.1
Supplemental disclosure of cash flow information :
Cash paid during the year
for:
Interest (net of amount capitalized) $ 22.5 $ 18.3
Income taxes $ 15.9 $ 17.3
The following notes are an integral part of the consolidated financial
statements.
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ILLINOIS CENTRAL RAILROAD COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. Merger and Special Charge
On February 10, 1998, ICR's parent, Illinois Central Corporation (the
"Corporation")and Canadian National Railway Company ("CN") entered into an
Agreement and Plan of Merger (as subsequently amended, the "Merger Agreement"),
pursuant to which Blackhawk Merger Sub, Inc. (the "Purchaser"), a wholly owned
subsidiary of CN, acquired on March 13, 1998, 46,051,761 of the outstanding
shares of the Corporation's Common Stock (the "Shares") at a price of $39.00 per
share through a cash tender offer (the "Offer"). The Corporation's Board of
Directors unanimously approved the Merger Agreement and the transactions
contemplated. On June 4, 1998, the Purchaser was merged with and into the
Corporation (the "Merger") and the remaining outstanding Corporation common
shares not purchased pursuant to the Offer were converted into a right to
receive 0.633 share of CN common stock for each share of Corporation common
stock. Pursuant to the Merger, each share of the Corporation's Common Stock,
including treasury stock held by the Corporation, was cancelled, and the
Corporation became an indirect, wholly-owned subsidiary of CN with 100 shares of
no-par Common Stock issued and outstanding. These shares were deposited in an
independent, irrevocable voting trust while CN and the Corporation await review
of the transaction by the STB.
Pursuant to the Merger Agreement, subject to consultations with the
Corporation and after giving good faith consideration to the views of the
Corporation, CN shall have final authority over the development, presentation
and conduct of the STB case, including over decisions as to whether to agree to
or acquiesce in conditions. The Corporation shall take no regulatory or legal
action in connection with the STB without CN's consent. The STB could impose
conditions or restrictions as it relates to CN's acquisition of control of the
Corporation. If the STB does not approve CN's acquisition of control of the
Corporation or CN deems any conditions imposed by the STB unacceptable, CN would
have the obligation to sell all the Corporation common shares held by the voting
trust. The STB's decision is expected in the first half of 1999.
The Corporation and ICR recorded a special charge ("Special Charge") in
the first quarter of 1998 for costs associated with the CN Merger Agreement. The
Special Charge includes $16.4 million for costs relating to payments under
various ICR compensation plans payable following a change in control at the
Corporation. Included in the Special Charge is $11 million for payments under
Plan 2000. A number of executive officers who are covered by Employment Security
Agreements will be entitled to receive between two or three years of severance
benefits if within two years after the change in control, their employment is
terminated by ICR without cause or they resign with good reasons. The amount
that may be paid under Employment Security Agreements, if any, is not
determinable and has not been recorded in the Special Charge.
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The Corporation's Employee Stock Purchase Plan and Management Employee
Discounted Stock Purchase Plan were terminated following the closing of the
Offer.
2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting policies described in the 1997 Annual
Report on Form 10-K and should be read in conjunction with the disclosures
therein.
In the opinion of management, these interim financial statements
reflect all adjustments, consisting of normal recurring accruals, necessary to
present fairly the financial position, results of operations and cash flows for
the periods presented. Interim results are not necessarily indicative of results
for the full year.
Income Per Share
Income per common share has been omitted as ICR is a wholly-owned
subsidiary of the Corporation.
3. Equity and Restrictions on Dividends
For the six month period ended June 30, 1998, ICR has paid cash
dividends of $34.6 million to the Corporation. At June 30, 1998 there were no
declared dividends payable to the Corporation. Covenants of the ICR Revolver
require specified levels of tangible net worth. At June 30, 1998, ICR exceeded
its tangible net worth covenant by $29.6 million.
4. Receivable Sales Agreement
On January 8, 1998, ICR terminated its revolving agreement to sell
undivided percentage interests in certain of its accounts receivable, with
recourse, to a financial institution.
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5. Litigation
ICR is one of several defendants in a New Orleans class action in which
a jury has returned a verdict against the ICR for $125 million in punitive
damages as a result of a tank car fire. The Louisiana Supreme Court has vacated
the judgment for technical reasons and remanded the case to the trial court for
further proceedings. On June 17, 1998, the trial court re-entered judgment in
favor of the class and certified it for interlocutory appeal. The case awaits
hearing in the trial court on post-trial motions.
While the final outcome of this proceeding cannot be determined, in the
opinion of management, based on present information, the ultimate resolution of
this case will not have a material adverse effect on ICR's financial position,
results of operations, cash flow or liquidity.
8
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30,
1997
Total revenues for 1998 increased from the prior year quarter by $14.5
million or 9.8% to $162.4 million.
Increased revenues from grain (corn, soybeans and wheat) resulted from
export shipments for corn, coupled with an increase in market share to domestic
poultry markets. In addition, revenue growth stemmed from milled grains (export
vegetable oils and soybean meal), and metals (new melt shop at Memphis,
Tennessee, increased steel imports and several major western pipeline projects).
Operating expenses increased $11.2 million or 12.2% to $103.0 million.
Labor and fringe benefits reflected more normal levels of expense this quarter
compared to last year which benefitted from the reduction of certain
compensation related accruals. Leases and car hire reflects increased loadings
and changes in business mix. Fuel expense reflects an increase in usage (14.3%)
offset by lower costs (14.8%). Materials and supplies have increased from last
year following a new repair program initiated in late 1997. Other expenses were
higher contrasted to last year which benefitted from the recovery of prior
period expenses relating to a derailment.
Other income (expense), net of $4.1 million for 1998 increased compared
to $1.7 million in 1997 primarily from a gain on sale of woodchip hopper cars.
Net interest expense of $7.1 million for 1998 decreased 2.7% compared
to $7.3 million in 1997.
Provision for income taxes of $21.1 million for 1998 increased 19.9%
compared to $17.6 million in 1997 due primarily to higher income before taxes.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Total revenues for 1998 increased from the prior year period by $23.3
million or 7.7% to $325.4 million.
Export shipments of corn during second quarter and new initiatives to
gain market share in the domestic poultry market helped to offset weak
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first quarter demand for export grains. Continuing demand for milled grains
(including vegetable oils and soybean meal) and continuing revenue growth in
metals (new melt shop at Memphis, Tennessee, increased import steel, several
major western state pipeline projects, plant expansions, and special project
development) have contributed to revenue growth.
Operating expenses increased $32.6 million or 17.3% to $220.9 million.
Labor and fringe benefits reflected more normal levels of expense this year
compared to last year which benefitted from the reduction of certain
compensation related accruals. Fuel expense reflects the increase in usage
(5.8%) offset by lower costs (18.4%). Materials and supplies reflects costs
associated with a new repair program initiated in late 1997. The $16.4 million
Special Charge is discussed in Note 1. Other expenses were higher contrasted to
last year which benefitted from the recovery of prior period expenses relating
to a derailment.
Other income (expense), net of $6.3 million for 1998 increased compared
to $2.2 million in 1997 primarily from a gain on sale of woodchip hopper cars
and terminated fees relating to the accounts receivable sales program.
Net interest expense of $14.0 million for 1998 decreased 3.4% compared
to $14.5 million in 1997.
Provision for income taxes includes a benefit from additional
deductions resulting from exercise of stock options by ICR employees.
Liquidity and Capital Resources
Operating Data ($ in millions): Six Months Ended June 30,
-------------------------
1998 1997
---- ----
Cash flows provided by (used for):
Operating activities................ $ 40.3 $ 85.9
Investing activities................ (77.0) (27.9)
Financing activities................ 21.9 (55.2)
----- ------
Net change in cash and
temporary cash investments $(14.8) $ 2.8
======= ======
Cash provided by operating activities in 1998 and 1997 was primarily net
income before depreciation and deferred taxes.
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Investing Data ($ in millions):
Additions to property were as follows:
Six Months Ended June 30,
1998 1997
---- ----
Communications and signals......... $ 5.1 $ 7.6
Equipment/rolling stock............ 9.0 1.9
Track and bridges.................. 24.4 30.2
Other.............................. 5.4 4.0
----- -----
Total.......................... $43.9 $43.7
===== =====
Property retirements and removals generated proceeds of $2.5 million
and $4.8 million in 1998 and 1997, respectively.
ICR anticipates that capital expenditures for 1998 will be
approximately $88.6 million. Replacement expenditures of $79.3 million will
concentrate on track maintenance, bridges and freight car upgrades. Productivity
and expansion expenditures will total $9.3 million. These expenditures are
expected to be met from current operations or other available sources.
Financing Activities
Through July, ICR paid dividends of $34.6 million and $48.5 million in
1998 and 1997, respectively, to the Corporation.
ICR has a commercial paper program whereby a total of $200 million can
be issued and outstanding at any one time. The program is supported by a $250
million ICR Revolver (see below). At June 30, 1998, $57.8 million was
outstanding. The average interest rate on commercial paper for the quarter ended
June 30, 1998, was 5.79% with a range of 5.77% to 5.81%. ICR's public debt is
rated Baa2 by Moody's and BBB by S&P.
In 1994, ICR entered into a revolving agreement to sell undivided
percentage interests in certain of its accounts receivable, with recourse, to a
financial institution. This agreement was terminated on January 8, 1998. ICR
serviced the accounts receivable sold under the agreement and retained the same
exposure to credit loss as existed prior to the sale. Costs related to the
agreement fluctuated with changes in prevailing interest rates. These costs,
which are included in Other Income (Expense), Net, were $.2 and $1.5 million for
the six months ended June 30, 1998, and 1997, respectively.
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ICR has a $250 million Revolver with its bank lending group, which
expires in 2001. Fees and borrowing spreads are predicated on ICR's long-term
credit ratings. Currently, the annual facility fee is 15 basis points and
borrowings under this agreement are at Eurodollar offered rate plus 22.5 basis
points. The Revolver is used primarily for backup for ICR's commercial paper
program but can be used for general corporate purposes. The available amount is
reduced by the outstanding amount of commercial paper borrowings and any letters
of credit issued on behalf of ICR under the facility. No amounts have been drawn
or letters of credit issued under the Revolver. At June 30, 1998, $192.2 million
was available.
Certain covenants of ICR's debt agreements require among others
specific levels of tangible net worth but not a specific dividend restriction.
At June 30, 1998, ICR exceeded its tangible net worth covenants by $29.6
million. ICR was in compliance with all covenants at June 30, 1998, and does not
contemplate any difficulty maintaining such compliance.
In June 1998, ICR issued $20 million in MTN's from its 1996 shelf
registration to replace $20 million in MTN's that matured in June 1998. The 1996
shelf registration can be used to issue an additional $50 million in MTN's or
other debt until 2000. Currently, there are no plans to issue additional debt
but replacing maturing MTN's, capital investments in the terminal facilities and
other ventures could necessitate use.
ICR believes that its available cash, cash generated by its operations
and cash available from the facilities described above will be sufficient to
meet foreseeable liquidity requirements. Additionally, ICR believes it has
access to the public debt market if needed.
Year 2000 Conversion
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Many of ICR's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based on recent assessments, ICR determined that it will be required to
modify or replace portions of its software so that its computer systems will
properly utilize dates beyond December 31, 1999. ICR presently believes that
with modifications to existing software and
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conversions to new software, the Year 2000 Issue can be mitigated. However, if
such modifications and conversions are not made, or are delayed, the Year 2000
Issue could have a material impact on the operations of ICR.
ICR has initiated formal communications with all of its suppliers and large
customers to determine the extent to which ICR is vulnerable to those third
parties' failure to remediate their own Year 2000 Issue. There can be no
guarantee that the systems of other companies on which ICR's systems rely will
be converted on a timely basis, or that a failure to convert by another company,
or a conversion that is incompatible with ICR's systems, would not have material
adverse effect on ICR.
In October 1997, ICR entered into an agreement to replace approximately 40
percent of its non-Year 2000 compliant programs with new software and will
utilize both internal and external resources to replace and test the software
for Year 2000 modifications. ICR began converting its remaining computer systems
with internal resources earlier in 1997. ICR expects to have spent approximately
$10.0 million between 1997 to 1999 to modify and replace its computer systems.
Of the total project cost, approximately $3.0 million is attributable to the
purchase of new software. ICR plans to complete conversion of non-Year 2000
compliant programs during 1998. However, user acceptance testing will continue
into 1999. Installation of new software programs should be completed during the
first quarter of 1999. The total cost of the project is being funded through
operating cash flows. Maintenance or modification costs will be expensed as
incurred, while the costs of new software will be capitalized and amortized over
the software's useful life. Accordingly, ICR does not expect the amounts
required to be expensed over the next two years to have a material effect on its
financial position or results of operations. The amount of spending to date is
approximately $5.3 million.
Business continuity and contingency planning to address Year
2000-related failure scenarios and ICR's response is an integral part of ICR's
Year 2000 program. The principal focus of continuity and contingency plans will
be on risks outside the control of ICR, e.g., the business failure of a major
customer or supplier, or a failure within the public telecommunications network.
The development of business continuity plans should be completed by the end of
the first quarter of 1999.
The costs of the project and the date on which ICR plans to complete the
Year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee
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that these estimates will be achieved and actual results could differ materially
from those plans. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.
Miscellaneous
In April 1998, the Corporation, ICR's parent, announced a 15-year
marketing alliance with CN and Kansas City Southern Railway Company. The
alliance will offer shippers new competitive options in a rail freight
transportation network linking key north-south continental freight markets. In
addition, the marketing alliance will give shippers access to Mexico's largest
rail system. Under terms of the marketing alliance, the companies will
coordinate sales and marketing, operations, fleets, and information systems, but
not for traffic movements where any two of them provide the only direct rail
service.
ICR has entered into various diesel fuel collar agreements designed to
mitigate significant changes in fuel prices. As a result, approximately 50% of
ICR's short-term diesel fuel requirements are protected against significant
price changes through July 1999, thereafter, approximately 25% will be protected
through September 1999.
Environmental Liabilities
ICR's operations are subject to comprehensive environmental regulation
by federal, state and local authorities. Compliance with such regulation
requires the Corporation to modify its operations and expend substantial
manpower and financial resources.
Under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("Superfund"), and similar state and federal laws, ICR
is potentially liable for the cost of clean-up of various contaminated sites.
ICR generally participates in the clean-up at sites where other substantial
parties share responsibility through cost-sharing arrangements, but under
Superfund and other similar laws ICR can be held jointly and severally liable
for all environmental costs associated with such sites.
ICR is aware of approximately 22 contaminated sites at which it is
probably liable for some portion of any required clean-up. Of these, 14 involve
contamination primarily by diesel fuel which can be remediated without material
cost. Six other sites are expected to require more than $1 million each in
clean-up costs. At three of these sites other parties are expected to contribute
the majority of the costs incurred.
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For all known sites of environmental contamination where ICR loss or
liability is probable, ICR has recorded an estimated liability at the time when
a reasonable estimate of remediation cost and ICR liability can first be
determined. Adjustments to initial estimates are recorded as necessary based
upon additional information developed in subsequent periods. Estimates of ICR`s
potential financial exposure for environmental claims or incidents are
necessarily imprecise because of the difficulty of determining in advance the
nature and extent of contamination, the varying costs of alternative methods of
remediation, the regulatory clean-up standards which will be applied, and the
appropriate allocation of liability among multiple responsible parties. At June
30, 1998, ICR estimated the probable range of its liability to be $8.5 million
to $44.1 million, and in accordance with the provisions of SFAS No. 5 had a
reserve of $8.5 million for environmental contingencies. This amount is not
reduced for potential insurance recoveries or third-party contributions.
The risk of incurring environmental liability in connection with both
past and current activities is inherent in railroad operations. Decades-old
railroad housekeeping practices were not always consistent with contemporary
standards, historically ICR leased substantial amounts of property to industrial
tenants, and ICR continues to haul hazardous materials which are subject to
occasional accidental release. Because the ultimate cost of known contaminated
sites cannot be definitively established and because additional contaminated
sites yet unknown may be discovered or future operations may result in
accidental releases, no assurance can be given that ICR will not incur material
environmental liabilities in the future. However, based on its assessments of
the facts and circumstances now known, management believes that it has recorded
adequate reserves for known liabilities and does not expect future environmental
charges or expenditures, based on these known facts and circumstances, to have a
material adverse effect on ICR`s financial position, results of operations, cash
flow or liquidity.
Litigation
ICR is one of several defendants in a New Orleans class action in which a
jury has returned a verdict against the ICR for $125 million in punitive damages
as a result of a tank car fire. The Louisiana Supreme Court has vacated the
judgment for technical reasons and remanded the case to the trial court for
further proceedings. On June 17, 1998, the trial court re-entered judgment in
favor of the class and certified it for interlocutory appeal. The case awaits
hearing in the trial court on post-trial motions.
While the final outcome of this proceeding cannot be determined, in the
opinion of management, based on present information, the ultimate
15
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resolution of this case will not have a material adverse effect on ICR's
financial position, results of operations, cash flow or liquidity.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index on page E-1
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ILLINOIS CENTRAL RAILROAD COMPANY
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, ICR
has duly caused this report to be signed on its behalf by the undersigned
hereto duly authorized.
ILLINOIS CENTRAL RAILROAD COMPANY
/s/ John V. Mulvaney
John V. Mulvaney
Vice President & Chief Financial Officer
/s/ Douglas A. Koman
Douglas A. Koman
Controller
Date: August 10, 1998
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ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
27 Financial Data Schedule (This exhibit is
required to be submitted electronically
pursuant to the rules and regulations of
the Securities and Exchange Commission and
shall not be deemed filed for the purposes
of Section 11 of the Securities Act of 1933
or Section 18 of the Securities Exchange
Act of 1934).
E-1
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 13400
<SECURITIES> 0
<RECEIVABLES> 142700
<ALLOWANCES> 1000
<INVENTORY> 18500
<CURRENT-ASSETS> 198800
<PP&E> 1439900
<DEPRECIATION> 47900
<TOTAL-ASSETS> 1826300
<CURRENT-LIABILITIES> 186700
<BONDS> 629200
<COMMON> 0
0
0
<OTHER-SE> 585800
<TOTAL-LIABILITY-AND-EQUITY> 1826300
<SALES> 325400
<TOTAL-REVENUES> 325400
<CGS> 220900
<TOTAL-COSTS> 220900
<OTHER-EXPENSES> (6300)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14000
<INCOME-PRETAX> 96800
<INCOME-TAX> 32500
<INCOME-CONTINUING> 64300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64300
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
