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 Quarterly Period Ended June 30, 1994
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: 1-8627
SANTA FE PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3258709
(State of Incorporation) (I.R.S. Employer Identification No.)
1700 East Golf Road, Schaumburg, Illinois 60173-5860
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (708) 995-6000
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Shares Outstanding at June 30, 1994
----------------------------- -----------------------------------
Common Stock, $1.00 par value 186,523,992 shares
<PAGE>
<TABLE>
PART I
FINANCIAL INFORMATION
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(In millions, except per share data)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating Revenues $ 658.2 $ 609.1 $ 1,289.7 $ 1,192.3
---------- ---------- ---------- ----------
Operating Expenses
Compensation and benefits 209.2 204.1 416.8 405.0
Contract services 94.1 82.0 178.1 154.1
Fuel 61.2 59.6 120.1 118.8
Equipment rents 62.0 53.0 122.4 104.7
Depreciation and amortization 50.1 46.8 99.2 92.8
Materials and supplies 32.3 35.2 64.8 64.2
Other 51.9 46.3 100.2 99.4
---------- ---------- ---------- ----------
Total Operating Expenses 560.8 527.0 1,101.6 1,039.0
---------- ---------- ---------- ----------
Operating Income 97.4 82.1 188.1 153.3
Equity in Earnings of Pipeline 10.7 8.9 17.0 14.6
Interest Expense 30.9 34.4 59.9 69.6
Gain on Sale of California Lines - - - 145.4
Other Income (Expense)-Net 6.7 (8.5) 32.7 (14.1)
---------- ---------- ---------- ----------
Income From Continuing Operations Before Income Taxes 83.9 48.1 177.9 229.6
Income Taxes 35.5 19.9 75.3 95.0
---------- ---------- ---------- ----------
Income From Continuing Operations 48.4 28.2 102.6 134.6
Income from Discontinued Operations, Net of Income Taxes 9.2 119.3 23.1 140.0
---------- ---------- ---------- ----------
Net Income $ 57.6 $ 147.5 $ 125.7 $ 274.6
========== ========== ========== ==========
Income Per Share of Common Stock
Continuing Operations $ 0.25 $ 0.15 $ 0.54 $ 0.72
Discontinued Operations 0.05 0.64 0.12 0.75
---------- ---------- ---------- ----------
Net Income $ 0.30 $ 0.79 $ 0.66 $ 1.47
========== ========== ========== ==========
Average Number of Common and Common Equivalent Shares 189.7 186.6 189.8 186.3
========== ========== ========== ==========
<F1>
(See accompanying notes to Consolidated Financial Statements)
</TABLE>
-1-
<PAGE>
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(In millions)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1994 1993
-------------- --------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents, at cost which approximates market $ 15.0 $ 70.3
Accounts receivable, less allowances 93.9 96.1
Materials and supplies 109.7 92.3
Note receivable - current 72.5 72.5
Current portion of deferred income taxes 100.5 99.3
Other 8.8 27.2
Net assets of discontinued operations 504.4 -
-------------- --------------
Total current assets 904.8 457.7
-------------- --------------
Note Receivable - 36.2
Other Long-Term Assets 321.8 323.3
Properties, Plant and Equipment 6,024.9 5,886.1
Less-accumulated depreciation and amortization 1,534.3 1,577.7
-------------- --------------
Net properties 4,490.6 4,308.4
Net Assets of Discontinued Operations - 248.4
-------------- --------------
Total Assets $ 5,717.2 $ 5,374.0
============== ==============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 697.1 $ 669.8
Dividend payable - Gold distribution 504.4 -
Long-term debt due within one year 172.2 184.7
-------------- --------------
Total current liabilities 1,373.7 854.5
-------------- --------------
Long-Term Debt Due After One Year 932.3 991.1
Postretirement Benefits Liability 259.1 284.7
Restructuring Liability 206.4 257.8
Other Long-Term Liabilities 641.8 601.7
Deferred Income Taxes 1,148.0 1,115.9
-------------- --------------
Total liabilities 4,561.3 4,105.7
-------------- --------------
Shareholders' Equity
Common stock 190.0 190.0
Paid-in capital 858.0 869.7
Retained income 212.3 340.3
Treasury stock, at cost (104.4) (131.7)
-------------- --------------
Total shareholders' equity 1,155.9 1,268.3
-------------- --------------
Total Liabilities and Shareholders' Equity $ 5,717.2 $ 5,374.0
============== ==============
</TABLE>
(See accompanying notes to Consolidated Financial Statements)
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<PAGE>
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1994 1993
---------- ----------
<S> <C> <C>
Operating Activities
Net income $ 125.7 $ 274.6
Adjustments to reconcile net income to operating cash flows:
Income from discontinued operations, net of income taxes (23.1) (140.0)
Depreciation and amortization 99.2 92.8
Deferred income taxes 33.7 65.6
Rail restructuring costs paid (33.8) (41.3)
Imputed interest expense 10.4 14.0
Gain on sales of property, plant and equipment (1.2) (148.1)
Other-net (48.5) (10.0)
Changes in working capital:
Accounts receivable:
Sale of accounts receivable 40.0 -
Other changes (43.5) (29.7)
Materials and supplies (22.4) (17.4)
Accounts payable and accrued liabilities 29.0 24.2
Short-term investments and other current assets 13.4 (6.3)
---------- ----------
Net Cash Provided By Operating Activities-Continuing Operations 178.9 78.4
Discontinued Operations-Net (11.3) 47.6
---------- ----------
Net Cash Provided by Operating Activities 167.6 126.0
---------- ----------
Investing Activities
Cash used for capital expenditures (205.8) (142.4)
Proceeds from sale of property, plant and equipment 14.6 231.2
Other-net 64.9 38.9
Discontinued Operations-Net (29.1) (48.3)
---------- ----------
Net Cash Provided By (Used For) Investing Activities (155.4) 79.4
---------- ----------
Financing Activities
Proceeds from long-term borrowings - 6.5
Principal payments on long-term borrowings (128.5) (93.1)
Other-net 7.1 6.7
Discontinued Operations-Net 53.9 (112.6)
---------- ----------
Net Cash Used For Financing Activities (67.5) (192.5)
---------- ----------
Increase (decrease) in Cash and Cash Equivalents (55.3) 12.9
Cash and Cash Equivalents:
Beginning of period 70.3 62.1
---------- ----------
End of period $ 15.0 $ 75.0
========== ==========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest $ 51.4 $ 57.1
Income Taxes $ 33.5 $ 3.3
========== ==========
<F1>
(See accompanying notes to Consolidated Financial Statements)
</TABLE>
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<PAGE>
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(a) The consolidated financial statements should be read in
conjunction with the Santa Fe Pacific Corporation ("SFP",
"Registrant" or "Company") Annual Report on Form 10-K for the
year ended December 31, 1993 ("1993 Form 10-K"), including those
financial statements and notes thereto incorporated by reference
from the Registrant's 1993 Annual Report to Shareholders, and the
Company's Current Report on Form 8-K dated August 3, 1994, which
restated certain sections of the 1993 Form 10-K to reflect SFP's
gold subsidiary, Santa Fe Pacific Gold Corporation ("SFP Gold"),
as discontinued operations.
(b) In the opinion of SFP management, the consolidated statement of
operations for the three and six months ended June 30, 1994 and
1993 reflects all adjustments necessary for a fair statement of
the results of operations.
(c) The consolidated statement of operations for the three and six
months ended June 30, 1994 is not necessarily indicative of the
results of operations for the full year 1994.
(d) On June 15, 1994, SFP Gold's registration statement for the
initial public offering of 14.6% of its common stock became
effective. Approximately 19 million shares were sold at a price
of $14 per share resulting in net proceeds of $250.3 million, the
majority of which was used for the repayment of outstanding debt
at SFP Gold. On June 29, 1994, SFP's Board of Directors approved
the distribution to SFP shareholders of its remaining 85.4%
interest in SFP Gold. As a result, SFP Gold will become a
separate, independent entity effective September 30, 1994.
Holders of record of SFP common stock as of September 12, 1994,
will receive a distribution of one share of common stock of SFP
Gold for every approximately 1.7 shares of SFP common stock held.
Under a ruling obtained from the Internal Revenue Service, the
distribution is tax-free to SFP shareholders. Accordingly,
certain current year and comparative prior year amounts in the
consolidated financial statements have been reclassified to
present SFP Gold as a discontinued operation. Income from
discontinued operations was as follows:
Three Months Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
------ ------ ------ ------
(In millions)
Revenues $ 93.5 $ 57.0 $177.8 $121.4
------ ------ ------ ------
Income before income taxes 24.8 233.8 43.9 259.5
Income taxes 15.6 114.5 20.8 119.5
------ ------ ------ ------
Income from discontinued operations $ 9.2 $119.3 $ 23.1 $140.0
------ ------ ------ ------
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<PAGE>
Net income of $9.2 million from discontinued operations
recorded in the second quarter of 1994 represents earnings
from current quarter operations, and estimated transaction
and other costs related to the distribution partially offset
by estimated earnings prior to the distribution on September
30, 1994. The consolidated Balance Sheet reflects a current
liability of $504.4 million for the dividend of SFP Gold to
shareholders.
In June 1993, SFP Gold completed an asset exchange with Hanson
Natural Resources Company ("Hanson"). SFP Gold received certain
gold assets of Hanson, and Hanson acquired essentially all coal
and aggregate assets of SFP Gold. Income from discontinued
operations for 1993 includes an after-tax gain on the exchange of
$108.3 million or $0.58 per share.
(e) In June 1994, SFP changed the eligibility requirements for
its postretirement medical benefits, resulting in a pre-tax,
non-cash curtailment gain of $29.5 million related to
employees who are no longer currently eligible for benefits.
The Atchison, Topeka and Santa Fe Railway Company ("Santa Fe
Railway") recorded $28.1 million of the gain which is
included in Other income (expense)-net. The remaining $1.4
million is reflected in the Equity in Earnings of Pipeline.
(f) In the first quarter of 1993, Santa Fe Railway completed the
second stage of three scheduled closings on the sale to
eight southern California transportation agencies of certain
interests in approximately 340 miles of rail lines and
additional property. Santa Fe Railway received $166.9
million in cash proceeds resulting in a pre-tax gain of
$145.4 million. The gain recognized is net of the cost of
the properties and other expenses of the sale. Proceeds of
$126 million were used to retire debt related to
discontinued operations. The final closing occurred in the
second quarter of 1993 in which proceeds of $60 million were
received. No gain was recognized under the final closing as
proceeds were offset by the cost of property, other expenses
of the sale and an obligation retained by Santa Fe Railway,
which under certain conditions, requires the repurchase of a
portion of the properties sold for $50 million.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
---------------------
Current Quarter Compared with Same Quarter of Preceding Year
------------------------------------------------------------
SFP reported net income for the second quarter of $57.6 million or
$0.30 per share compared to net income of $147.5 million or $0.79 per
share last year. Excluding discontinued operations, a pre-tax credit
of $29.5 million resulting from a change in postretirement medical
benefits eligibility requirements discussed in Note (e), and a $12.3
million pre-tax charge related to an adverse appellate court decision,
SFP reported net income of $38.5 million or $0.20 per share compared
to income from continuing operations of $28.2 million or $0.15 per
share last year.
Operating income at Santa Fe Railway for the quarter was $97.4
million, an increase of $15.3 million or 19% over the $82.1 million
reported in the second quarter of 1993. Operating revenues of $658.2
million, which includes revenue from miscellaneous transportation
related items, rose 8% as carloadings increased 7% and average revenue
per car increased 1%. Freight revenues by commodity for the three and
six months ended June 30, 1994 and 1993 were as follows:
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<PAGE>
Three Months Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
-------- -------- -------- --------
(In millions)
Intermodal
Intermodal Marketing Companies $ 114.5 $ 100.2 $ 212.4 $ 192.3
Direct Marketing 127.4 95.0 240.6 188.6
International 53.9 50.3 104.9 95.9
-------- -------- -------- --------
Total Intermodal 295.8 245.5 557.9 476.8
-------- -------- -------- --------
Carload Commodities
Petroleum 35.5 36.5 71.0 72.1
Chemicals & Plastics 37.0 32.6 70.6 64.1
Consumer/Food Products 32.4 32.2 66.4 64.8
Building Materials & Paper Prod. 29.3 26.3 59.0 52.3
Metals 19.2 19.3 40.4 37.3
-------- -------- -------- --------
Total Carload Commodities 153.4 146.9 307.4 290.6
-------- -------- -------- --------
Bulk Products
Coal 58.6 54.4 117.8 107.6
Minerals, Ores & Other 39.1 43.1 74.4 79.3
Grain 26.7 35.8 59.4 77.7
Grain Products 20.9 20.7 41.7 41.6
-------- -------- -------- --------
Total Bulk Products 145.3 154.0 293.3 306.2
-------- -------- -------- --------
Automotive
Motor Vehicles 48.1 45.4 99.1 84.2
Vehicle Parts 6.6 8.0 13.4 15.4
-------- -------- -------- --------
Total Automotive 54.7 53.4 112.5 99.6
-------- -------- -------- --------
Total Freight Revenue $ 649.2 $ 599.8 $1,271.1 $1,173.2
======== ======== ======== ========
Intermodal revenues increased 20% to $295.8 million, reflecting higher
shipments in direct marketing and international, and higher average
revenue per car in intermodal marketing companies. Direct marketing
revenues increased 34% primarily due to increased UPS, less-than-
truckload and Quantum shipments. Intermodal marketing companies
revenues increased 14% primarily due to revised rate schedules
increasing rates in the Texas and Northern California corridors; and
international revenues increased 7% primarily reflecting increased
volumes with existing customers. Carload commodity revenues of $153.4
million were 4% higher than last year, principally reflecting
increased volumes in building materials & paper products and chemicals
& plastics. Bulk products revenues declined 6% as a decline in
average rates was partially offset by higher volumes, both reflecting
changes in the traffic mix. Grain revenues were lower due to reduced
- 7 -
<PAGE>
export grain shipments, while coal traffic increased as utilities
continue to build inventory and experience strong off-system demand
for generated power.
Quarterly operating expenses for Santa Fe Railway were $560.8 million,
an increase of 6% from last year reflecting both volume increases and
inflation. Compensation and benefits expense of $209.2 million
increased 2% as increases due to higher traffic levels were partially
offset by operating efficiencies. Contract services expense and
equipment rents increased $12.1 million and $9.0 million,
respectively, principally due to higher business volumes.
SFP's investment in Santa Fe Pacific Pipeline Partners, L.P.
("Pipeline Partnership") produced equity income of $10.7 million in
the quarter including a credit of $1.4 million related to the change
in postretirement medical benefits eligibility requirements.
Excluding this credit, income was $9.3 million compared to $8.9
million in the prior year, reflecting an increase in commercial
volumes.
Interest expense decreased $3.5 million reflecting lower debt levels.
Other income (expense)-net of $6.7 million increased $15.2 million due
primarily to a credit of $28.1 million for the change in
postretirement medical benefits eligibility requirements, offset by a
pre-tax charge of $12.3 million for an adverse appellate court
decision related to pension obligations of a former subsidiary.
Year to Date 1994 Compared to Year to Date 1993
-----------------------------------------------
SFP reported net income of $125.7 million or $0.66 per share for the
six months ended June 30, 1994 compared to $274.6 million or $1.47 per
share in 1993. Excluding discontinued operations, the 1994 second
quarter special items discussed above and pre-tax gains of $34.2
million reflected in other income (expense)-net related to the sale of
an investment and a favorable litigation settlement recorded in the
first quarter of 1994, SFP reported adjusted net income of $73.0
million or $0.38 per share. Adjusted net income in 1993 was $49.4
million or $0.26 per share and excludes discontinued operations and a
pre-tax gain of $145.4 million related to the sale of California lines
as discussed in Note (f).
- 8 -
<PAGE>
Santa Fe Railway's operating income for the first six months was
$188.1 million compared with $153.3 million a year earlier. Operating
revenues of $1,289.7 million improved 8% as carloadings increased 7%
and average revenue per car increased 1%. Intermodal revenues
increased 17% compared to last year reflecting increased carloadings
in direct marketing and international, and higher average revenue per
car in intermodal marketing companies. Carload commodities revenues
increased 6% primarily reflecting increased volumes in building
materials & paper products and chemicals & plastics. Bulk products
revenues declined 4% as lower export grain shipments were offset by
higher coal revenues. Automotive revenues increased 13% reflecting
higher volumes in motor vehicles.
Operating expenses at Santa Fe Railway were $1,101.6 million, a 6%
increase over last year. Compensation and benefits expense was $11.8
million or 3% above last year reflecting volume increases, partially
offset by operating efficiencies. Contract services expense of $178.1
million was 16% above last year and equipment rents expense of $122.4
million was 17% above last year both reflecting increased business
volumes.
Excluding the change in postretirement benefits eligibility discussed
above, income from SFP's equity investment in the Pipeline Partnership
of $17.0 million increased by $2.4 million compared to last year,
primarily due to volume and rate related increases.
Interest expense of $59.9 million was $9.7 million lower due
principally to more favorable interest rates and lower outstanding
debt. Excluding the special items in 1994 discussed previously, other
income-net declined $3.2 million from last year, primarily the result
of lower real estate income.
Financial Condition and Other Matters
-------------------------------------
Year-to-Date Cash Flow
----------------------
For the six months ended June 30, 1994, net cash provided by operating
activities from continuing operations totaled $178.9 million.
Principal sources of cash from continuing operations included net
earnings before depreciation and deferred taxes and the sale of
accounts receivable. Total capital expenditures for the first six
months of 1994, which include noncash transactions, were $293.1
million. Noncash transactions of $87.3 million primarily represents
directly financed equipment acquisitions and reimbursable projects.
Capital spending principally related to equipment, new facilities and
improvements to track structure and other road properties and was
primarily funded through cash generated from continuing operations,
equipment financings, and available cash balances. Total principal
payments on long-term borrowings were $128.5 million for the six
months ended. SFP's ratio of total debt to capital was 49% at June
30, 1994.
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<PAGE>
Burlington Northern Agreement and Plan of Merger
------------------------------------------------
On June 29, 1994, Santa Fe Pacific Corporation ("SFP") and Burlington
Northern Inc. ("BNI") entered into a definitive Agreement and Plan of
Merger which calls for SFP to merge with and into BNI, with BNI being
the surviving corporation. At the closing of the merger, each SFP
share outstanding will be converted into the right to receive 0.27 of
a share of BNI stock. Upon completion of the merger, BNI will change
its name to Burlington Northern Santa Fe Corporation. Gerald
Grinstein, BNI's chairman and chief executive officer, will be
chairman of the surviving corporation. Robert D. Krebs, chairman,
president and chief executive officer of SFP and of Santa Fe Railway,
will be president and chief executive officer of the surviving
corporation. Two-thirds of the directors of the surviving corporation
will be designated by BNI, and one-third of the directors of the
surviving corporation will be designed by SFP.
The merger has been approved by the boards of directors of SFP and
BNI, but is still subject to a number of conditions, including
approval by the shareholders of both BNI and SFP and approval by the
Interstate Commerce Commission.
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<PAGE>
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings
--------------------------
On July 12, 1994, the settlements of the New TC Lawsuit and the
Great American Lawsuit as described in the Form 10-K of SFP for 1993
were completed.
Four purported shareholder class action suits have been filed
arising out of SFP's proposed participation in the merger with BNI.
On June 30, 1994, shortly after announcement of the proposed merger,
two purported shareholder class action suits were filed in the Court
of Chancery of the State of Delaware (Miller v. Santa Fe Pacific
Corporation, C.A. No. 13587; Cosentino v. Santa Fe Pacific
Corporation, C.A. No. 13588). On July 1, 1994, two additional
purported shareholder class action suits were filed in the Court of
Chancery of the State of Delaware (Fielding v. Santa Fe Pacific
Corporation, C.A. No. 13591; Wadsworth v. Santa Fe Pacific
Corporation, C.A. No. 13597).
The actions name as defendants SFP, the individual members of the
SFP Board of Directors and BNI. In general, the actions variously
allege that SFP's directors breached their fiduciary duties to the
shareholders by agreeing to the proposed merger for allegedly "grossly
inadequate" consideration in light of recent operating results of SFP,
recent trading prices of SFP's common stock and other alleged factors,
by allegedly failing to take all necessary steps to ensure that
shareholders will receive the maximum value realizable for their
shares (including allegedly failing to actively pursue the acquisition
of SFP by other companies or conducting an adequate "market check")
and by allegedly failing to disclose to shareholders the full extent
of the future earnings potential of SFP, as well as the current value
of its assets. The Miller and Fielding cases further allege that the
proposed merger is unfairly timed and structured and, if consummated,
would allegedly unfairly deprive the shareholders of standing to
pursue certain pending shareholder derivative litigation. Plaintiffs
also have alleged that BNI is responsible for aiding and abetting the
alleged breach of fiduciary duty committed by the SFP Board. The
actions seek certification of a class action on behalf of SFP's
shareholders. In addition, the actions seek injunctive relief against
consummation of the merger and, in the event that the merger is
consummated, the rescission of the merger, an award of unspecified
compensatory or rescissory damages and other damages, including court
costs and attorneys' fees, an accounting by defendants of all profits
realized by them as a result of the merger and various other forms of
relief. Defendants believe that these lawsuits are meritless and
intend to oppose them vigorously.
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<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) See Index to Exhibits on page E-1 for a description of the
exhibits filed as part of this report.
(b) Reports on Form 8-K.
Registrant filed a Current Report on Form 8-K dated June 29,
1994, (date of earliest event reported) and filed on July 11,
1994 which described under Part II, Item 1, the agreement and
plan of merger between SFP and BNI and included in Part II,
Item 7, exhibits relating to the merger agreement. Included
in this report and described under Part II, Item 5, was the
special dividend declared by the Board of Directors
consisting of SFP's interests in its subsidiary, Santa Fe
Pacific Gold Corporation ("SFP Gold") and included in Part
II, Item 7, an Exhibit of the press release announcing such
dividend. Subsequently, Registrant filed a report on Form 8-
K/A as Amendment No. 1 to this Current Report on Form 8-K
dated June 29, 1994, (date of earliest event reported) and
filed on July 29, 1994. This report included in Part II,
Item 7, an exhibit listing of schedules to the agreement and
plan of merger between SFP and BNI.
Registrant filed a Current Report on Form 8-K dated and filed
on August 3, 1994 which described under Part II, Item 5, the
dividend declared by SFP's Board of Directors of SFP's
remaining interest in SFP Gold and the resulting restatement
of certain financial information to reflect SFP's gold
operations as discontinued operations, and included in Part
II, Item 7, exhibits relating to the restatement.
- 12 -
<PAGE>
SIGNATURES
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 thereunto duly authorized.
SANTA FE PACIFIC CORPORATION
(Registrant)
/s/ Thomas N. Hund
------------------------------------------
Thomas N. Hund
Vice President & Controller
(On Behalf of the Registrant and as
Principal Accounting Officer)
Schaumburg, Illinois
August 8, 1994
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<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER Description of Exhibit
------- ----------------------
10.1* Amended and restated SFP Form of Severance Agreement
authorized January 25, 1994 (applicable to 30 people
as of June 20, 1994).
10.2* Santa Fe Pacific Gold Corporation Supplemental
Retirement and Savings Plan. Incorporated by reference
to Exhibit 10.18 to Amendment No. 1 to the Registration
Statement on Form S-1 (Commission File No. 33-77774)
dated May 24, 1994 of Santa Fe Pacific Gold
Corporation.
12 Statement regarding computation of ratio of earnings
to fixed charges (as of June 20, 1994).
* Management contract or compensatory plan or arrangement.
E-1
FORM A
1700 East Golf Road
Schaumburg, IL 60173
Dear :
You have previously entered into a letter agreement dated
_____________ (the "Prior Agreement") as amended from time to
time, with Santa Fe Pacific Corporation, formerly known as Santa
Fe Southern Pacific Corporation (the "Corporation") providing for
certain benefits in the event of termination of your employment
following a "change in control of the Corporation" (as the term
is defined in the Prior Agreement). On January 25, 1994, the
Corporation's Board of Directors approved certain modifications
and enhancements to the Prior Agreement. If you wish to accept
these changes, you will need to execute this restated Agreement
which incorporates the Board's modifications. If you accept this
restated Agreement, it will supersede and replace your Prior
Agreement in its entirety.
Santa Fe Pacific Corporation (the "Corporation") continues
to consider it essential to the best interests of its
stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors
of the Corporation (the "Board") recognizes that, as is the case
with many publicly held corporations, the possibility of a change
in control of the Corporation may exist and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in the employ of the
Corporation or its Affiliates, the Corporation agrees that you
shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event your employment with the
Corporation or its Affiliates, is terminated under the
<PAGE>
Page 2
circumstances described below subsequent to a "change in control
of the Corporation" (as defined in Section 2).
1. Term of Agreement. This Agreement shall commence on
_____________ and shall continue in effect through _____________;
provided, however, that commencing on January 1, 199_, and each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this
Agreement; and provided further, that if a change in control of
the Corporation, as defined in Section 2, shall have occurred
during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of not less than
the later of (a) thirty-six (36) months beyond the month in which
such change in control of the Corporation occurred, (b) in the
event Interstate Commerce Commission approval of such change in
control involving the Corporation or its Affiliate is required,
the effective date of the Interstate Commerce Commission approval
or, if later, the first anniversary of the consummation of the
transaction, provided, however that if the Corporation determines
that it will not consummate the transaction, the date of such
determination, or (c) in the event that Interstate Commerce
Commission approval of such change in control involving the
Corporation or its Affiliate is required, and the Interstate
Commerce Commission determines that the proposed transaction will
not be approved, the date of such Interstate Commerce Commission
determination.
2. Change in Control. No benefits shall be payable
hereunder unless there shall have been a "change in control of
the Corporation" as set forth below. For purposes of this
Agreement, a "change in control of the Corporation" shall be
deemed to have occurred if:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Corporation or The
Atchison, Topeka and Santa Fe Railway Company, any trustee or
other fiduciary holding securities under an employee benefit plan
of the Corporation or The Atchison, Topeka and Santa Fe Railway
Company, or any corporation owned, directly or indirectly, by the
stockholders of the Corporation or The Atchison, Topeka and Santa
Fe Railway Company in substantially the same proportions as their
ownership of stock of the Corporation or The Atchison, Topeka and
Santa Fe Railway Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation or The Atchison,
Topeka and Santa Fe Railway Company representing 25% or more of
the combined voting power of the Corporation's or The Atchison,
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Page 3
Topeka and Santa Fe Railway Company's then outstanding
securities;
(ii) during any period of two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Corporation
to effect a transaction described in clause (i), (iii) or (iv) of
this Section) whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"),
cease for any reason to constitute at least a majority thereof;
(iii) the stockholders of the Corporation or The
Atchison, Topeka and Santa Fe Railway Company approve a merger or
consolidation of the Corporation or The Atchison, Topeka and
Santa Fe Railway Company with any other corporation, other than
(a) a merger or consolidation which would result in the voting
securities of the Corporation or The Atchison, Topeka and Santa
Fe Railway Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 80% of the combined voting power of the voting
securities of the Corporation or The Atchison, Topeka and Santa
Fe Railway Company (or such surviving entity) outstanding
immediately after such merger or consolidation or (b) a merger or
consolidation effected to implement a recapitalization of the
Corporation or The Atchison, Topeka and Santa Fe Railway Company
(or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 25% of the combined voting power of
the Corporation's or The Atchison, Topeka and Santa Fe Railway
Company's then outstanding securities; or
(iv) the stockholders of the Corporation or The
Atchison, Topeka and Santa Fe Railway Company approve a plan of
complete liquidation of the Corporation or The Atchison, Topeka
and Santa Fe Railway Company or an agreement for the sale or
disposition by the Corporation or The Atchison, Topeka and Santa
Fe Railway Company of all or substantially all of the
Corporation's or The Atchison, Topeka and Santa Fe Railway
Company's assets. For purposes of this clause (iv), the term
"the sale or disposition by the Corporation or The Atchison,
Topeka and Santa Fe Railway Company of all or substantially all
of the Corporation's or The Atchison, Topeka and Santa Fe Railway
Company's assets" shall mean a sale or other disposition
transaction or series of related transactions involving assets of
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Page 4
the Corporation or The Atchison, Topeka and Santa Fe Railway
Company or of any direct or indirect subsidiary of the
Corporation or The Atchison, Topeka and Santa Fe Railway Company
(including the stock of any direct or indirect subsidiary of the
Corporation or The Atchison, Topeka and Santa Fe Railway Company)
in which the value of the assets or stock being sold or otherwise
disposed of (as measured by the purchase price being paid
therefor or by such other method as the Board of Directors of the
Corporation or The Atchison, Topeka and Santa Fe Railway Company
determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Corporation or The Atchison, Topeka
and Santa Fe Railway Company (as hereinafter defined). For
purposes of the preceding sentence, the "fair market value of the
Corporation or The Atchison, Topeka and Santa Fe Railway Company"
shall be the aggregate market value of the Corporation's or The
Atchison, Topeka and Santa Fe Railway Company's outstanding
common stock (on a fully diluted basis) plus the aggregate market
value of the Corporation's or The Atchison, Topeka and Santa Fe
Railway Company's other outstanding equity securities. The
aggregate market value of the Corporation's or The Atchison,
Topeka and Santa Fe Railway Company's common stock shall be
determined by multiplying the number of shares of the
Corporation's or The Atchison, Topeka and Santa Fe Railway
Company's common stock (on a fully diluted basis) outstanding on
the date of the execution and delivery of a definitive agreement
with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price for the
Corporation's or The Atchison, Topeka and Santa Fe Railway
Company's common stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of
The Atchison, Topeka and Santa Fe Railway Company or any other
equity securities of the Corporation shall be determined in a
manner similar to that prescribed in the immediately preceding
sentence for determining the aggregate market value of the
Corporation's or The Atchison, Topeka and Santa Fe Railway
Company's common stock (in the event such common stock is not
publicly traded) or by such other method as the Board of
Directors of the Corporation or The Atchison, Topeka and Santa Fe
Railway Company shall determine is appropriate.
(v) A "change in control of the Corporation" shall
also be deemed to have occurred if a distribution of the voting
securities of The Atchison, Topeka and Santa Fe Railway Company
to the shareholders of the Corporation shall occur.
3. Termination Following Change in Control.
(i) General. If any of the events described in Section 2
constituting a change in control of the Corporation shall have
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occurred, you shall be entitled to the benefits provided in
Section 4(iii) upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a)
because of your death or Disability, (b) by the Corporation for
Cause, or (c) by you other than for Good Reason. In the event
your employment with the Corporation or Affiliates is terminated
for any reason and subsequently a change in control of the
Corporation shall have occurred, you shall not be entitled to any
benefits hereunder.
(ii) Disability. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Corporation or
Affiliates for six (6) consecutive months, and within thirty (30)
days after written notice of termination is given you shall not
have returned to the full-time performance of your duties, your
employment may be terminated for "Disability." Notwithstanding
any other provision of this Agreement, you shall not be
considered a terminated employee within the meaning of the SFP
Long Term Disability Plan and your rights thereunder shall not be
affected by this Agreement.
(iii) Cause. Termination by the Corporation or an
Affiliate of your employment for "Cause" shall mean termination
(a) upon the willful and continued failure by you to
substantially perform your duties with the Corporation or an
Affiliate (other than any such failure resulting from your
incapacity due to physical or mental illness or any such actual
or anticipated failure after the issuance of a Notice of
Termination (as defined in Subsection 3(v)) by you for Good
Reason (as defined in Subsection 3(iv)), after a written demand
for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Corporation,
monetarily or otherwise. For purposes of this Subsection, no
act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the
best interest of the Corporation. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in
the good faith opinion of the Board you were guilty of conduct
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Page 6
set forth above in this Subsection and specifying the particulars
thereof in detail.
(iv) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without your express written consent,
the occurrence after a change in control of the Corporation of
any of the following circumstances unless, in the case of
paragraphs (a), (b), (c), and (d), such circumstances are
corrected in all material respects prior to the Date of
Termination (as defined in Section 3(vi)) specified in the Notice
of Termination (as defined in Section 3(v)) given in respect
thereof:
(a) Position and Duties. The assignment to you of a
position with the Corporation or an Affiliate of the
Corporation that violates the following requirements of
Section 3(iv)(a)(I) or Section 3(iv)(a)(II):
(I) Management. You shall not be assigned a
position that is not a senior management position.
However, this Section 3(iv)(a)(I) shall not prevent you
being assigned a senior management position: (A) with
an Affiliate of the Corporation, provided that such
assignment does not result in a significant reduction
of your responsibilities; (B) with responsibilities
that are different from the responsibilities assigned
to you immediately prior to the time of the change in
control of the Corporation, provided that such
assignment does not result in a significant reduction
of your responsibilities; or (C) with reporting
relationships that are different from your reporting
relationships immediately prior to the time of the
change in control of the Corporation, provided that
such assignment does not result in a significant
reduction of your responsibilities.
(II) Significant Adverse Change in Duties. You
shall not be assigned a position that requires a
significant adverse alteration in the nature or status
of responsibilities or conditions from those in effect
immediately prior to a change in control of the
Corporation, provided this will not preclude a change
in reporting relationship.
Assignment with Affiliate. This Section 3(iv)(a) shall
not prevent your being assigned to a position with an
Affiliate of the Corporation, but only to the extent
that any such position satisfies the requirements of
Section 3(iv)(a)(I) and Section 3(iv)(a)(II).
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(b) Compensation. The failure by the Corporation to
provide compensation to you which satisfies the requirements
of all of Section 3(iv)(b)(I), Section 3(iv)(b)(II), Section
3(iv)(b)(III) and Section 3(iv)(b)(IV):
(I) Current Compensation. The rate of your annual
salary and other current cash compensation
(disregarding compensation that is contingent on
satisfaction of performance standards) shall not be
less than the rate of your annual salary and other
current cash compensation (disregarding compensation
that is contingent on satisfaction on performance
standards) immediately prior to the change in control
of the Corporation, except that such compensation may
be reduced if there are comparable reductions for all
senior management employees of the Corporation (or all
senior management employees of the Corporation or all
senior management employees of an Affiliate of the
Corporation, if you are then employed by the Affiliate)
and all management personnel of any person in control
of the Corporation.
(II) Fringe benefits. You and your family shall
be provided with fringe benefit coverage while employed
by the Corporation or an Affiliate on substantially the
same basis, and to substantially the same extent, as
such coverage is provided to other senior management
employees of the Corporation or an Affiliate from time
to time. For purposes of this Section 3(iv)(b)(II),
the term "fringe benefit coverage" shall include
coverage provided under any plan that is a welfare
benefit plan (as defined in ERISA, which defines
welfare benefit plans to include such things as life
insurance, health (medical), accident and disability
plans) or a pension plan (as defined in ERISA).
(III) Material Compensation Plans. The failure of
the Corporation to maintain compensation plans that are
material to your aggregate compensation in effect prior
to a change in control of the Corporation, unless an
equitable substitute arrangement is adopted, both in
respect to the amount of benefits and level of
participation relative to other participants, and in
respect to benefits and level of participation that
existed at the time of the change of control of the
Corporation.
(IV) Vacation. You shall be provided with the
number of paid vacation days to which you are entitled
on the basis of your years of service with the
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Corporation in accordance with the Corporation's normal
vacation policy in effect immediately prior to the
change in control of the Corporation.
(c) Relocation. The relocation of the Corporation's
principal executive offices to a location outside the
Chicago Metropolitan Area (or, if different, the
metropolitan area in which such offices are located
immediately prior to the change in control of the
Corporation) or the Corporation's requiring you to be based
anywhere other than the Corporations' principal executive
offices except to the extent you were based outside the
principal executive offices prior to the change in control
of the Corporation or except to the extent for required
travel on the Corporation's business to the extent
substantially consistent with your business travel
obligations prior to the change in control of the
Corporation. Notwithstanding the foregoing, if you retain
or are offered a position in another location that is equal
to or better in status and responsibilities than the
position you held at the time of the change in control of
the Corporation, you shall not be entitled to benefits under
this Agreement on an after-tax basis, as set forth in
Section 4(iii)(g).
(d) Assumption by Successor. The failure of any
successor to the Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated by Section 5 of this
Agreement.
Your right to terminate your employment pursuant to this
Section 3(iv) shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason under this Agreement. For
purposes of this Agreement, the term "Affiliate" means (I) any
person during any period in which the person directly or
indirectly owns more than 50% of the voting power of the
Corporation and (II) any other person if more than 50% of the
combined voting power of the securities of such person is
directly or indirectly owned by the Corporation or by any person
described in clause (I) next above.
(v) Notice of Termination. Subject to any lesser time
periods set forth in Subsection 3(vi), any purported termination
of your employment by the Corporation or an Affiliate or by you
shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 6 and upon not less
than sixty (60) days' written notice. "Notice of Termination"
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Page 9
shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of your employment under the provision so
indicated.
(vi) Date of Termination, Etc. "Date of Termination" shall
mean (a) if your employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your
duties during such thirty (30)-day period), and (b) if your
employment is terminated pursuant to Subsection (iii) or (iv)
hereof or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a
termination for Cause shall not be less than thirty (30) days
from the date such Notice of Termination is given, and in the
case of a termination for Good Reason shall not be less than
fifteen (15) nor more than sixty (60) days from the date such
Notice of Termination is given); provided, however, that if
within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by
a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom
has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency
of any such dispute, the Corporation will continue to pay you
your full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation,
benefit and insurance plans in which you were participating when
the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement and shall
not be reduced by any compensation earned by you as the result of
employment by another employer.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Corporation, you shall be
entitled to the following benefits during a period of disability,
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or upon termination of your employment, as the case may be,
provided that such period or termination occurs during the term
of this Agreement:
(i) During any period that you fail to perform your
full-time duties with the Corporation or Affiliate as a result of
incapacity due to physical or mental illness, you shall continue
to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation
payable to you under the Long Term Disability Plan or other
similar plan during such period, until this Agreement is
terminated pursuant to Section 3(ii) hereof. Thereafter, or in
the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Corporation's
retirement, insurance and
other compensation programs then in effect in accordance with the
terms of such program; however, your receipt of benefits under
the SFP Long Term Disability Plan will not be affected by your
termination under this Agreement.
(ii) If your employment shall be terminated by the
Corporation or Affiliate for Cause or by you other than for Good
Reason, the Corporation shall pay you your full base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which
you are entitled under any compensation plan of the Corporation
at the time such payments are due, and the Corporation shall have
no further obligations to you under this Agreement.
(iii) If your employment by the Corporation or Affiliate
shall be terminated by you for Good Reason or by the Corporation
or Affiliate other than for Cause or Disability, then you shall
be entitled to the benefits provided below:
(a) the Corporation shall pay to you (1) your full base
salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given, no later than
the fifth day following the Date of Termination, plus all
other amounts to which you are entitled under any
compensation plan of the Corporation, at the time such
payments are due and (2) if you shall so elect, in lieu of
your right to receive deferred compensation under the Santa
Fe Pacific Supplemental Retirement and Savings Plan or any
other similar plan or arrangement, the Corporation shall pay
you, no later than the fifth day following the Date of
Termination, a lump sum amount, in cash, equal to the
deferred amounts together with any earnings credited on such
amounts under such plan or arrangement;
(b) You shall be entitled to the following:
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(I) If your employment by the Corporation shall be
terminated by the Corporation or Affiliate other
than for Cause or Disability, or if your
employment by the Corporation or Affiliate shall
be terminated by you for Good Reason described in
Section 3(iv)(b)(I) or Section 3(iv)(b)(III)
(relating to certain reductions in compensation),
then the Corporation shall pay to you a lump sum
severance payment equal to the sum of: (A) 200% of
your Annual Salary (as described below), which
shall be in lieu of any further salary payments to
you for periods subsequent to your Date of
Termination, and (B) 200% of the Maximum Incentive
Award (as described below), which shall be in lieu
of any further payments to you under the
Corporation's or Affiliate's annual Incentive
Compensation Plan for the year in which your Date
of Termination occurs, and for any subsequent
years. Payments under this paragraph (I) shall be
made to you at the time specified in Section
4(iv).
(II) If your employment by the Corporation or Affiliate
shall be terminated by you for Good Reason other
than as described in Section 3(iv)(b)(I) and
Section 3(iv)(b)(III) (relating to certain
reductions in compensation), then the Corporation
shall make monthly installment payments to you, at
an annual rate equal to the sum of (A) 200% of
your Annual Salary plus (B) 200% of the Maximum
Incentive Award, which payments shall be made for
the period beginning on your Date of Termination
and ending on the earliest to occur of 1) the 12-
month anniversary of your Date of Termination; 2)
the date of your death; or 3) the date you are in
Competition (as described below). If payments
under this paragraph (II) terminate by reason of
your being in Competition, such payments shall not
recommence regardless of whether you subsequently
refrain from Competition. Amounts payable under
this paragraph (II) shall be in lieu of any
further salary payments to you for periods
subsequent to your Date of Termination, and shall
be in lieu of any further payments to you under
the Corporation's or Affiliate's Annual Incentive
Compensation Plan for the year in which your Date
of Termination occurs, and for any subsequent
years. Payment under this paragraph (II) shall be
made in installments notwithstanding any
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provisions of Section 4(iv) to the contrary unless
mutually agreed by the parties.
For purposes of this Section 4:
1) Your "Severance Payments" shall be the payments
provided under paragraphs 4(iii)(b), (c) and (d)
of this Agreement.
2) Your "Annual Salary" shall be your annual salary
as in effect as of your Date of Termination, the
highest consecutive twelve (12) months' salary
over the twenty-four (24) month period preceding
your Date of Termination, or your annual salary in
effect immediately prior to the change in control
of the Corporation, whichever is greatest.
3) Your "Maximum Incentive Award" shall be the
maximum incentive award payable to you under the
Corporation's or Affiliate's Annual Incentive
Compensation Plan for the year in which your Date
of Termination occurs, assuming for purposes
hereof that all performance objectives for such
year had been met at the maximum levels and that
you are entitled to a full award thereunder.
4) You shall be considered to be in "Competition"
during any period in which you are employed by,
perform any material services for, or own any
interest in (except for an interest of not more
than 1% in any publicly traded business) any Class
I railroad, or any company or other
enterprise that offers shipping services to the
public (including, without limitation,
trucking services, rail services, air-freight
services, and water-going freight services).
Notwithstanding the foregoing provisions of this Section
4(iii)(b), in no event shall the amount payable under this
Section 4(iii)(b) exceed the sum of the amount of salary payments
plus the amount of bonus payments (determined on the basis used
for determining the amount of your Maximum Incentive Award,
above), on an undiscounted basis, which you would have received
had you remained in the employ of the Corporation until the
earlier of 1) your "Normal Retirement Date" (as defined in the
Corporation's Retirement Plan) to the extent permitted by law or
2) the date on which you are subject to mandatory retirement.
You may elect, in lieu of receipt of the salary replacement
payments described in Section 4(iii)(b)(I)(A) or Section
4(iii)(b)(II)(A), whichever is applicable, the benefits provided
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for under Section C.1.c. or Section C.1.d., Section D.3, Section
D.4, and Section D.5 of The Atchison, Topeka and Santa Fe Railway
Company Severance Program, as they may be amended from time to
time (the "Severance Program"), the terms and provisions of which
are incorporated herein by reference. This Severance Agreement
is part of a formal severance program and you will receive
Vesting and Benefit Service for the period in which severance
payments are made to the extent provided in the SFP Retirement
Plan.
(c) notwithstanding any provision of the Corporation's
Long Term Incentive Stock Plan and Incentive Stock
Compensation Plan, the Restricted Period with respect to any
Restricted Stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time
specified in Subsection (iv); and in lieu of your Right to
receive payment with respect to awards of Performance Units
granted in connection with such Restricted Stock, (which
Performance Units shall be cancelled upon the making of the
payment referred to below), the Corporation shall pay to
you, at the time specified in Subsection (iv), a lump sum
amount, in cash, equal to the sum of (1) the value of the
Performance Units granted to you with respect to performance
periods that ended prior to the Date of Termination but have
not yet been paid and (2) the aggregate value of the
contingent Performance Units granted to you for all
incomplete Performance Periods under such plan calculated as
if all corporate performance goals had been achieved (thus
warranting full value of the Performance Units); provided,
however, that if the Date of Termination occurs less than
two full years prior to your Normal Retirement Date, then
such Restricted Period shall lapse and shares be
distributed, and such Performance Units shall be cancelled
and such lump sum amount in respect of such Performance
Units shall be paid, only to the extent that such lapse and
distribution, or payment, would have occurred had you
remained in the employ of the Corporation until the earlier
of 1) your Normal Retirement Date to the extent permitted by
law, or 2) the date on which you are subject to mandatory
retirement; provided, further, that any shares of Restricted
Stock and Performance Units that are not affected by this
Subsection shall continue to be available pursuant to the
terms of the aforementioned Plans;
(d) in lieu of shares of common stock of the Corporation
("Common Shares") issuable upon exercise of outstanding
options ("Options"), if any, granted to you under the
Corporation's Long Term Incentive Stock Plan and Incentive
Stock Compensation Plan, (which Options shall be cancelled
upon the making of the payment referred to below), the
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Corporation shall pay to you, at the time specified in
Subsection (iv), an amount in cash equal to the product of
(1) the excess of, in the case of an "incentive stock
option" (as defined in section 422A of the Internal Revenue
Code of 1986, as amended (the "Code")), the closing price of
Common Shares as reported on the New York Stock Exchange on
or nearest the Date of Termination (or, if not listed on
such exchange, on a nationally recognized exchange or
quotation system on which trading volume in the Common
Shares is highest) and, in the case of all other Options,
the greater of the (a) highest quoted per-share sales price
for Common Shares on the New York Stock Exchange during the
sixty-day period commencing on the Date of Termination (or,
if not listed on such exchange, on a nationally recognized
exchange or quotation system on which trading volume of the
Common Shares is highest), or (b) the fixed or formula price
for the acquisition of shares of Common Stock specified in
an agreement in connection with any Change in Control of the
Corporation, over the per-share option price of each Option
held by you (whether or not then fully exercisable), and (2)
the number of Common Shares covered by each such Option;
provided, however, that any Options that are not affected by
this Subsection shall continue to be available pursuant to
the terms of the aforementioned Plans;
(e) the Corporation shall pay to you all legal fees and
expenses incurred by you as a result of such termination
(including without limitation all such fees and expenses, if
any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code, to any payment or
benefit provided hereunder);
(f) for a twenty-four (24) month period after such
termination, the Corporation shall arrange to provide you
with life, disability, accident and group health insurance
benefits substantially similar to those which you were
receiving immediately prior to the Notice of Termination.
Benefits otherwise receivable by you pursuant to this
paragraph (f) shall be reduced to the extent comparable
employer provided benefits are actually received by you
during the twenty-four (24) month period following your
termination, and any such benefits actually received by you
shall be reported to the Corporation. The group medical and
dental benefits provided herein are for the purpose of
providing "continuation coverage" at employer expense after
termination of employment. You shall have no right to
additional "continuation coverage" provided under the
<PAGE>
Page 15
Consolidated Omnibus Budget Reconciliation Act, except to
the extent that additional "continuation coverage" may be
required by law;
(g) the Corporation shall pay you an additional amount
necessary to provide the benefits under subsection (b) on an
after-tax basis, (except that this benefit shall be limited
to the extent set forth in Section 3(iv)(c) relating to
termination for Good Reason; however, you shall not be
entitled to payments or benefits under this Agreement to the
extent that any payment or benefit received or to be
received by you in connection with a change in control of
the Corporation or the termination of your employment
(whether pursuant to the terms of this Agreement ("Contract
Payments") or any other plan, arrangement or agreement with
the Corporation, any person whose actions result in a change
in control or any person affiliated with the Corporation or
such person (collectively with the Contract Payments, "Total
Payments")) would, as determined by tax counsel selected by
the Company, result in "Excess Parachute Payments" (as
defined below) equal to or greater than three times the
"base amount" as defined in section 280G of the Internal
Revenue Code of 1986, as amended the "Code"). "Excess
Parachute Payments" shall mean "parachute payments" as
defined in Section 280G of the Code other than (i) health
and life insurance benefits and (ii) payments attributable
to any award, benefit or other compensation plan or program
based upon the number of full or fractional months of any
restricted period (relating thereto) which has elapsed prior
to the date of the Change in Control. Furthermore, such
payments or benefits provided to a Participant under this
Plan shall be reduced to the extent necessary so that no
portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code, but only if, by reason of such
reduction, the Participant's net after tax benefit shall
exceed the net after tax benefit if such reduction were not
made. "Net after tax benefit" shall mean the sum of (i) all
payments and benefits which a Participant receives or is
then entitled to receive from the Company and any of its
subsidiaries that would constitute a "parachute payment"
within the meaning of Section 280G of the Code, less (ii)
the amount of federal income taxes payable with respect to
the payments and benefits described in (i) above calculated
at the maximum marginal income tax rate for each year in
which such payments and benefits shall be paid to the
Participant (based upon the rate in effect for such year as
set forth in the Code at the time of the first payment of
the foregoing), less (iii) the amount of excise taxes
imposed with respect to the payments and benefits described
in (i) above by Section 4999 of the Code.
<PAGE>
Page 16
(h) for a period of twelve (12) months following such
termination, the Corporation shall pay the expenses of such
outplacement services as you may require, with such services
to be performed by Right Associates or similar agency as the
Corporation shall designate.
(iv) The payments provided for in paragraphs (b), (c)
and (d), above, shall, unless you are eligible and elect an
option based upon the Corporation's or Affiliates' Severance
Program as described in Section 4(iii)(b) or elect to participate
in a deferred compensation program, be made not later than the
fifth day following the Date of Termination; provided, however,
that if the amounts of such payments cannot be finally determined
on or before such day, the Corporation shall pay to you on such
day an estimate, as determined in good faith by the Corporation,
of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Corporation to you, payable on the fifth
day after demand by the Corporation (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code).
(v) Except as provided in Subsection (iii)(f) hereof,
you shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit
provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be
owed by you to the Corporation, or otherwise.
5. Successors; Binding Agreement. (i) The Corporation
will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. Failure of the Corporation to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
you to compensation from the Corporation in the same amount and
on the same terms to which you would be entitled hereunder if you
terminate your employment for Good Reason following a change in
control of the Corporation, except that for purposes of
implementing the foregoing, the date on which any such succession
<PAGE>
Page 17
becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Corporation" shall mean the Corporation
as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and
be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devises and legatees. If you should die while any amount would
still be payable to you hereunder had you continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be
directed to the attention of the Board with a copy to the
Secretary of the Corporation, or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by
you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of Illinois without regard to its
conflicts of law principles. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of
<PAGE>
Page 18
the Corporation under Section 4 shall survive the expiration of
the term of this Agreement.
8. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
10. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration, conducted before a panel of three
arbitrators in Chicago, Illinois, in accordance with the rules of
the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid until the Date
of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
If you wish to accept this Agreement as amended, please
sign both copies of this Agreement and return them by close of
business on ______________________. If for any reason, you
should not wish to accept the Agreement, please return both
copies unsigned. If you have any questions about the Agreement,
please contact Ms. Carol Beerbaum.
<PAGE>
Page 19
Sincerely,
Santa Fe Pacific Corporation
By _______________________________
Name: Marsha K. Morgan
Title: Secretary
Agreed to this ____ day
of _______________ 199__.
_________________________________
Exhibit 12
Santa Fe Pacific Corporation
Statement of Computation of Ratio of Earnings to Fixed Charges
(as of June 30, 1994)
(In millions, except ratio)
Six Months Ended
June 30, 1994
Earnings: ----------------
Income from continuing operations
before income taxes $177.9
Less income of unconsolidated subsidiaries
greater than distributions (5.2)
Amortization of capitalized interest 1.1
Fixed charges before interest
capitalized (see below) 77.9
-------
Total Earnings $251.7
=======
Fixed Charges:
Interest expense including
amortization of debt discount $ 59.9
Portion of rentals representing
an interest factor 18.0
-------
Fixed charges before interest
capitalized 77.9
Interest capitalized 4.6
-------
Total Fixed Charges $ 82.5
=======
Ratio of earnings to fixed charges 3.1
=======
