SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 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
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PART I
FINANCIAL INFORMATION (a)
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF OPERATIONS (b)
(UNAUDITED)
(In millions, except per share data)
<CAPTION>
Three Months
Ended March 31,
1994 (c) 1993
---------- ----------
<S> <C> <C>
Revenues
Rail $ 631.5 $ 583.2
Gold 84.3 64.4
Pipeline 6.3 5.7
---------- ----------
Total revenues 722.1 653.3
---------- ----------
Operating Expenses
Rail 540.8 512.0
Gold 62.7 35.8
---------- ----------
Total operating expenses 603.5 547.8
---------- ----------
Operating Income 118.6 105.5
Other Income (Expense)-Net 26.1 (5.1)
Gain on Sale of California Lines - 145.4
Interest Expense 31.7 38.6
---------- ----------
Income Before Income Taxes 113.0 207.2
Income Tax 44.9 80.1
---------- ----------
Net Income $ 68.1 $ 127.1
========== ==========
Net Income Per Share $ 0.36 $ 0.68
========== ==========
Average Number of Common and Common Equivalent Shares 189.9 185.9
========== ==========
</TABLE>
(See accompanying notes to Consolidated Financial Statements)
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<TABLE>
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(In millions)
<CAPTION>
(Unaudited)
March 31, December 31,
1994 1993
-------------- --------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents, at cost which approximates market $ 26.3 $ 96.4
Accounts receivable, less allowances 124.4 103.5
Inventories 132.1 120.4
Note receivable - current 72.5 72.5
Current portion of deferred income taxes 80.5 78.1
Other 111.5 107.6
-------------- --------------
Total current assets 547.3 578.5
-------------- --------------
Note Receivable - 36.2
Other Long-Term Assets 315.1 326.1
Properties, Plant and Equipment 6,783.8 6,664.4
Less-accumulated depreciation, depletion and amortization 1,705.2 1,668.2
-------------- --------------
Net properties 5,078.6 4,996.2
-------------- --------------
Total Assets $ 5,941.0 $ 5,937.0
============== ==============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 696.3 $ 715.7
Deferred gold revenues - current 19.3 15.4
Long-term debt due within one year 181.8 190.7
-------------- --------------
Total current liabilities 897.4 921.8
-------------- --------------
Long-Term Debt Due After One Year 1,106.7 1,185.1
Postretirement Benefits Liability 292.7 291.2
Restructuring Liability 229.9 257.8
Deferred Gold Revenues 124.8 133.8
Other Long-Term Liabilities 692.8 644.4
Deferred Income Taxes 1,254.3 1,234.6
-------------- --------------
Total liabilities 4,598.6 4,668.7
-------------- --------------
Shareholders' Equity
Common stock 190.0 190.0
Paid-in capital 855.3 869.7
Retained income 408.4 340.3
Treasury stock, at cost (111.3) (131.7)
-------------- --------------
Total shareholders' equity 1,342.4 1,268.3
-------------- --------------
Total Liabilities and Shareholders' Equity $ 5,941.0 $ 5,937.0
============== ==============
</TABLE>
(See accompanying notes to Consolidated Financial Statements)
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<TABLE>
SANTA FE PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In millions)
<CAPTION>
Three Months
Ended March 31,
1994 1993
---------- ----------
<S> <C> <C>
Operating Activities
Net income $ 68.1 $ 127.1
Adjustments to reconcile net income to operating cash flows:
Depreciation, depletion and amortization 68.2 55.2
Deferred income taxes 17.2 56.4
Rail restructuring costs paid (19.8) (18.3)
Imputed interest expense 5.2 7.1
Gain on sales of property, plant and equipment (0.6) (147.1)
Other-net (23.6) (3.6)
Changes in Working Capital:
Accounts receivable (22.4) (18.2)
Inventories (16.6) (16.6)
Accounts payable and accrued liabilities (18.6) 3.6
Short-term investments and other current assets (8.8) (4.7)
---------- ----------
Net Cash Provided By Operating Activities 48.3 40.9
---------- ----------
Investing Activities
Cash used for capital expenditures (103.9) (70.4)
Proceeds from sale of property, plant and equipment 5.4 168.5
Other-net 68.6 37.6
---------- ----------
Net Cash Provided By (Used For) Investing Activities (29.9) 135.7
---------- ----------
Financing Activities
Proceeds from long-term borrowings and deferred gold revenues - 10.0
Principal payments on long-term borrowings and deferred gold revenues (92.6) (201.4)
Other-net 4.1 3.5
---------- ----------
Net Cash Used For Financing Activities (88.5) (187.9)
---------- ----------
Decrease in Cash and Cash Equivalents (70.1) (11.3)
Cash and Cash Equivalents:
Beginning of period 96.4 100.1
---------- ----------
End of period $ 26.3 $ 88.8
========== ==========
Supplemental Disclosure of Cash Flow Information
Cash paid (refunded) during the period for:
Interest $ 24.8 $ 27.8
Income Taxes $ (0.3) $ (11.2)
</TABLE>
(See accompanying notes to Consolidated Financial Statements)
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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, including those financial
statements and notes thereto incorporated by reference from the
Registrant's 1993 Annual Report to Shareholders.
(b) In the opinion of SFP management, the consolidated statement of
operations for the three months ended March 31, 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 months
ended March 31, 1994 is not necessarily indicative of the results
of operations for the full year 1994.
(d) On April 15, 1994, the Company's wholly-owned subsidiary, Santa
Fe Pacific Gold Corporation ("Gold"), filed a registration
statement with the Securities and Exchange Commission for the
public offering of approximately 15% of its common stock.
Following a successful completion of the offering, SFP management
and the board of directors will decide whether to distribute the
remaining stock of Gold to SFP shareholders. SFP has received a
ruling from the Internal Revenue Service that a distribution of
its shares in Gold to SFP shareholders would not result in the
recognition of taxable income by the Company, its subsidiaries,
or its shareholders.
(e) In the first quarter of 1993, The Atchison, Topeka and Santa
Fe Railway Company ("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. The final closing
occurred in the second quarter of 1993.
(f) SFP is a party to a number of legal actions and claims, various
governmental proceedings and private civil suits arising in the
ordinary course of business, including those related to
environmental exposures and employee injury claims. While the
final outcome of these items cannot be predicted with certainty,
considering among other things, the meritorious legal defenses
available, it is the opinion of SFP management that none of these
items, when finally resolved, will have a material adverse effect
on the annual results of operations, financial position or
liquidity of SFP, although an adverse resolution of a number of
these items in a single year could have a material adverse effect
on the results of operations for that year.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
---------------------
Current Quarter Compared with Same Quarter of Preceding Year
------------------------------------------------------------
Including special items, SFP reported first quarter net income of
$68.1 million or $0.36 per share compared to net income of $127.1
million or $0.68 per share last year. Other income-net in 1994
includes pre-tax gains of $34.2 million related to a gain on the sale
of an investment and a favorable litigation settlement. The first
quarter of 1993 included a pre-tax gain of $145.4 million related to
the sale of rail lines in southern California discussed in Note (e) of
the notes to consolidated financial statements. Excluding these
special items, SFP reported net income of $47.5 million or $0.25 per
share compared to $37.9 million or $0.20 per share last year.
Operating income at Santa Fe Railway for the quarter was $90.7
million, an increase of $19.5 million or 27% over the $71.2 million
reported in the first quarter of 1993. The operating ratio improved
to 85.6% from 87.8%. Operating revenues of $631.5 million, which
include revenue from miscellaneous transportation related items,
improved 8% primarily driven by higher business volumes handled.
Freight revenues by business group for the three months ended March
31, 1994 and 1993 were as follows:
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Three Months
Ended March 31,
1994 1993
------ ------
(In millions)
Intermodal
Intermodal Marketing Companies $ 97.9 $ 92.1
Direct Marketing 113.2 93.6
International 51.0 45.6
------ ------
Total Intermodal 262.1 231.3
------ ------
Carload Commodities
Petroleum 35.5 35.6
Chemicals & Plastics 33.6 31.5
Consumer/Food Products 34.0 32.6
Building Materials & Paper Products 29.7 26.0
Metals 21.2 18.0
------ ------
Total Carload Commodities 154.0 143.7
------ ------
Bulk Products
Coal 59.2 53.2
Minerals, Ores & Other 35.3 36.2
Grain 32.7 41.9
Grain Products 20.8 20.9
------ ------
Total Bulk Products 148.0 152.2
------ ------
Automotive
Motor Vehicles 51.0 38.8
Vehicle Parts 6.8 7.4
------ ------
Total Automotive 57.8 46.2
------ ------
Total Freight Revenue $621.9 $573.4
====== ======
Intermodal revenues increased 13% to $262.1 million, reflecting higher
direct marketing and international shipments. Direct marketing
revenues increased 21% primarily due to increased UPS shipments and
higher less-than-truckload shipments. International revenues
increased 12% principally reflecting increased volumes with existing
customers. Carload Commodity revenues increased 7% to $154.0 million
reflecting increased shipments of metals and other commodities,
partially offset by a decline in average rates. Bulk Products
revenues declined 3% as lower export grain shipments were offset by
increased coal shipments. Automotive revenues increased 25% due to
increased shipments of finished vehicles.
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<PAGE>
Santa Fe Railway's quarterly operating expenses of $540.8 million
increased 6%, principally due to the increase in volume. Operating
expenses for the three months ended March 31, 1994 and 1993 consisted
of the following:
Three Months
Ended March 31,
1994 1993
------ ------
(In millions)
Compensation and benefits $207.6 $200.9
Contract services 84.0 72.1
Fuel 58.9 59.2
Equipment rents 60.4 51.7
Depreciation and amortization 49.1 46.0
Materials and supplies 32.5 29.0
Other 48.3 53.1
------ ------
Total operating expenses $540.8 $512.0
====== ======
Compensation and benefits expense of $207.6 million increased only 3%
as increases due to the higher traffic were partially offset by
operating efficiencies. Contract services expense was $11.9 million
higher principally due to increased intermodal and other traffic.
Equipment rents of $60.4 million increased $8.7 million primarily
reflecting the increased volume.
Gold quarterly operating income of $21.6 million decreased $7.0
million compared to the same quarter last year; however, the prior
year included operating income from coal and aggregate assets,
including the receipt of a $16.0 million annual coal royalty payment,
which assets were exchanged with Hanson Natural Resources Company on
June 25, 1993. Gold sales increased 156,000 ounces to 209,000 ounces
due to the addition of the mines acquired as part of the asset
exchange, as well as increased production at the properties owned
prior to the transaction. Operating expenses increased reflecting the
increase in production and higher exploration expenses due to Gold's
expanded exploration program.
SFP's equity investment in the Pipeline Partnership produced operating
income of $6.3 million in the first quarter, compared to $5.7 million
last year, reflecting an increase in revenues from commercial and
military shipments.
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<PAGE>
Other income-net of $26.1 million increased $31.2 million due
principally to a $23.7 million gain on the sale of SFP's investment in
a publicly-traded insurance company and a pre-tax gain of $10.5
million related to a favorable litigation settlement. Excluding these
items, other income-net was $3.0 million below last year due to lower
income from real estate activities at Santa Fe Railway. Interest
expense of $31.7 million decreased $6.9 million from 1993 reflecting
favorable interest rates, lower imputed interest and higher
capitalized interest.
Financial Condition and Other Matters
-------------------------------------
Year-to-Date Cash Flow
----------------------
For the three months ended March 31, 1994, net cash provided by
operations totaled $48.3 million. Principal sources of cash from
operations included net earnings before depreciation and deferred
taxes. Uses of cash from operations included restructuring payments
(primarily representing severance, relocation and other labor
payments) and changes in working capital. Additional cash was
provided through the sale of an investment previously discussed.
Total capital expenditures, which include noncash transactions, for
the first three months of 1994 were $151.2 million. Noncash
transactions of $47.3 million primarily represent directly financed
locomotive acquisitions and reimbursable projects. Capital spending
was primarily funded through cash generated from operations, equipment
financings and available cash balances.
Approximately 90% of these expenditures were used for equipment, new
facilities, and improvements to track structure and other road
properties at Santa Fe Railway with the balance for development of
gold properties. Through March 31, 1994, Santa Fe Railway had
acquired 27 new locomotives at a cost of $33.4 million, and has
received an additional 23 new locomotives in the second quarter of
1994. Also, Santa Fe Railway has recently committed to acquire an
additional 50 locomotives which are anticipated to be received in the
third and fourth quarters of 1994. It is currently anticipated that
these locomotives will be directly financed. SFP's total 1994 capital
expenditures are now expected to exceed $650 million including a total
of 100 locomotives.
Gold Registration Statement
---------------------------
On April 15, 1994, the Company's wholly-owned subsidiary, Gold, filed
a registration statement with the Securities and Exchange Commission
for the public offering of approximately 15% of its common stock.
Following a successful completion of the offering, SFP management and
the board of directors will decide whether to distribute the remaining
stock of Gold to SFP shareholders. SFP has received a ruling from the
Internal Revenue Service that a distribution of its shares in Gold to
SFP shareholders would not result in the recognition of taxable income
by the Company, its subsidiaries, or its shareholders.
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Rail Restructuring
------------------
Benefits for the eastern lines crew consist agreement of approximately
$25 million annually and for centralization of certain transportation
functions of approximately $20 million annually are being realized as
expected and as previously disclosed. Restructuring costs paid of
$19.8 million for the first three months of 1994 are also being
incurred as expected, with annual payments estimated to be
approximately $60 million in 1994.
Subsequent Event
----------------
On April 22, 1994, the Company received an adverse appellate decision
involving pension obligations of a subsidiary which was sold in 1984.
The Company has filed a petition for reconsideration of this decision.
The Company may record a charge related to this decision in the second
quarter, depending upon the court's action on the petition for
reconsideration. The magnitude of the net charge, if any, would not
be expected to exceed $8 million, or $0.04 per share.
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings
--------------------------
SFP is a party to a number of legal actions and claims, various
governmental proceedings and private civil suits arising in the
ordinary course of business, including those related to environmental
exposures and employee injury claims. While the final outcome of
these items cannot be predicted with certainty, considering among
other things, the meritorious legal defenses available, it is the
opinion of SFP management that none of these items, when finally
resolved, will have a material adverse effect on the annual results of
operations, financial position or liquidity of SFP, although an
adverse resolution of a number of these items in a single year could
have a material adverse effect on the results of operations for that
year.
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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
October 5, 1994
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