SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-10720
ILLINOIS CENTRAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3545405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
455 North Cityfront Plaza Drive, Chicago, Illinois 60611-5504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 755-7500
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
As of March 31, 1997, 61,406,831 common shares were outstanding.
<PAGE>
ILLINOIS CENTRAL CORPORATION
AND SUBSIDIARIES
FORM 10-Q
Quarter Ended March 31, 1997
CONTENTS
Part I - Financial Information: Page
Item 1. Financial Statements:
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index E-1
<PAGE>
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
($ in millions, except share data)
(Unaudited)
Three Months Ended March 31,
1997 1996
---- ----
Revenues $ 172.1 $ 162.6
Operating expenses:
Labor and fringe benefits 48.3 47.2
Leases and car hire 10.2 10.1
Diesel fuel 11.1 8.8
Materials and supplies 9.2 8.3
Depreciation and amortization 11.2 9.1
Casualty, insurance and losses 4.6 4.2
Other taxes 6.0 5.1
Other 7.0 9.5
Operating expenses 107.6 102.3
Operating income 64.5 60.3
Other income (expense), net 0.1 0.3
Interest expense, net (10.4) (7.7)
Income before income taxes 54.2 52.9
Provision for income taxes 20.3 19.8
Net income $ 33.9 $ 33.1
Income per share $ 0.55 $ 0.54
Weighted average number of shares
of common stock and common stock
equivalents outstanding 62,207,817 61,742,614
The following notes are an integral part of the consolidated financial
statements.
<PAGE>
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
($ in millions)
ASSETS March 31, 1997 December 31, 1996
------ -------------- -----------------
Current assets:
Cash and temporary cash investments $ 61.1 $ 59.2
Receivables, net of allowance for doubtful
accounts of $1.3 in 1997 and 1996 110.0 107.0
Secured financing receivable - 32.6
Materials and supplies, at average cost 18.9 17.3
Assets held for disposition 1.0 1.6
Deferred income taxes - current 20.3 20.3
Other current assets 10.2 10.6
Total current assets 221.5 248.6
Investments 11.8 17.5
Properties:
Transportation:
Road and structures, including land 1,404.4 1,375.0
Equipment 264.6 261.2
Other, principally land 41.2 41.5
Total properties 1,710.2 1,677.7
Accumulated depreciation (59.0) (53.6)
Net properties 1,651.2 1,624.1
Other assets 26.9 21.2
Total assets $1,911.4 $ 1,911.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 6.2 $ 6.3
Accounts payable 48.3 60.4
Dividends payable 14.1 14.1
Income taxes payable 10.8 1.1
Casualty and freight claims 21.1 21.1
Employee compensation and vacations 16.1 21.4
Taxes other than income taxes 12.3 17.4
Accrued redundancy reserve 4.8 4.9
Other accrued expenses 93.7 85.3
Total current liabilities 227.4 232.0
Long-term debt 606.7 633.7
Deferred income taxes 370.4 356.6
Other liabilities and reserves 131.6 133.6
Contingencies and commitments (Note 15)
Stockholders' equity:
Common stock, par value $.001, authorized
100,000,000 shares, 64,307,395 shares issued
and 61,406,831 shares outstanding 0.1 0.1
Additional paid-in capital 167.4 167.1
Retained income 473.6 453.8
Treasury stock (2,900,564 shares) (65.8) (65.5)
Total stockholders' equity 575.3 555.5
Total liabilities and stockholders' equity $1,911.4 $ 1,911.4
The following notes are an integral part of the consolidated financial
statements.
<PAGE>
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in millions)
(Unaudited)
Three Months Ended March 31,
1997 1996
---- ----
Cash flows from operating activities :
Net income $ 33.9 $ 33.1
Reconciliation of net income to net cash
provided by (used for) operating
activities :
Depreciation and amortization 11.2 9.1
Deferred income taxes 8.4 7.2
Equity in undistributed earnings of
affiliates, net of dividends
received (0.1) 0.1
Net gains on sales of real estate 0.1 (0.4)
Cash changes in working capital (9.7) 2.9
Changes in other assets (0.5) (0.3)
Changes in other liabilities and
reserves (3.6) (12.1)
---- -----
Net cash provided by operating
activities 39.7 39.6
Cash flows from investing activities :
Additions to properties (25.5) (25.2)
Proceeds from real estate sales 0.3 0.8
Proceeds from equipment sales 0.1 0.6
Proceeds from sales of investments - 0.1
Secured financing 32.6 -
Other .4 (2.0)
---- ----
Net cash provided by (used for)
investing activities 7.9 (25.7)
Cash flows from financing activities :
Proceeds from issuance of debt - -
Principal payments on debt (11.3) (0.9)
Net change in commercial paper (20.0) 5.0
Dividends paid (14.1) (11.9)
Stock repurchase program (0.3) -
Purchase of subsidiary's common stock - -
Net cash (used for) financing activities (45.7) (7.8)
----- ----
Changes in cash and temporary cash investments 1.9 6.1
Cash and temporary cash investments at
beginning of period 59.2 5.0
---- ---
Cash and temporary cash investments at end
of period $ 61.1 $ 11.1
======= =======
Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 11.1 $ 6.1
======= =======
Income taxes $ 0.4 $ 4.4
======= =======
The following notes are an integral part of the consolidated financial
statements.
<PAGE>
ILLINOIS CENTRAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
Except as described below, the accompanying unaudited consolidated
financial statements have been prepared in accordance with accounting
policies described in the 1996 Annual Report on Form 10-K and should be
read in conjunction with the disclosures therein.
In the opinion of management, these interim financial statements reflect
all adjustments, consisting of normal recurring accruals, necessary to
present fairly the financial position, results of operations and cash
flows for the periods presented. Interim results are not necessarily
indicative of results for the full year. Certain 1996 amounts have been
reclassified to conform with the presentation used in the 1997 financial
statements.
Income Per Share
Income per common share of the Company is based on the weighted average
number of shares of common stock and common stock equivalents
outstanding during the period. See also Note 4.
2. Common Stock and Dividends
On March 12, 1997, the Board of Directors approved a quarterly dividend
of $.23 per share which was paid April 8, 1997. The Board intends to
continue its policy of quarterly dividends. Future dividends may be
dependent on the ability of the Illinois Central Railroad Company
("ICRR") and CCP Holdings, Inc. ("CCPH") to pay dividends to the Company.
Covenants of ICRR's Revolver and CCPH's Revolver require specified levels
of tangible net worth. At March 31, 1997, ICRR and CCPH exceeded their
tangible net worth covenants by $25.0 million and $23.9 million,
respectively.
3. Acquisition of CCP Holdings, Inc.
On June 13, 1996, following the effective date of the approval order
issued by the Surface Transportation Board, the Company closed the
purchase of CCPH. The purchase price was $147.1 million in cash and the
assumption of approximately $2.5 million in debt and approximately $17.3
million of capitalized lease obligations existing on acquisition date.
Additionally, under the Stock Purchase Agreement, the actual purchase
price is subject to various potential adjustments for up to one year
after the closing date.
The acquisition has been accounted for under the purchase method of
accounting. Accordingly, the Company has allocated the purchase cost to
CCPH's assets and liabilities as of June 13, 1996. The allocation is
based on preliminary estimates. No significant adjustments to the
preliminary purchase accounting allocations were made during the three
months ended March 31, 1997. A final determination of the purchase price
alocation will be made at June 30, 1997, when detailed studies are
completed. A summary of the CCPH assets acquired and liabilities assumed
at June 13, 1996, after reflecting the preliminary purchase accounting
allocations, is set forth below ($ in millions):
<PAGE>
Cash and Cash
Equivalents $ 4.9
Accounts Receivable 14.1
Other Current Assets 12.3
Properties 256.0
Accounts Payable $(16.8)
Other Current Liabilities (10.2)
Long-Term Debt (21.3)
Deferred Income Taxes (79.8)
Other Liabilities and Reserves(12.2)
The following unaudited pro-forma results of the Company are presented
to reflect the Company's results of operations for the quarter ended
March 31, 1996, and year ended December 31, 1996, as if CCPH had been
acquired on January 1, 1996 ($ in millions, except per share data):
Quarter Ended, Year Ended
March 31, 1996 December 31, 1996
(Unaudited)
Revenues $184.2 $697.3
Operating income 69.7 255.5
Net income 37.9 143.2
Net Income per share $ .61 $ 2.32
========= =======
4. Pro-Forma Earnings Per Share under SFAS No. 128
In March 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("SFAS No. 128"). The new standard is effective for interim and
annual periods ending after December 15, 1997; early adoption is not
permitted. Had SFAS No. 128 been effective January 1, 1996, the effect
on previously reported earnings per share ("EPS") data would have been
as follows:
Three Months ended March 31,
1997 1996
Primary EPS as reported $.55 $.54
Effect of SFAS No. 128 - -
------ ------
Basic EPS $.55 $.54
Fully diluted EBS as reported $.55 $.54
Effect of SFAS No. 128 - (.01)
------ -----
Diluted EPS $.55 $.53
==== ====
Basic EPS is computed by dividing net income for the period by the
weighted average number of shares of common stock outstanding during
the period. Diluted EPS is computed based on the assumption that
outstanding stock options are exercised during the period provided the
average common stock market price exceeds the option exercise price.
<PAGE>
The following is a reconciliation of the shares used to calculate Basic
and Diluted EPS at:
Three Months ended March 31,
1997 1996
Shares outstanding at beginning of period 61,406,831 61,425,094
Effects of options exercised in the period (a) 109 367
-------------- ---------------
Shares used in Basic EPS 61,406,940 61,425,461
Assumed exercise of outstanding options (b) 800,877 420,292
------------ ------------
Shares used in Diluted EPS 62,207,817 61,845,753
========== ==========
(a) Company policy is to repurchase, in the open market, all shares
issued upon the exercise of stock options. The indicated effects on
shares result since repurchases do not always occur on exact exercise
dates.
(b) Represents net shares after application of Treasury Stock method.
The policy of actual repurchases above in (a), was not assumed.
5. Receivable Sales Agreement
On January 1, 1997, the Company adopted SFAS 125. The accounting and
reporting of sales relating to ICRR's accounts receivable agreement was
not changed.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
On a consolidated basis total revenues for 1997 increased from the prior
year quarter by $9.5 million or 5.8% to $172.1 million. For the 1997 quarter
ICRR declined $8.4 million and CCPH contributed $17.7 million.
Total freight carloads of 257,880 were up 12%, primarily reflecting
inclusion of CCPH which was acquired in June 1996. The 12% traffic increase
offset weak export grain which had a negative impact on the revenue mix.
Grain and grain mill accounted for 20% of the Company's carloads and 37% of
ton-miles in 1997. While 1997's rail rates were higher on average versus last
year and demand for grain domestically was strong as processors returned to more
normal production levels , the negative impact of weak export grain traffic was
only partially offset. Export grain movements are not expected to improve until
the fourth quarter of 1997.
Coal accounted for 23% of the Company's carloads and 21% of ton-miles in
1997. Against 1996, carloads, ton-miles and revenues were up 31%, 17% and 11%,
respectively. Increased one time moves and new business offset production
difficulties at several shippers' operations. Production difficulties could
impact carloading in the second quarter.
Chemicals accounted for 15% of the Company's carloads and 16% of ton-miles
in 1997. Against 1996, carloads, ton-miles and revenues were up 14%, 13% and 5%,
respectively. The previously announced BNSF agreement is beginning to benefit
chemicals.
Paper and Forest Products were 14% of 1997 carloads and 12% of ton-miles.
Carloads were down 2% while ton-miles and revenues were flat versus 1996.
Bulk Commodities contributed 4% of carloads and ton-miles in 1997. Bulk
commodities are primarily stone and other construction materials and are closely
tied to state highway projects. This smaller commodity group fluctuates with the
timing of projects as well as the availability of freight cars for this
lower-margin business. The weather also held shipments down in the quarter.
Finally, Intermodal accounted for 20% of loads and 6% of ton-miles. Versus
1996, carloads were up 12%, with ton-miles and revenues up 14%.
Operating expenses overall increased $5.3 million or 5.2% in 1997. Labor
and fringe costs include the costs for CCPH for 1997. Leases and car hire
returned to more normal operating levels. Fuel expense reflects the increase in
cost per gallon (11.2%) coupled with increased usage (13.6%). Increased
depreciation is a result of the acquisition of CCPH. The expense category
Casualty, Insurance and Losses reflects normal operating levels. Other expenses
reflect recovery of prior period expenses in relation to a derailment.
Operating income for 1997 increased by $4.2 million or 7.0% to $64.5
million for the reasons cited above.
Net interest expense of $10.4 million for 1997 increased 35.1% compared to
$7.7 million in 1996. The 1997 expense includes borrowings to support the $109.9
million transferred from ICRR in June 1996 in connection with the acquisition of
CCPH.
Liquidity and Capital Resources
Operating Data ($ in millions): Three Months Ended March 31,
----------------------------
1997 1996
---- ----
Cash flows provided by (used for):
Operating activities......................... $39.7 $39.6
Investing activities......................... 7.9 (25.7)
Financing activities......................... (45.7) (7.8)
------- --------
Net change in cash and
temporary cash investments........ ........ $ 1.9 $ 6.1
====== ======
Cash from operating activities in 1997 and 1996 was primarily net income
before depreciation and deferred taxes.
Investing Data ($ in millions):
Additions to property were as follows:
Three Months Ended March 31,
1997 1996
---- ----
Communications and signals................... $ 4.2 $ 3.3
Equipment/rolling stock...................... - 10.4
Track and bridges............................ 15.1 9.7
Other........................................ 6.2 1.8
------- -------
Total.................................... $25.5 $25.2
===== =====
Property retirements and removals generated proceeds of $.5 million and
$1.4 million in 1997 and 1996, respectively.
The Company anticipates that capital expenditures for 1997 will be
approximately $172 million. Base expenditures of $93 million will concentrate on
track maintenance, bridges and freight car upgrades. Another $60 million will be
spent on constructing the dry bulk transfer facility and expanding the recently
acquired liquid bulk transfer facility located along the Mississippi River in
Louisiana. Most of the remainder of these expenditures are expected to be met
from current operations or other available sources.
In June 1996, following the effectiveness of the order by the STB, the
Company acquired the stock of CCPH Holdings, Inc. (See Note 3.) The Company used
its own bank credit lines and funds received from ICRR (a loan of $59.9 million
and a $50 million dividend) to complete the $147 million transaction. The
acquisition is being treated as a purchase and under the Stock Purchase
Agreement, the actual purchase price is subject to potential adjustments for up
to one year.
<PAGE>
Financing Activities
The Company has a $50 million 364-day floating-rate revolving loan
agreement which expires in August 1997. In June 1996, the Company borrowed $40
million under this agreement to acquire CCPH. The amount was also repaid in June
1996. At March 31, 1997, no amounts were drawn under this agreement. IC
Financial leases equipment to ICRR and has approximately $9.1 million in
long-term borrowing agreements which were used to acquire locomotive and freight
car equipment during 1993 and 1991. IC Financial lease revenue and corresponding
expense at ICRR, which is eliminated in consolidation, was $4.7 million and $3.6
million for the first quarter of 1997 and 1996, respectively.
In April 1997 and 1996, the Company paid $14.1 million and $11.9 million,
respectively, in cash dividends on its common stock. Dividends from ICRR were
used to fund these payments. Included in the 1996 dividends to the Company is
the March 1996 transfer by ICRR of its ownership in the Chicago Intermodal
Company ("CIC") via a dividend of CIC stock. The book value of the CIC
investment was $5.7 million.
CCPH has a revolving credit agreement with its bank lending group for an
unsecured $50 million revolving credit facility, (the "CCPH Revolver"). The CCPH
Revolver has a $5 million sublimit for letters of credit and expires in 2001.
The revolver can be used for general corporate purposes. Currently, the annual
commitment fee is 25 basis points and borrowings are at the Eurodollar offered
rate plus 62.5 basis points. The credit agreement contains various financial
covenants including minimum consolidated tangible net worth, minimum interest
coverage and maximum leverage ratio. At March 31, 1997, CCPH was in compliance
and does not anticipate any difficulty in maintaining compliance with such
covenants. At March 31, 1997, $5.5 million of CCPH's Revolver was outstanding.
ICRR has a commercial paper program whereby a total of $200 million can be
issued and outstanding at any one time. The program is supported by a $250
million Revolver with the ICRR's lending group (see below). At March 31, 1997,
no amounts were outstanding. The average interest rate on commercial paper for
the quarter ended March 31, 1997, was 5.68% with a range of 5.68% to 5.69%.
ICRR's public debt is rated Baa2 by Moody's and BBB by S&P.
In 1994, ICRR entered into a revolving agreement to sell undivided
percentage interests in certain of its accounts receivable, with recourse, to a
financial institution. The agreement, which expires in June 1998, allows for
sales of accounts receivable up to a maximum of $50 million at any one time.
ICRR services the accounts receivable sold under the agreement and retains the
same exposure to credit loss as existed prior to the sale. At March 31, 1997,
$50 million had been sold pursuant to the agreement. Costs related to the
agreement fluctuate with changes in prevailing interest rates. These costs,
which are included in Other Income (Expense), Net, were $.8 million each for the
quarters ended March 31, 1997, and 1996. ICRR's accounting and reporting for the
sale of accounts receivable was not changed by the implementation of SFAS No.
125.
ICRR has a $250 million Revolver with its bank lending group, which expires
in 2001. Fees and borrowing spreads are predicated on ICRR's long-term credit
ratings. Currently, the annual facility fee is 15 basis points and borrowings
under this agreement are at Eurodollar offered rate plus 22.5 basis points. The
Revolver is used primarily for backup for ICRR's commercial paper program but
can be used for general corporate purposes. The available amount is reduced by
the
<PAGE>
outstanding amount of commercial paper borrowings and any letters of credit
issued on behalf of ICRR under the facility. No amounts have been drawn under
the Revolver. At March 31, 1997, the full $250 million was available but
undrawn.
Certain covenants of ICRR's debt agreements and CCPH's Revolver require
among others specific levels of tangible net worth but not a specific dividend
restriction. At March 31, 1997, ICRR and CCPH exceeded their tangible net worth
covenants by $25.0 million and $23.9 million, respectively. Both ICRR and CCPH
were in compliance with all covenants at March 31, 1997, and do not contemplate
any difficulty maintaining such compliance.
A shelf registration from 1996 can be used to issue an additional $70
million in MTN's or other debt until 2000. Currently, there are no plans to
issue additional debt but capital investments in the terminal facilities and
other ventures could necessitate use.
The Company believes that its available cash, cash generated by its
operations and cash available from the facilities described above will be
sufficient to meet foreseeable liquidity requirements. Additionally, the Company
believes it has access to the public debt market if needed.
Miscellaneous
ICRR has entered into various diesel fuel collar agreements designed to
mitigate significant changes in fuel prices. As a result, approximately 17% of
ICRR's short-term diesel fuel requirements through June 1997 are protected
against significant price changes.
In January 1997, the United Transportation Union ("UTU") ratified a new
agreement which settles wage and work rule issues through 2000. The UTU
agreement is similar to the nationally negotiated agreement in effect with other
Class I carriers. The main distinction is timing of the various lump sum payouts
and scheduled wage increases. ICRR and the Brotherhood of Locomotive Engineers
("BLE") have negotiated on a local agreement and ratification is pending.
The new agreement, if ratified, settles wage and work rule issues through
2000. The BLE agreement requires a ratification payment based on 1996 earnings
and an effective increase of approximate 4.9% in wage rates upon ratification.
Long-Term Equity Enhancement Program
The Company paid its twenty-first consecutive quarterly cash dividend on
April 8, 1997. The Board of Directors believes quarterly dividends are an
integral part of its announced Long-Term Equity Enhancement Program designed to
increase stockholder value through dividend payments and stock repurchases.
Actual dividends are declared by the Board based on profitability, capital
expenditure requirements, debt service and other factors. The Board has
determined that cash needs for the CCPH acquisition and other capital
expenditures precluded a Stock Purchase program for 1996 and to date in 1997.
Environmental Liabilities
The Company's operations are subject to comprehensive environmental
regulation by federal, state and local authorities. Compliance with such
regulation requires the Company to modify its operations and expend substantial
manpower and financial resources.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("Superfund"), and similar state and federal laws, the
Company is potentially liable for the cost of clean-up of various contaminated
sites. The Company generally participates in the clean-up at sites where other
substantial parties share responsibility through cost-sharing arrangements, but
under Superfund and other similar laws the Company can be held jointly and
severally liable for all environmental costs associated with such sites.
The Company is aware of approximately 25 contaminated sites at which it is
probably liable for some portion of any required clean-up. Of these, 17 involve
contamination primarily by diesel fuel which can be remediated without material
cost. Five other sites are expected to require more than $1 million in clean-up
costs. At four of these sites other parties are expected to contribute the
majority of the costs incurred. The Company anticipates expenditures of
approximately $2.8 million annually for the investigation and remediation at all
sites.
For all known sites of environmental contamination where Company loss or
liability is probable, the Company has recorded an estimated liability at the
time when a reasonable estimate of remediation cost and Company liability can
first be determined. Adjustments to initial estimates are recorded as necessary
based upon additional information developed in subsequent periods. Estimates of
the Company`s potential financial exposure for environmental claims or incidents
are necessarily imprecise because of the difficulty of determining in advance
the nature and extent of contamination, the varying costs of alternative methods
of remediation, the regulatory clean-up standards which will be applied, and the
appropriate allocation of liability among multiple responsible parties. At March
31, 1997, the Company estimated the probable range of its liability to be $13
million to $53 million, and in accordance with the provisions of SFAS No. 5 had
a reserve of $13 million for environmental contingencies. This amount is not
reduced for potential insurance recoveries or third-party contributions.
The risk of incurring environmental liability in connection with both past
and current activities is inherent in railroad operations. Decades-old railroad
housekeeping practices were not always consistent with contemporary standards.
Historically the Company has leased substantial amounts of property to
industrial tenants, and ICRR continues to haul hazardous materials which are
subject to occasional accidental release. Because the ultimate cost of known
contaminated sites cannot be definitively established and because additional
contaminated sites yet unknown may be discovered or future operations may result
in accidental releases, no assurance can be given that the Company will not
incur material environmental liabilities in the future. However, based on its
assessments of the facts and circumstances now known, management believes that
it has recorded adequate reserves for known liabilities and does not expect
future environmental charges or expenditures, based on these known facts and
circumstances, to have a material adverse effect on the Company`s financial
position, results of operations, cash flow or liquidity.
Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
("SFAS No. 125"), issued by the Financial Accounting Standards Board in 1996 and
effective for 1997, provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishment of liabilities. The
<PAGE>
accounting and reporting for the ICRR's sales of accounts receivable agreement
was not changed by the January 1, 1997 implementation of SFAS No. 125.
In March 1997, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No.
128"). The new statement is effective December 15, 1997; early adoption is not
permitted. When adopted, SFAS No. 128 will require restatement of prior years'
earnings per share. See Note 4 for proforma presentations of the effect of this
new standard.
The FASB has also released Statement of Financial Accounting Standard No.
129 "Disclosure of Information about Capital Structure" ("SFAS No. 129"). The
Company complies with all the requirements of the standard which is effective
for periods ending after December 15, 1997.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 7, 1997, the Registrant held its Annual Meeting of Stockholders.
At the meeting, the stockholders' were asked to vote on the election of
Class II Directors until 2000.
Description Vote Recap
The election of George D. Gould, For 55,228,126
Alexander P. Lynch, and F. Jay Taylor Against 487,855
as Class III directors until 2000
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index on page E-1
<PAGE>
ILLINOIS CENTRAL CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
ILLINOIS CENTRAL CORPORATION
/s/ Dale W. Phillips
Dale W. Phillips
Vice President & Chief Financial
Officer
/s/ John V. Mulvaney
John V. Mulvaney
Controller
Date: May 14, 1997
<PAGE>
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
11 Computation of Income per Common Share E-2
27 Financial Data Schedule (This exhibit is required to
be submitted electronically pursuant to the rules
and regulations of the Securities and Exchange
Commission and shall not be deemed filed for the
purposes of Section 11 of the Securities Act of 1933
or Section 18 of the Securities Exchange Act of 1934).
<PAGE>
ILLINOIS CENTRAL CORPORATION
COMPUTATION OF INCOME PER CO
($ in millions, except share data)
Three Months
Ended March 31,
1997 1996
Net income 33.9 33.1
==== ====
Calculation of average number of shares outstanding:
Primary:
Weighted average number of common shares
outstanding 61,406,940 61,425,461
Effect of shares issuable under stock options 800,877 317,153
------- -------
62,207,817 61,742,614
========== ==========
Fully diluted:
Weighted average number of common shares
outstanding 61,406,940 61,425,461
Effect of shares issuable under stock options (1) 800,877 377,548
-- ------- -------
62,207,817 61,803,009
Income per common share:
Primary:
Net income $ 0.55 $ 0.54
========== ==========
Fully diluted:
Net income $ 0.55 $ 0.54
========== ==========
(1) Such items are included in primary calculation. Additional shares
price of common stock for the period and the end of period price.
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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<SECURITIES> 0
<RECEIVABLES> 110000
<ALLOWANCES> 1300
<INVENTORY> 18900
<CURRENT-ASSETS> 221500
<PP&E> 1651200
<DEPRECIATION> 59000
<TOTAL-ASSETS> 1911400
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<COMMON> 0
0
0
<OTHER-SE> 575300
<TOTAL-LIABILITY-AND-EQUITY> 1911400
<SALES> 172100
<TOTAL-REVENUES> 172100
<CGS> 107600
<TOTAL-COSTS> 107600
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<INCOME-TAX> 20300
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<EPS-PRIMARY> .55
<EPS-DILUTED> .55
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