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 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 1-12184
-------
CONRAIL INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2728514
- - ----------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Market Street, Philadelphia, Pennsylvania 19101
- - ---------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(215) 209-4000
- - ---------------------------------------------------------------------
(Registrant's telephone number, including area code)
- - ---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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.
Number of shares of common stock outstanding (as of April 30, 1994)
79,035,291
<PAGE>
CONRAIL INC.
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements
of Income - Quarters ended
March 31, 1994 and 1993 3
Condensed Consolidated Balance
Sheets - March 31, 1994 and
December 31, 1993 4
Condensed Consolidated Statements
of Cash Flows - Quarters ended
March 31, 1994 and 1993 5
Notes to Condensed Consolidated
Financial Statements 6
Reports of Independent Accountants 8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
CONRAIL INC.
Item 1. Financial Statements.
--------------------
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
($ In Millions Except Per Share Data)
Quarters ended
March 31,
--------------
1994 1993
----- -----
<S> <C> <C>
Revenues $ 847 $ 816
----- -----
Operating expenses
Way and structures 144 136
Equipment 210 176
Transportation 350 322
General and administrative 91 97
Early retirement program 84
----- -----
Total operating expenses 879 731
----- -----
Income (loss) from operations (32) 85
Interest expense (47) (44)
Other income, net 26 32
----- -----
Income (loss) before income taxes and the
cumulative effect of changes in accounting
principles (53) 73
Income taxes (benefits) (21) 27
----- -----
Income (loss) before the cumulative effect
of changes in accounting principles (32) 46
Cumulative effect of changes in accounting
principles (74)
----- -----
Net loss $ (32) $ (28)
===== =====
Income (loss) per common share
Before the cumulative effect of changes
in accounting principles
Primary $(.45) $ .52
Fully diluted (.45) .52
Cumulative effect of changes in accounting
principles
Primary and fully diluted (.91)
Net loss per common share
Primary $(.45) $(.39)
Fully diluted (.45) (.39)
Dividends per common share $.325 $.275
Weighted average number of shares used in
computing earnings (loss) per share (thousands)
Primary 79,629 80,982
Fully diluted 79,629 80,982
Ratio of earnings to fixed charges - 2.25x
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
CONRAIL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
($ In Millions) March 31, December 31,
1994 1993
---------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 43 $ 38
Accounts receivable 661 644
Deferred tax assets 236 227
Material and supplies 153 132
Other current assets 26 21
------ ------
Total current assets 1,119 1,062
Property and equipment, net 6,309 6,313
Other assets 612 573
------ ------
Total assets $8,040 $7,948
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings 112 79
Current maturities of long-term debt 154 146
Accounts payable 95 62
Wages and employee benefits 179 185
Casualty reserves 96 93
Accrued and other current liabilities 519 510
------ ------
Total current liabilities 1,155 1,075
Long-term debt 1,985 1,959
Casualty reserves 210 132
Deferred income taxes 1,083 1,081
Special income tax obligation 560 575
Other liabilities 337 342
------ ------
Total liabilities 5,330 5,164
------ ------
Stockholders' equity
Series A ESOP convertible junior
preferred stock 286 286
Unearned ESOP compensation (251) (253)
Common stock 80 80
Additional paid-in capital 1,829 1,819
Retained earnings 795 857
------ ------
2,739 2,789
Treasury stock (29) (5)
------ ------
Total stockholders' equity 2,710 2,784
------ ------
Total liabilities and
stockholders' equity $8,040 $7,948
====== ======
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
CONRAIL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
($ In Millions)
Quarters ended
March 31,
---------------
1994 1993
----- -----
<S> <C> <C>
Cash flows from operating activities $ 62 $ 33
Cash flows from investing activities
Property and equipment acquisitions (68) (80)
Other (2) (35)
----- -----
Net cash used in investing activities (70) (115)
----- -----
Cash flows from financing activities
Repurchase of common stock (24) (10)
Net proceeds from (repayment of)short-term
borrowings 33 (21)
Payment of capital lease and equipment obligations (18) (24)
Proceeds from medium-term notes 50 79
Payment of medium-term notes (5)
Proceeds from long-term debt 54
Dividends paid on common stock (26) (22)
Dividends paid on preferred stock (5) (5)
Other 8 5
----- -----
Net cash from financing activities 13 56
----- -----
Increase (decrease) in cash and cash equivalents 5 (26)
Cash and cash equivalents
Beginning of period 38 40
----- -----
End of period $ 43 $ 14
===== =====
See accompanying notes.
</TABLE>
5
<PAGE>
CONRAIL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The unaudited financial statements contained herein present
the consolidated financial position of Conrail Inc. (the
"Company") as of March 31, 1994 and December 31, 1993, and the
consolidated results of operations and cash flows for the
quarters ended March 31, 1994 and 1993. In the opinion of
management, these financial statements include all adjustments,
consisting of normal recurring adjustments and the cumulative
effect of changes in accounting principles mentioned in Note 3,
necessary to present fairly the results for the interim periods
included.
The rules and regulations of the Securities and Exchange
Commission permit certain information and footnote disclosures,
ordinarily required by generally accepted accounting principles,
to be condensed or omitted from interim financial reports.
Accordingly, the financial statements included herein should be
read in conjunction with the audited financial statements and
notes for the year ended December 31, 1993, presented in the
Company's Annual Report on Form 10-K.
2. During the first quarter of 1994, the Company recorded a
charge of $51 million (after tax benefits of $33 million) for a
non-union employee voluntary early retirement program and
related costs. The majority of the cost of the early retirement
program will be paid from the Company's overfunded pension plan.
3. Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" and Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." As a result, the Company recorded cumulative
after tax charges totalling $74 million in the first quarter of
1993.
4. In April 1994, Consolidated Rail Corporation, the Company's
principal subsidiary, entered into a $500 million
uncollateralized bank credit agreement with a group of banks to
replace the $300 million credit facility that would have expired
in the first quarter of 1995. The new credit agreement, which
will be used for general corporate purposes and to support
Consolidated Rail Corporation's commercial paper program,
provides for a $350 million revolving credit facility with a
five year maturity and a $150 million revolving credit facility
with a one year maturity. Both credit facilities require
interest to be paid on amounts borrowed at rates based on
various defined short-term rates and an annual maximum fee of
.125% of the facility amounts. The new credit agreement
contains, among other conditions, restrictive covenants relating
6
<PAGE>
to a debt ratio and consolidated tangible net worth. There were
no borrowings outstanding under the prior credit agreement at
March 31, 1994.
5. In July 1993, the Board of Directors authorized a $100
million common stock repurchase program. Under this program,
the Company acquired 404,824 shares for approximately $24
million during the first quarter of 1994.
6. Information regarding contingent liabilities and litigation
was included in Note 12 to Consolidated Financial Statements and
Part I, Item 3 - Legal Proceedings in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
Material developments with respect to these and other matters
are discussed in Part II, Item 1 - Legal Proceedings in this
Form 10-Q.
7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Stockholders and Board of Directors of
Conrail Inc.
We have reviewed the accompanying condensed consolidated balance
sheet of Conrail Inc. and its subsidiaries (the "Company") as of
March 31, 1994 and the related condensed consolidated statements
of income and cash flows for the three months ended March 31,
1994. The condensed consolidated statements of income and cash
flows of Consolidated Rail Corporation for the three months
ended March 31, 1993 were reviewed by other independent
accountants, whose report dated April 21, 1993, disclosed that
no material modifications should have been made to the interim
financial information for it to be in conformity with generally
accepted accounting principles. This financial information is
the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying interim
financial information for it to be in conformity with generally
accepted accounting principles.
The Company's consolidated balance sheet as of December 31, 1993
and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended (not presented
herein) were audited by other independent accountants, whose
report dated January 24, 1994 expressed an unqualified opinion
on those statements and included an explanatory paragraph
describing the Company's change in methods for accounting for
income taxes and postretirement benefits other than pensions in
1993.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, PA 19103
April 20, 1994
8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Stockholders and Board of Directors of
Conrail Inc.
We have made a review of the condensed consolidated balance
sheet of Conrail Inc. and subsidiaries as of March 31, 1993 and
the related condensed consolidated statements of income and cash
flows for the three-month period ended March 31, 1993, in
accordance with standards established by the American Institute
of Certified Public Accountants.
A review of interim financial information consists principally
of obtaining an understanding of the system for the preparation
of interim financial information, applying analytical procedures
to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less
in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of
an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet as
of December 31, 1993, and the related consolidated statements of
income, stockholders' equity and cash flows for the year then
ended (not presented herein); and in our report, dated
January 24, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1993, is fairly presented, in
all material respects, in relation to the consolidated balance
sheet from which it has been derived.
COOPERS & LYBRAND
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 24, 1994
9
<PAGE>
CONRAIL INC.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
-----------------------------------
Results of Operations
---------------------
Overview
--------
Conrail Inc. (the "Company") incurred a net loss of $32 million
($.45 per share, primary and fully diluted basis) for the first
quarter of 1994 compared with a net loss of $28 million for the
first quarter of 1993 ($.39 per share, primary and fully diluted
basis). The first quarter of 1994 includes a one-time charge of
$51 million (net of $33 million tax benefits) relating to a non-
union voluntary early retirement program and related costs and
the first quarter of 1993 includes charges totalling $74 million
(net of taxes of $14 million) for adoption of required changes
in accounting for income taxes and postretirement benefits other
than pensions. Absent these one-time charges, the Company would
have shown net income of $19 million for the first quarter of
1994,(net income per common share of $.20 primary and $.19 fully
diluted), and net income of $46 million for the first quarter of
1993 (net income per common share of $.52 primary and $.49 fully
diluted).
The Company's first quarter 1994 results were adversely affected
by difficult operating conditions caused by severe winter
weather, which diminished its ability to handle an increase in
traffic volume during the quarter. The poor operating
conditions and greater than anticipated traffic volumes combined
to create a shortage of locomotives and crews. These factors in
conjunction with the simultaneous implementation of the
Company's new service group structure resulted in service
disruptions and increased operating expenses.
The Company has revised its economic assumptions for 1994, to
3.5 percent growth in real gross domestic product and 4.5
percent in industrial production, from 3.0 percent and 3.4
percent, respectively. While the Company's financial goal of
achieving an 81.5 percent operating ratio (operating expenses as
a percent of revenues but excluding non-recurring charges) for
the full year has not changed, the high operating expenses in
the first quarter will make achieving the goal more difficult.
The goal will continue to be evaluated as the year progresses.
Management is continuing its review of asset utilization in
light of the Company's goal to earn its cost of capital and its
revised economic assumptions with a view to identifying excess
assets and addressing competing demands for additional assets.
10
<PAGE>
First Quarter 1994 compared with First Quarter 1993
---------------------------------------------------
Net loss for the first quarter of 1994 was $32 million after the
effects of a one-time charge of $51 million related to a non-
union voluntary early retirement program and related costs which
the Company completed during the quarter (see Note 2 to the
Condensed Consolidated Financial Statements). Net loss for the
first quarter of 1993 was $28 million after the effects of one-
time charges of $74 million for adoption of required changes in
accounting principles (see Note 3 to the Condensed Consolidated
Financial Statements).
Operating revenues (primarily freight line-haul revenues, but
also including switching, demurrage and incidental revenues)
increased $31 million, or 3.8%, from $816 million in the first
quarter of 1993 to $847 million in the first quarter of 1994. A
7.8% increase in traffic volume in units (freight cars and
intermodal trailers and containers) resulted in a $61 million
increase in revenues that was partially offset by a 3.0%
decrease in average revenue per unit which reduced revenue by
$25 million. The decline in average revenue per unit is
attributable to traffic mix and decreases in average rates which
lowered revenue by $7 million and $18 million, respectively.
Incidental revenues decreased $5 million.
Operating expenses increased $148 million (including the $84
million charge related to the non-union voluntary early
retirement program and related costs), or 20.2%, from $731
million in the first quarter of 1993 to $879 million in the
first quarter of 1994. The following table sets forth the
operating expenses for the two periods:
First Quarter
-------------
Increase
($ In Millions) 1994 1993 (Decrease)
---- ---- ----------
Compensation and benefits $341 $323 $ 18
Fuel 47 43 4
Material and supplies 62 57 5
Equipment rents 91 75 16
Depreciation and amortization 70 72 (2)
Casualties and insurance 45 34 11
Other 139 127 12
Early retirement program 84 84
---- ---- ----
$879 $731 $148
==== ==== ====
Compensation and benefits as a percent of revenues was 40.3% in
the first quarter of 1994 and 39.6% in the first quarter of
1993. The labor cost increase of $18 million, or 5.6%, was
11
<PAGE>
attributable primarily to increased overtime caused by the
adverse weather conditions and service disruptions experienced
in the first quarter.
The increase of $16 million, or 21.3%, in equipment rents
primarily reflects the effects of crowded serving yards and
train delays due to adverse weather conditions and higher
traffic volume.
The increase of $11 million, or 32.4%, in casualties and
insurance cost was due to an increase in the number of personal
injury claims plus increases in the average cost per claim.
Also contributing to the increase were costs associated with
loss and damage to lading from train derailments.
Other operating expenses increased $12 million, or 9.4%,
primarily due to increases in lease rentals, snow removal and
property and corporate taxes during the quarter.
In the first quarter of 1994, the Company incurred a one-time
charge of $84 million for the non-union voluntary early
retirement program and related costs (see Note 2 to the
Condensed Consolidated Financial Statements).
The Company's operating ratio (operating expenses as a percent
of revenues) was 103.8% for the first quarter of 1994 compared
with 89.6% for the first quarter of 1993. Without the one-time
charge for the early retirement program, the operating ratio for
the first quarter of 1994 would have been 93.8%.
Liquidity and Capital Resources
-------------------------------
The Company's cash and cash equivalents increased $5 million in
the first quarter of 1994, from $38 million at December 31, 1993
to $43 million at March 31, 1994. Cash generated from
operations, primarily from its wholly-owned subsidiary,
Consolidated Rail Corporation, and borrowings are the Company's
principal sources of liquidity and are used primarily for
capital expenditures, debt service and dividends. In the first
quarter of 1994, operating activities provided cash of $62
million and net short-term borrowings and proceeds from medium-
term notes provided $83 million.
The principal uses of cash during the quarter were for:
property and equipment acquisitions, $68 million; repurchase of
common stock, $24 million; payment of capital lease and
equipment obligations, $18 million; and cash dividends on common
and preferred stock, $31 million.
A working capital (current assets less current liabilities)
deficiency of $36 million existed at March 31, 1994 as compared
12
<PAGE>
with a deficiency of $13 million at December 31, 1993.
Management believes that the Company's financial position allows
it sufficient access to credit sources on investment grade
terms, and, if necessary, additional intermediate or long-term
debt could be obtained for working capital requirements.
In July 1993, the Company began a third common stock repurchase
program of up to $100 million. During the first quarter of
1994, 404,824 shares were acquired for $24 million, bringing the
total acquired under this program through March 31, 1994 to
642,679 shares at a cost of approximately $38 million.
During the first quarter of 1994, Consolidated Rail Corporation
issued $243 million of commercial paper and repaid $210 million.
At March 31, 1994, $212 million of commercial paper remained
outstanding, of which $100 million is classified as long-term
debt since it is expected to be refinanced through subsequent
issuances of commercial paper and is supported by a long-term
credit facility.
In January 1994, Consolidated Rail Corporation established a
$300 million Medium-Term Note Program under a shelf registration
statement filed on Form S-3 in August 1993. Under this Program,
Consolidated Rail Corporation issued $50 million of medium-term
notes during the first quarter of 1994, with an average interest
rate of 5.73%.
In April 1994, Consolidated Rail Corporation entered into an
uncollateralized bank credit agreement with a group of banks to
replace the $300 million credit facility that would have expired
in the first quarter of 1995. The new credit agreement, which
will be used for general corporate purposes and to support the
Consolidated Rail Corporation's commercial paper program,
provides for a $350 million revolving credit facility with a
five year maturity and a $150 million revolving credit facility
with a one year maturity.
13
<PAGE>
PART II. OTHER INFORMATION
CONRAIL INC.
Item 1. Legal Proceedings.
-----------------
United States v. Consolidated Rail Corporation, et al.
-----------------------------------------------------
On March 17, 1994, the United States Department of Justice
("DOJ") served notice that it had filed a complaint in the
Federal District Court for the Eastern District of Pennsylvania
against Consolidated Rail Corporation and two other parties
citing various violations of the Clean Air Act ("CAA") and the
National Emission Standard for Hazardous Air Pollutants
("NESHAP") in connection with the alleged release of asbestos
during the renovation of a grain storage facility. DOJ seeks
civil penalties and injunctive relief against further violations
of CAA and NESHAP.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
11 Statement of earnings (loss) per share
computations.
12 Computations of the ratio of earnings to
fixed charges.
15.a Letter re unaudited interim financial
information from Price Waterhouse.
15.b Letter re unaudited interim financial
information from Coopers & Lybrand.
(b) Reports on Form 8-K
On February 18, 1994, the Company filed a report
on Form 8-K reporting the following under "Item 4.
Change in Registrant's Certifying Accountants,":
On February 16, 1994, the Company dismissed
Coopers & Lybrand as its independent accountants
and engaged Price Waterhouse as its new
independent accountants effective as of that date.
14
<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.
CONRAIL INC.
Registrant
Bruce B. Wilson
-----------------------------
Bruce B. Wilson
Senior Vice President - Law
H. W. Brown
-----------------------------
H. W. Brown
Senior Vice President -
Finance and Administration
(Principal Financial Officer)
Date: May 11, 1994
15
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page Number in
No. SEC Sequential
Numbering System
------- ----------------
11 Statement of earnings (loss)
per share computations.
12 Computations of the ratio of
earnings to fixed charges.
15.a Letter re unaudited interim
financial information from
Price Waterhouse.
15.b Letter re unaudited interim
financial information from
Coopers & Lybrand.
<TABLE>
Exhibit 11
----------
CONRAIL INC.
-----------
EARNINGS (LOSS) PER SHARE COMPUTATIONS
--------------------------------------
($ In Millions Except Per Share)
<CAPTION>
Quarters ended
March 31,
----------------------
1994 1993
---- ----
<S> <C> <C>
Income before the cumulative effect
-----------------------------------
of changes in accounting principles (1)
-----------------------------------
Primary
Income (loss) $(32) $ 46
Dividends declared on Series A
ESOP convertible junior preferred
stock (ESOP Stock), net of
tax benefits (3) (3)
---- ----
$(35) $ 43
==== ====
Fully diluted
Income (loss) (32) 46
Dividends declared on ESOP Stock,
net of tax benefits (3) (3)
---- ----
$(35) $ 43
==== ====
Weighted average number of shares
---------------------------------
Primary
Weighted average number of
common shares outstanding 79,628,510 79,874,152
Effect of shares issuable
under stock option plans (2) - 1,107,994
---------- ----------
79,628,510 80,982,146
========== ==========
Fully diluted (3)
Weighted average number of
common shares outstanding 79,628,510 79,874,152
Effect of shares issuable
under stock option plans (2 - 1,107,994
---------- ----------
79,628,510 80,982,146
========== ==========
Income (loss) per common share before
the cumulative effect of changes in
accounting principles
Primary $(.45) $.52
Fully diluted (.45) .52
</TABLE>
Page 1 of 4
<PAGE>
Exhibit 11
----------
<TABLE>
CONRAIL INC.
-----------
EARNINGS (LOSS) PER SHARE COMPUTATIONS
--------------------------------------
($ In Millions Except Per Share)
<CAPTION>
Quarters ended
March 31,
----------------
1994 1993
---- ----
<S> <C> <C>
Charges relative to the cumulative effect
-----------------------------------------
of changes in accounting principles (1)
-----------------------------------
Primary and fully diluted
Postretirement benefits $(22)
Income taxes (52)
----
$(74)
====
Weighted average number of shares (*)
80,982,146
==========
Charges per common share relative
to the cumulative effect of
changes in accounting principles
Postretirement benefits $(.27)
Income taxes (.64)
-----
$(.91)
=====
(*) See Page 1 of 4 for components.
</TABLE>
Page 2 of 4
<PAGE>
Exhibit 11
----------
<TABLE>
CONRAIL INC.
-----------
EARNINGS (LOSS) PER SHARE COMPUTATIONS
--------------------------------------
($ In Millions Except Per Share)
<CAPTION>
Quarters ended
March 31,
----------------
1994 1993
---- ----
<S> <C> <C>
Net loss
--------
Primary
Net loss $(32) $(28)
Dividends declared on Series A
ESOP convertible junior preferred
stock (ESOP Stock), net of tax
benefits (3) (3)
---- ----
$(35) $(31)
==== ====
Fully diluted
Net loss (32) (28)
Dividends declared on ESOP Stock,
net of tax benefits (3) (3)
---- ----
$(35) $(31)
==== ====
Weighted average number of shares (*)
---------------------------------
Primary 79,628,510 80,982,146
========== ==========
Fully diluted 79,628,510 80,982,146
========== ==========
Net loss per common share
Primary $(.45) $(.39)
Fully diluted (.45) (.39)
(*) See Page 1 of 4 for components.
</TABLE>
Page 3 of 4
<PAGE>
Exhibit 11
----------
CONRAIL INC.
-----------
EARNINGS (LOSS) PER SHARE COMPUTATIONS
--------------------------------------
($ In Millions Except Per Share)
Notes: 1. Conrail adopted Statement of Financial Accounting
Standards No. 106 ("Employers' Accounting for
Postretirement Benefits Other Than Pensions") and
Statement of Financial Accounting Standards No. 109
("Accounting for Income Taxes") effective January 1,
1993. As a result, Conrail recorded cumulative after
tax charges of $22 million, or $.27 per share,
primary and fully diluted, and $52 million, or $.64
per share, primary and fully diluted, respectively.
2. The effects of shares issuable under stock option
plans were antidilutive for the first quarter of 1994
and were excluded from the per share calculations.
3. The effects of the assumed conversion of Series A
ESOP convertible junior preferred stock were
antidilutive for both the first quarters of 1993 and
1994 and were excluded from the per share
calculations.
Page 4 of 4
Exhibit 12
----------
<TABLE>
CONRAIL INC.
-----------
COMPUTATIONS OF THE RATIO OF EARNINGS TO FIXED CHARGES
------------------------------------------------------
($ In Millions)
<CAPTION>
Quarters ended
March 31,
--------------
1994 1993
---- ----
<S> <C> <C>
Earnings
--------
Pre-tax income $(53) $ 73
Add:
Interest expense 47 44
Rental expense interest factor 9 7
Less equity in undistributed earnings
of 20-50% owned companies (3) (9)
---- ----
Earnings available for fixed charges - $115
==== ====
Fixed charges
-------------
Interest expense 47 44
Rental expense interest factor 9 7
---- ----
Fixed charges $ 56 $ 51
==== ====
Ratio of earnings to fixed charges - 2.25x
<FN>
For purposes of computing the ratio of earnings to fixed
charges, earnings represent income before income taxes plus
fixed charges, less equity in undistributed earnings of 20% to
50% owned companies. Fixed charges represent interest expense
together with interest capitalized and a portion of rent under
long-term operating leases representative of an interest factor.
</FN>
</TABLE>
Exhibit 15.a
------------
May 11, 1994
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Dear Sirs:
We are aware that Conrail Inc. has incorporated by reference
our report dated April 20, 1994 (issued pursuant to the
provisions of Statement of Auditing Standards No. 71) in the
following registration statements:
Registration Statement on Form S-8 No. 33-19155
Registration Statement on Form S-8 No. 33-44140
Registration Statement on Form S-3 No. 33-64670.
We are also aware of our responsibilities under the
Securities Act of 1933 and that pursuant to Rule 436(c) our
report dated April 20, 1994 shall not be considered part of
a registration statement prepared or certified by us or a
report prepared or certified by us within the meaning of
Sections 7 and 11 of the Securities Act of 1933.
Yours very truly,
PRICE WATERHOUSE
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, PA 19103
Exhibit 15.b
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May 10, 1994
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Conrail Inc.
Registration on Form S-8 (Registration Form No. 33-19155 and
(Registration Form No. 33-44140)
Registration on Form S-3 (Registration Form No. 33-64670)
We are aware that our report dated January 24, 1994 on our
review of interim financial information of Conrail Inc. and
subsidiaries for the three-month period ended March 31, 1993
and included in the Company's quarterly report on Form 10-Q
for the quarter ended March 31, 1994 will be incorporated by
reference in the registration statements. Pursuant to
Rule 436(c) under the Securities Act of 1933, this report
should not be considered a part of the registration
statements prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
COOPERS & LYBRAND
COOPERS & LYBRAND
