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, 1995
-------------
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
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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 Conrail Inc. common stock outstanding (as of
July 31, 1995) 82,803,622
<PAGE>
CONRAIL INC.
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements
of Income - Quarters and six months
ended June 30, 1995 and 1994 3
Condensed Consolidated Balance
Sheets - June 30, 1995 and
December 31, 1994 4
Condensed Consolidated Statements
of Cash Flows - Six months ended
June 30, 1995 and 1994 5
Notes to Condensed Consolidated
Financial Statements 6
Report of Independent Accountants 8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote
of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
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 Six Months Ended
June 30, June 30,
-------------- ----------------
1995 1994 1995 1994
---- ---- ------ ------
<S> <C> <C> <C> <C>
Revenues $923 $951 $1,812 $1,798
Operating expenses
Way and structures 117 121 251 265
Equipment 187 209 388 419
Transportation 330 342 673 692
General and administrative 109 90 206 181
Early retirement program 84
---- ---- ------ ------
Total operating expenses 743 762 1,518 1,641
---- ---- ------ ------
Income from operations 180 189 294 157
Interest expense (50) (48) (98) (95)
Other income, net 35 25 60 51
---- ---- ------ ------
Income before income taxes 165 166 256 113
Income taxes 42 65 78 44
---- ---- ------ ------
Net income $123 $101 $ 178 $ 69
==== ==== ====== ======
Net income per common share
Primary $1.52 $1.24 $2.17 $.79
Fully diluted 1.37 1.12 1.98 .74
Dividends per common share $.375 $.325 $ .75 $.65
Weighted average number of shares
used in computing earnings per share
(thousands)
Primary 78,710 79,632 78,903 80,033
Fully diluted 88,569 89,547 88,765 89,962
Ratio of earnings to fixed charges 3.42x 3.84x 2.92x 1.94x
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
CONRAIL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
($ In Millions) June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 46 $ 43
Accounts receivable 619 646
Deferred tax assets 249 249
Material and supplies 174 164
Other current assets 36 23
------ ------
Total current assets 1,124 1,125
Property and equipment, net 6,660 6,498
Other assets 825 699
------ ------
Total assets $8,609 $8,322
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings 214 112
Current maturities of long-term debt 115 130
Accounts payable 109 119
Wages and employee benefits 175 169
Casualty reserves 100 103
Accrued and other current liabilities 537 568
------ ------
Total current liabilities 1,250 1,201
Long-term debt 2,068 1,940
Casualty reserves 212 212
Deferred income taxes 1,276 1,203
Special income tax obligation 476 513
Other liabilities 320 328
------ ------
Total liabilities 5,602 5,397
------ ------
Stockholders' equity
Series A ESOP convertible junior
preferred stock 283 283
Unearned ESOP compensation (238) (243)
Common stock 85 80
Additional paid-in capital 2,111 1,848
Employee benefits trust (263)
Retained earnings 1,167 1,056
------ ------
3,145 3,024
Treasury stock (138) (99)
------ ------
Total stockholders' equity 3,007 2,925
------ ------
Total liabilities and
stockholders' equity $8,609 $8,322
====== ======
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
CONRAIL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
($ In Millions)
Six Months Ended
June 30,
----------------
1995 1994
----- -----
<S> <C> <C>
Cash flows from operating activities $ 306 $ 223
----- -----
Cash flows from investing activities
Property and equipment acquisitions (224) (181)
Payments for capital lease buyouts (56)
Other (48) (20)
----- -----
Net cash used in investing activities (328) (201)
----- -----
Cash flows from financing activities
Repurchase of common stock (39) (60)
Net proceeds from short-term borrowings 102 105
Net proceeds from medium-term notes 10 10
Proceeds from long-term debt 55
Payment of capital lease and equipment obligations (33) (37)
Dividends paid on common stock (59) (51)
Dividends paid on preferred stock (16) (11)
Other 5 12
----- -----
Net cash provided by (used in) financing
activities 25 (32)
----- -----
Increase (decrease) in cash and cash equivalents 3 (10)
Cash and cash equivalents
Beginning of period 43 38
----- -----
End of period $ 46 $ 28
===== =====
</TABLE>
See accompanying notes.
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 June 30, 1995 and December 31, 1994, the
consolidated results of operations for the three and six-month
periods ending June 30, 1995 and 1994 and the consolidated cash
flows for the six-month periods ended June 30, 1995 and 1994. In
the opinion of management, these financial statements include all
adjustments, consisting of normal recurring adjustments,
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, 1994, presented in the
Company's Annual Report on Form 10-K.
2. As a result of a decrease in a state income tax rate enacted
during the second quarter of 1995, income tax expense for the
quarter and six months ended June 30, 1995 was reduced by $21
million representing the effects of adjusting deferred income
taxes and the special income tax obligation for the rate decrease
as required under SFAS 109, "Accounting for Income Taxes".
3. In June 1995, the Company completed the disposition of the
last of two major waste disposal facilities of Concord Resources,
Inc.("Concord"). The dispositions had no financial statement
impact as the Company's investment in Concord had been reserved
in 1993.
4. 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
is being paid from the Company's overfunded pension plan.
6
<PAGE>
5. In July 1994, the Board of Directors authorized a $100 million
common stock repurchase program. During the first six months of
1995, the Company acquired 723,910 shares for approximately $39
million under this program, and at June 30, 1995 approximately
$52 million remained available from the authorization. In April
1995, the Company's Board of Directors approved an additional
$250 million multi-year stock repurchase program.
6. On June 15, 1995, the Company issued approximately 4.7
million shares of its common stock to the Conrail Employee
Benefits Trust (the "Trust") in exchange for a promissory note of
$250 million at an interest rate of 6.9%. The Trust will be used
to fund certain employee benefits and other forms of compensation
over its fifteen-year term. The amount representing unearned
employee benefits is recorded as a deduction from stockholders'
equity and is reduced as benefits and compensation are paid
through the release of shares from the Trust. The shares owned by
the Trust are valued at the closing market price as ofthe end of each
reporting period, with the corresponding changes in the balance
of the Trust reflected in additional paid-in capital. Shares
held by the Trust are not considered outstanding for earnings per
share computations until released by the Trust, but do have
voting and dividend rights.
7. 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, 1994. Material
developments with respect to these and other matters are
discussed in Part II, Item I - 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
June 30, 1995 and the related condensed consolidated statements of
income for the three and six months ended June 30, 1995 and June 30,
1994 and the condensed consolidated statements of cash flows for the
six months ended June 30, 1995 and June 30, 1994. 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.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1994, and
the related consolidated statements of income, of stockholders' equity
and of cash flows for the year then ended (not presented herein), and
in our report dated January 23, 1995 we expressed an unqualified
opinion on those consolidated financial statements and included an
explanatory paragraph describing the Company's change in methods of
accounting for income taxes and postretirement benefits other than
pensions in 1993. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31,
1994, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, PA 19103
July 19, 1995
8
<PAGE>
CONRAIL INC.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Results of Operations
---------------------
Overview
--------
Net income for Conrail Inc. ("Conrail" or the "Company") was $123
million for the second quarter of 1995 compared with $101 million for
the second quarter of 1994. Net income for the second quarter of 1995
includes recognition of a $21 million reduction in income taxes related
to a decrease in a state income tax rate enacted during the quarter (see
Note 2 to the Condensed Consolidated Financial Statements). Without this
tax benefit, Conrail's net income for the second quarter of 1995 would
have been $102 million.
Net income for the first six months of 1995 was $178 million compared
with $69 million for the first six months of 1994. Results for the first
six months of 1995 include the aforementioned $21 million tax benefit.
Results for 1994 include a one-time charge of $51 million (net of tax
benefits of $33 million) relating to a non-union early retirement
program and related costs that the Company recorded in the first quarter
of 1994 (see Note 4 to the Condensed Consolidated Financial Statements).
Absent the tax benefit and the one-time charge relating to the early
retirement program, Conrail's net income would have been $157 million
and $120 million for the first six months of 1995 and 1994,
respectively.
Net income per common share for the second quarter of 1995 was $1.52 on
a primary basis and $1.37 on a fully diluted basis compared with $1.24
and $1.12 on the same bases for the second quarter of 1994. Without the
effects of the state tax rate reduction, net income per share would have
been $1.25 on a primary basis and $1.14 on a fully diluted basis. Net
income per common share for the six months of 1995 was $2.17 on a
primary basis and $1.98 on a fully diluted basis compared with $.79 and
$.74 on the respective bases for the same six-month period of 1994.
Excluding the one-time tax benefit for the first six months of 1995, net
income per common share would have been $1.91 on a primary basis and
$1.74 on a fully diluted basis. Without the one-time charge in the
first six months of 1994, net income per common share would have been
$1.43 on a primary basis and $1.31 on a fully diluted basis.
Traffic volume decreased for both the quarter and six months ended June
30, 1995 compared with the same periods in 1994, with the greatest
decline in the Intermodal Service Group. For the remainder of the year,
Conrail expects industrial production to be down slightly from the first
half of 1995. Accordingly, the Company has revised its 1995 projection
of line haul revenue from the 2.0% to 3.0% growth previously projected
to a decline of between 1.5% and 2.5% for the year over 1994. Despite the
lower revenue projections, the Company has retained its goal of achieving a
79.5% operating ratio (operating expenses as a percent of revenues) for
1995.
9
<PAGE>
The Company continues to evaluate certain portions of its route system
and other assets to determine the extent to which such assets
effectively and economically support its operations. Conrail intends to
dispose of those assets which do not economically support current or expected
operations. While it is not possible at this time to estimate the extent of
asset rationalization and other changes, it is possible that the results of
this evaluation could have an adverse effect on the Company's financial
statements.
Second Quarter 1995 compared with Second Quarter 1994
-----------------------------------------------------
Net income for the second quarter of 1995 was $123 million versus $101
million for the second quarter of 1994.
Operating revenues (primarily freight line haul revenues, but also
including switching, demurrage and incidental revenues) decreased $28
million, or 2.9%, from $951 million in the second quarter of 1994 to
$923 million in the second quarter of 1995. A 7.1% decline in traffic
volume in units (freight cars and intermodal trailers and containers)
resulted in a $64 million decrease in revenues, that was partially
offset by an improvement in average revenue per unit which increased
revenues by $30 million. The increase in average revenue per unit is
attributable to increases in average rates, $21 million, and a favorable
traffic mix, $9 million. Switching, demurrage and incidental revenues
increased $6 million.
Operating expenses decreased $19 million, or 2.5%, from $762 million in
the second quarter of 1994 to $743 million in the second quarter of
1995. The following table sets forth the operating expenses for the two
periods:
Second Quarter
--------------
Increase
($ In Millions) 1995 1994 (Decrease)
---- ---- --------
Compensation and benefits $322 $311 $ 11
Fuel 41 47 (6)
Material and supplies 43 51 (8)
Equipment rents 83 102 (19)
Depreciation and amortization 73 69 4
Casualties and insurance 37 39 (2)
Other 144 143 1
---- ---- ----
$743 $762 $(19)
==== ==== ====
Compensation and benefits as a percent of revenues was 34.8% in the
second quarter of 1995 as compared with 32.6% in the second quarter of
1994. The increase in labor costs of $11 million, or 3.5%, was caused
by approximately $4 million in severance costs associated a workforce
reduction of approximately 600 employees and higher fringe benefit costs.
10
<PAGE>
Equipment rents decreased $19 million, or 18.6%, principally as a result
of lower traffic volumes and improvements in equipment utilization.
Conrail's operating ratio was 80.5% for the second quarter of 1995,
compared with 80.1% for the second quarter of 1994.
Other income, net, increased $10 million, or 40.0%, primarily due to an
$8 million gain from a property sale completed during the quarter.
The Company's effective income tax rate for the second quarter of 1995
was 25.5% compared with 39.2% for the second quarter of 1994. The
decrease is primarily related to a $21 million reduction in income taxes
resulting from a decrease in a state income tax rate enacted during the
quarter (see Note 2 to the Condensed Consolidated Financial Statements).
First Six Months of 1995 compared with First Six Months of 1994
---------------------------------------------------------------
Net income for the first six months of 1995 was $178 million which
included the aforementioned tax benefit of $21 million recorded during
the second quarter (see Note 2 to the Condensed Consolidated Financial
Statements). Net income for the first six months of 1994 was $69 million
and included the one-time after-tax charge of $51 million related to the
early retirement program (see Note 4 to the Condensed Consolidated
Financial Statements).
Operating revenues increased $14 million, or less than 1%, to $1,812
million for the first six months of 1995 from $1,798 million for the
first six months of 1994. A 3.0% decrease in traffic volume resulted in
a $51 million decrease in revenues that was offset by an increase in
revenues resulting from a $47 million increase in average rates and a
favorable traffic mix of $4 million. Switching, demurrage and incidental
revenues increased $14 million.
Operating expenses decreased $123 million, or 7.5%, from $1,641
million in the first six months of 1994, which included the $84
million charge related to the non-union voluntary early retirement
program and related costs, to $1,518 million in the first six
months of 1995. The following table sets forth the operating
expenses for the two periods:
11
<PAGE>
First Six Months
-----------------
Increase
($ In Millions) 1995 1994 (Decrease)
------ ------ --------
Compensation and benefits $ 654 $ 652 $ 2
Fuel 87 94 (7)
Material and supplies 99 113 (14)
Equipment rents 168 193 (25)
Depreciation and amortization 146 139 7
Casualties and insurance 76 84 (8)
Other 288 282 6
Early retirement program 84 (84)
------ ------ -----
$1,518 $1,641 $(123)
====== ====== =====
Compensation and benefits as a percent of revenues was 36.0% in the
first six months of 1995 as compared with 36.2% in the first six months
of 1994.
The decrease of $14 million, or 12.4%, in material and supplies cost was
attributable to a lower level of repair and maintenance expenditures
caused primarily by declining traffic volumes.
Equipment rents decreased $25 million, or 13.0%, primarily as a result
of improved equipment utilization and lower traffic volumes.
Conrail's operating ratio was 83.8% for the first six months of 1995,
compared with 91.3% for the first six months of 1994. Without the $84
million one-time charge for the early retirement program, the operating
ratio for the first six months of 1994 would have been 86.6%.
Other income, net, increased $9 million, or 17.6%, primarily due to the
$8 million gain from a property sale completed during the second quarter
of 1995.
The Company's effective income tax rate for the first six months
of 1995 was 30.5% compared with 38.9% for the same period of 1994.
The decrease is primarily related to a $21 million reduction in
income taxes as a result of a decrease in a state income tax rate
which was enacted during the second quarter (see Note 2 to the
Condensed Consolidated Financial Statements).
Liquidity and Capital Resources
-------------------------------
The Company's cash and cash equivalents increased $3 million in
the first six months of 1995, from $43 million at December 31,
1994 to $46 million at June 30, 1995. Cash generated from
operations, primarily from its wholly-owned subsidiary,
Consolidated Rail Corporation ("CRC"), and borrowings are the
Company's principal sources of liquidity and are used primarily
for capital expenditures, debt service and dividends. In the
12
<PAGE>
first six months of 1995, operating activities provided cash of
$306 million and net proceeds from short-term borrowings and long-
term debt provided $167 million. The principal uses of cash were
for property and equipment acquisitions, $224 million; payments
for capital lease buyouts, $56 million; repurchases of common
stock, $39 million; payment of capital lease and equipment
obligations, $33 million; and cash dividends on common and
preferred stock, $75 million.
A working capital (current assets less current liabilities)
deficiency of $126 million existed at June 30, 1995 as compared
with a deficiency of $76 million at December 31, 1994. 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.
During the first six months of 1995, CRC issued $70 million of
commercial paper and repaid $18 million. At June 30, 1995, $264
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.
During June 1995, CRC borrowed $50 million under its uncollateralized
bank credit agreement at an interest rate of 6.2%, which was repaid in
July 1995.
In June 1995, CRC issued $110 million of 6.76% Pass Through
Certificates, Series 1995-A, due 2015, to finance the
acquisition of equipment. Of these Certificates, $55 million are direct
obligations of CRC secured by the acquired equipment. The remaining $55
million of Certificates were issued to finance equipment that CRC will
utilize under a capital lease, and while such certificates are not
direct obligations of, or guaranteed by CRC, the amounts payable by CRC
under the lease will be sufficient to pay principal and interest on the
Certificates.
In June 1995, CRC issued $30 million of 6.3% Medium-Term Notes
maturing in 1999.
In July 1994, the Board of Directors authorized a fourth common
stock repurchase program of up to $100 million. During the first
six months of 1995, the Company acquired 723,910 shares for $39
million, bringing the total acquired under this program through
June 30, 1995 to 899,410 shares at a cost of approximately $48
million. At June 30, 1995, approximately $52 million remained
from this program. In April 1995, the Board of Directors approved
an additional $250 million multi-year stock repurchase program.
In response to lower than expected traffic and revenues, the Company
reduced its planned capital expenditures for 1995 from $550 million to
$500 million.
On July 19, 1995, the Company's Board of Directors approved a
quarterly dividend of $.425 per common share, an increase of $.05
per share, commencing with the dividend payable September 15,
1995, to shareholders of record on August 31, 1995.
13
<PAGE>
PART II. OTHER INFORMATION
CONRAIL INC.
Item 1. Legal Proceedings.
-----------------
United States v. Consolidated Rail Corporation, et al. On May 25, 1995,
------------------------------------------------------
Consolidated Rail Corporation executed a Partial Consent Order in which
it agreed to pay $800,000 in civil penalties in order to resolve alleged
violations of the Clean Air Act and National Emission Standard for
Hazardous Air Pollutants in connection with the alleged release of
asbestos during the renovation of a grain storage facility.
This matter was last reported in Conrail's Report on Form 10-K for
the year ended December 31, 1994.
Beacon Park, Massachusetts On July 24, 1995, Consolidated Rail Corporation
--------------------------
agreed to plead guilty to charges that it violated the Clean Water Act in
connection with the permitting and operation of a waste water
discharge facility at Beacon Park, Massachusetts and the
unauthorized discharge of oil from the facility into the Charles
River. Consolidated Rail Corporation has agreed to pay $2.75 million
in fines ($250,000 of which are suspended) and to make a $250,000 donation
to a local environmental foundation. The majority of these amounts were
accrued prior to June 30, 1995. This matter was last reported in
Conrail's Report on Form 10-K for the year ended December 31,
1994.
14
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
(a) The Registrant held its Annual Meeting of
Shareholders on May 17, 1995.
(b) Proxies for the meeting were solicited pursuant to
Rule 14A; there was no solicitation in
opposition to management's nominees for directors as
listed in such Proxy Statement and all such nominees
were elected.
(c) Listed below is each matter voted on at the
Registrant's Annual Meeting as fully described in
the Registrant's Proxy Statement solicited pursuant
to Rule 14A. Following are the results of the
voting and the number of votes cast for each matter.
(i) The election of four directors in Class II
to serve until the Annual Meeting of
Shareholders in 1998 and until their sucessors
are elected and take office. All nominees were
elected by majority vote and the number of
votes cast for each follows (there were no
broker non-votes):
Common Preferred
---------- ---------
Kathleen Foley Feldstein
For 66,454,708 8,888,227
Withheld 320,726 933,131
---------- ---------
Total 66,775,434 9,821,358
========== =========
David B. Lewis
For 65,802,326 8,920,795
Withheld 973,108 900,563
---------- ---------
Total 66,775,434 9,821,358
========== =========
15
<PAGE>
John C. Marous
For 66,444,518 8,815,314
Withheld 330,916 1,006,044
---------- ---------
Total 66,775,434 9,821,358
========== =========
Raymond T. Schuler
For 66,455,152 8,888,569
Withheld 320,282 932,789
---------- ---------
Total 66,775,434 9,821,358
========== =========
(ii) Approval of the Conrail Senior Executive Performance
Plan ("the Plan"). The Plan was passed by majority
vote and the number of votes cast follows:
Common Preferred
---------- ---------
For 61,044,718 5,619,128
Against 4,732,116 3,614,562
Abstentions 998,600 587,668
---------- ---------
Total 66,775,434 9,821,358
========== =========
(iii) Ratification of the appointment of Price Waterhouse
LLP as the independent accountants for the year 1995.
The appointment of Price Waterhouse LLP was ratified
by majority vote and the number of votes cast follows
(there were no broker non-votes):
Common Preferred
---------- ---------
For 66,505,232 9,000,376
Against 75,734 475,989
Abstentions 194,468 344,993
---------- ---------
Total 66,775,434 9,821,358
========== =========
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
11 Statement of earnings per share
computations.
12 Computations of the ratio of earnings to
fixed charges.
15 Letter re unaudited interim financial
information from Price Waterhouse LLP.
27 Financial data schedule.
(b) Reports on Form 8-K
None
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONRAIL INC.
Registrant
/S/ Bruce B. Wilson
-------------------------------
Bruce B. Wilson
Senior Vice President - Law
/S/ H. W. Brown
-------------------------------
H. W. Brown
Senior Vice President -
Finance and Administration
(Principal Financial Officer)
Date: August 4, 1995
18
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No.
-------
11 Statement of earnings per share
computations.
12 Computations of the ratio of earnings to
fixed charges.
15 Letter re unaudited interim financial
information from Price Waterhouse LLP.
27 Financial data schedule.
19
<PAGE>
<TABLE>
Exhibit 11
----------
CONRAIL INC.
------------
EARNINGS PER SHARE COMPUTATIONS
-------------------------------
($ In Millions Except Per Share)
<CAPTION>
Quarters Ended Six Months Ended
June 30, June 30,
----------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income
----------
Primary
Net income $123 $101 $178 $69
Dividends declared on Series A ESOP
convertible junior preferred stock
(ESOP Stock), net of tax benefit (4) (3) (7) (6)
---- ---- ---- ---
$119 $ 98 $171 $63
==== ==== ==== ===
Fully diluted
Net income 123 101 178 69
Nondiscretionary adjustment (1) (1) (2) (2) (4)
---- ---- ---- ---
$122 $ 99 $176 $65
==== ==== ==== ===
Weighted average number of shares (2)
---------------------------------
Primary
Weighted average number of common
shares outstanding 78,258,484 79,005,858 78,427,633 79,306,171
Effect of shares issuable under
employee stock compensation
plans 451,532 625,930 475,729 726,475
---------- ---------- ---------- ----------
78,710,016 79,631,788 78,903,362 80,032,646
========== ========== ========== ==========
Fully diluted
Weighted average number of common
shares outstanding 78,258,484 79,005,858 78,427,633 79,306,171
Series A ESOP convertible
junior preferred stock 9,806,989 9,915,237 9,814,132 9,929,331
Effect of shares issuable under
employee stock compensation
plans 503,103 625,930 522,785 726,475
---------- ---------- ---------- ----------
88,568,576 89,547,025 88,764,550 89,961,977
========== ========== ========== ==========
Net income per common share
Primary $1.52 $1.24 $2.17 $.79
Fully diluted 1.37 1.12 1.98 .74
</TABLE>
Page 1 of 2
<PAGE>
Exhibit 11
----------
CONRAIL INC.
------------
EARNINGS PER SHARE COMPUTATIONS
-------------------------------
Notes: 1. Represents the increase, net of income tax benefits, in
ESOP-related expenses assuming conversion of all ESOP
Stock to common stock.
2. Shares held by the Employee Benefits Trust (the
"Trust") are not considered outstanding for earnings per
share computations until issued by the Trust.
Page 2 of 2
<PAGE>
Exhibit 12
----------
<TABLE>
CONRAIL INC.
------------
COMPUTATIONS OF THE RATIO OF EARNINGS TO FIXED CHARGES
------------------------------------------------------
<CAPTION>
($ In Millions)
Quarters Ended Six Months Ended
June 30, June 30,
-------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
Earnings
--------
<S> <C> <C> <C> <C>
Pre-tax income $165 $166 $256 $113
Add:
Interest expense 50 48 98 95
Rental expense interest factor 16 9 30 18
Less equity in undistributed
earnings of 20%-50% owned companies (5) (4) (10) (7)
---- ---- ---- ----
Earnings available for fixed charges $226 $219 $374 $219
==== ==== ==== ====
Fixed charges
-------------
Interest expense 50 48 98 95
Rental expense interest factor 16 9 30 18
---- ---- ---- ----
Fixed charges $ 66 $ 57 $128 $113
==== ==== ==== ====
Ratio of earnings to fixed charges 3.42x 3.84x 2.92x 1.94x
<FN>
For purposes of computing the ratio of earning to fixed charges,
earnings represent income before income taxes plus fixed charges, less
equity in undistributed earnings of 20% to 50% owned companies. Fixed
charges represent interest expense together with any interest
capitalized and a portion of rent under long-term operating leases
representative of an interest factor.
</FN>
</TABLE>
<PAGE>
Exhibit 15
----------
August 4, 1995
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Dear Sirs:
We are aware that Conrail Inc. has incorporated by
reference our report dated July 19, 1995 (issued pursuant
to the provisions of Statement of Auditing Standards
No. 71) in the following documents:
* Registration Statement on Form S-8 No. 33-19155
* Registration Statement on Form S-8 No. 33-44140
* Registration Statement on Form S-8 No. 33-57717
* Registration Statement on Form S-8 No. 33-60445
* Propectus constituting part of Registration Statement on Form S-3
No. 33-64670.
We are also aware of our responsibilities under the
Securities Act of 1933 and that pursuant to Rule 436(c) our
report dated July 19, 1995 shall not be considered part of a
registration statement prepared or certified by us or a
report prepared or certified by us within the meaning of
Sections 7 and 11 of the Securities Act of 1933.
Yours very truly,
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, PA 19103
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
----------
CONRAIL INC.
FINANCIAL DATA SCHEDULE
($ In Millions Except Per Share)
<CAPTION>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM FORM 10-Q AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
<S> <C>
<MULTIPLIER> 1,000,000
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<PERIOD-TYPE> 6-MOS
<CASH> 46
<SECURITIES> 0
<RECEIVABLES> 619
<ALLOWANCES> 0
<INVENTORY> 174
<CURRENT-ASSETS> 1,124
<PP&E> 6,660
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,609
<CURRENT-LIABILITIES> 1,250
<BONDS> 2,068
0
283
<COMMON> 85
<OTHER-SE> 2,639
<TOTAL-LIABILITY-AND-EQUITY> 8,609
<SALES> 0
<TOTAL-REVENUES> 1,812
<CGS> 0
<TOTAL-COSTS> 1,518
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 256
<INCOME-TAX> 78
<INCOME-CONTINUING> 178
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 1.98
<PAGE>
</TABLE>
