SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
AMENDMENT NO. 17
to
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
------------------------------------
CONRAIL INC.
(Name of Subject Company)
------------------------------------
CONRAIL INC.
(Name of Person(s) Filing Statement)
------------------------------------
Common Stock, par value $1.00 per share
(including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
208368 10 0
(CUSIP Number of Class of Securities)
------------------------------------
Series A ESOP Convertible Junior Preferred Stock, without par value
(including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
------------------------------------
James D. McGeehan
Corporate Secretary
Conrail Inc.
2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania 19101
(215) 209-4000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Robert A. Kindler, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
<PAGE>
INTRODUCTION
Conrail Inc. ("Conrail") hereby amends and supplements its
Solicitation/Recommendation Statement on Schedule 14D-9, originally
filed on November 6, 1996, and amended on November 7, 1996,
November 8, 1996, November 13, 1996, November 18, 1996, November 20,
1996, November 21, 1996, November 26, 1996, December 3, 1996, December
6, 1996, December 12, 1996, December 20, 1996, January 3, 1997,
January 10, 1997, January 14, 1997, January 16, 1997 and January 21,
1997 (as amended, the "Norfolk Schedule 14D-9"), with respect to an
offer by Atlantic Acquisition Corporation, a Pennsylvania corporation
("Atlantic") and a wholly owned subsidiary of Norfolk Southern
Corporation, a Virginia corporation ("Norfolk"), to purchase all the
issued and outstanding Shares of Conrail. Capitalized terms not
defined herein have the meanings assigned thereto in the Norfolk
Schedule 14D-9.
Item 2. Tender Offer of the Bidder.
Item 2 of the Norfolk Schedule 14D-9 is hereby amended and
supplemented by adding the following text to the end thereof:
On January 22, 1997, Norfolk and Atlantic amended the Norfolk
Offer. Atlantic is now offering to purchase up to 8.2 million Shares
(approximately 9.9% of the outstanding Shares) at $115 per Share, net
to the seller in cash and without interest, upon the terms and
conditions set forth in the amended Norfolk Offer to Purchase.
According to the amended Norfolk Offer to Purchase, the amended
Norfolk Offer is no longer subject to any conditions. Except as set
forth above, the amended Norfolk Offer remains unchanged. Certain
additional terms of the amended Norfolk Offer are described in the
original Norfolk Schedule 14D-9 filed with the Commission on
November 6, 1996 (the "Original Norfolk Schedule 14D-9").
The amended Norfolk Offer will expire at midnight on February 4,
1997.
Item 4. The Solicitation or Recommendation.
Item 4 of the Norfolk Schedule 14D-9 is hereby amended and
supplemented by adding the following text thereto:
THE CONRAIL BOARD HAS DETERMINED THAT A MERGER OF EQUALS WITH CSX
IS IN THE BEST INTERESTS OF CONRAIL AND THAT
<PAGE>
A BUSINESS COMBINATION WITH NORFOLK IS NOT IN THE BEST INTERESTS OF
CONRAIL.
At a meeting held on January 27, 1997, the Conrail Board,
including the disinterested members of the Conrail Board, unanimously
determined to express no opinion with respect to the amended Norfolk
Offer because it believes that Conrail shareholders who desire to
receive cash now for a portion of their Shares should feel free to
tender their Shares pursuant to the amended Norfolk Offer. On the
other hand, Conrail shareholders who desire to participate in the
long-term growth of the railroad industry and the substantial upside
potential of the CSX Merger should not tender their Shares pursuant to
the amended Norfolk Offer and should support the CSX Merger.
Based on its earlier determination that the terms of the CSX
Merger Agreement are in the best interests of Conrail (taking into
account all the Conrail constituencies affected by the transactions
proposed therein, the short-term and long-term interests of Conrail,
the resources, intent and conduct (past, stated and potential) of any
person seeking to acquire control of Conrail, and all other pertinent
factors), the Conrail Board continues to recommend that, whether or
not they tender their Shares pursuant to the amended Norfolk Offer,
the shareholders of Conrail who desire to receive cash for a portion
of their Shares should tender their remaining Shares pursuant to the
Second CSX Offer.
The Conrail Board has been advised that the directors and
executive officers of Conrail will not tender their Shares pursuant to
the amended Norfolk Offer.
Copies of a press release announcing the Board's determinations,
and a letter to the shareholders of Conrail communicating the Board's
recommendations are filed as Exhibits (a)(24) and (a)(25) hereto,
respectively, are incorporated herein by reference, and the foregoing
is qualified by reference to such Exhibits.
Item 8. Additional Information to be Furnished.
Item 8 of the Norfolk Schedule 14D-9 is hereby amended and
supplemented by adding the following text thereto:
<PAGE>
On January 22, 1997, CSX extended the Second CSX Offer until
5:00 p.m., Eastern Standard Time, on February 14, 1997.
On January 22, 1997, Conrail issued a press release in which it
reported its fourth quarter earnings and announced that for the third
consecutive quarter Conrail produced record results in net income,
earnings per share and operating ratio. A copy of the text of the
press release is attached as Exhibit (a)(26) hereto and is
incorporated herein by reference and the foregoing summary is
qualified in its entirety by reference to such Exhibit.
On January 23, 1997, Conrail issued a press release announcing
that the Conrail shareholders voted against the opt out proposal at
the Pennsylvania Special Meeting. A copy of the text of the press
release is attached as Exhibit (a)(27) hereto and is incorporated
herein by reference and the foregoing summary is qualified in its
entirety by reference to such Exhibit.
Item 9. Materials to be filed as Exhibits.
Item 9 of the Norfolk Schedule 14D-9 is hereby amended and
supplemented by adding the following text thereto:
(a)(24) Text of press release issued by Conrail dated
January 28, 1997.
(a)(25) Letter to shareholders of Conrail dated January 28,
1997.
(a)(26) Text of press release issued by Conrail dated
January 22, 1997.
(a)(27) Text of press release issued by Conrail dated
January 23, 1997.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
CONRAIL INC.
By /s/ Timothy T. O'Toole
----------------------
Name: Timothy T. O'Toole
Title: Senior Vice President--Finance
Dated as of January 28, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
*(a)(1) Text of press release issued by Conrail
dated October 23, 1996 (incorporated by
reference to Exhibit (a)(9) to the
Solicitation/Recommendation Statement on
Schedule 14D-9 of Conrail Inc. dated
October 16, 1996, as amended (the "CSX
14D-9"))....................................
*(a)(2) Text of press release issued by Norfolk,
dated October 23, 1996 (incorporated by
reference to Exhibit (a)(8) to the CSX
14D-9)......................................
*(a)(3) Text of press release issued by Conrail
and CSX dated November 6,
1996........................................
*(a)(4) Letter to shareholders of Conrail dated
November 6, 1996............................
*(a)(5) Text of press release issued by Conrail,
dated November 7, 1996 (incorporated by
reference to Exhibit (a)(16) to the CSX
14D-9)......................................
*(a)(6) Text of press release issued by Conrail,
dated November 7, 1996 (incorporated by
reference to Exhibit (a)(17) to the CSX
14D-9)......................................
*(a)(7) Text of press release issued by Conrail,
dated November 8, 1996 (incorporated by
reference to Exhibit (a)(18) to the CSX
14D-9)......................................
*(a)(8) Text of press release issued by Conrail
and CSX, dated November 13, 1996
(incorporated by reference to Exhibit
(a)(19) to the CSX 14D-9)...................
*(a)(9) Text of press release issued by Conrail
and CSX dated November 19, 1996
(incorporated by reference to
Exhibit (a)(20) to the CSX 14D-9)...........
*(a)(10) Text of press release issued by Conrail
and CSX dated November 20, 1996
(incorporated by reference to Exhibit
(a)(21) to the CSX 14D-9)...................
<PAGE>
Exhibit Description Page No.
- ------- ----------- --------
*(a)(11) Text of press release issued by CSX
dated November 21, 1996 (incorporated by
reference to Exhibit (a)(22) to the CSX
14D-9)......................................
*(a)(12) Text of press release issued by Conrail,
dated November 25,
1996........................................
*(a)(13) Text of press release issued by CSX,
dated November 26, 1996 (incorporated by
reference to Exhibit (a)(23) to the CSX
14D-9)......................................
*(a)(14) Text of press release issued by Conrail
and CSX dated December 5,
1996........................................
*(a)(15) Text of press release issued by Conrail
and CSX dated December 10, 1996
(incorporated by reference to
Exhibit (a)(8) to the
Solicitation/Recommendation Statement on
Schedule 14D-9 of Conrail dated
December 6, 1996, as amended, relating
to the second tender offer by CSX (the
"Second CSX 14D-9"))........................
*(a)(16) Text of press release issued by CSX and
Conrail dated December 19, 1996
(incorporated by reference to Exhibit
(a)(12) to the Second CSX 14D-9)............
*(a)(17) Text of press release issued by Conrail
dated December 20, 1996 (incorporated by
reference to Exhibit (a)(13) to the
Second CSX 14D-9)...........................
*(a)(18) Text of joint advertisement published by
Conrail and CSX on December 10, 1996
(incorporated by reference to Exhibit
(a)(14) to the Second CSX 14D-9)............
*(a)(19) Text of joint advertisement published by
Conrail and CSX on December 12, 1996
(incorporated by reference to Exhibit
(a)(15) to the Second CSX 14D-9)............
*(a)(20) Text of joint press release issued by
Conrail and CSX on January 9, 1997
(incorporated by reference to
Exhibit (a)(16) to the Second CSX 14D-9)....
*(a)(21) Text of joint press release issued by
Conrail and CSX on January 13, 1997
(incorporated by reference to
Exhibit (a)(17) to the Second CSX 14D-9)....
<PAGE>
Exhibit Description Page No.
- ------- ----------- --------
*(a)(22) Text of joint press release issued by
Conrail and CSX dated January 15, 1997
(incorporated by reference to
Exhibit (a)(18) to the Second CSX
14D-9)......................................
*(a)(23) Text of press release issued by Conrail
dated January 17, 1997 (incorporated by
reference to Exhibit (a)(19) to the
Second CSX
14D-9)......................................
(a)(24) Text of press release issued by Conrail
dated January 28, 1997......................
**(a)(25) Letter to shareholders of Conrail dated
January 28, 1997............................
(a)(26) Text of press release issued by Conrail
dated January 22, 1997......................
(a)(27) Text of press release issued by Conrail
dated January 23, 1997......................
(b) Not applicable..........................
*(c)(1) Pages 4-5 and 9-14 of Conrail's Proxy
Statement dated April 3, 1996
(incorporated by reference to Exhibit
(c)(7) to the CSX 14D-9)....................
*(c)(2) Employment Agreement of Mr. David M.
LeVan dated as of October 14, 1996
(incorporated by reference to Exhibit
(c)(5) to the CSX 14D-9)....................
*(c)(3) Change of Control Agreement of Mr. David
M. LeVan dated as of October 14, 1996
(incorporated by reference to Exhibit
(c)(6) to the CSX 14D-9)....................
*(c)(4) First Amended Complaint in Norfolk
Southern et al. v. Conrail Inc., et al.,
No. 96-CV- 7167, filed on October 28,
1996 in the United States District Court
for the Eastern District of Pennsylvania
(incorporated by reference to Exhibit
(c)(9) to the CSX 14D-9)....................
<PAGE>
Exhibit Description Page No.
- ------- ----------- --------
*(c)(5) Second Amended Complaint in Norfolk
Southern et. al. v. Conrail Inc., et
al., No. 96-CV-7167, filed on
November 15, 1996 in the United States
District Court for the Eastern District
of Pennsylvania (incorporated by
reference to Exhibit (c)(12) to the
CSX 14D-9)..................................
*(c)(6) Text of opinion of Judge Donald
VanArtsdalen of the United States
District Court for the Eastern District
of Pennsylvania as delivered from the
bench on November 20, 1996..................
*(c)(7) Conrail's Definitive Proxy Statement,
dated November 25, 1996.....................
*(c)(8) Answer and Defenses of Conrail, CSX and
the individual defendants to Second
Amended Complaint, and Counterclaim of
Conrail and CSX in Norfolk Southern et
al. v. Conrail Inc. et al., filed on
December 5, 1996, in the United States
District Court for the Eastern District
of Pennsylvania.............................
*(c)(9) Second Amendment to Agreement and Plan
of Merger dated as of December 18, 1996,
(incorporated by reference to
Exhibit (c)(10) to the Second CSX
14D-9)......................................
*(c)(10) Form of Amended and Restated Voting
Trust Agreement (incorporated by
reference to Exhibit (c)(11) to the
Second CSX 14D-9)...........................
*(c)(11) Text of opinion of Judge Donald
VanArtsdalen of the United States
District Court for the Eastern District
of Pennsylvania as delivered from the
bench on January 9, 1997 (incorporated
by reference to Exhibit (c)(12) to the
Second CSX 14D-9)...........................
*(c)(12) Text of STB Decision No. 5 of STB
Finance Docket No. 33220 dated
January 8, 1997 (incorporated by
reference to Exhibit (c)(13) to the
Second CSX 14D-9)...........................
- ---------------------
* Previously filed
** Included in materials delivered to shareholders of
Conrail.
EXHIBIT (a)(24)
FOR IMMEDIATE RELEASE
CONTACTS:
Conrail Inc. Abernathy MacGregor Group
Craig MacQueen Joele Frank/Matthew Sherman
(215) 209-4594 (212) 371-5999
CONRAIL BOARD FULLY COMMITTED TO CSX MERGER:
TAKES NO POSITION WITH RESPECT TO
AMENDED NORFOLK SOUTHERN OFFER
Phildelphia, PA (January 28, 1997) -- Conrail Inc. (NYSE:
CRR) announced today that while the Conrail Board of Directors remains
fully committed to the CSX Conrail merger because it firmly believes
that such a combination will create the world's leading freight
transportation and logistics company, and in doing so will best serve
the interests of all of Conrail's constituencies, the Board is not
taking a position with respect to Norfolk Southern's amended offer for
approximately 9.9% of the Conrail shares at $115 per share.
The Conrail Board believes that Conrail shareholders who
wish to receive cash now for a portion of their shares should feel
free to tender their shares into the amended Norfolk Southern offer.
On the other hand, shareholders who desire to continue to participate
in the future growth of the railroad industry and in the substantial
upside potential of the CSX-Conrail transaction should retain their
shares and not tender into the amended Norfolk Southern offer.
The text of the January 28, 1996 letter to Conrail
shareholder follows:
[Conrail logo]
January 28, 1997
Dear Shareholders:
Last week Norfolk Southern Corporation amended its tender
offer and is now offering to purchase 8.2 million
<PAGE>
Conrail shares (or approximately 9.9% of the outstanding shares) at
$115 per share, as more fully described in the enclosed amendment to
the Schedule 14D-9 filed by Conrail with the Securities and Exchange
Commission. This action was Norfolk's last-minute enticement to cause
Conrail shareholders to vote against the opt out proposal at the
January 17 Conrail shareholders' meeting.
The Conrail Board remains fully committed to the CSX/Conrail
merger because it firmly believes that such a combination will create
the world's leading freight transportation and logistics company, and
in doing so, will best serve the interests of all of Conrail's
constituencies. In addition, the Conrail Board continues to believe
that a sale to Norfolk is not in the best interests of Conrail.
The Conrail Board is not taking a position with respect to
the amended Norfolk offer because it believes that Conrail
shareholders who desire to receive cash now for a portion of their
shares should feel free to tender their shares into the amended
Norfolk offer. On the other hand, Conrail shareholders who desire to
continue to participate in the long term growth of the railroad
industry and the substantial upside potential of the CSX/Conrail
merger, in what is expected to be a tax-free transaction, should
retain their Conrail shares and not tender into the amended Norfolk
offer. You should consider carefully the information contained in the
supplement to the offer to purchase relating to the amended Norfolk
offer that you have received, and make your own decision whether or
not to tender your shares into the amended Norfolk offer. We have been
advised by Conrail's directors and executive officers that they will
not tender their shares into the amended Norfolk offer.
Whether or not you decide to tender, the Conrail Board
recommends that, following consummation of the amended Norfolk offer,
Conrail shareholders who desire to receive cash for a portion of their
remaining shares should tender into the second CSX tender offer.
We believe that CSX is the superior strategic partner with
whom Conrail can realize the extraordinary
<PAGE>
value and significant upside potential in the railroad industry for
its shareholders and all its other constituencies.
Sincerely,
/s/ David M. LeVan
------------------
DAVID M. LEVAN
Chairman, President and
Chief Executive Officer
Conrail, with corporate headquarters in Phildelphia, PA,
operates an 11,000-mile rail freight network in 12 northeastern and
midwestern states, the District of Columbia, and the Province of
Quebec. Conrail's home page on the Internet can be reached at
http://www.CONRAIL.com.
<PAGE>
EXHIBIT (a)(25)
[Conrail logo]
January 28, 1997
Dear Shareholders:
Last week Norfolk Southern Corporation amended its tender
offer and is now offering to purchase 8.2 million Conrail shares (or
approximately 9.9% of the outstanding shares) at $115 per share, as
more fully described in the enclosed amendment to the Schedule 14D-9
filed by Conrail with the Securities and Exchange Commission. This
action was Norfolk's last-minute enticement to cause Conrail
shareholders to vote against the opt out proposal at the January 17
Conrail shareholders' meeting.
The Conrail Board remains fully committed to the CSX/Conrail
merger because it firmly believes that such a combination will create
the world's leading freight transportation and logistics company, and
in doing so, will best serve the interests of all of Conrail's
constituencies. In addition, the Conrail Board continues to believe
that a sale to Norfolk is not in the best interests of Conrail.
The Conrail Board is not taking a position with respect to
the amended Norfolk offer because it believes that Conrail
shareholders who desire to receive cash now for a portion of their
shares should feel free to tender their shares into the amended
Norfolk offer. On the other hand, Conrail shareholders who desire to
continue to participate in the long term growth of the railroad
industry and the substantial upside potential of the CSX/Conrail
merger, in what is expected to be a tax-free transaction, should
retain their Conrail shares and not tender into the amended Norfolk
offer. You should consider carefully the information contained in the
supplement to the offer to purchase relating to the amended Norfolk
offer that you have received, and make your own decision whether or
not to tender your shares into the amended Norfolk offer. We have been
advised by Conrail's directors and executive officers that they will
not tender their shares into the amended Norfolk offer.
Whether or not you decide to tender, the Conrail Board
recommends that, following consummation of the amended Norfolk offer,
Conrail shareholders who desire to receive cash for a portion of their
remaining shares should tender into the second CSX tender offer.
<PAGE>
We believe that CSX is the superior strategic partner with
whom Conrail can realize the extraordinary value and significant
upside potential in the railroad industry for its shareholders and all
its other constituencies.
Sincerely,
/s/ David M. LeVan
------------------
DAVID M. LEVAN
Chairman, President and
Chief Executive Officer
<PAGE>
Conrail Reports $147 Million Net Income For Fourth Quarter
PHILADELPHIA, Jan. 22, 1997 -- Conrail
(NYSE: CRR) today reported net income of $147 million ($1.86 and
$1.70 per share, primary and fully diluted basis, respectively)
for the fourth quarter of 1996, compared with a loss of
$30 million ($.43 per share, primary and fully diluted basis)
for the fourth quarter of 1995. For the full year 1996,
net income was $342 million ($4.25 and $3.89 per share,
primary and fully diluted basis, respectively), compared
with net income of $264 million ($3.19 and $2.94 per share,
primary and fully diluted basis, respectively) for 1995.
Excluding unusual items in 1996 and 1995, Conrail
would have reported fourth quarter 1996 net income of
$157 million ($1.99 and $1.82 per share, primary and fully
diluted, respectively), full year 1996 net income of
$435 million ($5.45 and $4.96 per share, primary and fully
diluted, respectively), fourth quarter 1995 net income of
$146 million ($1.82 and $1.65 per share, primary and fully
diluted, respectively), and full year 1995 net income of
$419 million ($5.16 and $4.69 per share, primary and fully
diluted, respectively). The unusual items were: merger-
related costs of $16 million in the fourth quarter of 1996
($10 million after income tax effect), a one-time charge in
the second quarter of 1996 of $135 million ($83 million
after income tax effect) for non-union voluntary employee
early retirement and separation programs and related costs,
a special charge in the fourth quarter of 1995 of
$285 million which reduced net income by $176 million (after tax
benefits of $109 million) for the disposition of
underutilized rail lines and other operating assets, and
the favorable impact on deferred income taxes ($21 million)
from a reduction of a state income tax rate in the second
quarter of 1995.
Revenue for the fourth quarter of 1996 totaled
$943 million compared with fourth quarter revenue of
$951 million. Full year 1996 revenue was $3.714 billion, versus
$3.686 billion in 1995.
Excluding unusual items, the fourth quarter
operating ratio for 1996 was 72.5 percent compared with
74.9 percent for the same period of 1995. The full year
operating ratios, excluding unusual items, were
79.7 percent for 1996 and 79.9 percent for 1995.
<PAGE>
For the fourth quarter, expenses decreased in every
major category compared with the fourth quarter of 1995 except
fuel, which increased 30 percent primarily due to higher prices.
Major improvements were reported in compensation and benefits
(down 8.2 percent), materials and supplies (down 6.1 percent),
and casualties and insurance (down 21.2 percent).
"Though we began the year with one of the harshest
winters on record, we finished 1996 on a very strong note," said
David M. LeVan, Conrail's Chairman, President and Chief Executive
Officer. "This is the third consecutive quarter that we produced
record results in net income, earnings per share and operating
ratio. More importantly, despite the potential for distractions
resulting from our proposed merger with CSX, our people clearly
focused on controlling costs, improving safety, and maintaining
high levels of service to our customers."
Conrail reported that its safety program continued to
make major strides in reducing the number of lost time injuries.
For the fourth quarter, lost time injuries declined by 36 percent
compared with the same period of 1995. In addition, lost time
injuries for the full year showed a 21 percent improvement over
1995.
"The dramatic reduction in lost time injuries is
testimony to the fact that safety is, and will continue to be,
our number one priority," said LeVan.
Fourth quarter 1996 traffic in units (freight cars and
intermodal shipments) increased 4.7 percent. Volume increased
15.2 percent for the Intermodal Service Group and was unchanged
for the Unit Train Service Group. Traffic decreased 1.0 percent
for the Core Service Group and 6.6 percent for the Automotive
Service Group. Within the Core Service Group, Petrochemicals
increased 1.2 percent and Forest & Manufactured Products
increased 1.1 percent. Metals and Food & Agriculture Products
decreased 3.0 percent and 3.7 percent, respectively.
For the full year, traffic increased 2.1 percent in
1996. Intermodal increased 7.6 percent and Unit Train was
unchanged. Core traffic declined 1.6 percent and Automotive
traffic declined 1.7 percent. Within the Core Service Group,
Metals increased 4.0 percent, Petrochemicals decreased 2.5
percent, Food & Agriculture Products decreased 2.8 percent, and
Forest & Manufactured Products were down 5.3 percent.
Looking ahead, LeVan reiterated that the company's
commitment to the strategic merger of equals with CSX was firmly
intact, and that the company's areas of focus remain unchanged.
"The proposed merger with CSX is clearly in the best
interests of all Conrail constituents," said LeVan. "As we work
to complete this merger, we will not lose sight of the areas that
have been the hallmark of our success: safety, customer service,
cost control and employee development."
Conrail, with corporate headquarters in Philadelphia,
operates 11,000-mile rail freight network in 12 Northeaster and
Midwestern states, the District of Columbia, and the Province of
Quebec.
Contact: Rudy Husband of Conrail at (215) 209- 4594.
Conrail news releases are archived at its site on the World Wide
Web: http://www.conrail.com.
<PAGE>
<TABLE>
CONRAIL INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Millions Except Per Share Data)
<CAPTION>
Quarters Ended Years Ended
December 31, December 31,
------------------- -------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
==================================================================================================
Revenues $943 $951 $3,714 $3,686
- --------------------------------------------------------------------------------------------------
Operating expenses
Before one-time charges 700 712 2,978 2,945
Voluntary separation programs 135
Asset disposition charge 285 285
---- ---- ------ ------
- --------------------------------------------------------------------------------------------------
Income (loss) from operations 243 (46) 601 456
- --------------------------------------------------------------------------------------------------
Interest expense (45) (47) (182) (194)
- --------------------------------------------------------------------------------------------------
Other income, net 29 41 112 130
---- ---- ----- -----
- --------------------------------------------------------------------------------------------------
Income (loss) before income taxes 227 (52) 531 392
- --------------------------------------------------------------------------------------------------
Income taxes (benefit) 80 (22) 189 128
---- ---- ------ -----
- --------------------------------------------------------------------------------------------------
Net income (loss) $ 147 $ (30) $342 $264
---- ----- ---- ----
- --------------------------------------------------------------------------------------------------
Net income (loss) per common share
- --------------------------------------------------------------------------------------------------
Primary $1.86 $(.43) $4.25 $3.19
- --------------------------------------------------------------------------------------------------
Fully diluted 1.70 (.43) 3.89 2.94
==================================================================================================
Notes:
1. Merger-related costs of $16 million ($10 million after taxes) are included in
the fourth quarter 1996 operating expenses. Without these costs, net income
for the quarter would have been $157 million ($1.99 and $1.82 per share,
primary and fully diluted, respectively). During the second quarter of 1996,
the Company recorded a one-time charge of $135 million (which reduced net
income by $83 million after tax benefits of $52 million) for non-union employee
voluntary early retirement and separation programs and related costs. Without
this charge and the merger-related costs, net income for the year ended
December 31, 1996 would have been $435 million ($5.45 and $4.96 per share,
primary and fully diluted, respectively).
2. During the fourth quarter of 1995, the Company recorded a special charge of
$285 million which reduced net income by $176 million (after tax benefits of
$109 million). The special charge represented the expected loss on the
disposition of the underutilized rail lines and other operating assets.
Without this charge, net income for the fourth quarter of 1995 would have been
$146 million ($1.82 and $1.65 per share, primary and fully diluted,
respectively). Also, in 1995, as a result of a decrease in a state income tax
rate enacted during the second quarter of 1995, income tax expense included a
reduction of $21 million representing the effects of adjusting deferred income
taxes for the rate decrease as required under SFAS 109, "Accounting for Income
Taxes". Without these items, net income for 1995 would have been $419 million
($5.16 and $4.69 per share, primary and fully diluted, respectively).
</TABLE>
EXHIBIT (a)(27)
FOR IMMEDIATE RELEASE
CONTACTS:
Conrail Inc. Abernathy MacGregor Group
Craig MacQueen Joele Frank/Matthew Sherman
(215) 209-4594 (212) 371-5999
CONRAIL ANNOUNCES RESULTS OF SHAREHOLDERS VOTE;
CONRAIL BOARD FULLY COMMITTED TO CSX MERGER
Phildelphia, PA (January 23, 1997) -- Conrail Inc. (NYSE:
CRR) announced today that its shareholders had voted against the
proposal to opt out of a Pennsylvania statute at its January 17
special meeting. The date for a new special meeting has not yet been
determined.
David M. LeVan, chairman, president and chief executive
officer, said "The outcome of the shareholder meeting was not
unexpected given Norfolk Southern's last-minute enticement to
purchase 9.9% of the Conrail shares. Norfolk knew that our
shareholders would support the CSX transaction, and made this offer
solely to undermine this vote. The vote has no implications as to how
our shareholders will ultimately decide on the CSX merger.
"The Conrail Board of Directors remains fully committed to
the CSX-Conrail merger and will not approve a transaction with Norfolk
Southern."
The results of the shareholder vote on January 17, with
approximately 77 million shares properly voted, were that 49,898,715
shares voted against the opt out proposal, 26,782,745 shares voted for
the opt out proposal and 313,066 shares voted to abstain.
Conrail, with corporate headquarters in Philadelphia, PA,
operates an 11,000-mile rail freight network in 12 northeastern and
midwestern states, the District of Columbia, and the Province of
Quebec. Conrail's home page on the Internet can be reached at
http://www.CONRAIL.com.
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