<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
COMMISSION FILE NUMBER 1-12166
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
SOUTHERN PACIFIC BUILDING
ONE MARKET PLAZA
SAN FRANCISCO, CALIFORNIA 94105
-------------------------------
(FULL TITLE AND ADDRESS OF THE PLAN)
SOUTHERN PACIFIC RAIL CORPORATION
---------------------------------
(NAME OF ISSUER OF SECURITIES HELD PURSUANT TO THE PLAN)
SOUTHERN PACIFIC BUILDING
ONE MARKET PLAZA
SAN FRANCISCO, CALIFORNIA 94105
-------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE OF ISSUER
OF THE SECURITIES HELD PURSUANT TO THE PLAN)
<PAGE>
REQUIRED INFORMATION
ITEMS 1, 2, AND 3. Not applicable.
ITEM 4. Southern Pacific Rail Corporation Thrift Plan financial statements
prepared in accordance with ERISA reporting requirements including
independent auditor's report thereon are attached hereto as Exhibit
99.1.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrator of the Plan has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
Date: June 26, 1996 Southern Pacific Rail Corporation Thrift
Plan
By: /s/ J.A. Holm
-------------
J.A. Holm, Plan
Administrator
<PAGE>
EXHIBIT INDEX
EXHIBIT DOCUMENT DESCRIPTION
------- -------------------------------------------------------
23.1 Consent of KPMG Peat Marwick LLP.
99.1 Southern Pacific Rail Corporation Thrift Plan Financial
Statements and Supplemental Schedules (Modified Cash
Basis), December 31, 1995 and 1994 (with Independent
Auditors' Report thereon).
<PAGE>
Exhibit 23.1
ACCOUNTANT'S CONSENT
The Board of Directors
Southern Pacific Rail Corporation:
We consent to incorporation by reference in the registration statements No. 33-
76930 and No. 33-83390 on Form S-8 of Southern Pacific Rail Corporation of our
report dated June 26, 1996, relating to the statements of net assets available
for plan benefits (modified cash basis) of Southern Pacific Rail Corporation
Thrift Plan as of December 31, 1995 and 1994, and the related statements of
changes in net assets available for plan benefits (modified cash basis), for the
years then ended and the related supplemental schedules, which report appears in
the December 31, 1995 annual report on Form 11-K of Southern Pacific Rail
Corporation Thrift Plan. Our report notes these financial statements and
supplemental schedules were prepared on a modified cash basis of accounting,
which is a comprehensive basis of accounting other than generally accepted
accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
June 27, 1996
<PAGE>
Exhibit 99.1
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Financial Statements
and Supplemental Schedules
(Modified Cash Basis)
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Financial Statements and Supplemental Schedules
(Modified Cash Basis)
December 31, 1995 and 1994
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report...................................... 1
Statement of Net Assets Available for Plan Benefits (Modified
Cash Basis) - December 31, 1995 and 1994..................... 2
Statements of Changes in Net Assets Available for Plan
Benefits (Modified Cash Basis) - Years ended December 31,
1995 and 1994................................................ 3
Notes to Financial Statements (Modified Cash Basis)............... 4
Supplemental Schedules - (Modified Cash Basis)
- - ----------------------------------------------
Item 27a - Schedules of Assets Held for Investment Purposes
(Modified Cash Basis) - December 31, 1995.................... Schedule 1
Item 27d - Schedule of Reportable Transactions (Modified Cash
Basis) - Year ended December 31, 1995........................ Schedule 2
</TABLE>
<PAGE>
Independent Auditors' Report
----------------------------
The Thrift Plan Committee
Southern Pacific Rail Corporation Thrift Plan:
We have audited the accompanying statements of net assets available for plan
benefits (modified cash basis) of Southern Pacific Rail Corporation Thrift Plan
(the Plan) as of December 31, 1995 and 1994, and the related statements of
changes in net assets available for plan benefits (modified cash basis) for the
years then ended, and the supplemental schedules as listed in the accompanying
table of contents. These financial statements and supplemental schedules are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and supplemental schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in note 2(a), these financial statements and supplemental schedules
were prepared on a modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Southern Pacific
Rail Corporation Thrift Plan as of December 31, 1995 and 1994, and changes in
net assets available for benefits for the years then ended, on the basis of
accounting described in note 2(a).
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) Item
27a - Schedule of Assets Held for Investment Purposes (Modified Cash Basis), and
(2) Item 27d - Schedule of Reportable Transactions (Modified Cash Basis) are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
San Francisco, California
June 26, 1996
1
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Statements of Net Assets Available for Plan Benefits
(Modified Cash Basis)
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Assets:
Investments, at fair value (note 2):
Common stock................................... $ 2,148,384 $ 20,074,003
Commingled funds............................... 43,290,298 28,774,211
Temporary investment funds..................... 3,010,085 2,397,442
------------ ------------
Subtotal.................................. 48,448,767 51,245,656
Investments, at contract value (note 2):
Investment contracts........................... 127,786,622 119,850,715
------------ ------------
Total investments......................... 176,235,389 171,096,371
Receivable from broker.............................. 8,726 1,225,228
Investment income receivable........................ 730,618 737,165
------------ ------------
Total assets.............................. 176,974,733 173,058,764
------------ ------------
Liabilities:
Unsettled stock sale................................ 6,815 316,113
------------ ------------
Net assets available for plan benefits.... $176,967,918 $172,742,651
============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Statements of Changes in Net Assets Available for Plan Benefits
(Modified Cash Basis)
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest....................................... $ 8,929,902 $ 8,084,989
Dividends...................................... 25 389,330
Net appreciation in fair value of
investments (note 9)...................... 11,757,093 667,167
------------ ------------
Total investment income.............. 20,687,020 9,141,486
------------ ------------
Contributions:
Employer....................................... 2,908,910 2,702,612
Participants................................... 6,645,656 6,222,622
------------ ------------
Total contributions................. 9,554,566 8,925,234
Total additions..................... 30,241,586 18,066,720
------------ ------------
Deductions from net assets attributed to:
Distributions to participants - cash................ 15,021,561 23,552,013
Distributions to participants - non-cash............ 10,649,546 864,547
Investment and administrative expenses.............. 345,212 283,247
------------ ------------
Total deductions.................... 26,016,319 24,699,807
------------ ------------
Increase (decrease) in net assets available for
plan benefits....................................... 4,225,267 (6,633,087)
Net assets available for plan benefits:
Beginning of year................................... 172,742,651 179,375,738
------------ ------------
End of year......................................... $176,967,918 $172,742,651
============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 1995 and 1994
(1) DESCRIPTION OF PLAN
(a) General
The following description of the Southern Pacific Rail Corporation Thrift
Plan (the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
The Plan is a defined contribution plan which was established by Rio Grande
Holding, Inc. (RGH) on January 1, 1982 as an individual account savings and
investment plan for employees of RGH and its subsidiaries (the RGH
participants). RGH is a wholly owned subsidiary of Southern Pacific Rail
Corporation (SPRC). SPRC adopted the Plan and became its sponsor. SPRC and
its subsidiaries that are participating in the Thrift Plan are collectively
referred to as the Company. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
Southern Pacific Rail Corporation's employees not subject to a collective
bargaining agreement and not paid on an hourly basis are eligible to
participate in the Plan any time after the first anniversary of their
employment if they have not incurred a break in service. In addition,
certain employees which are currently covered under collective bargaining
agreements which were previously not covered have been allowed to continue
participation in the Plan.
On February 1, 1994, the Plan amended its eligibility requirement, allowing
new employees to participate immediately in the Thrift Plan and to accept
rollovers.
Effective July 1, 1994, the Plan changed the Trustee for the Plan's assets
from Northern Trust Company to Chase Manhattan.
(b) Contributions
Plan participants may elect to make employee contributions in an amount not
less than 1% nor more than 16% of their salary. These contributions may be
made on either an after-tax or a before-tax basis, or a combination of the
two, provided the total contribution does not exceed the lesser of 16% of
salary or the applicable Internal Revenue Code annual limitation of $9,240.
The employer matches the first 3% of employee contributions (whether before
-tax or after-tax) on a dollar-for-dollar basis. All contributions are
subject to limitations imposed by the Internal Revenue Code such as those
under Sections 401(k), 401(m), 402(g) and 415.
(c) Participant's Accounts
Each participant's account is credited with his or her own contributions,
employer contributions and an allocation of the Plan's earnings (or losses)
based on the type of investments selected and their performance. The
allocation of earnings (or losses) is based on each participant's account
balance by investment type.
(Continued)
4
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
(d) Vesting
Participant and employer contributions are fully vested when made.
(e) Investment Options
Upon enrollment in the plan, a participant may direct contributions in 1%
increments in any of six investment options:
Fixed Investment Fund - Funds are invested in high quality investment
---------------------
contracts with a diversified group of insurance companies, banks and
other financial institutions.
Value Equity Fund - As of October 1, 1994, funds are invested in
-----------------
shares of the Invesco Retirement Trust Equity Fund (a trust company
commingled fund). The fund primarily invests in common stocks and
securities convertible into common stock.
Balanced Fund - As of October 1, 1994, funds are invested in shares
-------------
of the Invesco Retirement Trust Flex Fund (a trust company commingled
fund). The fund contains a mix of stocks and high quality bonds.
International Equity Fund - As of October 1, 1994, funds are invested
-------------------------
in the Capital Guardian International (Non-U.S.) Equity Fund (a trust
company commingled fund). The fund invests in a portfolio comprised
primarily of securities of non-U.S. issuers and securities whose
principal markets are outside of the United States.
SPRC Stock Fund - Funds are invested in common stock of Southern
---------------
Pacific Rail Corporation.
Growth Equity Fund - As of October 1, 1994, funds are invested in
------------------
shares of the Invesco Trust Company Common Stock Fund (a trust company
commingled fund). The fund consists primarily of small and large
capitalization stocks with strong earnings growth.
Participants may change their investment options monthly.
Effective December 31, 1994 SFP Stock and SFP subsidiary stock (which was
held in the SFPAC stock fund) was eliminated from the plan as an investment
option. Each participant whose account was invested in that fund was
permitted to elect to withdraw, in kind, shares of stock with a fair market
value equal to the total value allocated to the participant's After-Tax
Contributions Account and Company matching contributions account as of the
date of withdrawal. All such shares not withdrawn were sold and the
proceeds were invested in the Fixed Investment Fund.
(Continued)
5
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
(f) Payment of Benefits
Benefits are payable to a participant upon retirement, disability, death or
termination of employment. Subject to certain hardship rules and limits, a
participant may also withdraw employer and employee contributions under
other circumstances. The benefit to which a participant is entitled is the
benefit that can be provided from that participant's account net of any
withholding for federal income taxes.
(g) Investment and Administrative Expenses
In 1995, the Plan paid investment expenses of $304,230 and administrative
expenses of $40,982. The majority of administrative expenses in 1995 were
paid by the Company. In 1994, the Plan paid investment expenses of $145,612
and administrative expenses of $137,635. In 1994, the majority
of administrative expenses of the Plan were paid by the Plan. The change in
the payor of the Plan expenses is in accordance with the Plan document.
(h) Plan Termination
SPRC may terminate the Plan at any time. In the event of termination, Plan
net assets will be allocated and distributed to the participants based on
their respective account balances.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The Plan's policy is to prepare its financial statements and supplemental
schedules on a modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles.
Investment income receivable is accrued and investments, other than
insurance contracts, are recorded at fair value, and all other items are
recorded on a cash basis.
(b) Investment Valuation and Income Recognition
The plan's assets are stated at fair value except for its investment
contracts which are valued at contract value. Shares of commingled funds
are valued at quoted market prices which represent the net asset value of
shares held by the plan at year end. The SPRC stock is valued at its
quoted market price. The investment contracts held in the fixed investment
fund are fully benefit responsive and as such are valued at contract value.
Contract value represents contributions made under the contract, plus
earnings, less participant withdrawals. Purchases and sales of securities
are recorded on a trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date. The
difference between cost and market value from one period to the next is
recognized at net appreciation (depreciation) in fair value in investments
in the accompanying state of changes in net assets available for benefits.
(c) Use of Estimates
The preparation of the financial statements requires management to make
certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the disclosed amounts of income
and expenses during the reported periods. Actual results could differ from
those estimates.
(Continued)
6
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
(3) INVESTMENTS
Chase Manhattan Bank, trustee of the plan, held the Plan's investment and
executed transactions therein. The following table presents the fair value
of the underlying investments in investment options at December 31, 1995
and 1994. Investments that represent 5% or more of the Plan's net assets
are separately identified.
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
----------- ----------
<S> <C> <C>
Investment contracts, at contract value:
Fixed investment fund:
Allstate Life Insurance Company:
Group Annuity Contract No. 5572, 6.45%,
April 1, 1999.................................... $5,560,072 $5,223,177
Group Annuity Contract No. 5607, 7.32%,
June 1, 1999..................................... 1,036,054 1,037,258
CDC Investment Management Company:
Contract No. 114-01, 6.62%, April 15, 1998.......... 5,088,338 5,088,338
Canada Life Assurance Company:
Contract No. 45842, 7.17%, July 1, 1999............. 5,144,331 5,157,034
Commonwealth Life Insurance Co.:
ADA-00346-FR, 8.48%, December 28, 1995.............. - 1,645,292
ADA-00288-ST, floating interest rate,
perpetual with 30 day notice for termination..... 3,288,032 6,011,640
Continental Life Assurance Co.:
Group Annuity Contract No. 12664, 8.51%,
May 1, 1997...................................... 4,849,691 6,701,550
Group Annuity Contract No. 12750, 7.08%,
March 29, 1996................................... 6,472,139 6,044,209
Group Annuity Contract No. E3000-11D,
7.86%, January 12, 1996.......................... 93,425 789,208
Hartford Life Insurance Co.:
Group Annuity Contract No. 9405, 5.68%,
March 20, 1995................................... - 5,813,856
John Hancock Mutual Life Insurance Co.
Guaranteed Investment Contract No. 7942,
6.56%, May 1, 2004............................... 5,113,392 -
Insurance Contract No. 7767, variable rate,
February 1, 2000................................. 502,272 -
</TABLE>
* Indicates asset is greater than 5% of net assets available for plan
benefits at beginning of the year.
(Continued)
7
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
----------- ----------
<S> <C> <C>
Mass Mutual Insurance Co.:
Guaranteed Investment Contract No. 10479,
6.88%, July 5, 2002................................. 5,349,948 6,117,448
Guaranteed Investment Contract No. 10744,
6.11%, July 5, 2002 *............................... 8,867,525 8,470,579
Metropolitan Life Insurance Co.:
Group Annuity Contract No. 12500, 8.18%,
September 2, 1996................................... 4,743,721 8,770,052
Group Annuity Contract No. 14018, 7.6%,
January 2, 2001..................................... 2,140,405 -
New York Life Insurance Co.:
Group Annuity Contract No. 06200, 8.35%,
May 13, 1996........................................ 5,230,423 5,231,055
Group Annuity Contract No. 06497, 6.98%,
February 2, 1997.................................... 5,287,805 5,287,805
Group Annuity Contract No. 06497-003,
6.65%, October 31, 1995............................. - 2,598,385
Peoples Security Life Insurance Co.:
Contract No. 00064TR-4, 7.87%,
July 20, 1999....................................... 4,968,837 4,965,957
Contract No. 00064TR-3, 6.14%,
February 25, 1998................................... 4,881,605 4,820,291
Contract No. 00064TR-2, 6.45%,
November 15, 2000................................... 4,805,026 4,771,262
Contract No. 00064TR-1, 6.17%,
May 17, 1999........................................ 4,869,542 4,834,544
Provident Life and Accident Insurance Co.
Contract No. 630-05805 *................................. 20,835,513 -
Prudential Insurance Co.:
Group Annuity Contract No. 748715, 6.16%
September 30, 1998.................................. 2,046,495 2,672,750
Group Annuity Contract No. 7375, 7.31%,
April 18, 1996...................................... 6,382,539 5,947,758
</TABLE>
* Indicates asset is greater than 5% of net assets available for plan
benefits at beginning of the year.
(Continued)
8
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
<TABLE>
<CAPTION>
December 31,
--------------------------
1995 1994
----------- ----------
<S> <C> <C>
Group Annuity Contract No. 7395-212,
7.05%, April 18, 1996.............................. 4,425,824 4,134,352
Sun Life Assurance Co.:
Contract No. S-0905-G, 7.28%,
June 10, 1999...................................... 5,561,706 5,185,467
Traveler's Insurance Co.:
Group Annuity Contract No. 13999, 8.20%,
March 1, 1996...................................... 241,962 465,629
United of Omaha Mutual Life Insurance Co.:
SDGA-10272, 8.40%, August 15, 1995...................... - 2,065,819
----------- -----------
Total investment contracts............................ 127,786,622 119,850,715
----------- -----------
Common stock, at market value:
SFPAC Stock Fund:
Catellus Development Corporation........................ - 541,281
Santa Fe Energy Resources Inc........................... - 1,585,528
Santa Fe Pacific Gold Corporation....................... - 4,758,650
Santa Fe Pacific Corporation............................ - 12,327,280
----------- -----------
Subtotal.............................................. - 19,212,739
----------- -----------
SPRC Stock Fund:
Southern Pacific Rail Corporation....................... 2,148,384 861,264
----------- -----------
Total common stock.................................... 2,148,384 20,074,003
----------- -----------
Commingled funds, at market value:
Value Equity Fund:
Invesco Institutional Series
Trust Equity Fund*....................................... 26,940,068 19,820,922
Balanced Fund:
Invesco Institutional Series Trust Flex Fund*............ 11,050,017 6,305,284
Growth Equity Fund:
Invesco Common Stock Fund................................ 3,156,291 1,209,891
International Equity Fund:
CGTC International Non-U.S. Equity Record................ 2,143,922 1,438,114
----------- -----------
Total commingled funds................................ 43,290,298 28,774,211
----------- -----------
</TABLE>
* Indicates asset is greater than 5% of net assets available for plan
benefits at beginning of the year.
(Continued)
9
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1994
----------- ----------
<S> <C> <C>
Temporary investment funds, at market value:
Chase Temporary Investment Fund:
Fixed Investment Fund....................... 2,982,643 1,837,684
Value Equity Fund........................... - 62
SFPAC Stock Fund............................ - 243,294
Balanced Fund............................... - 24
SPRC Stock Fund............................. 27,442 316,378
------------ ------------
Total temporary investment funds....... 3,010,085 2,397,442
------------ ------------
Total investments...................... $176,235,389 $171,096,371
============ ============
</TABLE>
* Indicates asset is greater than 5% of net assets available for plan
benefits at beginning of the year.
(4) TAX STATUS
The Plan was amended on April 9, 1996. This revision amends and restates
the Plan to reflect changes required by the Tax Reform Act of 1986. The
Plan received a favorable determination letter from the Internal Revenue
Service on February 8, 1996 that the Plan is qualified under the provisions
of Section 401(a) of the Internal Revenue Code, as amended, and exempt from
federal income taxes under Section 501(a). The Plan administrator believes
that the Plan continues to operate in compliance with the applicable
provisions of the IRS.
(5) RELATED PARTY TRANSACTION
Certain Plan investments are shares of temporary investment funds managed
by Chase Manhattan Bank. Chase Manhattan Bank is the trustee as defined by
the Plan, and qualifies as a party-in-interest. Investment and
administrative expenses paid to the trustee by the Plan amounted to $12,364
for the year ended December 31, 1995. In addition, the Plan held stock
issued by the Plan sponsor, Southern Pacific Rail Corporation.
(6) PROPOSED MERGER WITH UNION PACIFIC
On August 3, 1995, the Board of Directors of SPRC approved an agreement
providing for the merger of SPRC and Union Pacific Railroad Company (UPRR),
a wholly-owned subsidiary of Union Pacific Corporation (UP). Under the
terms of the agreement, a subsidiary of UP acquired 25% of the common stock
of SPRC at a price of $25.00 per share pursuant to a tender offer. The
merger requires approval by the Surface Transportation Board (STB) of the
Department of Transportation (successor to the Interstate Commerce
Commission (ICC)). Based on the 255 day procedural schedule adopted by the
ICC, the earliest a decision can be expected is August 1996. The shares
purchased in the tender offer are held in a voting trust pending a decision
by the STB. Following receipt of STB approval and the satisfaction of other
conditions, SPRC (and the UP subsidiary that purchased SPRC stock in the
cash tender off) would be merged into UPRR. In the merger, each share of
SPRC stock would be
(Continued)
10
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
converted, at the holder's election (subject to proration), into the right
to receive $25.00 in cash or 0.4065 shares of UP common stock. Of the
shares of SPRC common stock outstanding immediately prior to the merger
(other than the shares previously acquired by UP in the tender offer), 20%
would be acquired for cash and 80% would be acquired in exchange for shares
of UP common stock.
On August 9, 1995, under the trust agreement with the trustee, transactions
by Plan participants in SPRC stock held in the SPRC Stock Fund were
temporarily frozen due to UP's tender offer. On September 15, 1995, the
Plan committee voted to allow investment activity to resume in the SPRC
Stock Fund.
On November 30, 1995, UPRR and SPRC filed an application for the proposed
merger with the ICC and the application process is ongoing. The earliest
closing of the transaction, if approved, would be September 1996.
On January 17, 1996, at a special meeting called to consider the proposed
merger, the stockholders of SPRC voted to proceed with the transaction.
(7) Voluntary Compliance Resolution Application
In October 1994, the Plan Administrator filed a Voluntary Compliance
Resolution (VCR) application with the IRS relating to the failure to timely
distribute the minimum distribution required under section 401(a)(9) to one
employee. The Plan sponsor proposes to correct the situation by
distributing to the employee from her account the required amounts due of
approximately $66,158. The IRS has not yet responded to this VCR
application. However, the Plan Administrator expects that this proposed
correction will be accepted by the IRS with no adverse implications to the
Plan's tax status.
(Continued)
11
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
(8) STATEMENT OF PLAN NET ASSETS (MODIFIED CASH BASIS) BY INVESTMENT FUND
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------------------------------------------------------------------
Fixed Value Balanced International SPRC Stock Growth
Investment Fund Equity Fund Fund Equity Fund Fund Equity Fund Total Plan
--------------- ----------- -------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Common stock.................. $ 2,148,384 2,148,384
Commingled funds.............. 26,940,068 11,050,017 2,143,922 3,156,291 43,290,298
Temporary investment funds.... 2,982,643 27,442 3,010,085
------------ ---------- ---------- --------- --------- --------- -----------
Sub-total................ 2,982,643 26,940,068 11,050,017 2,143,922 2,175,826 3,156,291 48,448,767
Investments, at contract value:
Fixed income annuity contracts 127,786,622 127,786,622
------------ ---------- ---------- --------- --------- --------- -----------
Total investments........ 130,769,265 26,940,068 11,050,017 2,143,922 2,175,826 3,156,291 176,235,389
Accounts receivable........... 8,726 8,726
Income receivable............. 730,618 730,618
------------ ---------- ---------- --------- --------- --------- -----------
Total assets.... $131,499,883 26,948,794 11,050,017 2,143,922 2,175,826 3,156,291 176,974,733
============ ========== ========== ========= ========= ========= ===========
Liabilities:
Unsettled stock sale.......... (6,815) (6,815)
------------ ---------- ---------- --------- --------- --------- -----------
Net assets available
for plan benefits............ $131,499,883 26,948,794 11,050,017 2,143,922 2,169,011 3,156,291 176,967,918
============ ========== ========== ========= ========= ========= ===========
</TABLE>
(Continued)
12
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements
(Modified Cash Basis)
(8) STATEMENT OF PLAN NET ASSETS (MODIFIED CASH BASIS) BY INVESTMENT FUND
(CONTINUED)
<TABLE>
<CAPTION>
December 31, 1994
---------------------------------------------------------------------------------------------------
Fixed Value SFPAC Interna- SPRC Growth
Investment Equity Stk Balanced tional Stock Equity
Fund Fund Fund Fund Equity Fund Fund Fund Total Plan
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Common stock........... $ 19,212,739 861,264 20,074,003
Commingled funds....... 19,820,922 6,305,284 1,438,114 1,209,891 28,774,211
Temporary investment
funds................. 1,837,684 62 243,294 24 316,378 2,397,442
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Sub-total........ 1,837,684 19,820,984 19,456,033 6,305,308 1,438,114 1,177,642 1,209,891 51,245,656
Investments, at contract
value:
Investment contracts... 119,850,715 119,850,715
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investments 121,688,399 19,820,984 19,456,033 6,305,308 1,438,114 1,177,642 1,209,891 171,096,371
Accounts receivable... 1,225,228 1,225,228
Income receivable..... 737,165 737,165
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets..... $122,425,564 19,820,984 20,681,261 6,305,308 1,438,114 1,177,642 1,209,891 173,058,764
============ =========== =========== =========== =========== =========== =========== ===========
Liabilities:
Unsettled stock sale .. (316,113) (316,113)
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets available
for plan benefits..... $122,425,564 19,820,984 20,681,261 6,305,308 1,438,114 861,529 1,209,891 172,742,651
============ =========== =========== =========== =========== =========== =========== ===========
</TABLE>
(Continued)
13
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements (Modified Cash Basis)
(9) STATEMENT OF CHANGES IN PLAN NET ASSETS (MODIFIED CASH BASIS) BY INVESTMENT
FUND
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------------------------------------------------------
Fixed Value SFPAC Interna- SPRC Growth
Investment Equity Stk Balanced tional Stock Equity
Fund Fund Fund Fund Equity Fund Fund Fund Total Plan
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Interest............... $ 8,854,248 70,208 5,446 8,929,902
Dividend............... 25 25
Net appreciation
(depreciation) in fair 6,453,492 2,027,404 2,096,786 244,050 496,813 438,548 11,757,093
value of investments.. ------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment
income............. 8,854,248 6,453,492 2,097,637 2,096,786 244,050 502,259 438,548 20,687,020
Contributions:
Employer.................. 1,784,575 643,940 286,890 68,207 43,223 82,075 2,908,910
Participants.............. 4,153,278 1,426,518 635,774 151,349 96,164 182,573 6,645,656
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions.. 5,937,853 2,070,458 0 922,664 219,556 139,387 264,648 9,554,566
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions...... 14,792,101 8,523,950 2,097,637 3,019,450 463,606 641,646 703,196 30,241,586
Deductions from net assets
attributable to:
Distributions to
participants-cash........ 12,358,036 1,608,570 455,102 386,990 60,238 71,246 81,379 15,021,561
Distr. to participants-
non-cash................. 10,649,546 10,649,546
Investment and
administrative exp........ 152,924 137,735 (4,983) 47,689 11,847 345,212
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deductions..... 12,510,960 1,746,305 11,099,665 434,679 60,238 71,246 93,226 26,016,319
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Transfer between funds,
net....................... 6,793,178 350,165 (11,679,233) 2,159,938 302,440 737,082 1,336,430 0
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
(Decrease) increase in net
assets available for
plan benefits............ 9,074,319 7,127,810 (20,681,261) 4,744,709 705,808 1,307,482 1,946,400 4,225,267
Net assets available for
plan benefits:
Beginning of year......... 122,425,564 19,820,984 20,681,261 6,305,308 1,438,114 861,529 1,209,891 172,742,651
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of year............... $ 31,499,883 26,948,794 0 11,050,017 2,143,922 2,169,011 3,156,291 176,967,918
============ =========== =========== =========== =========== =========== =========== ===========
</TABLE>
14
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Notes to Financial Statements (Modified Cash Basis)
(9) STATEMENT OF CHANGES IN PLAN NET ASSETS (MODIFIED CASH BASIS) BY INVESTMENT
FUND (CONTINUED)
<TABLE>
<CAPTION>
December 31, 1994
---------------------------------------------------------------------------------------------------
Fixed Value SFPAC Interna- SPRC Growth
Investment Equity Stk Balanced tional Stock Equity
Fund Fund Fund Fund Equity Fund Fund Fund Total Plan
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Interest............... $ 8,021,705 1,993 12,607 47,917 767 8,084,989
Dividend............... 235,211 77,283 76,836 389,330
Net appreciation
(depreciation) in
fair value of
investments........... 99,502 108,078 693,847 (178,532) (35,687) (544) (19,497) 667,167
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment
income............. 8,121,207 345,282 783,737 (53,779) (35,687) 223 (19,497) 9,141,486
Contributions:
Employer.................. 1,725,212 668,822 300,693 3,780 1,345 2,760 2,702,612
Participants.............. 3,950,459 1,597,101 655,152 10,013 3,017 6,880 6,222,622
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions. 5,675,671 2,265,923 955,845 13,793 4,362 9,640 8,925,234
Other receipts.............
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions..... 13,796,878 2,611,205 783,737 902,066 (21,894) 4,585 (9,857) 18,066,720
Deductions from net assets
attributable to:
Distributions to
participants-cash........ 18,779,948 2,825,889 1,459,242 486,934 23,552,013
Distributions to
participants-non-cash.... 864,547 864,547
Investment and
administrative exp....... 225,923 30,994 15,627 9,721 982 283,247
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deductions.... 19,005,871 2,856,883 2,339,416 496,655 982 24,699,807
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Transfer between funds, net (2,402,134) 1,193,091 (3,618,652) 1,290,013 1,460,008 856,944 1,220,730 0
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
(Decrease) increase in net
assets available for plan
benefits.................. (7,611,127) 947,413 (5,174,331) 1,695,424 1,438,114 861,529 1,209,891 (6,633,087)
Net assets available for
plan benefits:
Beginning of year......... 130,036,691 18,873,571 25,855,592 4,609,884 0 0 0 179,375,738
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of year............... $122,425,564 19,820,984 20,681,261 6,305,308 1,438,114 861,529 1,209,891 172,742,651
============ =========== =========== =========== =========== =========== =========== ===========
</TABLE>
15
<PAGE>
Schedule 1
-----------
Page 1 of 3
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
(Modified Cash Basis)
Year ended December 31, 1995
<TABLE>
<CAPTION>
Cost Current
Description of Investment basis value
- - ------------------------------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Investment Contracts:
Fixed Investment Fund:
Allstate Life Insurance Company 6.45% investment contract due April 1, 1999 $5,560,072 $5,560,072
Allstate Life Insurance Company 7.32% investment contract due June 1, 1999 1,036,054 1,036,054
CDC Investment Management Company 6.62% investment contract due April 15, 1998 5,088,338 5,088,338
Canada Life Assurance Company 7.17% investment contract due July 1, 1999 5,144,331 5,144,331
Commonwealth Life Insurance Company Floating rate contract, 30 day termination notice 3,288,032 3,288,032
Continental Life Assurance Company 8.51% investment contract due May 1, 1997 4,849,691 4,849,691
Continental Life Assurance Company 7.08% investment contract due March 29, 1996 6,472,139 6,472,139
Continental Life Assurance Company 7.86% investment contract due January 12, 1996 93,425 93,425
John Hancock Mutual Life Insurance Company 6.56% investment contract due May 1, 2004 5,113,392 5,113,392
John Hancock Mutual Life Insurance Company Variable rate investment contract due February 1, 2000 502,272 502,272
Mass Mutual Insurance Company 6.88% investment contract due July 5, 2002 5,349,948 5,349,948
Mass Mutual Insurance Company 6.11% investment contract due July 5, 2002 8,867,525 8,867,525
Metropolitan Life Insurance Company 8.18% investment contract due September 2, 1996 4,743,721 4,743,721
Metropolitan Life Insurance Company 7.6% investment contract due January 2, 2001 2,140,405 2,140,405
New York Life Insurance Company 8.35% investment contract due May 13, 1996 5,230,423 5,230,423
New York Life Insurance Company 6.98% investment contract due February 2, 1997 5,287,805 5,287,805
Peoples Security Life Insurance Company 7.87% investment contract due July 20, 1999 4,968,837 4,968,837
Peoples Security Life Insurance Company 6.14% investment contract due February 25, 1998 4,881,605 4,881,605
Peoples Security Life Insurance Company 6.45% investment contract due November 15, 2000 4,805,026 4,805,026
Peoples Security Life Insurance Company 6.17% investment contract due May 17, 1999 4,869,542 4,869,542
Provident Life and Accident Insurance Company Variable rate investment contract due May 27, 2002 20,835,513 20,835,513
Prudential Insurance Company 6.16% investment contract due September 30, 1998 2,046,495 2,046,495
</TABLE>
16
<PAGE>
Schedule 1
-----------
Page 2 of 3
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
(Modified Cash Basis)
Year ended December 31, 1995
<TABLE>
<CAPTION>
Cost
Description of Investment basis Current value
- - ------------------------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Prudential Insurance Company 7.31% investment contract due April 18, 1996 6,382,539 6,382,539
Prudential Insurance Company 7.05% investment contract due April 18, 1996 4,425,824 4,425,824
Sun Life Assurance Company 7.28% investment contract due June 10, 1999 5,561,706 5,561,706
Traveler's Insurance Company 8.20% investment contract due March 1, 1996 241,962 241,962
------------ ------------
Total investment contracts 127,786,622 127,786,622
Common Stock:
SPRC Stock Fund:
Southern Pacific Rail Corporation ** 89,516 shares of common stock 1,728,578 2,148,384
------------ -----------
Total common stock 1,728,578 2,148,384
Commingled Funds:
Value Equity Fund:
Invesco Institutional Series Trust Equity Fund 1,212,424.29 shares of commingled fund 20,616,826 26,940,068
Balanced Fund:
Invesco Institutional Series Trust Flex Fund 481,482.23 shares of commingled fund 8,967,181 11,050,017
International Equity Fund:
CGTC International Non-U.S. Equity Record 183,241.23 shares of commingled fund 1,945,626 2,143,922
Growth Equity Fund:
Invesco Common Stock Fund 90,880.82 shares of commingled fund 2,745,747 3,156,291
------------ -----------
Total commingled funds 34,275,380 43,290,298
</TABLE>
** Includes party-in-interest
(Continued)
17
<PAGE>
Schedule 1
-----------
Page 3 of 3
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
(Modified Cash Basis)
Year ended December 31, 1995
<TABLE>
<CAPTION>
Cost
Description of Investment basis Current value
- - ----------------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Temporary Investment Funds:
Chase Temporary Investment Fund:
Fixed Investment Fund 2,982,643 2,982,643
SPRC Stock Fund 27,442 27,442
------------ ------------
Total Temporary Investment Funds 3,010,085 3,010,085
------------ ------------
Total Investments $166,800,665 $176,235,389
============ ============
</TABLE>
** Includes party-in-interest
18
<PAGE>
Schedule 2
----------
SOUTHERN PACIFIC RAIL CORPORATION
THRIFT PLAN
Item 27d - Schedule of Reportable Transactions
(Modified Cash Basis)
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Current Value
Purchase Sales Cost of of Asset on Gain/ Number of
Issuer Description of Asset Price Price Asset Trans. Date (Loss) Transactions
- - ------------------------- -------------------------- ----------- ----------- ----------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Chase Bank Temporary Investment $50,211,058 $50,211,058 $50,211,058 $ - 181
Fund $49,616,488 49,616,488 49,616,488 - 110
Provident Life & Accident Investment Contract 21,473,059 21,473,059 21,473,059 - 16
Insurance Company 637,546 637,546 637,546 - 20
Santa Fe Pacific Santa Fe Pacific Common 465,123 465,123 465,123 - 5
Corporation Stock 14,272,184 4,475,421 14,272,184 9,796,763 501
</TABLE>
Note: Reportable transactions are included as defined in 29 CFR 2520.103-6
of the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
In general terms, reportable transactions are those transactions, or
series of transactions when aggregated within the plan year, which
involve an amount in excess of 5% of net assets available for plan
benefits as of the beginning of the year.
19
