UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission file numbers 1-743; 1-3744; 1-4793; 1,546-2
NORFOLK SOUTHERN RAILWAY COMPANY
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 53-6002016
- ---------------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Three Commercial Place
Norfolk, Virginia 23510-2191
- ---------------------------------------- -------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (804) 629-2682
-------------------
No Change
- ---------------------------------------------------------------------------
(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. (X) Yes ( ) No
The number of shares outstanding of each of the registrant's classes of
Common Stock, as of the last practicable date:
Class Outstanding as of April 30, 1995
----- --------------------------------
Common Stock (par value $1.00) 16,668,997
<PAGE> PAGE 2
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES (NS RAIL)
INDEX
Page
----
Part I. Financial Information:
Item 1. Consolidated Statements of Income
Three Months Ended March 31, 1995 and 1994 3
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
PartII. Other Information:
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Index to Exhibits 17
<PAGE> PAGE 3
<TABLE>
PART I. FINANCIAL INFORMATION
-------------------------------
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Consolidated Statements of Income
(In millions of dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
-------------------
1995 1994
-------- --------
<S> <C> <C>
RAILWAY OPERATING REVENUES:
Coal $ 300.3 $ 304.9
Merchandise 670.2 609.4
Other 28.7 28.0
------- -------
Railway operating revenues 999.2 942.3
------- -------
RAILWAY OPERATING EXPENSES:
Compensation and benefits 375.3 351.4
Materials, services and rents 164.2 163.4
Depreciation 92.9 88.7
Diesel fuel 48.7 45.7
Casualties and other claims 32.2 29.1
Other 35.5 37.5
------- -------
Railway operating expenses 748.8 715.8
------- -------
Income from railway operations 250.4 226.5
Other income (expense):
Interest income 6.4 6.1
Interest expense on debt (7.8) (6.7)
Other - net (1.6) 9.1
------- -------
Other income (expense) (3.0) 8.5
------- -------
Income before income taxes 247.4 235.0
Provision for income taxes 94.1 82.8
------- -------
NET INCOME $ 153.3 $ 152.2
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 4
<TABLE>
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Consolidated Balance Sheets
(In millions of dollars)
(Unaudited)
<CAPTION>
March 31, December 31,
1995 1994
-------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 104.9 $ 33.8
Short-term investments (Note 5) 127.5 147.1
Accounts receivable - net 542.6 552.7
Materials and supplies 64.3 58.5
Deferred income taxes 90.1 91.1
Other current assets 82.9 89.8
--------- ---------
Total current assets 1,012.3 973.0
Due from NS (Note 3) 247.9 201.7
Investments (Note 5) 649.7 598.4
Properties less accumulated depreciation 8,668.4 8,493.4
Other assets 16.6 22.7
--------- ---------
TOTAL ASSETS $10,594.9 $10,289.2
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 27.2 $ 27.2
Accounts payable 519.6 529.3
Income and other taxes 191.9 119.1
Other current liabilities 123.7 118.0
Current maturities of long-term debt (Note 4) 63.7 65.8
--------- ---------
Total current liabilities 926.1 859.4
Long-term debt (Note 4) 562.0 474.0
Other liabilities 883.1 868.2
Minority interests 2.1 2.1
Deferred income taxes (Notes 3 and 5) 2,672.3 2,645.0
--------- ---------
TOTAL LIABILITIES 5,045.6 4,848.7
--------- ---------
Stockholders' equity:
Serial preferred stock $50 stated value 54.8 54.8
Common stock $10 stated value 166.7 166.7
Other capital 515.0 515.0
Unrealized gain on marketable
securities (Note 5) 281.8 253.1
Retained income 4,531.0 4,450.9
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 5,549.3 5,440.5
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $10,594.9 $10,289.2
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 5
<TABLE>
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Consolidated Statements of Cash Flows
(In millions of dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 153.3 $ 152.2
Reconciliation of net income to net cash
provided by operating activities:
Special charge payments (2.8) (23.8)
Depreciation 93.2 88.9
Deferred income taxes 9.7 5.6
Nonoperating gains on property sales (1.0) (0.6)
Changes in assets and liabilities affecting
operations:
Accounts receivable 10.1 (15.7)
Materials and supplies (5.8) (1.9)
Other current assets 6.9 5.3
Current liabilities other than debt 68.7 59.3
Other - net 16.3 (6.2)
------- -------
Net cash provided by operating activities 348.6 263.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (Note 4) (177.5) (136.4)
Property sales and other transactions 15.0 5.5
Investment purchases (23.7) (18.2)
Investment sales and other transactions 18.3 14.4
Advances due from NS (46.2) (53.8)
Short-term investments - net 21.0 51.6
------- -------
Net cash used for investing activities (193.1) (136.9)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends (73.2) (70.7)
Proceeds from long-term borrowings 7.6 22.0
Debt repayments (18.8) (13.7)
------- -------
Net cash used for financing activities (84.4) (62.4)
------- -------
Net increase in cash and cash equivalents 71.1 63.8
CASH AND CASH EQUIVALENTS:*
At beginning of year 33.8 2.3
------- -------
At end of period $ 104.9 $ 66.1
======= =======
- -----------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized) $ 13.2 $ 11.7
Income taxes $ 4.1 $ 6.2
* Cash equivalents are highly liquid investments purchased three months or
less from maturity.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 6
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars)
1. In the opinion of Management, the accompanying unaudited interim
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position
as of March 31, 1995, and the results of operations and cash flows for
the three months ended March 31, 1995 and 1994.
While Management believes that the disclosures presented are adequate
to make the information not misleading, these consolidated financial
statements should be read in conjunction with the financial statements
and notes included in the Company's latest Annual Report on Form 10-K.
2. Contingencies
There have been no significant changes since year end 1994 in the
matters as discussed in NOTE 17, CONTINGENCIES, appearing in the NS
Rail Annual Report on Form 10-K for 1994, Notes to Consolidated
Financial Statements, beginning on page 59.
3. Related Parties
GENERAL
-------
Norfolk Southern Corporation (NS) is the parent holding company of
NS Rail. The costs of functions performed by NS are allocated to
NS Rail. Rail operations are coordinated at the holding company level
by the NS Executive Vice President-Operations.
<TABLE>
INTERCOMPANY ACCOUNTS
---------------------
<CAPTION>
March 31, 1995 December 31, 1994
------------------ --------------------
Average Average
Interest Interest
Balance Rate Balance Rate
------- -------- ------- --------
<S> <C> <C> <C> <C>
Due from NS:
Advances $ 395.2 3.1% $ 336.3 2.6%
Due to NS:
Notes and advances 147.3 5.7% 134.6 5.7%
------- -------
Due from NS - net $ 247.9 $ 201.7
======= =======
</TABLE>
Interest is applied to certain advances at the average NS yield on
short-term investments and to the notes at specified rates.
<PAGE> PAGE 7
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars)
3. Related Parties (continued)
INTERCOMPANY FEDERAL INCOME TAX ACCOUNTS
----------------------------------------
In accordance with the NS Tax Allocation Agreement, intercompany
federal income tax accounts are recorded between companies in the NS
consolidated group. At March 31, 1995 and December 31, 1994, NS Rail
had intercompany federal income tax payables (which are included in
"Deferred income taxes" in the Consolidated Balance Sheets) of
$261.0 million.
CASH REQUIRED FOR NS STOCK PURCHASE PROGRAM AND NS DEBT
-------------------------------------------------------
Since 1987, the NS Board of Directors has authorized the purchase and
retirement of up to 65 million shares of NS common stock. Purchases
under the programs have been made with internally generated cash and
through issuances of debt by NS. Since the first purchases in
December 1987 through March 31, 1995, NS has purchased and retired
60,205,100 shares of its common stock at a cost of approximately
$2.6 billion. Future purchases are dependent on market conditions,
the economy, cash needs and alternative investment opportunities.
Consistent with earlier purchases, a significant portion of the funding
for future NS stock purchases, either in the form of direct cash or
cash used for debt service, will come from NS Rail through intercompany
advances or dividends to NS. Cash required to service NS debt, which
also may be issued for general corporate purposes, also will come
principally from NS Rail.
4. Capital Leases
During the first quarter of 1995, NS Rail entered into capital leases
covering 114 new locomotives having a total cost of $134.9 million.
The related capital lease obligations totaling $104.5 million were
reflected in the Consolidated Balance Sheet as debt and, because they
were non-cash transactions, were excluded from the Consolidated
Statement of Cash Flows. The lease obligations carry stated interest
rates between 8.23 percent and 8.60 percent but were converted to
variable rate obligations using interest rate swap agreements. The
interest rates on these obligations are based on the six-month London
Interbank Offered Rate, plus 35 basis points, and will be reset every
six months with realized gains or losses accounted for as an adjustment
of interest expense over the terms of the leases.
<PAGE> PAGE 8
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars)
5. Required Accounting Change in 1994
Effective January 1, 1994, NS Rail adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115), which addresses the accounting
and reporting for investments in equity securities that have readily
determinable fair values and for all investments in debt securities.
For NS Rail, SFAS 115 affects only balance sheet accounts and has no
impact on earnings. The total unrealized holding gain on NS Rail's
investments classified as "available for sale" at March 31, 1995, and
December 31, 1994, net of related deferred taxes, is reflected as a
separate component of "Stockholders' equity" in the Consolidated
Balance Sheets. Carrying value adjustments, which are non-cash
transactions, are not included in the Consolidated Statements of Cash
Flows.
<TABLE>
Under SFAS 115, NS Rail increased the reported carrying value of
certain short-term and long-term investments classified as "available
for sale" at March 31, 1995, as follows:
<CAPTION>
Gross
Unrealized
Holding Gain
Cost (Loss) Fair Value
-------- -------------- ----------
<S> <C> <C> <C>
Short-term securities,
principally U.S. Treasury
securities $ 247.1 $ (0.2) $ 246.9
Equity securities:
7.3 million shares of NS stock 20.6 464.4 485.0
Other -- 0.6 0.6
</TABLE>
Total unrealized holding gains increased $47.3 million during the first
quarter of 1995. The increased gains primarily reflect the change in
NS' stock price from $60-5/8 per share at December 31, 1994, to $66-7/8
per share at March 31, 1995. "Stockholders' equity" for the three
months increased $28.7 million as a result.
<PAGE> PAGE 9
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars)
<TABLE>
6. Norfolk and Western Railway Company and Subsidiaries (NW)--Summarized
Consolidated Financial Information
SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------
<CAPTION>
Three Months Ended
March 31,
------------------
1995 1994
-------- --------
(Unaudited)
<S> <C> <C>
Railway operating revenues $ 474.5 $ 455.9
Railway operating expenses 365.0 354.7
------- -------
Income from operations 109.5 101.2
Other - net 6.0 13.4
------- -------
Income before income taxes 115.5 114.6
Provision for income taxes 43.4 37.8
------- -------
Net income $ 72.1 $ 76.8
======= =======
</TABLE>
<TABLE>
SUMMARIZED CONSOLIDATED BALANCE SHEETS
--------------------------------------
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Assets
Current assets $ 349.7 $ 330.0
Noncurrent assets 4,508.3 4,439.6
-------- --------
Total assets $4,858.0 $4,769.6
======== ========
Liabilities and stockholder's equity
Current liabilities $ 213.0 $ 178.6
Noncurrent liabilities 1,600.6 1,590.0
Stockholder's equity 3,044.4 3,001.0
-------- --------
Total liabilities and
stockholder's equity $4,858.0 $4,769.6
======== ========
</TABLE>
<PAGE> PAGE 10
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Net Income
- ----------
"Net income" increased $1.1 million, or 1 percent, in the first quarter of
1995, compared with the same period last year. An 11 percent improvement
in operating income was offset by reduced nonoperating income and a higher
effective income tax rate.
<TABLE>
Railway Operating Revenues
- --------------------------
First-quarter "Railway operating revenues" increased $56.9 million, or
6 percent, compared with the same period last year.
This change in operating revenues was due to:
<CAPTION>
First Quarter
1995 vs. 1994
Increase (Decrease)
------------------
(In millions of dollars)
<S> <C>
Traffic volume (carloads) $ 87.8
Revenue per unit/mix (31.6)
Other 0.7
-------
$ 56.9
=======
</TABLE>
<TABLE>
The principal revenue commodity groups and changes from the prior year were
as follows:
<CAPTION>
First Quarter
1995 vs. 1994
Increase (Decrease)
------------------
(In millions of dollars)
<S> <C>
Coal $ (4.6)
Merchandise:
Intermodal 17.5
Metals/construction 12.0
Automotive 11.9
Chemicals 8.7
Paper/forest 7.4
Agriculture 3.3
Other, principally switching
and demurrage 0.7
-------
$ 56.9
=======
</TABLE>
<PAGE> PAGE 11
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Coal
- ----
The decline in coal revenues compared with last year was attributable to a
weather-related decrease in long-haul utility coal shipments and continued
weakness in export coal. Severe winter weather in the first quarter of
1994 created high demand for utility coal, while this year's mild weather
resulted in much lower burn rates at utilities served by NS Rail. The
decline in long-haul traffic was partially offset by an increase in short-
haul utility business, including NS Rail's new COLTainer rail-truck
service. The overall comparative weakness in utility coal traffic was
somewhat mitigated by increased movements of metallurgical coal. Higher
metallurgical traffic is largely due to the return to service of certain
facilities which were experiencing downtime last year.
Looking ahead, the utility coal market in 1995 is expected to recover
slowly with the return of more seasonal weather patterns and temperatures.
However, most of the gain is not expected to occur until the second half of
the year due to high utility stockpiles. The export coal market is
expected to be mixed, with lower rates offsetting increased demand,
although some improvement over 1994's depressed results is expected.
Merchandise
- -----------
All merchandise commodity groups showed improvement over last year's first
quarter, as overall merchandise traffic volume was up 12 percent. The
largest increase was in intermodal, with revenues up 18 percent on a
23 percent increase in traffic. Intermodal, which has been NS Rail's
fastest growing line of business in 1995, is expected to continue to expand
as additional business is shifted from trucks, and capacity improvements
generate growth from existing sources. The metals/construction and
automotive groups also posted strong first-quarter gains, compared with
last year, with revenues up 17 percent and 11 percent, respectively. Both
groups benefited from an overall improvement in the economy, with metals/
construction also gaining from new production facilities coming on-line.
Revenues from metals/construction traffic are expected to continue ahead of
last year, as growth is projected in construction and steel output.
Automotive volume and revenues are expected to decline somewhat due to
lower production and planned retooling downtime.
Railway Operating Expenses
- --------------------------
First-quarter "Railway operating expenses" increased $33.0 million, or
5 percent, compared with the same period last year. The largest increase
was in "Compensation and benefits" which was up $23.9 million, or
7 percent. The higher labor costs were partly due to the 10 percent
increase in total rail traffic. Other factors were: (1) a 4 percent wage
increase, effective July 1, 1994, for agreement employees; (2) higher
health care costs for agreement employees due to the absorption last year
of the cash surplus in a multi-railroad insurance fund; and (3) increased
<PAGE> PAGE 12
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
accruals for stock-based compensation, a result of the rise in the NS
stock price during the first quarter of 1995. "Casualties and other
claims" increased $3.1 million, or 11 percent, over expenses in the
first quarter of 1994, which were unusually low due to favorable
development experience related to claims filed in past years. Also
increasing were "Diesel fuel" expenses, up $3.0 million, or 7 percent,
largely due to higher consumption related to increased traffic, and
"Depreciation," up $4.2 million, or 5 percent, due to increased
investment in plant and equipment. "Other expenses" declined
$2.0 million, or 5 percent, due to lower employee moving expenses
which had been unusually high in the first quarter of 1994 due to
the early retirement program in the fall of 1993.
Other Income (Expense)
- ----------------------
"Other income (expense)" was down $11.5 million from first quarter 1994,
principally due to the absence of favorable interest accrual adjustments
and the reduction in corporate-owned life insurance (COLI) proceeds, both
of which benefited 1994.
Income Taxes
- ------------
The "Provision for income taxes" in first quarter 1995 totaled
$94.1 million, for an effective rate of 38.0 percent, compared with
an effective rate of 35.2 percent last year. The lower effective rate
in first quarter 1994 was due to an adjustment in federal income tax
reserves related to prior years.
<TABLE>
FINANCIAL CONDITION AND LIQUIDITY
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
(Dollars in millions)
<S> <C> <C>
Cash and short-term investments $232.4 $180.9
Working capital $ 86.2 $113.6
Current ratio 1.1 1.1
Debt to total capitalization 10.5% 9.4%
</TABLE>
CASH FLOWS FROM OPERATING ACTIVITIES are NS Rail's principal source of
liquidity and were sufficient to cover cash outflows for dividends, debt
repayments and capital spending (see Consolidated Statements of Cash Flows
on page 5). The increase in cash provided by operating activities compared
with the first quarter of 1994 was primarily due to higher income from
operations and to lower special charge payments.
CASH FLOWS FROM INVESTING ACTIVITIES were affected principally by capital
spending for property additions, which in the first quarter of 1995
included approximately $30 million related to locomotives under capital
leases (see Note 4). "Investment purchases" consists primarily of
premium payments related to COLI, while "Investment sales and other
transactions" principally reflects borrowing on COLI.
<PAGE> PAGE 13
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
(A Majority-Owned Subsidiary of Norfolk Southern Corporation)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
CASH FLOWS FROM FINANCING ACTIVITIES in the first quarter of 1995
includes "Proceeds from long-term borrowings" which represents amounts
received in connection with capital lease transactions entered into
during the first quarter (see Note 4).
As discussed in Note 3, NS has issued a significant amount of long-term
debt in recent years. The servicing of this debt is expected to be
primarily from NS Rail's funds, as it is NS' principal subsidiary.
<PAGE> PAGE 14
PART II - OTHER INFORMATION
---------------------------
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months
ended March 31, 1995.
<PAGE> PAGE 15
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORFOLK SOUTHERN RAILWAY COMPANY
------------------------------------------
(Registrant)
Date: May 10, 1995 /s/ Dezora M. Martin
------------------- ------------------------------------------
Dezora M. Martin
Corporate Secretary (Signature)
Date: May 10, 1995 /s/ John P. Rathbone
------------------- ------------------------------------------
John P. Rathbone
Vice President and Controller
(Principal Accounting Officer) (Signature)
<PAGE> PAGE 16
NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
INDEX TO EXHIBITS
-----------------
Electronic
Submission
Exhibit
Number Description Page Number
- ----------- ----------------------------------------- -----------
27 Financial Data Schedule (This exhibit is
required to be submitted electronically
pursuant to the rules and regulations of
the Securities and Exchange Commission and
shall not be deemed filed for purposes of
Section 11 of the Securities Act of 1933
or Section 18 of the Securities Exchange
Act of 1934). 17
<PAGE> PAGE 17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> $ 105
<SECURITIES> 128
<RECEIVABLES> 549
<ALLOWANCES> 6
<INVENTORY> 64
<CURRENT-ASSETS> 1,012
<PP&E> 12,679
<DEPRECIATION> 4,011
<TOTAL-ASSETS> 10,595
<CURRENT-LIABILITIES> 926
<BONDS> 562
<COMMON> 167
0
55
<OTHER-SE> 515
<TOTAL-LIABILITY-AND-EQUITY> 10,595
<SALES> 0
<TOTAL-REVENUES> 999
<CGS> 0
<TOTAL-COSTS> 749
<OTHER-EXPENSES> (5)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 247
<INCOME-TAX> 94
<INCOME-CONTINUING> 153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 153
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
