-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WA+a/FpmC1NsfuXGXzR5OEMzZ3A4c16M0vMex8/ndvE1KUJvQ/D5CUN7j/mjxMVq S04qPkHLGENfEqpLoBqRBw== 0000859119-96-000028.txt : 19960716 0000859119-96-000028.hdr.sgml : 19960716 ACCESSION NUMBER: 0000859119-96-000028 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960515 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19960715 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ILLINOIS CENTRAL CORP CENTRAL INDEX KEY: 0000859119 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 133545405 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10720 FILM NUMBER: 96594912 BUSINESS ADDRESS: STREET 1: 455 N CITYFRONT PLZ DR STREET 2: 20TH FLOOR CITY: CHICAGO STATE: IL ZIP: 60611-5504 BUSINESS PHONE: 3127557500 MAIL ADDRESS: STREET 1: 455 NORTH CITYFRONT PLAZA DR STREET 2: 455 NORTH CITYFRONT PLAZA DR CITY: CHICAGO STATE: IL ZIP: 60611 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 15, 1996 Illinois Central Corporation Exact name of Registrant as specified in its charter Delaware 1-10720 13-3545405 (State or other jurisdiction (Commission (IRS Employer of incorporation File Number) Identification No.) 455 North Cityfront Plaza Drive, Chicago, Illinois 60611-5504 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (312) 755-7500 Item 5. Other Events This Amendment to Form 8-K dated May 15, 1996 is being filed to amend the Pro Forma Statements included in the original filing. See Item 7 and page P-1. Item 7. Financial Statements and Exhibits (a) Pro Forma financial information See Index at page 4 (c) Exhibits See Exhibit Index at E-1. SIGNATURE 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 hereto duly authorized. ILLINOIS CENTRAL CORPORATION John V. Mulvaney Controller Date: July 15, 1996 ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES INDEX TO PRO FORMA FINANCIAL INFORMATION Pro Forma Financial Information . . . . . . . . P-1 Pro Forma Condensed Consolidated Statement of Income for the Three Months Ended March 31, 1996. . . . . P-3 Notes to Pro Forma Condensed Consolidated Statements of Income for the Three Months Ended March 31, 1996 . . P-4 Pro Forma Condensed Consolidated Balance Sheet at March 31, 1996. . . . . . . . . . .. . . . . . . . . P-5 Notes to Pro Forma Condensed Consolidated Balance Sheet at March 31, 1996 . . . . . . . . . . . P-6 Pro Forma Condensed Consolidated Statement of Income for the year Ended December 31, 1995 . . . . . . . P-7 Notes to Pro Forma Condensed Consolidated Statement of Income for the year Ended December 31, 1995 . P-8 PRO FORMA FINANCIAL INFORMATION General The following unaudited pro forma condensed consolidated statements of income of Illinois Central Corporation and Subsidiaries ("IC") for the twelve months ended December 31, 1995 and the three months ended March 31, 1996 (the "Pro Forma Income Statements") and the pro forma condensed consolidated balance sheet of IC as of March 31, 1996 (the "Pro Forma Balance Sheet") (together the "Pro Forma Statements") were prepared to illustrate the estimated effects of the acquisition of CCP Holdings, Inc. ("CCPH") by IC (the "Acquisition")(See Below). The Pro Forma Statements reflect the use of the purchase method of accounting. The Pro Forma Income Statements assume that the Acquisition occurred as of January 1, 1995 and January 1, 1996, respectively. The Pro Forma Balance Sheet assumes that the Acquisition occurred on March 31, 1996. The total purchase cost, including fees and expenses, has been allocated to the assets and liabilities of CCPH based on their book values as no studies, evaluations or other investigations have occurred or will be conducted until closing. The unaudited Pro Forma Statements have been presented for informational purposes only, are not indicative of what IC's actual results of operations or financial conditions would have been had the Acquisition occurred as of January 1,1995 or January 1, 1996, respectively or at March 31, 1996 and do not purport to indicate IC's consolidated results of operations for any future date or period or financial position at any future date. In accordance with recent interpretations of Article 11 of Regulation S-X, no adjustments have been made to reflect revised operating policies and procedures, reduced employment levels and lower materials expense as a result of IC's intended operating plan for CCPH. Management believes that this plan would have lowered operating expenses approximately $1.7 million for the three months ended March 31, 1996 and approximately $6.9 million for the year ended December 31, 1995. Additionally, the pro forma information presented does not include $4.5 million in one-time severance costs. Likewise, anticipated revenue synergies have not been quantified and are not included. The unaudited pro forma adjustments are based upon available information and upon certain assumptions. The unaudited Pro Forma Statements and the accompanying notes should be read in conjunction with the selected historical consolidated financial statements of IC and CCPH, including the notes thereto. IC's financial statements are contained in its Form 10-Q for the three months ended March 31, 1996 (File No. 1-10720) filed with the Commission on May 10, 1996 and its Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-10720) filed with the Commission on March 11, 1996. The historical audited consolidated financial statements of CCPH as of December 31, 1995 and 1994 and for each of the three years ended December 31, 1995 and the unaudited consolidated financial statements of CCPH as of March 31, 1996 and for the three months ended March 31, 1996 and 1995 are contained in the IC's Form 8-K dated as of May 15, 1996 (SEC File No. 1-10720). The Acquisition On January 17, 1996, IC announced a definitive agreement for the acquisition of CCPH. The announced purchase price was approximately $125 million in cash, and the assumption of approximately $14 million in net debt, and approximately $18 million of capitalized lease obligations. The cash price is adjusted for any unscheduled prepayments of long-term debt prior to closing. Additionally, the actual purchase price is subject to various potential adjustments for up to one year after the closing date. The application for the required approval of the Surface Transportation Board (the "STB") was filed January 31, 1996. On April 30, 1996, the STB announced they had voted in favor of the acquisition. Formal written approval was issued May 13, 1996, and is effective June 13, 1996. The transaction actually closed on that date. IC is purchasing the stock of CCPH from CCPH's three stockholders and will account for the acquisition using the purchase method of accounting. CCPH has two principal operating subsidiaries - - the Chicago Central and Pacific Railroad (CCPR") and the Cedar River Railroad ("CRR") - which together comprise a Class II Railroad system operating 850 miles of road. CCPR operates from Chicago west to Omaha, Nebraska, with connecting lines to Cedar Rapids and Sioux City, Iowa. CRR runs from Waterloo, Iowa north to Albert Lea, Minnesota. The Pro Forma Statements herein are based on the announced purchase price and historical information referred to above which was the only information available at May 15, 1996. Pro Forma financial statements based on the actual purchase price (see below) will be filed by IC upon the completion of an audit and appraisal of CCPH as of June 13, 1996. The actual purchase price was $144.5 million in cash (including $1.6 million of Seller's expenses), the assumption of approximately $5 million in debt, and approximately $18 million of capitalized lease obligations. IC used its existing bank credit lines and funds received from its operating subsidiary, the Illinois Central Railroad Company (the "Railroad") to fund the acquisition. The Railroad used proceeds from its issuance of commercial paper to provide the monies needed to make a dividend of $50.0 million and $59.9 million loan to IC. ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statement of Income Three Months Ended March 31, 1996 ($ in millions) (Unaudited) ADJUSTMENTS/ IC CCPH ELIMINATIONS Pro Forma Revenues $ 162.3 $ 21.6 $ $ 183.9 Operating expenses 102.0 12.2 0.8 (1) 115.0 Operating income 60.3 9.4 (0.8) 68.9 Interest expense, net (7.7) (0.8) 0.3 (2) (1.9)(3) (10.1) Other income, net 0.3 0.2 0.5 Income before income taxes 52.9 8.8 (2.4) 59.3 Provision for income taxes 19.8 3.5 (0.9)(4) 22.4 Net income $ 33.1 $ 5.3 $ (1.5) $ 36.9 Income per share $ 0.54 $ 0.60 Weighted average number of shares of common stock and common stock equivalents outstanding 61,742,614 61,742,614 See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income P-2 ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME THREE MONTHS ENDED MARCH 31, 1996 The following is a summary of the adjustments/eliminations reflected in the unaudited Pro Forma Condensed Consolidated Statement of Income for the three months ended March 31, 1996. 1) Amortization of Goodwill calculated on the difference between the price of $125 million and the book value of stockholders' equity ($54.1 million) on January 1, 1996 as adjusted for the amortization of acquisition liability for severance and amortized over 25 years. Actual Goodwill will be determined following the closing of the acquisition and the complete valuation of the assets and liabilities existing upon closing. The amortization period of 25 years is based on preliminary evaluation of asset lives and could change. 2) Elimination of CCPH's interest expense on the portion of the beginning debt balance assumed paid off with cash available on January 1, 1996, of approximately $15.8 million. 3) Increased interest expense caused by the additional borrowings required to finance the acquisition. Approximately $100 million will be financed at IC's subsidiary, Illinois Central Railroad Company. Approximately $25 million will be financed by IC using its bank lines. 4) Reflects the tax effects of Pro Forma adjustments. ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Balance Sheet As of March 31, 1996 ($ in millions) (Unaudited) ADJUSTMENTS / Assets: IC CCPH ELIMINATIONS Pro Forma Cash and cash equivalents $ 11.1 $ 6.8 (5.0)(2) $ 12.9 Other current assets 102.9 21.0 (0.2)(4) 123.7 Investments 13.3 - 13.3 Properties, net 1,292.6 114.3 1,406.9 Goodwill 77.1 (1) 4.5 (3) 81.6 Other assets 15.3 0.4 15.7 Total assets $1,435.2 $ 142.5 76.4 $1,654.1 Liabilities and Stockholders' Equity: Current liabilities $ 189.1 $ 26.7 4.5 (3) $ (1.3)(2) (0.2)(4) 218.8 Long-term debt 387.4 21.9 136.5 (1) (3.7)(2) 542.1 Deferred taxes 252.7 25.8 278.5 Other liabilities 114.9 8.7 123.6 Stockholders' equity 491.1 59.4 (59.4)(1) 491.1 Total liabilities and stock- holders' equity $1,435.2 $ 142.5 76.4 $1,654.1 See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet. P-4 ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 The following is a summary of the adjustments/eliminations reflected in the unaudited Pro Forma Condensed Consolidated Statement of Financial Position as of March 31, 1996. 1) Reflects the acquisition of 100% of the stock of CCP. 2) Assumes CCP's cash is used to reduce acquired bank debt. 3) Reflects anticipated severance costs of $4.5 million. 4) Eliminates intercompany car hire balances at March 31, 1996. ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statement of Income Year Ended December 31, 1995 ($ in millions) (Unaudited) ADJUSTMENTS/ IC Corp CCPH ELIMINATIONS Pro Forma Revenues $ 643.8 $ 76.0 $ $ 719.8 Operating expenses 413.3 53.0 3.4 (1) 469.7 Operating income 230.5 23.0 (3.4) 250.1 Interest expense, net (29.5) (4.1) 0.3 (2) (7.4)(3) (40.7) Other income, net (0.2) 0.9 0.7 Income before income taxes 200.8 19.8 (10.5) 210.1 Provision for income taxes 71.0 7.9 (3.9)(4) 75.0 Income before extraordinary item, net $ 129.8 $ 11.9 $ (6.6) $ 135.1 Income per share before extraordinary item $ 2.06 $ 2.15 Weighted average number of shares of common stock and common stock equivalents outstanding 62,885,121 62,885,121 See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Income P-6 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1995 The following is a summary of the adjustments/eliminations reflected in the unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 1995. 1) Amortization of Goodwill calculated on the difference between the price of $125 million and the book value of stockholders' equity ($43.9 million) on January 1, 1995 as adjusted for amortization of acquisition liability for severances and amortized over 25 years. Actual Goodwill will be determined following the closing of the acquisition and the complete valuation of the assets and liabilities existing upon closing. The amortization period of 25 years is based on preliminary evaluation of asset lives and could change. 2) Elimination of CCPH's interest expense on the portion of the beginning debt balance assumed paid off with cash available on January 1, 1995, of approximately $3.8 million. 3) Increased interest expense caused by the additional borrowings required to finance the acquisition. Approximately $100 million will be financed at IC's subsidiary, Illinois Central Railroad Company. Approximately $25 million will be financed by IC using its bank lines. 4) Reflects the tax effects of Pro Forma adjustments. ILLINOIS CENTRAL CORPORATION & SUBSIDIARIES EXHIBIT INDEX Exhibit Index Description Sequential Page No. 23.1 Consent of Arthur Andersen LLP (A) (A) Included herein but not reproduced EX-23 2 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ILLINOIS CENTRAL CORPORATION As independent public accountants, we hereby consent to the use of our report dated January 19, 1996 on the consolidated financial statements of CCP Holdings, Inc. and its subsidiaries (the "Company") as of December 31, 1995 and 1994 and for each of the years in the three year period ended December 31, 1995 in this Amendment No. 1 to Current Report on Form 8-K. /s/Arthur Andersen LLP Chicago, Illinois July 12, 1996 -----END PRIVACY-ENHANCED MESSAGE-----