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| Norfolk Southern 1993 10-K Report (Partial 10-K shown; subscribers can see the entire 10-K report.) |
0000092275-94-000002.hdr.sgml : 19940331
ACCESSION NUMBER: 0000092275-94-000002
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19931231
FILED AS OF DATE: 19940328
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NORFOLK SOUTHERN RAILWAY CO/VA
CENTRAL INDEX KEY: 0000092275
STANDARD INDUSTRIAL CLASSIFICATION: 4011
IRS NUMBER: 536002016
STATE OF INCORPORATION: VA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 34
SEC FILE NUMBER: 001-00743
FILM NUMBER: 94518145
BUSINESS ADDRESS:
STREET 1: THREE COMMERCIAL PL
CITY: NORFOLK
STATE: VA
ZIP: 23510
BUSINESS PHONE: 8046292682
FORMER COMPANY:
FORMER CONFORMED NAME: SOUTHERN RAILWAY CO
DATE OF NAME CHANGE: 19910117
10-K
1
NORFOLK SOUTHERN RAILWAY COMPANY 10-K FYE 12/31/93
PAGE 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------------
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or l5(d) of THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ --------------
Commission file 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 (I.R.S. Employer
incorporation or organization) Identification No.)
Three Commercial Place, Norfolk, Virginia 23510-2191
- ----------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 629-2682
--------------------
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS SO REGISTERED. EACH CLASS REGISTERED ON NEW YORK
STOCK EXCHANGE:
Southern Railway Company First Consolidated Mortgage 5% Gold Bonds, due
July 1, 1994; Southern Railway Company Memphis Division First Mortgage
5% Gold Bonds, due July 1, 1996; Norfolk and Western Railway Company
First Consolidated Mortgage 4% Bonds, due October 1, 1996; Guarantee of
Norfolk Southern Railway Company with respect to $23,877,300 principal
amount of Norfolk and Western Railway Company First Consolidated
Mortgage 4% Bonds due October 1, 1996; Norfolk and Western Railway
Company 4.85% Subordinated Income Debentures, due November 15, 2015;
Guarantee of Norfolk Southern Railway Company with respect to $1,865,900
principal amount of Norfolk and Western Railway Company 4.85%
Subordinated Income Debentures due November 15, 2015; The Virginian
Railway Company 6% Subordinated Income Debentures, due August 1, 2008;
Guarantee of Norfolk Southern Railway Company with respect to $5,043,000
principal amount of The Virginian Railway Company 6% Subordinated Income
Debentures due August 1, 2008; Norfolk Southern Railway Company $2.60
Cumulative Preferred Stock, Series A (No Par Value, $50 Stated Value).
PAGE 2
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. (X)
The aggregate market value of the voting stock held by
nonaffiliates as of February 28, 1994: $43,312,260
The number of shares outstanding of each of the registrant's
classes of Common Stock, as of February 28, 1994: 16,668,997
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's definitive proxy statement (to be
dated April 19, 1994) to be filed electronically pursuant to
Regulation 14A not later than 120 days after the end of the fiscal
year are incorporated by reference in Part III.
PAGE 3
TABLE OF CONTENTS
Item Page
---- ----
Part I 1. Business...................................... 4
2. Properties.................................... 4
3. Legal Proceedings............................. 21
4. Submission of Matters to a Vote of Security
Holders..................................... 23
Executive Officers of the Registrant.......... 23
Part II 5. Market for Registrant's Common Stock and
Related Stockholder Matters................... 29
6. Selected Financial Data....................... 30
7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 31
8. Financial Statements and Supplementary Data... 31
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........ 32
Part III 10. Directors and Executive Officers of the
Registrant.................................... 33
11. Executive Compensation........................ 33
12. Security Ownership of Certain Beneficial
Owners and Management......................... 33
13. Certain Relationships and Related
Transactions.................................. 33
Part IV 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K........................... 34
Index to Consolidated Financial Statement
Schedules..................................... 34
Power of Attorney............................................ 37
Signatures................................................... 37
Exhibit Index................................................ 84
PAGE 4
PART I
Item 1. Business.
- ------ --------
and
Item 2. Properties.
- ------ ----------
GENERAL. Norfolk Southern Railway Company (Norfolk
Southern Railway) was incorporated in 1894 under the name Southern
Railway Company (Southern) in the Commonwealth of Virginia and,
together with its consolidated subsidiaries (collectively, NS Rail),
is primarily engaged in the transportation of freight by rail.
On June 1, l982, Southern and Norfolk and Western Railway
Company (NW) became subsidiaries of Norfolk Southern Corporation
(NS), a transportation holding company. Effective December 31, 1990,
NS transferred all the common stock of NW to Southern, and Southern's
name was changed to Norfolk Southern Railway Company. Accordingly,
all the common stock of NW, which is its only voting security, is
owned by Norfolk Southern Railway, and all the common stock of
Norfolk Southern Railway (16,668,997 shares) is owned directly by NS.
NS common stock is publicly held and listed on the New York Stock
Exchange.
There remain issued and outstanding as of February 28,
1994, 1,197,027 shares of Norfolk Southern Railway's $2.60 Cumulative
Preferred Stock, Series A (Series A Stock), of which 1,096,907 shares
(including 74 shares not entitled to vote) were held by other than
subsidiaries. The Series A Stock is entitled to one vote per share,
is nonconvertible, and is traded on the New York Stock Exchange.
STOCK PURCHASE PROGRAM. On June 2, 1989, NS announced
that it intended to purchase up to 250,000 shares of Norfolk Southern
Railway's Series A Stock during the subsequent two-year period. In
May 1991, NS extended the previously announced stock purchase program
through 1993. In March 1994, NS announced that it would continue
purchasing up to 250,000 shares of the Series A Stock through 1996.
As of February 28, 1994, NS had purchased 77,626 shares of preferred
stock at a total cost of approximately $2.67 million. Consequently,
as of February 28, 1994, NS held 94.3 percent of the voting stock of
Norfolk Southern Railway.
OPERATIONS. As of December 3l, l993, NS Rail operated
14,589 miles of road in the states of Alabama, Florida, Georgia,
Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan,
Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Virginia and West Virginia, and the
Province of Ontario, Canada. Of this total, 12,761 miles are owned,
677 miles are leased and 1,151 miles are operated under trackage
PAGE 5
rights. Of the operated mileage, 11,870 miles are main line and
2,719 miles are branch line. In addition, NS Rail operates
approximately 11,266 miles of passing, industrial, yard and side
tracks.
NS Rail has major leased lines in North Carolina and
between Cincinnati, Oh., and Chattanooga, Tn. The North Carolina
leases, covering approximately 300 miles, expire at the end of 1994,
and NS Rail is discussing possible renewals with the lessor. If these
leases are not renewed, NS Rail could be required to continue using
the lines subject to conditions prescribed by the Interstate Commerce
Commission (ICC) or might find it necessary ultimately to operate over
an alternate route or routes. It is not expected that the resolution
of this matter, whether resulting in renewal of the leases, continued
use of the leased lines under prescribed conditions or operation over
one or more alternate routes, will have a material effect on NS Rail's
consolidated financial position. The Cincinnati-Chattanooga lease,
also covering about 335 miles, expires in 2026, subject to an option
to extend the lease for an additional 25 years at terms to be agreed
upon.
NS Rail's lines carry raw materials, intermediate products
and finished goods primarily in the Southeast and Midwest and to and
from the rest of the United States and parts of Canada. These lines
also transport overseas freight through several Atlantic and Gulf
Coast ports. Atlantic ports served by NS Rail include: Norfolk,
Va.; Morehead City, N.C.; Charleston, S.C.; Savannah and Brunswick,
Ga.; and Jacksonville, Fl. Gulf Coast ports served include: Mobile,
Al., and New Orleans, La.
NS Rail's lines reach most of the larger industrial and
trading centers of the Southeast and Midwest, with the exception of
those in central and southern Florida. Atlanta, Birmingham, New
Orleans, Memphis, St. Louis, Kansas City (Missouri), Chicago,
Detroit, Cincinnati, Buffalo, Norfolk, Charleston, Savannah and
Jacksonville are among the leading centers originating and
terminating freight traffic on the system. In addition to serving
other established centers, its lines reach many industries, mines (in
western Virginia, eastern Kentucky and southern West Virginia) and
businesses located in smaller communities in its service area. The
traffic corridors carrying the heaviest volumes of freight include
those from the Appalachian coal fields of Virginia, West Virginia and
Kentucky to Norfolk and Sandusky, Oh.; Buffalo to Chicago and Kansas
City; Chicago to Jacksonville (via Cincinnati, Chattanooga and
Atlanta); and Washington, D.C./Hagerstown, Md., to New Orleans (via
Atlanta and Birmingham).
Buffalo, Chicago, Hagerstown, Jacksonville, Kansas City,
Memphis, New Orleans and St. Louis are major gateways for
interterritorial system traffic.
PAGE 6
REVENUES. NS Rail's railway operating revenues were
$3.7 billion in 1993. These revenues were received for the
transportation of 262.3 million tons of revenue freight of which
approximately 210.4 million tons originated on line, approximately
222.8 million tons terminated on line (including 177.1 million tons of
local traffic -- originating and terminating on line) and
approximately 6.2 million tons was overhead traffic (neither
originating nor terminating on line).
Revenue and revenue ton mile (one ton of freight moved one
mile) contributions by principal railway operating revenue sources for
the period 1989 through 1993 are set forth in the following table:
Year Ended December 31,
Principal Railway -------------------------------------------------
Operating Revenue Sources 1993 1992 1991 1990 1989
- ------------------------- ---- ---- ---- ---- ----
(Revenues in Millions and Revenue Ton Miles in Billions)
COAL
Revenues............... $1,213.3 $1,296.0 $1,330.3 $1,408.8 $1,299.0
% of total railway
operating revenues.... 32.5% 34.9% 37.0% 37.7% 35.6%
Revenue ton miles...... 41.4 41.9 42.7 46.0 41.8
PAPER/FOREST
Revenues............... $ 502.7 $ 499.5 $ 476.1 $ 486.5 $ 481.1
% of total railway
operating revenues.... 13.5% 13.5% 13.2% 13.0% 13.2%
Revenue ton miles...... 15.1 14.7 13.6 13.3 13.8
CHEMICALS
Revenues............... $ 472.9 $ 471.7 $ 449.7 $ 443.9 $ 436.9
% of total railway
operating revenues.... 12.7% 12.7% 12.5% 11.9% 12.0%
Revenue ton miles...... 14.7 14.3 13.6 12.8 12.2
AUTOMOTIVE
Revenues............... $ 429.5 $ 401.5 $ 325.9 $ 367.9 $ 407.2
% of total railway
operating revenues.... 11.5% 10.8% 9.1% 9.9% 11.1%
Revenue ton miles...... 4.2 3.7 3.0 3.7 4.1
AGRICULTURE
Revenues............... $ 319.7 $ 301.4 $ 293.6 $ 299.6 $ 286.8
% of total railway
operating revenues.... 8.6% 8.1% 8.2% 8.0% 7.8%
Revenue ton miles...... 13.6 12.6 12.2 11.3 12.1
METALS/CONSTRUCTION
Revenues............... $ 296.1 $ 276.3 $ 274.0 $ 305.6 $ 317.9
% of total railway
operating revenues.... 7.9% 7.5% 7.6% 8.2% 8.7%
Revenue ton miles...... 9.6 8.5 8.2 9.1 9.2
PAGE 7
Principal Year Ended December 31,
Railway Operating -------------------------------------------------------
Revenue Sources (cont'd) 1993 1992 1991 1990 1989
- ------------------------ ---- ---- ---- ---- ----
(Revenues in Millions and Revenue Ton Miles in Billions)
INTERMODAL
(Trailers and Containers)
Revenues............... $ 371.9 $ 341.0 $ 324.6 $ 300.1 $ 309.9
% of total railway
operating revenues.... 10.0% 9.2% 9.0% 8.0% 8.5%
Revenue ton miles...... 13.0 11.9 10.4 10.1 9.9
-------- -------- -------- -------- --------
Total Freight Revenues... $3,606.1 $3,587.4 $3,474.2 $3,612.4 $3,538.8
Total Revenue Ton Miles.. 111.6 107.6 103.7 106.3 103.1
OTHER RAILWAY OPERATING
Revenues............... $ 121.5 $ 121.7 $ 123.8 $ 122.7 $ 114.1
% of total railway
operating revenues.... 3.3% 3.3% 3.4% 3.3% 3.1%
-------- -------- -------- -------- --------
Total Railway Operating
Revenues............... $3,727.6 $3,709.1 $3,598.0 $3,735.1 $3,652.9
Note: Revenue ton miles (RTMs) for 1989 and 1990 have been restated from
"shortest distance" miles to "actual route" miles. RTMs for 1990
through 1992 have been restated from a one-month-delay basis to
a current-month basis.
COAL TRAFFIC - The commodity group moving in largest
tonnage volume over NS Rail is coal, coke and iron ore, most of which
is bituminous coal. NS Rail originated 112.1 million tons of coal,
coke and iron ore in 1993 and handled a total of 118.0 million tons.
Originated tonnage decreased 5 percent from 118.0 million tons in
1992, and total tons handled decreased 5 percent from 124.4 million
tons. Revenues from coal, coke and iron ore, which accounted for
33 percent of NS Rail's total railway operating revenues and
37 percent of total revenue ton miles in 1993, were $1.21 billion, a
decrease of 6 percent from $1.30 billion in 1992.
The following table shows total coal tonnage originated on
NS Rail, received from connections and handled for the five years
ended December 31, 1993:
Tons of Coal (Millions)
---------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Originated 109.8 115.5 116.8 126.6 116.2
Received 5.9 6.3 6.5 6.8 4.2
----- ----- ----- ----- -----
Handled 115.7 121.8 123.3 133.4 120.4
Note: Coal tonnage for 1989 and 1990 has been restated
from a settled basis to a movement basis.
PAGE 8
Of the 109.8 million tons of coal originating on NS Rail in
1993, the approximate breakdown is as follows: 37.9 million tons from
West Virginia, 37.6 million tons came from Virginia, 22.9 million tons
from Kentucky, 7.6 million tons from Alabama, 1.7 million tons from
Tennessee, 1.1 million tons from Illinois, and 1.0 million tons from
Indiana. Of this NS Rail-origin coal, approximately 25.3 million tons
moved for export, principally through NS Rail's pier facilities at
Norfolk (Lamberts Point), Virginia; 20.1 million tons moved to domestic
and Canadian steel industries; 55.6 million tons of steam coal moved to
electric utilities; and 8.8 million tons moved to other industrial and
miscellaneous users. NS Rail moved 9.7 million tons of originated coal
to various docks on the Ohio River for further movement by barge and
5.1 million tons to various Lake Erie ports. Other than coal moving
for export, virtually all coal tonnage handled by NS Rail was
terminated in states situated east of the Mississippi River.
Total NS Rail coal tonnage handled through all system ports
in 1993 was 42.4 million. Of this total, 65 percent moved through the
pier facilities at Lamberts Point. In 1993, total tonnage handled at
Lamberts Point, including coastwise traffic, was 27.6 million tons, a
20 percent decrease from the 34.7 million tons handled in 1992.
The quantities of NS Rail coal handled for export only
through Lamberts Point for the five years ended December 31, 1993,
were as follows:
Export Coal through Lamberts Point
(Millions of tons)
--------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Originated 24.6 30.8 34.3 35.1 30.9
Handled 24.9 31.2 34.6 35.4 31.4
The recession in Europe and high stockpiles of coal
overseas continued to affect NS Rail's export coal shipments in 1993,
as did the UMWA strike at several mines served by NS Rail. Domestic
coal was essentially flat, compared with 1992, although the market for
utility coals increased slightly because of the hot weather in our
service region and continued spot tonnage purchases. Increased
shipments to steel producers were attributed to strike-related
problems encountered by suppliers served by other carriers; the
industrial market stayed even with the previous year.
MERCHANDISE RAIL TRAFFIC - The merchandise traffic group
consists of Intermodal and five major commodity groupings (Paper/
Forest; Chemicals; Automotive; Agriculture; and Metals/Construction).
Total NS Rail merchandise revenues increased in 1993 to $2.39 billion,
a 4 percent increase over 1992. Merchandise carloads handled in 1993
were 2.82 million, compared with 2.66 million handled in 1992, an
increase of 6 percent.
PAGE 9
In 1993, 97.8 million tons of merchandise freight, or
approximately 68 percent of total merchandise tonnage handled by NS
Rail, originated on line. The balance of NS Rail's merchandise
traffic was received from connecting carriers (mostly railroads, with
some intermodal, water and highway as well), usually at
interterritorial gateways. The principal interchange points for NS
Rail-received traffic included Chicago, Memphis, New Orleans,
Cincinnati, Kansas City, Detroit, Hagerstown, St. Louis/East St.
Louis, and Louisville.
The economy improved in 1993, but the pace of recovery was
still below the average of post-war recoveries. All merchandise
commodity groups showed improvement over 1992. The biggest gains were
in Intermodal, up $30.9 million; Automotive, up $28.0 million; Metals/
Construction, up $19.8 million and Agriculture, up $18.3 million.
There were smaller gains in Paper/Forest and Chemicals.
PAPER/FOREST traffic (including paper, paperboard, wood
pulp, pulpwood, wood chips, lumber, kaolin clay and waste paper)
accounted for 13 percent of NS Rail's total operating revenues and
13 percent of total revenue ton miles during 1993. Compared with
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