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 ROSEMONT, Ill., Nov. 1 /PRNewswire/ -- Wisconsin Central Transportation Corporation (NASDAQ-NMS: WCLX) (WCTC) today reported record third quarter operating revenues, operating income and net income and record year-to-date operating revenues and operating income. WCTC's quarterly earnings increased by 39.6 percent over 1992 to $4.7 million, while quarterly earnings per common share increased 9.6 percent over 1992 to 57 cents per share, despite a 28.4 percent increase in the average number of common shares outstanding and a five cents per share charge resulting from the increased Federal income tax rate discussed below. These results include the initial operations of the Fox Valley & Western Ltd. (FV&W), which acquired the operating assets of the Fox River Valley Railroad Corporation and Green Bay and Western Railroad Company (FV&W Acquisitions) on Aug. 27, 1993.
 Compared with the third quarter of last year, the company's operating revenues increased $5.0 million, or 15.2 percent, to $38.3 million, and traffic volume increased 21.0 percent to almost 65,000 carloads during the quarter. Contributing to this increase were nearly 8,000 carloads from the FV&W's initial operations. Edward A. Burkhardt, WCTC president said, "We are happy with the initial operations of the FV&W, but are even more excited about the future. The extended routing connections and timely service that we can provide customers as a result of these acquisitions offer us growth potential." Burkhardt indicated that other factors that contributed to the traffic increases for the quarter were increases in metallic ore, lumber, and food and grain shipments, offset slightly by a decline in intermodal revenues. This revenue growth, coupled with smaller increases in operating expenses, led to record third quarter operating income of $10.1 million, or a 25.5 percent increase over 1992 levels.
 In the quarter the company also recorded $550,000 of additional income tax expense resulting from the increase in the Federal income tax rate to 35 percent from 34 percent. Included in this amount is $430,000, or five cents per share, which results from the application of the new rate to deferred income taxes as of Dec. 31, 1992. The company's third quarter results benefited from a $660,000, or 26.7 percent decline in interest expense compared with last year's levels due to the temporary repayment of debt prior to the FV&W Acquisitions, as discussed below.
 The company also indicated that it is optimistic about the future potential of its recent investment in New Zealand Rail Limited (NZRL). As previously announced, on Sept. 30, 1993, a consortium including the company's Wisconsin Central International, Inc. (WCI) subsidiary acquired NZRL, which was being privatized by the New Zealand government. For its US$16.0 million equity investment, the company received a 27 percent interest in NZRL, a 2,500-mile railroad, which has 5,200 employees, 269 locomotives, and about 6,000 freight cars and had operating income of US$25 million in the fiscal year ended June 30, 1993, on revenue of US$271 million. The total purchase price of the acquisition was approximately US$222 million. The company will account for the investment using the equity method of accounting. Burkhardt said, "While our equity investment is a limited one, it affords us a unique opportunity to influence the future development of this railroad."
 First Nine Months Results
 Operating revenues for the first nine months of 1993 increased by 13.6 percent, or $12.7 million to $105.9 million compared with the year earlier period. Operating income increased to $23.3 million, as compared with $19.5 million in the year ago period as stronger revenues were partially offset by smaller volume-related increases in expenses. Income before an extraordinary charge and accounting change increased $3.2 million, or 42.2 percent to $10.9 million for the first nine months of 1993, as compared with the same period in 1992. An extraordinary charge and an accounting change totaling $3.5 million, net of income taxes, or 42 cents per share recorded in the first quarter of 1993 caused net income for the first nine months of 1993 to decline slightly to $7.4 million, versus net income of $7.7 million for the year ago period.
 The extraordinary charge was associated with the company's prepayment of debt during the first quarter of 1993 in which the company temporarily used cash from its December 1992 public offering to prepay $20.5 million in 13 percent fixed-rate subordinated notes and to retire an additional $1.1 million of other debt. In connection with these prepayments, the company wrote off $1.0 million of non-cash deferred financing costs and incurred a prepayment penalty of $1.3 million. Combined, these factors led to a $1.4 million extraordinary charge, net of income taxes, or 17 cents per common share. The prepayments temporarily reduced WCTC's overall debt until the FV&W Acquisitions were consummated. The FV&W Acquisitions were financed using a combination of existing and new credit facilities, as well as cash on hand. The company's recent investment in NZRL was financed through a combination of borrowings from a new credit facility and cash on hand.
 Results for the first nine months of 1993 were also impacted by the company's required Jan. 1, 1993, adoption of the Financial Accounting Standards Board's Statement No. 109, "Accounting for Income Taxes." This adoption, combined with legislation effective Jan. 1, 1991, which retroactively eliminated the exemption for railroads from income taxes in the state of Wisconsin, resulted in the establishment of a deferred state tax liability with a cumulative effect of $2.1 million, or 25 cents per common share for this required change in method of accounting for income taxes. In addition, the company also recorded $430,000, or five cents per share, of additional income tax expense resulting from the application of the increase in the Federal income tax rate to 35 percent from 34 percent to deferred income taxes as of Dec. 31, 1992.
 Shares of Wisconsin Central Transportation Corporation are publicly traded on the NASDAQ National Market System under the symbol WCLX. The company's principal subsidiaries, Wisconsin Central Ltd. and Fox Valley & Western Ltd., operate about 2,500 miles of railroad serving Wisconsin, Illinois, Minnesota, Michigan's Upper Peninsula and Ontario.
 Quarter Ended
 9/30/93 9/30/92
 Operating revenues $38,274,000 $33,227,000
 Net income $4,677,000 $3,350,000
 Average number of common
 shares outstanding 8,275,000 6,445,000
 Earnings per common share $.57 $.52
 Nine Months Ended
 9/30/93 9/30/92
 Operating revenues $105,860,000 $93,177,000
 Income before extraordinary
 item and cumulative effect
 of accounting change 10,912,000 7,674,000
 Extraordinary item (1,398,000)(a) --
 Cumulative effect of
 accounting change (2,067,000)(b) --
 Net income $7,447,000 $7,674,000
 Average number of common
 shares outstanding 8,256,000 6,425,000
 Earnings per common share:
 Income before extraordinary item $1.32 $1.19
 Extraordinary item (.17)(a) --
 Cumulative effect of
 accounting change (.25)(b) --
 Net income $.90 $1.19
 (a) Represents an extraordinary charge (net of income taxes) for the write-off of non-cash deferred financing costs and the effects of a prepayment penalty associated with early debt repayment.
 (b) Represents the cumulative effect of a change in the method of accounting for income taxes.
 -0- 11/1/93
 /CONTACT: Tom Power, executive vice president and chief financial officer, of Wisconsin Central Transportation, 708-318-4602/

CO: Wisconsin Central Transportation ST: Illinois IN: TRN SU: ERN

DS-AL -- MN009 -- 9046 11/01/93 10:18 EST
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Publication:PR Newswire
Date:Nov 1, 1993

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