COVER
Exhibit 99(c)
SKYWAY RETIREMENT SAVINGS PLAN
Financial Statements for the Years Ended
December 31, 1996 and 1995, Supplemental
Schedules for the Year Ended December 31, 1996
and Independent Auditors' Report
INDEX
SKYWAY RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
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Page
Independent Auditors' Report 1
Financial Statements for the Years Ended December 31, 1996 and 1995:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
Supplemental Schedules for the Year Ended December 31, 1996:
Item 27a - Assets Held for Investment Purposes 8
Item 27d - Reportable Plan Transactions 9
1
INDEPENDENT AUDITORS' REPORT
The Administrative Committee of the
Skyway Retirement Savings Plan:
We have audited the accompanying statements of net assets
available for benefits of the Skyway Retirement Savings Plan
(the Plan) as of December 31, 1996 and 1995, and the related
statements of changes in net assets available for benefits for
the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements 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.
In our opinion, such financial statements present fairly, in
all material respects, the net assets available for benefits of
the Plan as of December 31, 1996 and 1995, and the changes in
net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment as of
December 31, 1996 and reportable Plan transactions for the year
ended December 31, 1996 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. These schedules are the responsibility of the Plan's
management. Such supplemental schedules have been subjected to
the auditing procedures applied in our audit of the basic
1996 financial statements and, in our opinion, are fairly
stated in all material respects when considered in relation to
the basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
May 1, 1997
2
SKYWAY RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996 AND 1995
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ASSETS 1996 1995
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INVESTMENTS
Vanguard Windsor II - at fair value $2,103,245 $1,339,429
Vanguard Investment Contract Trust - at contract
value 1,136,733 1,228,841
Vanguard Index Trust 500 Portfolio - at fair value 1,447,980 985,987
Vanguard International Growth Portfolio - at
fair value 1,144,940 864,414
Union Pacific Company Stock Fund - at fair value 848,248 848,031
Union Pacific Resource Group Stock fund - at
fair value 320,474 -
Vanguard Total Bond Market Fund - at fair value 644,483 570,476
Participant loans - at face value 410,528 570,476
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Total investments 8,056,631 6,085,825
CONTRIBUTIONS RECEIVABLE 71,519 67,451
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NET ASSETS AVAILABLE FOR BENEFITS $8,128,150 $6,153,276
========== ==========
See notes to financial statements.
3
SKYWAY RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1996 AND 1995
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1996 1995
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CONTRIBUTIONS:
Employee $1,509,826 $1,335,213
Employer Matching 326,023 333,572
Less forfeited employer matching funds (65,194) (28,193)
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Total contributions 1,770,655 1,640,592
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INVESTMENT INCOME:
Interest and dividends 383,480 255,458
Net appreciation in fair value of investments 765,142 846,716
Total investment income 1,148,622 1,102,174
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BENEFIT PAYMENTS (944,403) (1,028,786)
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NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 1,974,874 1,713,980
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 6,153,276 4,439,296
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End of year $8,128,150 $6,153,276
========== ==========
See notes to financial statements.
4
SKYWAY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
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1. DESCRIPTION OF THE PLAN
The following description of the Skyway Retirement Savings Plan (the Plan)
provides only general information. Participants should refer to the Plan
agreement and amendments for a more complete description of the Plan's
provisions.
General - The Plan, established January 1983 by Skyway Freight
Systems, Inc. (the Company), is a defined contribution plan covering all
full-time employees who have completed one year and 1,000 hours of service.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). Vanguard Fiduciary Trust Company (Vanguard)
serves as trustee of the Plan.
Contributions - Participants may elect to make tax deferred contributions
of up to 10% of their compensation (subject to certain Internal Revenue
Code limitations). Rollover contributions from a participant's former
qualified plan or individual retirement account are also allowed.
Employer contributions are determined at the discretion of the Company's
Board of Directors. For the years ended December 31, 1996 and 1995, the
Company contributed an amount equal to 25% of each participant's
contributions, limited to 10% of the individual participant's annual
compensation. Forfeited matching contributions revert to the Company
and may be used in the following year to reduce the amount the Company
must contribute for the matching contribution.
Participant Accounts - Each participant's account is credited with the
participant's contributions and an allocation of (a) the Company's
contributions and (b) Plan earnings.
Vesting - Participants are immediately vested as to participant
contributions and earnings thereon. Vesting in the remainder of their
accounts is based on years of continuous employment. Participants are
fully vested after seven years of employment, attainment of age 65, or
if employment is terminated by disability or death, regardless of years
of service. Upon employee termination, all nonvested amounts will be
forfeited.
Spin-Off - During 1996, the Union Pacific Corporation spun off Union
Pacific Resource Group. Each Plan participant's account received
0.846946 shares of Union Pacific Resource Group common stock for each
share of Union Pacific common stock held in the account. Participants
are not allowed to make additional purchases of Union Pacific Resource
Group common stock.
Investment Options - Participants may direct the investment of their
accounts in any of the following seven investment options:
Vanguard Windsor II - Funds are invested with a growth and income
objective in common stocks.
Vanguard Investment Contract Trust - Funds are invested in contracts
issued by insurance companies and banks, and in similar types of fixed
income investments.
Vanguard Index Trust 500 Portfolio - Funds are invested in all of the
stocks included in the Standard & Poor's 500 Index.
5
Vanguard International Growth Portfolio - Funds are invested in
potential growth companies based outside of the United States.
Union Pacific Company Stock Fund - Funds are invested in common stock
of Union Pacific Corporation.
Union Pacific Resource Group Stock Fund- Funds are invested in common
stock of Union Pacific Resource Group, Inc.
Vanguard Total Bond Market Fund - Funds are invested in corporate bonds.
Investment decisions may be changed on a daily basis.
Payment of Benefits - On termination of employment or attainment of age
65, whichever is later, a participant may elect to receive the benefit in
one of the following forms: (1) a lump-sum amount equal to the value of the
vested portion of the participant's account; (2) installments, payable
at least annually over a period of years determined by the Plan's
Administrative Committee; (3) a nontransferable annuity contract providing
for a monthly guaranteed income for a specified number of years; or (4) a
combination of the above.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared
under the accrual method of accounting.
Payment of Benefits - Benefits are recorded when paid.
Investments are stated at fair value as determined by quoted market
prices except for the Vanguard Investment Contract Trust, which is
stated at contract value, and participant loans, which are stated at face
value.
Administrative expenses of the Plan are paid by the Company.
3. PARTICIPANT LOANS
The Plan permits participants to borrow against the lesser of 50% of the
vested portion of their account balance, or 100% of their before-tax
contribution amount, to a maximum of $50,000. The loans bear interest
at prime rate plus 1% and are payable over a maximum five-year period.
Loan repayment generally is made through payroll deductions.
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants immediately become fully vested.
5. ASSETS OF TERMINATED EMPLOYEES
At December 31, 1996 and 1995, approximately $24,000 and $265,000,
respectively, of vested Plan assets were payable to terminated employees
who have withdrawn from participation in the Plan.
6
6. INCOME TAX STATUS
A favorable determination letter has been received from the Internal
Revenue Service as to the qualified status of the Plan as amended through
December 15, 1994. Therefore, management believes the Plan was qualified
and tax-exempt as of and for the years ended December 31, 1996 and 1995.
Accordingly, no provision for federal or state income taxes has been made.
7. INVESTMENT CONTRACT ACCOUNTS
The Plan maintains contract accounts with Vanguard Group, Incorporated in
its Investment Contract Account.
The Plan's investment contract accounts are fully benefit responsive and
therefore have been presented in the financial statements at contract
value. The fair value of the Plan's investment contract accounts
approximate the contract value at December 31, 1996.
The average yield on investment contract accounts for the year ended
December 31, 1996 and 1995 was 6.07% and 6.23%, respectively. The
average crediting interest rates for the respective years were 6.00% and
6.12%.
8. FUND INFORMATION
Contributions, benefit payments and investment income by fund for the
years ended December 31, 1996 and 1995 are as follows:
1996 1995
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Contributions:
Employee Contributions:
Vanguard Windsor II $ 351,478 $ 277,426
Vanguard Investment Contract Trust 212,402 209,279
Vanguard Index Trust 500 Portfolio 318,753 249,402
Vanguard International Growth Portfolio 251,915 258,342
Union Pacific Company Stock Fund 233,849 212,921
Union Pacific Resource Group Stock Fund -- --
Vanguard Total Bond Market Fund 141,429 127,843
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$1,509,826 $1,335,213
========== ==========
Employer matching contributions:
Vanguard Windsor II $ 82,560 $ 67,346
Vanguard Investment Contract Trust (43,293) 35,073
Vanguard Index Trust 500 Portfolio 71,051 60,600
Vanguard International Growth Portfolio 61,064 61,075
Union Pacific Company Stock Fund 54,851 50,568
Union Pacific Resource Group Stock Fund -- --
Vanguard Total Bond Market Fund 34,596 30,717
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$ 260,829 $ 305,379
========== ==========
7
1996 1995
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Benefit payments:
Vanguard Windsor II $ 171,898 $ 250,171
Vanguard Investment Contract Trust 204,618 160,078
Vanguard Index Trust 500 Portfolio 166,416 98,296
Vanguard International Growth Portfolio 146,338 304,165
Union Pacific Company Stock Fund 132,546 159,252
Union Pacific Resource Group Stock Fund 10,528 --
Vanguard Total Bond Market Fund 62,011 25,536
Participant loans 50,048 31,288
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$ 944,403 $1,028,786
========== ==========
Investment income:
Vanguard Windsor II $ 371,776 $ 346,362
Vanguard Investment Contract Trust 71,316 70,647
Vanguard Index Trust 500 Portfolio 243,011 226,727
Vanguard International Growth Portfolio 136,962 109,739
Union Pacific Company Stock Fund 194,511 256,554
Union Pacific Resource Group Stock Fund 82,864 --
Vanguard Total Bond Market Fund 23,098 76,986
Participant loans 25,084 15,159
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$1,148,622 $1,102,174
========== ==========
* * * * *
8
SKYWAY RETIREMENT SAVINGS PLAN
ITEM 27a - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES
DECEMBER 31, 1996
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Number Market
of Units Cost Value
Vanguard Windsor II 88,260 $ 371,776 $ 346,362
Vanguard Investment Contract Trust 1,136,733 71,316 70,647
Vanguard Index Trust 500 Portfolio 20,937 243,011 226,727
Vanguard International Growth Portfolio 69,559 136,962 109,739
Union Pacific Company Stock Fund 1 86,029 194,511 256,554
Union Pacific Resource Group Stock Fund 1 30,550 82,864 -
Vanguard Total Bond Market Fund 65,496 23,098 76,986
Participant loans 2 - 25,084 15,159
1 Represents a party-in-interest.
2 Consists of 120 individual loans with interest at prime plus 1% and terms
ranging from one to five years.
9
SKYWAY RETIREMENT SAVINGS PLAN
ITEM 27d - SUPPLEMENTAL SCHEDULE OF REPORTABLE PLAN TRANSACTIONS*
YEAR ENDED DECEMBER 31, 1996
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Cost Proceeds Gain
Vanguard Windsor II (67 Transactions) $919,197
Vanguard Investment Contract Trust (107 Transactions) 620,237
Vanguard Index Trust 500 Portfolio (67 Transactions) 581,083
Vanguard International Growth Portfolio (50 transactions) 433,830
Union Pacific Company Stock Fund (51 transactions) 340,186
Vanguard Investment Contract Trust (83 Transactions) $712,346 $ 712,346 $ --
Vanguard Windsor II (87 Transactions) 326,902 381,197 $ 54,295
Vanguard Index Trust 500 Portfolio (86 Transactions) 271,489 331,855 60,366
* Reportable Plan transactions are defined as
transactions that exceed 5% of the fair market value
of Plan assets at the beginning of the year.