SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant X
---
Filed by a Party other than the Registrant
----
Check the appropriate box:
Preliminary Proxy Statement
- ----
Confidential, for Use of the Commission Only
- ---- (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
- ----
X Definitive Additional Materials
- ----
Soliciting Material Pursuant to Section 240.14a-11(c) or
- ---- Section 240.14a-12
CONRAIL INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
- ----
Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated
and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
- ----
Check box if any part of the fee is offset as provided
- ---- by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[Presentation given by Conrail management to
Institutional Shareholder Services on December 10, 1996]
Overview
o Creates Leading Global Transportation Company
- Annual revenues exceeding $14 billion
- Serves 80 countries worldwide
- Links rail, shipping, barge, intermodal and contract logistics
customers
o Enhances Shareholder Value
- Most revenue growth
- Highest cost savings
- Greatest financial flexibility
o Promotes Competition
- Access to North/South markets
- Truck-dominated markets
- Follows regulatory guidelines
Summary of Benefits
o Broadest Geographic Scope
- Extensive single-line service
- Direct and efficient routes
o Greatest Synergy Potential
- Transportation efficiencies
- Consolidations
- Productivity gains
o Financial Strength
- Solid investment grade credit
- Strong cash flow
CSX & Conrail
Systems
[Map showing respective rail systems]
CSX & Conrail
Systems
[Map showing respective rail systems and interstate highways]
Broadest Geographic Scope
o Strong Coverage in East, Midwest and Southeast
- 29,645 route miles
- Serves 22 states east of the Mississippi
- Covers major markets from Chicago, Boston and New York to
Miami and New Orleans
- Allows efficient rail service in North/South markets
o Provides Extensive Single-Line Service
- Connects producing points in South/Southeast with consuming
region in Northeast
- Creates faster and more reliable service at lower cost
Revenue Synergies
o Top Line Growth Resulting in $165 Million Additional Operating
Income
- 80% from Coal, Automotive and Carload Business
- 20% from Intermodal
o Margin Improvements from Incremental Traffic
- Optimized train sizing
- Increased length of haul
- Reduced empty movements
Carload Business
o Almost 50% of Pro-Forma Revenues from Carload Business
o Breadth of Market Coverage is Critical
- CSX has broadest customer access
o Revenue Growth Will Result from:
- Expanded single-line service
- Penetration of North/South truck market
- Improvements in asset utilization
o Single-Line Service Opportunities
- Chemicals from Gulf Origins to Northeast
- Midwest grain producers to users in South
- Recycled Pulp and Paper Products to Southeast
o Penetration of Truck-Dominated North/South Markets
- Forest products from Southern Mills
- Citrus products from Southeast
- Minerals business in the East
o Improved Asset Utilization
- Reduced empty car movements
- Opportunities for backhauls
- Cycle time improvements
Conrail/CSXT-Served
Coal Mines and Power Plants
[Map showing coal mines and power plants served by respective rail systems]
Coal Business
o 23% of Pro-Forma Revenues from Coal
o CSX Has Most Low Sulfur Coal Reserves in East
- Provides additional long-term compliance choices for Conrail
utility customers
- Adds efficient single-line service opportunities
o Allows More Competitive Access for Export Coal at Bayside and
Curtis Bay Terminals in Baltimore
- CRR "Pittsburgh Seam" coal not competitive at Hampton Roads
Terminal
o Reduces Circuity on Major Movements
- 400 to 450 miles from Charleston, W. Virginia export coal
- 200 miles for W. Virginia coal to Northeast utilities
o Removes 15,000 Annual Carloads from Amtrak
- Reduces transit time by 12 hours in each direction
- Saves $7.0 million in trackage rights payments
Conrail/CSX Rail Served
Automotive Assembly Plants
[Map showing automotive assembly plants served by respective rail systems]
Conrail/CSX
Auto Terminal Locations
[Map showing respective auto terminal locations]
Automotive Business
o Represents 12% of Pro-Forma Revenues
o Eliminates Rail Inefficiencies in Truck Dominated Markets
- 11,000 annual truckloads between North Jersey and CSX's Twin
Oaks, PA Terminal
- 22,000 annual truckloads in Detroit area
o Provides Access to Seven of Nine Major East Coast Ports for
Export/Import Business
- Customer can select most competitive port
o Offers Unequaled Network Density and Scope
- Serves every major metropolitan market east of the Mississippi
- Opens single-line service to Nashville, Tampa and Miami
Conrail/CSX Rail Served
Intermodal Terminal Locations
[Map showing respective intermodal terminal locations]
Intermodal Business
o Represents 18% of Pro-Forma Revenues
Enhances Merchandise Flow in the "Eastern Triangle"
o Complementary Infrastructure and Terminals
- Conrail Access to New York, New England and Midwest
- CSX terminal coverage in Orlando and Tampa
o Allows Penetration of Truck Dominated Markets
- East Coast - Atlanta
- East Coast - Atlantic Seaboard, including Savannah, Charleston
and Florida
o Combines "Best Practices" of Each Railroad to Provide Superior
Product for Customers
- Conrail high speed reliable service
- CSX equipment supply and rate quotation programs
Diverse Revenue Base
[Pie Chart showing the following:
Food and Agriculture: 10%
Chemicals: 21%
Forest: 9%
Automotive: 12%
Coal: 23%
Intermodal: 18%
Metals: 7%]
Cost Savings
o Consolidations $295M
o Facility Coordinations $ 71M
o Transportation Efficiencies $127M
o Productivity Gains $ 72M
Total Synergies $565M
Synergy Timing
Year 1 Year 2 Year 3
Incremental Operating Income
Net Traffic $ 70 $125 $165
Cost Savings 170 396 565
---- ---- ----
Total Synergies $240 $521 $730
Timing 33% 71% 100%
One-Time Cash Flows
Capital Expenditures $ 75 $100 $ 25
Transition Costs 205 130 75
---- ---- ----
Total $280 $230 $100
Regulatory Process
o Public Interest is Served by CSX/CRR Combination
- Broad network reach for customers
- Single-line service
- Operating efficiencies
- Elimination of redundant assets
- Capital investment
- Reduced highway congestion
- Progress in separation of freight and passenger operations
o Preserving Competition
- Competitive overlaps appreciably fewer than UPSP
- STB has long declined to grant access to markets where
traffic and competitive options
are "not harmed by the merger"
- CSX/CRR will preserve competition for customers whose rail
options are reduced from 2 to 1
Summary
o Provides Greatest Opportunity for Long-Term Revenue Growth
and Synergies
- Comprehensive market coverage
- Single-line service
- Transportation efficiencies
- Consolidation and productivity gains
o Financial Strength Provides Further Opportunities for Increased
Shareholder Value
- Solid balance sheet
- Strong cash flows
- Financial management strategy