the railroad organization (chapter 18). all shapes, all sizes, and all revenue levels stb / aar...
TRANSCRIPT
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THE RAILROAD ORGANIZATION
(CHAPTER 18)
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All Shapes, All Sizes, and All Revenue Levels
STB / AAR
Class I / Class I
Class II / Regional
Class III / Local (Short Lines), Switching, & Terminal
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Financial and Other Data – SEC
Corporate Structure
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Financial and Other Data – SEC
Financial Results
Accounting Rules are Regulated, Must Follow – GAAP
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Financial and Other Data – SEC
Three Main Parts of Reports
Income Statement
Balance Sheet
Statement of Cash Flows
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Income Statement
Total Revenues from RR Operations
Expenses Incurred to Provide Revenue
Operating Income
Operating Ratio – Efficiency Measurement Proportion of Revenues Received that is Required to Maintain and Operate RR Lower the Better – 70 is OK
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Balance Sheet
Shows Capitalization in Addition to Assets,
Liabilities and Equity
Capitalization = (Long-Term Debt - Cash) + Equity
Keep Debt/Capitalization Under 50 percent
Cash Flow Statement
Cash Generated by Operating Activities
Higher the Better
Railroads are Very Capital Intensive
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Financial Effects of Railroad Regulation
1980 Staggers
1995 ICC Termination
Common Carrier
Revenue Adequacy = Return of Net Investment/Cost of Capital
Rail Cost Recovery Index – Adjust for Inflation
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• Post-Staggers Earnings
• Pre-Staggers Years
• Leased Equipment
• Re-Regulation ?????
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Infrastructure Maintenance
Deferred Maintenance-of-Way
Deferred Maintenance of Equipment
Pre-Staggers
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Equipment Depreciation
• New or Repair
• Equipment Trusts
- General Purpose Rolling Stock - Repossessed
• Equipment Leases
- Capital or Operating
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• Track
- 1982 – Ratable Depreciation
- Prior – Additions/Betterments
• Tunnels/Embankments
- May Be Depreciated ???
• Deferred Taxes
- Depreciate Faster