Amtrak 2013 Annual Report Download - page 71

National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1411-1359280 32
5. Accounting and Reporting for Federal Payments (continued)
matures on December 31, 2975, and is secured by the real and personal property of Amtrak,
WTC, CUS, and PRIL. The second note with a balance of $1.1 billion as of September 30, 2013
and 2012, was issued in 1983 and matures on November 1, 2082, with successive 99-year
renewal terms, if the note has not been paid at maturity or accelerated in accordance with its
terms and is secured by all rolling stock owned by Amtrak. Neither of the notes bears interest,
unless prepaid, which Amtrak does not intend to do. The Federal Government’ s security interest
in Amtrak’ s rolling stock entitles it to repayment and interest in the event Amtrak ceases
operations, is acquired by another entity, or seeks relief under bankruptcy or insolvency laws.
The amount due to the Federal Government on the first note may be accelerated by enactment of
federal law or upon the occurrence of an event of default under the leases and mortgage entered
into by Amtrak and PSL on June 20, 2001 (see Note 7), or upon the occurrence of various
actions concerning an Amtrak bankruptcy, reorganization, or assignment for the benefit of
creditors.
6. Preferred and Common Stock
For funds received from the Federal Government prior to December 2, 1997, the Rail Passenger
Service Act (49 U.S.C. 24304) required Amtrak to issue to the Secretary preferred stock equal in
par value to all federal operating payments and most federal capital payments received
subsequent to October 1, 1981, as well as capital and certain operating payments received prior
to that date. As of September 30, 2013 and 2012, 109,396,994 shares of $100 par value preferred
stock were authorized, all of which were issued and outstanding. All issued and outstanding
preferred shares are held by the Secretary for the benefit of the Federal Government. The Amtrak
Reform and Accountability Act of 1997 (the “Act”) resulted in significant modifications to
Amtrak’ s capital structure. Prior to the Act, dividends were to be fixed at a rate not less than 6%
per annum, and were cumulative. No dividends were ever declared. The Act abolished the voting
rights and the liquidation preference of the preferred stockholder and the 6% minimum annual
cumulative preferred stock dividend and established that no additional preferred stock be issued
by Amtrak in exchange for federal grants received. At the time of enactment of the Act, the
minimum undeclared cumulative preferred dividend in arrears for all series issued and currently
outstanding approximated $5.8 billion and ranged between $0.02 and $97.08 per share. Each
share of preferred stock is convertible into 10 shares of common stock at the option of the
preferred stockholder.