Amtrak 2015 Annual Report Download - page 35

National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
10. Commitments and Contingencies
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Financial Assistance
Amtrak receives significant financial assistance from the Federal Government in the form of grants and
entitlements. The right to these resources is generally conditioned upon compliance with terms and conditions
of the grant agreements and applicable federal regulations, including the expenditure of the resources for
eligible purposes. Substantially all grants are subject to financial and compliance audits by the grantors. Any
disallowances because of these audits become a liability of the Company. The Company does not believe
that the liabilities that may result from such audits for periods through September 30, 2015, would have a
material effect on its financial position or the results of operations.
Commitments
Amtrak has various purchase commitments related to capital improvements pertaining to the ordinary conduct
of business. In addition, Amtrak has entered into various agreements with states, cities, and other local
transportation authorities and private companies pursuant to which Amtrak is required to fund various railroad
facility and infrastructure improvements, and to fund the remanufacture and supply of railroad passenger
equipment. Such commitments are not in excess of expected requirements and are not reasonably likely to
result in performance penalties or payments that would have a material adverse effect on the Company’s
liquidity.
On August 3, 2010, the Company entered into a four-year contract with a contractor to purchase 130 new
long-distance single level cars. The Company issued a Notice to Proceed on September 7, 2010. As of
September 30, 2015, the base price of the contract with change orders is $299.5 million. The Company makes
payments to the contractor pursuant to an approved payment schedule upon the contractor’s successful
completion of certain tasks (milestones) during the contract. As of September 30, 2015, the Company has
incurred $178.4 million in project-related costs. Deliveries of the cars started in December 2014. As of
September 30, 2015, the Company has taken delivery of 58 cars, and final delivery of the remaining cars is
expected to be completed by April 2017.
On September 28, 2010, the Company entered into a six-year contract with a contractor to purchase 70 new
electric locomotives and certain spare parts. As of September 30, 2015, the base price of the contract with
change orders is $467.6 million. The Company will make payments to the contractor pursuant to an approved
payment schedule upon the contractor’s successful completion of certain tasks (milestones) during the
contract. As of September 30, 2015, the Company has incurred $437.2 million in project costs related to the
contract, of which $406.6 million has been funded by the RRIF loan (see Note 6). As of September 30, 2015,
the Company had taken delivery of 51 locomotives, and the Company took delivery of the remaining
locomotives in FY2016. On September 12, 2014, the Company entered into a 15-year contract with the same
contractor to provide materials and engineering technical support for the new electric locomotives. The
Company is paying the contractor $7.1 million per year plus a variable amount based on total mileage of the
fleet each year.
Most of the rights-of-way over which Amtrak operates are owned by other railroads. Amtrak uses such
trackage under contracts with these railroads. The terms of the agreements range up to twenty years, although
they may remain in effect longer if neither party seeks to renegotiate. Costs incurred are based on usage. The
total amount incurred for use of the other railroads’ rights-of-way during FY2015 and FY2014, totaled