SP’s $90-Million Charge Excludes Dunsmuir Spill

Southern Pacific Transportation Co., in its annual earnings statement released Tuesday, said it was taking one-time charges that include $90 million for “anticipated legal and environmental matters.” But it said the amount does not reflect costs of a July 14 chemical spill near Dunsmuir, Calif., that killed virtually all life along 45 miles of the Sacramento River.

Larry Yarberry, SP vice president for finance, said the Dunsmuir derailment cost, which he declined to estimate, would be covered by insurance and that the amount had already been accounted for in the privately held company’s 1991 operating results. The company announced net profit of $1.7 million in 1991, compared to $29 million in 1990.

“We have insurance that has a deductible of $10 million and we have accrued our $10 million,” Yarberry said.

The $90-million charge will pay for cleanups over the next few years of fuel spills and other pollution from its 100 years of operation, Yarberry said.

The company reported a 1991 fourth-quarter loss of $141.2 million versus a profit of $52.9 million a year earlier. Added to the loss was $270 million in special charges, including the $90 million, primarily for environmental matters, and another $125 million for severance pay and other costs stemming from announced layoffs of 700 workers from the total work force of 22,000.

The layoffs will be limited mainly to personnel working east of Denver, on the St. Louis Southwestern (Cotton Belt) Railway as well as various Eastern lines of Southern Pacific.