Intercity Passenger Rail: Amtrak's Progress in Improving Its Financial
Condition Has Been Mixed (Letter Report, 07/09/1999, GAO/RCED-99-181).

Since its creation in 1971, Amtrak has accumulated massive financial
losses, with recent losses averaging more than $800 million per year. To
help Amtrak sustain operations and make needed capital investments, the
federal government has provided Amtrak nearly $23 billion in financial
assistance since 1971. In this report, GAO discusses (1) Amtrak's
overall financial performance in fiscal year 1998, (2) the prospects for
Amtrak to meet its financial goals for operating self-sufficiency
outlined in its most recent strategic business plan, and (3) the extent
to which current and anticipated federal funding and recently enacted
legislative reforms aimed at helping Amtrak better control its costs are
likely to help improve its financial condition. Basically, GAO found
that Amtrak's overall losses increased in fiscal year 1998 after several
years of improvement.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-99-181
     TITLE:  Intercity Passenger Rail: Amtrak's Progress in Improving
	     Its Financial Condition Has Been Mixed
      DATE:  07/09/1999
   SUBJECT:  Financial management
	     Railroad transportation operations
	     Cost control
	     Federal aid to railroads
	     Strategic planning
	     Program graduation
	     Losses

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    United States General Accounting Office GAO                Report
    to the Chairman, Committee on Commerce, Science, and
    Transportation, U.S. Senate July 1999          INTERCITY PASSENGER
    RAIL Amtrak's Progress in Improving Its Financial Condition Has
    Been Mixed GAO/RCED-99-181 GAO                 United States
    General Accounting Office Washington, D.C. 20548 Resources,
    Community, and Economic Development Division B-282088 July 9, 1999
    The Honorable John McCain Chairman, Committee on Commerce,
    Science, and Transportation United States Senate Dear Mr.
    Chairman: Since its inception in 1971, the National Railroad
    Passenger Corporation (Amtrak) has accumulated massive financial
    losses, with recent losses averaging over $800 million per year.
    To help Amtrak sustain operations and make needed capital
    investments, the federal government has provided it with nearly
    $23 billion in financial assistance since 1971. In 1994, in
    response to a request from the administration, Amtrak established
    a goal of eliminating its need for federal operating subsidies by
    fiscal year 2002 (termed being "operationally self-sufficient").
    To accomplish this goal, Amtrak developed a series of strategic
    business plans designed to increase revenues and control costs. In
    1998, we reported that Amtrak was in a precarious financial
    condition.1 This report responds to your request to provide an
    updated assessment of Amtrak's current financial performance as
    well as its prospects for improved future financial performance.
    In particular, this report discusses (1) Amtrak's overall
    financial performance in fiscal year 1998; (2) the prospects for
    Amtrak to meet its financial goals for operating self-sufficiency
    outlined in its most recent strategic business plan; and (3) the
    extent to which current and anticipated federal funding and
    recently enacted legislative reforms aimed at helping Amtrak
    better control its costs are likely to help improve its financial
    condition. Results in Brief    Amtrak's overall losses increased
    in fiscal year 1998 after several years of improvement. In fiscal
    year 1998, Amtrak's net loss (total expenses less total operating
    revenues) was $930 million, the largest loss in the last 10
    1Intercity Passenger Rail: Prospects for Amtrak's Financial
    Viability (GAO/RCED-98-211R, June 5, 1998); Intercity Passenger
    Rail: Financial Performance of Amtrak's Routes (GAO/RCED-98-151,
    May 14, 1998); Intercity Passenger Rail: Outlook for Improving
    Amtrak's Financial Health (GAO/T-RCED-98-134, Mar. 24, 1998); and
    Intercity Passenger Rail: Issues Associated With a Possible Amtrak
    Liquidation (GAO/RCED-98-60, Mar. 2, 1998). Page 1
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 years.2 By
    comparison, Amtrak's net loss in fiscal year 1997 was $762
    million. Amtrak has made some progress in reducing its reliance on
    federal operating support. However, between now and 2002, it needs
    to achieve about 5 times as much in financial improvements (or
    what it terms "net impact") as it has been able to achieve over
    the past 4 years to reach operational self-sufficiency. Amtrak's
    current strategic business plan, approved by its Board of
    Directors in October 1998, estimates that ongoing and planned
    initiatives will result in a cumulative net impact of $1.6 billion
    from fiscal year 1999 through fiscal year 2002, primarily through
    increases in revenues as a result of taking business plan actions.
    However, uncertainty surrounds Amtrak's ability to achieve this
    net impact and to reach operational self-sufficiency by fiscal
    year 2002. For example, the plan contains over $160 million in
    "placeholders" for productivity increases and other reforms to be
    defined at a later date. Furthermore, Amtrak's expectations to
    increase revenues through other initiatives, such as implementing
    new high-speed service between Boston and Washington, D.C., and
    increasing its express service (the delivery of higher-value,
    time-sensitive goods) are based on critical assumptions-about such
    things as passenger ridership and the ability to obtain access to
    specialized equipment-that have yet to be tested in the
    marketplace. Current and anticipated annual federal funding and
    recently enacted reforms aimed at helping Amtrak better control
    its costs will likely have little short-term impact on improving
    its overall financial condition. First, Amtrak plans to use nearly
    $1 billion of the $1.6 billion it expects to receive in federal
    capital appropriations over the next 3 fiscal years for
    maintenance rather than capital improvements. While maintenance is
    important for preserving assets and Amtrak's fiscal year 1999
    capital appropriation could be used for equipment maintenance,
    Amtrak's plans to continue to use capital appropriations in this
    way means it will forgo or delay capital investment projects that
    could increase future revenues and reduce future costs. However,
    Amtrak's Board of Directors has approved plans for $1.3 billion of
    capital improvements from the $2.2 billion made 2This net loss is
    adjusted to exclude federal financial assistance counted as
    revenues. The Amtrak Reform and Accountability Act of 1997
    eliminated the requirement that Amtrak issue preferred stock to
    the Department of Transportation in the value of the federal
    appropriations received. As a result, beginning with its fiscal
    year-end 1998 audited financial statements, Amtrak recorded a
    significant amount of federal financial assistance as revenues
    instead of preferred shareholder equity. In addition, Amtrak
    received federal financial assistance in fiscal years 1998 and
    1999 through the Taxpayer Relief Act and recorded a portion of
    these funds as revenues. In this report, we present net loss
    amounts, excluding the amount of federal financial assistance that
    Amtrak's audited financial statements include as revenues in 1998.
    This adjustment allow us to better compare Amtrak's net loss
    position with those of previous years. Page 2
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 available to
    it through the Taxpayer Relief Act of 1997. In addition, as we
    reported in 1998, while the Amtrak Reform and Accountability Act
    of 1997 provided Amtrak greater flexibility in its business
    operations, the reforms provide few financial benefits in the
    short term. We found this condition continues to exist largely
    because Amtrak and its unions have not completed negotiations over
    labor protection arrangements and reforms for contracting out
    work. Background    The Rail Passenger Service Act of 1970 created
    Amtrak as the nation's intercity passenger railroad. Prior to
    Amtrak's creation, intercity passenger service was provided by a
    number of individual railroads, which had lost money, especially
    after World War II. The act, as amended, gave Amtrak a number of
    goals, including providing modern, efficient intercity passenger
    rail service; giving Americans an alternative to automobiles and
    airplanes to meet their transportation needs; and minimizing
    federal operating subsidies. As of June 1999, Amtrak provided
    intercity passenger service along 42 routes that include most
    states. Like all major national intercity rail services in the
    world, Amtrak receives substantial government support. From 1971
    through June 1999, the federal government provided Amtrak with
    nearly $23 billion in financial assistance. However, in December
    1994, at the direction of the administration, Amtrak established
    the goal of eliminating its need for federal operating subsidies,
    that is, achieving operational self-sufficiency, by fiscal year
    2002. In addition, the Amtrak Reform and Accountability Act of
    1997 authorized appropriations for Amtrak's operating and capital
    expenses through fiscal year 2002 but prohibited Amtrak from using
    federal funds for operating expenses, except for an amount equal
    to excess Railroad Retirement Tax Act payments after 2002.3 In
    fiscal year 2002, Amtrak expects to spend only $185 million (its
    estimated payments to the railroad retirement system in excess of
    the retirement benefits for Amtrak employees) of federal funding
    for expenses other than capital projects. To meet the goal of
    operating self-sufficiency and respond to continually growing
    losses and a widening gap between operating deficits and federal
    operating subsidies, Amtrak developed a series of strategic
    business plans. By following these plans, Amtrak has attempted to
    increase revenues and control costs through such actions as
    expanding mail and express service, 3Amtrak participates in the
    railroad retirement system, under which each participating
    railroad pays a portion of the costs for all retirements and
    benefits in the industry. Page 3
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 adjusting
    routes and service frequency, and reorganizing into strategic
    business units. Its Board of Directors approved Amtrak's most
    recent strategic business plan in October 1998. Historically,
    Amtrak received separate federal appropriations for operating
    expenses and capital improvements. For fiscal year 1999, Amtrak
    received a single capital appropriation of $609 million instead of
    separate appropriations for operating and capital assistance.
    However, the conference report accompanying the appropriation
    provided that Amtrak could use appropriated funds for the
    maintenance of equipment (an operating expense) in addition to
    traditional capital investments. The Congress also provided Amtrak
    with financial assistance through the Taxpayer Relief Act of 1997.
    This act made a total of about $2.2 billion available to Amtrak in
    fiscal years 1998 and 1999 to acquire capital improvements and pay
    for the maintenance of existing equipment, among other things. The
    Amtrak Reform and Accountability Act of 1997 made certain reforms
    to Amtrak's operations. Among other things, the act (1) eliminated
    existing statutory and contractual labor protection arrangements
    as of May 31, 1998, and required negotiations over new
    arrangements; (2) repealed the statutory ban on contracting out
    work when it would result in employee layoffs and made contracting
    out part of the collective bargaining process (except for food and
    beverage service, for which contracting out was already allowed);
    and (3) placed a $200 million cap on the aggregate amount that
    Amtrak and others must pay rail passengers for all claims
    (including claims for punitive damages) arising from a single
    accident or incident.4 The act also established an independent
    council-the Amtrak Reform Council-to evaluate Amtrak's performance
    and make recommendations for cost containment, productivity
    improvements, and financial reforms. If at any time more than 2
    years after the enactment of the act and the implementation of a
    financial plan for operating within authorized funding levels, the
    Council finds that Amtrak is not meeting its financial goals or
    that Amtrak will require federal operating funds after December
    2002, then the Council is to submit to the Congress, within 90
    days, an action plan for a restructured national intercity
    passenger rail system. In addition, if the 4These include claims
    made against Amtrak, any high-speed railroad authority or
    operator, any commuter authority or operator, any rail carrier, or
    any state. Page 4
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 above events
    occur, Amtrak is required to develop and submit an action plan for
    its liquidation. The act also eliminated the requirement that
    Amtrak issue preferred stock to the Department of Transportation
    in the value of federal appropriations received. As a result,
    beginning with its fiscal year-end 1998 audited financial
    statements, Amtrak, following guidance from its external auditors,
    recorded a significant amount of federal financial assistance as
    revenues instead of preferred shareholder equity. In addition, a
    significant amount of the federal funds made available by the
    Taxpayer Relief Act was also recorded as revenues. One effect of
    this situation is that Amtrak's fiscal year 1998 financial
    statements are not comparable to previous financial reports unless
    certain adjustments are made. In this report, we present net loss
    and working capital amounts that exclude the amount of federal
    assistance that Amtrak's audited financial statements include as
    revenues or current assets in 1998. These adjustments allow us to
    better compare Amtrak's net loss and working capital positions
    over time. Amtrak's Overall       Amtrak had made some progress in
    reducing its net losses in recent 5 Losses Increased in    years-
    from about $833 million in fiscal year 1994  to $762 million in
    fiscal year 1997. However, Amtrak's net loss (adjusted to exclude
    $577 million of Fiscal Year 1998       federal funds that its
    audited financial statements count as revenues)6 increased to $930
    million in fiscal year 1998. (See fig. 1.) This amount is the
    largest net loss in the last 10 years. One of the reasons for the
    increase is that the 1998 figure includes retroactive payments
    attributable to labor negotiations concluded by the end of 1998.7
    But, even when the roughly $106 million of such labor payments are
    not included in the net loss, the net loss is still $824 million,
    $62 million more than in fiscal year 1997. 5The net loss for
    fiscal year 1994 excludes a one-time charge of $244 million for
    restructuring costs and other items. 6See the "Background" section
    for why we made adjustments to the net loss and working capital
    amounts we present for fiscal year 1998. 7Although these
    retroactive payments are attributable to the period 1995 through
    1998, Amtrak's fiscal year 1998 financial statements reflect the
    liability for the retroactive portion of all labor agreements made
    in fiscal year 1998 and expected to be made in fiscal year 1999.
    Amtrak will make these retroactive payments in fiscal years 1999
    and 2000. Page 5
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 Figure 1:
    Amtrak's Net Losses, Fiscal Years 1994 Through 1999
    -1000        Dollars in millions -700 -400 -100 1994
    1995           1996          1997       1998         1999
    estimated Fiscal year Note: The amount shown for fiscal year 1998
    has been adjusted to exclude federal financial assistance from
    revenues. Source: GAO's analysis of Amtrak's data. Amtrak
    officials stated that the increase in net loss is also due to an
    increase in capital investment that resulted in increased
    depreciation expenses. Specifically, depreciation expenses, a
    noncash item, increased by $52 million in 1998-from $242 million
    in fiscal year 1997 to $294 million in fiscal year 1998. Amtrak
    expects that depreciation expenses will grow by another $66
    million in fiscal year 1999 and by additional amounts in
    subsequent years as it makes additional capital investments. While
    an increase in depreciation-which reflects the amount of capital
    equipment that is consumed and must be replaced in future years-
    increases net loss, Amtrak points out that investments resulting
    in Page 6                                              GAO/RCED-
    99-181 Amtrak's Financial Condition B-282088 increased
    depreciation expenses are expected to have positive effects in the
    future, such as increasing revenues, reducing costs, and
    eliminating the need for federal operating support. In October
    1998, Amtrak estimated that the net loss for fiscal year 1999 will
    be $930 million. However, through April 1999, Amtrak's net loss
    for the current fiscal year is $11.4 million less than expected.
    Another measure of Amtrak's overall financial condition is its
    working capital (current assets less current liabilities). Working
    capital measures a corporation's ability to pay its bills when
    due. Amtrak's working capital deficit (adjusted to exclude $647
    million in short-term investments and related interest resulting
    from unspent Taxpayer Relief Act funds) at the end of fiscal year
    1998 was about $400 million. This amount is $100 million worse
    than the $300 million working capital deficit Amtrak recorded at
    the end of fiscal year 1997 and is the worst such deficit in at
    least the last 10 years. Figure 2 shows the degree to which
    working capital balances have fallen over the past 4 years. Page 7
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 Figure 2:
    Amtrak's Working Capital, Fiscal Years 1994 Through 1998         -
    500         Dollars in millions -400 -300 -200 -100 0
    1994            1995         1996           1997        1998
    Fiscal year Working Capital Source: GAO's analysis of Amtrak's
    data. Amtrak continues to need to borrow money to pay its current-
    year operating expenses, including those for payroll, fuel, ticket
    stock, and food. At the end of fiscal year 1997, Amtrak had
    outstanding borrowing of $75 million to meet its operating
    expenses. At the end of fiscal year 1998, the amount of
    outstanding borrowing needed to meet operating expenses had fallen
    to $50 million. This $50 million in year-end borrowing was half of
    what Amtrak had estimated at the beginning of the fiscal year.
    However, at the end of fiscal year 1999, Amtrak estimates, it will
    need to have $100 million in borrowing to meet its operating
    expenses. Additionally, Amtrak plans to have short-term borrowing
    of $100 million outstanding at the end of fiscal year 2000. Page 8
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 To help its
    cash flow, Amtrak is seeking legislation specifically authorizing
    it to use its fiscal year 2000 capital appropriation to pay for a
    wider variety of maintenance expenses than in fiscal year 1999.
    This would be similar to the flexibility allowed recipients of
    federal transit financial assistance. For fiscal year 2000, Amtrak
    is requesting the authority to use its capital appropriation for
    maintenance-of-way expenses (e.g., costs for maintaining tracks)
    in addition to maintenance-of-equipment expenses, as permitted in
    fiscal year 1999. Without this authority, Amtrak has stated that
    it will not be able to use existing cash to cover $50 million of
    its operating expenses in fiscal year 2000. As of June 1999,
    Amtrak had not developed a way to meet its financial obligations
    if the Congress does not allow this flexibility. Amtrak's
    Prospects          Amtrak's October 1998 strategic business plan
    does not anticipate that the for Achieving
    corporation will use any federal subsidies for operating expenses
    (other than for excess railroad retirement expenses) in fiscal
    year 2002-1 year Operating                   earlier than
    requested by the administration and specified in the Amtrak Self-
    Sufficency Are         Reform and Accountability Act of 1997.
    However, considerable uncertainty exists about whether Amtrak will
    be able to achieve its targets Clouded by                  for
    revenues and expenses for several key business plan actions, and
    Uncertainties in Its        Amtrak historically has not met its
    financial goals for increasing revenues Business Plan and by
    and reducing expenses. Past Performance Amtrak Cites a Narrowing
    Amtrak's efforts are pointed toward achieving operating self-
    sufficiency by Budget Gap                  fiscal year 2002. To do
    this, Amtrak's strategic business plan focuses on reducing what it
    calls its "budget gap,"8 which Amtrak defines as the corporation's
    net loss less capital-related expenses, including depreciation of
    its physical plant (such as locomotives, cars, and stations),
    other noncash expenses, and expenses from its program to
    progressively overhaul railcars (i.e., to conduct a limited
    overhaul of cars each year rather than a single comprehensive
    overhaul every several years). In essence, the budget gap
    represents expenses not funded by its revenues or its capital
    program. According to Amtrak, its budget gap fell by $18 million
    in fiscal year 1998-from $512 million in fiscal year 1997 to $494
    million in fiscal year 1998 after an adjustment for the cost of
    retroactive labor payments is made. (See fig. 3.) Even though
    Amtrak's audited financial statements 8Amtrak also calls this its
    "budget result." Page 9
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 allocated
    the full $106 million amount of the retroactive payments for
    recently negotiated labor agreements to fiscal year 1998 expenses,
    Amtrak officials, in calculating the budget gap, allocated the
    amounts over the years for which those payments actually accrued
    ($35 million in fiscal year 1996 and in fiscal year 1997 and $36
    million in fiscal year 1998). Amtrak officials told us that they
    believe that such an allocation is a more appropriate methodology
    for presenting its financial situation. The result of this
    allocation improves Amtrak's fiscal year 1998 budget gap by $70
    million. Amtrak's October 1998 strategic business plan estimates
    that the budget gap will be reduced by another $10 million in
    fiscal year 1999. Page 10                              GAO/RCED-
    99-181 Amtrak's Financial Condition B-282088 Figure 3: Amtrak's
    Budget Gap and Progressive Overhaul Expenses, Fiscal Years 1994
    Through 1999       -600         Dollars in millions -500 -400 -300
    -200 -100 0 1994             1995          1996               1997
    1998                1999 estimated Fiscal year Progressive
    Overhauls Budget Gap Note: Amtrak's progressive overhaul program
    started in fiscal year 1995 (and affected its expenses starting in
    fiscal year 1996). For fiscal year 1998, amounts for progressive
    overhauls include $4 million to prepare for the Year 2000 date
    change. Source: GAO's analysis of Amtrak's data. However, even
    with these improvements in Amtrak's budget gap, Amtrak must still
    reduce its losses substantially if it is to become operationally
    Page 11                                         GAO/RCED-99-181
    Amtrak's Financial Condition B-282088 self-sufficient by the end
    of fiscal year 2002. In the next 4 fiscal years, Amtrak must
    reduce its budget gap by $309 million, from $494 million to an
    amount equivalent to excess railroad retirement payments9
    (estimated at $185 million in fiscal year 2002). This needed
    improvement by 2002 is about 5 times the $60 million improvement
    Amtrak was able to achieve in the previous 4 fiscal years, 1995
    through 1998. Another issue in Amtrak's calculation of the budget
    gap is the treatment of progressive overhaul expenses. Amtrak does
    not include these expenses in its calculation of the budget gap
    even though they are considered to be operating expenses under
    generally accepted accounting principles. As described, the Amtrak
    Reform and Accountability Act of 1997 prohibits Amtrak from using
    federal funds for operating expenses, except for an amount equal
    to excess Railroad Retirement Tax Act payments after 2002.
    According to Amtrak officials, while generally accepted accounting
    principles require the recording of such spending as operating
    expenses, Amtrak funds progressive overhauls through its capital
    program and therefore believes that the costs for them should be
    counted as capital costs.10 If progressive overhauls are included
    in the calculation of the budget gap, the gap increases by $12
    million in fiscal year 1998-from $549 million in fiscal year 1997
    to $561 million in fiscal year 1998-and in fiscal year 1999 will
    be $560 million. Amtrak's Strategic          Under its October
    1998 strategic business plan, Amtrak plans to reach Business Plan
    Emphasizes    financial health by emphasizing business growth,
    that is, primarily by Revenue Growth to           increasing
    revenues. Amtrak expects significant revenue increases from
    Achieve Operational         implementing new high-speed rail
    service between Boston and Self-Sufficiency            Washington,
    D.C., and expanding its express service (delivery of higher-value,
    time-sensitive goods). Amtrak also plans to increase its revenues
    and control costs by developing a market-based intercity route
    network that aligns its passenger service more closely with
    customer demand (adding trains to certain routes or starting new
    service where appropriate, for instance). Amtrak does not plan to
    eliminate any routes or services in fiscal year 1999 but has not
    made any long-term decisions about routes. (In 1997, 39 of
    Amtrak's 40 routes were unprofitable when 9See the "Background"
    section. 10According to Amtrak, if it is unable to fund its
    progressive overhaul program from federal funds after 2002, it may
    be forced to move to a heavy overhaul program. Amtrak officials
    believe that the progressive approach keeps its equipment in a
    higher average state of good repair and is less expensive. Page 12
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 train,
    route, and system costs are included.)11 In addition, by
    developing and implementing service standards (such as improving
    service to passengers), Amtrak expects to increase ridership (and
    revenues) through higher-quality and more consistent service.
    Finally, Amtrak plans to contain costs primarily by reducing the
    costs of electric power in the Northeast Corridor and enhancing
    productivity in a number of ways throughout its system. Amtrak
    estimates that its business plan initiatives will result in net
    financial improvements of $1.6 billion for fiscal years 1999-2002.
    (See table 1.) In particular, it expects to begin obtaining most
    revenue increases and cost savings beginning in fiscal year 2000.
    For example, over the period covered by the plan, Amtrak expects
    that its initiative for express service will generate a cumulative
    net impact of about $60 million. Of this $60 million, Amtrak
    expects to obtain about $56 million between fiscal years 2000 and
    2002. Amtrak also estimates that its new high-speed rail service,
    which will begin in fiscal year 2000, will have a $408 million net
    impact during the period. Over one-third ($631 million) of the
    total net impact of $1.6 billion is expected to occur in fiscal
    year 2002, the last year of the plan. 11Intercity Passenger Rail:
    Financial Performance of Amtrak's Routes (GAO/RCED-98-151, May 14,
    1998.) Page 13                                        GAO/RCED-99-
    181 Amtrak's Financial Condition B-282088 Table 1: Estimated
    Financial Results of Amtrak's Initiatives From Fiscal Year 1999
    Through Fiscal Year 2002 Dollars in millions Change in
    Change in Initiative
    revenues         expenses        Net impact Basis for estimate
    Align network to meet customer demand                    $60
    ($45)            $105 Officials' professional judgment Implement
    service standards to improve
    Officials' professional judgment quality
    85               (20)             105 Undertake actions to be
    defined later                     56              (154)
    210 Placeholders to balance annual budgets Begin high-speed
    service                                 822              414a
    408 Ridership forecast Expand express service
    248              188a               60 Analyses of market
    potential Purchase electricity at wholesale rates
    (5)             (34)              29 Contract with a utility
    company Subtotal
    $1,266              $349              $917 Implement hundreds of
    other initiativesb                 840              148
    692 Strategic business units' forecasts Total
    $2,106              $497             $1,609 aThe expenses for
    high-speed rail service and express service exclude $179 million
    and $8 million for depreciation, respectively. bThese hundreds of
    individual initiatives have been developed by Amtrak's three
    strategic business units-the Intercity, Northeast Corridor, and
    West business units, as well as Corporate/Service centers. We did
    not review the bases for these estimates. Source: GAO's analysis
    of Amtrak's October 1998 strategic business plan. Table 1 also
    shows that the expected financial impact from six key initiatives
    will account for nearly 60 percent of the expected net impact-$917
    million. The remaining benefits come from hundreds of individual
    actions outlined in Amtrak's business plan. Overall, Amtrak
    projects that if it achieves the financial benefits associated
    with these initiatives, including 100 percent of the $631 million
    in financial improvements it projects for fiscal year 2002, it
    will gradually reduce its reliance on federal operating
    assistance, and achieve operating self-sufficiency in 2002. To
    Achieve Estimated Net                    All plans are subject to
    uncertainty and Amtrak's estimates for six key Impacts for Six Key
    initiatives reflect this uncertainty. First, Amtrak plans to align
    its service to Initiatives, Amtrak Must                    better
    meet customer demand, referred to as implementing a market-based
    Address Uncertainties in                    network. Amtrak
    expects to generate $105 million in net impact over the Its
    Strategic Business Plan                 period by such actions as
    serving currently unserved markets that have good demand
    potential. According to Amtrak officials, for the most part this
    estimate was based on senior officials' judgment of changes in
    revenues and expenses resulting from analysis of the potential for
    Page 14                                           GAO/RCED-99-181
    Amtrak's Financial Condition B-282088 partnerships with states and
    local governments in certain transportation corridors. However,
    Amtrak did not supply us with any information on how it derived
    the $105 million amount. Second, Amtrak expects to generate
    another $105 million in net impact by implementing a variety of
    service standards designed to ensure a consistent, high-quality
    product. These service standards will be focused on encouraging
    employees to provide consistent, high-quality service; improving
    customer-to-staff ratios; addressing customers' complaints and
    resolving them as quickly as possible; and instituting a service
    guarantee program (such as providing a transportation credit) if
    service does not meet established standards. Overall, Amtrak
    expects that these efforts will increase revenues by generating
    additional ridership and reduce operating costs by lowering
    employees' absenteeism. However, the service standards had not
    been defined at the time the $105 million estimate was made.
    Instead, Amtrak officials told us that the $105 million estimate
    was based on extensive analysis completed by senior management,
    including benchmarking against corporations that had implemented
    similar types of programs, such as the United States Postal
    Service, Ritz Carlton, Sears, and Continental Airlines. Amtrak
    then estimated that it could have a net impact of $59 million per
    year from (1) a reduction in occasions in which customers will not
    ride Amtrak again as the result of poor, inconsistent service ($10
    million per year); (2) fare increases justified by higher-quality,
    more consistent service ($20 million per year); (3) increases in
    employees' productivity ($23 million per year); and (4) reductions
    in absenteeism ($6 million per year). An Amtrak official told us
    that Amtrak chose to be conservative in estimating a $105 million
    in savings over the life of the 4-year plan, rather than utilizing
    the full $59 million per year in its estimate of savings. Third,
    Amtrak's plan contains a broad category of undefined actions
    referred to as "undefined initiatives" and "planned management
    actions to be developed." These categories represent $210 million
    in net impact for which Amtrak had not identified specific
    initiatives or developed any plan of action at the time the plan
    was approved. The amounts were placeholders to balance the yearly
    budgets. According to Amtrak officials, these initiatives
    represent the gap that Amtrak must fill even if it successfully
    implements all of its other business plan actions. Amtrak intends
    to achieve this net impact primarily through cost savings that it
    will identify on an ongoing basis. By June 1999, Amtrak officials
    had identified actions representing a net impact of about $49
    million, reducing the dollar amount of actions yet to be defined
    to about $161 million. Page 15
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 Fourth,
    Amtrak's plan estimates $408 million in net impact from
    implementing high-speed rail service in the Northeast Corridor.
    This estimate was based on an extensive ridership forecast.
    However, in November 1998 the Department of Transportation's
    Office of Inspector General questioned $192 million of the gross
    revenue projections for fiscal years 1999 through 2002. In
    particular, the Inspector General's review indicated that Amtrak
    was too optimistic regarding the system's ability to generate
    ridership in the early years of the forecast.12 While Amtrak
    disagreed with the Inspector General's assessment of the expected
    gains in ridership in the early years, this type of disagreement
    highlights the inherent uncertainty in estimating revenues from
    high-speed rail service. Fifth, Amtrak estimates that its express
    service will result in a net impact of $60 million, which Amtrak
    officials stated was based on their assessment of the market
    potential for this service. Amtrak has made some initial steps in
    this area. For example, it has entered into a partnership with the
    United Parcel Service and four other carriers to provide time-
    sensitive express service generating an estimated $2.9 million in
    annual revenues (less than 1 percent of Amtrak's estimate of
    revenues from express service over the period covered by the
    business plan). However, Amtrak is new to this area and does not
    yet have a track record on which to base its projections. In
    addition, Amtrak does not yet have long-term contracts to support
    much of the projected financial benefit. Furthermore, much of the
    expected benefit depends on Amtrak's expanding its fleet of
    express equipment through acquisition, leasing, or other
    arrangements, most of which still need the approval of Amtrak's
    Board of Directors. Thus, while it is possible that Amtrak may
    achieve its net revenue goal, many important actions remain to be
    taken. Finally, Amtrak plans to have net savings of $29 million
    from buying electric power in the Northeast Corridor at wholesale
    rates. Currently, Amtrak buys electricity at retail rates for its
    own use and for resale to commuter railroads owned by state and
    local governments. Its estimated cost savings were based on
    negotiations with a utility under which Amtrak would purchase
    power at a wholesale price. However, the Federal Energy Regulatory
    Commission denied a request to treat Amtrak as a government entity
    that would be exempt from the Federal Power Act's restrictions on
    wholesale power purchases. Consequently, Amtrak now plans to seek
    enactment of legislation that would designate the railroad as a
    power wholesaler. Amtrak's estimate of savings is contingent upon
    obtaining this 12Amtrak officials pointed out that the Inspector
    General's report included greater estimated revenues than Amtrak
    did after 2003, resulting in a convergence of the estimates by
    2006. Page 16                                          GAO/RCED-
    99-181 Amtrak's Financial Condition B-282088 legislation by
    September 30, 2000. In the meantime, Amtrak officials stated that
    Amtrak will help cut its electricity costs by using a competitive
    bid process allowed under deregulation, including "retail choice"
    programs in Pennsylvania, New York, Massachusetts, Rhode Island,
    and Connecticut for electric power purchases. However, this
    approach will not achieve Amtrak's estimated $29 million in
    savings. Amtrak Has Not Achieved              Amtrak has been
    unable to achieve its planned budget gap in any of the Its Plans
    for the Budget             last 4 years. Specifically, from fiscal
    year 1995 through fiscal year 1998, Gap, Although
    Amtrak's budget gap was, in total, $285 million more than planned,
    as Performance Is Improving             shown in table 2.13 This
    result occurred primarily because Amtrak's expenses were
    significantly higher than planned. During the 4-year period,
    Amtrak's revenues were $34 million less than planned, and expenses
    were $251 million more than planned. As a result, Amtrak's actual
    budget gap was higher than it expected. However, the table also
    shows that the difference between the planned budget gap and the
    actual budget gap has been decreasing since fiscal year 1996.
    Moreover, through April of the current fiscal year, the budget gap
    is about $10 million less than what Amtrak had estimated for the
    first 7 months of fiscal year 1999.14 Table 2: Degree to Which
    Amtrak's Budget Gap Exceeded Its Goals for    Dollars in millions
    Fiscal Years 1995 Through 1998
    Difference between planned and actual performance-Better/(Worse)
    1995              1996              1997             1998a
    Total Revenues                     $152               ($48)
    $48             ($186)             ($34) Expenses
    (163)              (77)             (155)             144
    (251) Budget gap                    ($11)           ($125)
    ($107)             ($42)            ($285) Note: Expenses of about
    $106 million in fiscal year 1998 retroactive labor payments were
    not included in this analysis because they were not in Amtrak's
    strategic business plans. aCompares differences based on Amtrak's
    September 1997 strategic business plan rather than the revised
    March 1998 plan. See the "Agency Comments and Our Evaluation"
    section for a pertinent discussion. Source: GAO's analysis of
    Amtrak's data. 13This table focuses on the difference between
    actual and planned performance. See fig. 3 for total losses
    reflected by the budget gap. 14Amtrak's budget result was a loss
    of about $35 million for the first 7 months of fiscal year 1999,
    as opposed to the estimated $45 million loss. Page 17
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 The table
    shows that Amtrak's revenues exceeded planned amounts for 2 of the
    4 years. Fiscal year 1998 revenues were significantly lower than
    planned (by $186 million), primarily because of lower than
    expected express service business. In contrast, expenses were
    greater than planned in fiscal years 1995 through 1997 but much
    lower than planned (by $144 million) in fiscal year 1998. The
    better than planned results were primarily due to lower than
    expected train operation costs, such as lower than expected fuel
    costs. If Amtrak experiences difficulties in controlling expenses
    over the next 4 years, it will have to generate significantly more
    revenues than planned in order to achieve operating self-
    sufficiency. Federal Funding and         Current and planned
    annual federal funding and reforms contained in the Reform
    Legislation          Amtrak Reform and Accountability Act of 1997
    are likely to have little short-term impact on improving Amtrak's
    overall financial condition. In Will Likely Have Little     the
    short term, continued annual federal funding will help Amtrak
    cover a Short-Term Impact on        significant portion of its
    operating expenses for maintenance and help meet its cash flow
    needs. However, in the long term, using these funds for Improving
    Amtrak's          maintenance expenses will limit the use of
    funding for capital investments Overall Financial           that
    would help Amtrak reduce its costs and increase its revenues in
    the Condition                   future. Finally, although the act
    allowed Amtrak greater flexibility in its business operations,
    these reforms are not likely to provide immediate financial
    benefits. Use of Federal Funds for    According to its October
    1998 strategic business plan, Amtrak ultimately Maintenance
    Expenses        plans to use $559 million (about 92 percent) of
    its $609 million fiscal year Limits Needed Capital       1999
    capital appropriation to pay for the maintenance of equipment-a
    use Investments                 specifically referred to in the
    conference report accompanying the appropriation. Most of the
    remaining $50 million will be used to pay principal on its capital
    debt. Amtrak plans to continue using a large portion of the
    appropriations that it expects to receive from fiscal year 2000
    through fiscal year 2002 for maintenance expenses (including
    progressive overhauls)-in total, about $1 billion. This $1 billion
    represents nearly two-thirds of the $1.6 billion Amtrak expects to
    receive through annual federal capital appropriations.15 The
    short-term benefits of using substantial portions of its capital
    appropriations for maintenance carry long-term consequences.
    Capital investments play a critical role in supporting Amtrak's
    business plan and 15According to Amtrak's October 1998 strategic
    business plan, the Office of Management and Budget's 5-year
    funding plan incorporated anticipated capital support of $571
    million for fiscal year 2000 and $521 million each year for fiscal
    2001 and 2002, for a total of about $1.6 billion for the 3 fiscal
    years. Page 18
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 ultimately
    in building and maintaining Amtrak's viability.16 However, as we
    reported last year, Amtrak had a $500 million shortfall between
    its estimated capital needs and available funding.17 Using federal
    funds for maintenance will limit the funds available for needed
    capital investments that would help Amtrak reduce its costs and
    increase its revenues in the future. By using its federal
    appropriations to cover maintenance expenses, Amtrak may widen
    this gap between its stated capital needs and expected available
    funds. However, in fiscal year 1999, Amtrak has plans to use $758
    million of the $2.2 billion it received through the Taxpayer
    Relief Act of 1997 for capital improvements in addition to the
    $558 million its Board of Directors approved for capital
    investments in fiscal year 1998. Amtrak does not yet have a
    capital plan detailing its capital investments for the remainder
    of these funds. Amtrak has pledged to ultimately use all of the
    $2.2 billion for high-return capital initiatives and for certain
    mandatory and tactical projects. In the short term, Amtrak plans
    to temporarily use a significant portion of these funds for
    certain authorized expenses for equipment maintenance because
    (under an agreement with the administration) the railroad will not
    draw down all of its fiscal year 1999 federal capital
    appropriation in the year in which the funds are appropriated.18
    Amtrak expects that as its revenues increase as a result of its
    strategic business plan initiatives, it will repay the borrowed
    Taxpayer Relief Act funds. Finally, after 2002, questions about
    whether Amtrak is truly operationally self-sufficient would arise
    if Amtrak's capital appropriations are made available and used for
    maintenance expenses, which are operating expenses. On the other
    hand, if Amtrak is not permitted to continue to use appropriated
    funds for maintenance, then it would have to look for additional
    ways to increase revenues and reduce expenses. Short-Term
    Financial          The Amtrak Reform and Accountability Act of
    1997 was intended to help Effects of Amtrak Reform      improve
    Amtrak's financial condition by making reforms to Amtrak's
    Legislation May Be Limited    operations to help the railroad
    better control and manage its costs. Among the act's reforms aimed
    at improving Amtrak's financial condition were provisions that
    16See GAO/T-RCED-98-134. 17See GAO/T-RCED-98-134. As of early June
    1999, Amtrak's Board of Directors had not approved a revised
    capital plan showing capital needs and the funds expected to be
    available to meet those needs. 18Amtrak's October 1998 strategic
    business plan assumes that it may draw down only 40 percent of
    each year's general capital appropriation on the first day of the
    fiscal year and the remaining 60 percent on the first day of the
    following fiscal year. Page 19
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 *
    eliminated, as of May 31, 1998, existing statutory and contractual
    labor protection arrangements that provided up to 6 years of
    compensation for employees who lost their jobs because of the
    discontinuance of service on a route or such other covered actions
    and required negotiation over new arrangements; * repealed the
    statutory ban on contracting out work that would result in
    employee layoffs (except for food and beverage service, which
    could already be contracted out), incorporated the ban into
    existing collective bargaining agreements, and made contracting
    out subject to negotiation by November 1999; and * placed a $200
    million cap on the aggregate amount that Amtrak and others must
    pay rail passengers for all claims (including claims for punitive
    damages) arising from a single accident or incident. As we
    reported in 1998, the reforms contained in the act may have
    little, if any, immediate effect on Amtrak's financial performance
    for several reasons. First, regarding labor protection
    arrangements, after 10 negotiating sessions, Amtrak and its unions
    agreed to submit the matter to binding arbitration. As of early
    June 1999, the panel of arbitrators had not reached a decision.
    Second, Amtrak officials do not expect to address contracting out
    work unrelated to food and beverage service before November 1,
    1999. The officials believe the repeal of the ban may provide
    long-term flexibility, including flexibility in union negotiations
    and in controlling costs, but at this time cannot predict what
    changes may result from these negotiations and what the effect on
    costs may be. Finally, Amtrak believes the limit of $200 million
    per accident for rail passenger liability claims may have a
    limited financial effect because this cap is significantly higher
    than amounts Amtrak has historically paid on such claims. This
    reform may not result in measurable financial savings as much as
    in additional flexibility in negotiating with labor unions and in
    addressing the freight railroads' concerns over such issues as
    liability payments.19 The act also made other changes that have
    the potential for a significant impact on Amtrak's future. For
    example, it established an independent council-the Amtrak Reform
    Council-to evaluate Amtrak's performance and make recommendations
    for cost containment, productivity 19The financial effects-if any-
    of the March 15, 1999, crash of Amtrak's City of New Orleans train
    operating on Illinois Central Railroad Company tracks in
    Bourbonnais, Illinois, are not yet known. Page 20
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088
    improvements, and financial reforms. If, at any time more than 2
    years after the enactment of the act and implementation of a
    financial plan for operating within authorized funding levels, the
    Council finds that Amtrak is not meeting its financial goals or
    that it will require operating funds after December 2002, then the
    Council is to submit to the Congress, within 90 days, an action
    plan for a restructured national intercity passenger rail system.
    In addition, if the above events occur, Amtrak is required to
    develop and submit an action plan for its liquidation. Conclusions
    Amtrak has focused its strategic business plan on the near-term
    goal of becoming operationally self-sufficient by 2002-a goal
    established by the administration and the Congress. Amtrak's plan
    is ambitious; and, to its credit, it is currently somewhat ahead
    of the plan's financial goals. Yet the overwhelming bulk of the
    expected financial benefits of the plan are still to come-with
    most to be achieved in the final year of the plan. Our concerns
    are two-fold. First, several aspects of the plan are subject to
    considerable uncertainty, including, but not limited to,
    identifying over $160 million in productivity and other
    improvements during the remaining 3 years of the plan. Second,
    Amtrak has a history of not meeting its financial goals, and the
    current 4-year plan anticipates achieving about 5 times as much in
    financial improvements as Amtrak was able to achieve through its
    business plans over the previous 4 years. We recognize that all
    plans by their very nature are subject to uncertainty. However,
    given the uncertainties in the current plan, Amtrak's history of
    missing financial goals, and the magnitude of the savings still to
    be achieved, it is difficult to be confident that Amtrak will
    become operationally self-sufficient within the next 3 years. The
    stakes are high: The Congress gave Amtrak until the end of fiscal
    year 2002 to reach operational self-sufficiency and required that
    plans for restructuring and liquidating Amtrak be prepared if the
    railroad does not meet this goal. Agency Comments       We
    provided Amtrak and the Federal Railroad Administration within the
    and Our Evaluation    Department of Transportation copies of a
    draft of this report for their review and comment. We met with
    Amtrak officials, including the Vice-President for Government and
    Public Affairs and the Controller. In general, Amtrak believed
    that the draft report contained inappropriate analyses and
    mischaracterized how Amtrak derived selected expected financial
    benefits in its strategic business plan. Page 21
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 Amtrak
    believes that the preferred measure of progress toward achieving
    operating self-sufficiency is not net loss but rather its "budget
    gap," an Amtrak financial measure that excludes expenses funded
    from its capital program. Amtrak apparently misunderstood the
    purpose of our work. As stated in the draft report, the objective
    of this portion of our work was to assess Amtrak's financial
    performance in 1998. The work was not limited to assessing
    progress in meeting its goal of operational self-sufficiency.
    Consequently, a discussion of financial performance that is
    limited to Amtrak's budget gap would be inappropriate and
    incomplete. We have clarified the objective and the discussion of
    this topic in the report. Amtrak also disagreed with our inclusion
    of expenses for progressive overhauls in our discussion of
    Amtrak's progress in achieving operational self-sufficiency.
    Amtrak stated that while generally accepted accounting principles
    require Amtrak to record such spending as operating expenses, it
    funds progressive overhauls through its capital program and
    therefore believes that they should be counted as capital costs.
    As a result, in Amtrak's view, the costs of progressive overhauls
    would be excluded from the calculation of Amtrak's progress toward
    achieving operational self-sufficiency by 2002. As discussed in
    our report, generally accepted accounting principles consider
    progressive overhaul expenses to be operating expenses. As a
    result, we have not revised how these costs are categorized. We
    have added to this report Amtrak's rationale for excluding
    progressive overhaul expenses from its budget gap and show the
    impact of both including and excluding it. Amtrak stated that we
    did not recognize that the higher net loss in fiscal year 1998 was
    partially the result of higher depreciation expenses resulting
    from investments and that these investments will have positive
    impacts for ridership and revenues in the future. We agree and
    have included information regarding the impact that Amtrak's
    capital investments have had on its operating expenses and net
    loss. We have also added a discussion of the important role that
    these investments will have on Amtrak's ability to increase
    revenues in the future. Amtrak officials stated that our analysis
    of actual versus planned financial results for fiscal year 1998
    was inappropriate because we used Amtrak's original strategic
    business plan issued in September 1997 rather than its revised
    plan issued in March 1998. They stated that the revised March plan
    is a better benchmark to judge its fiscal year performance because
    it reflects business changes resulting from the enactment of the
    Amtrak Reform and Accountability Act and the Taxpayer Relief Act
    in 1997, as Page 22                              GAO/RCED-99-181
    Amtrak's Financial Condition B-282088 well as other factors, such
    as significant management changes. We disagree. We believe that
    the most appropriate benchmark for evaluating yearly performance
    is the plan approved at the beginning of the fiscal year. Revising
    a plan 6 months into a fiscal year significantly reduces the
    uncertainty inherent in preparing an initial estimate of
    performance. In addition, the March 1998 plan was an exception-
    Amtrak typically produces a plan in September or October of each
    year. Finally, while we agree that the enactment of the two laws
    and Amtrak's change in leadership were significant events for
    Amtrak, the primary financial revisions contained in the March
    1998 plan were reductions in revenues associated with Amtrak's
    mail and express service initiatives. These reductions were
    primarily due to revised assumptions about the market for express
    service, rather than a direct result of the above mentioned
    events. Amtrak also objected to our characterization of how it
    derived estimates for the expected financial benefits associated
    with the initiatives to (1) implement service standards and (2)
    align its route network to meet customer demand. Amtrak stated
    that the estimates were based on extensive analyses completed by
    senior management officials and included benchmarking with other
    service providers. We believe that the characterization in our
    draft report was wholly consistent with the information that we
    obtained from top financial officials and others within Amtrak. In
    commenting on our draft report, Amtrak officials supplied us with
    a rationale for how they derived the estimate for financial
    benefits associated with implementing service standards. We have
    added this material to our report. The officials did not supply
    any additional information on how they derived the estimate for
    the expected financial benefits associated with aligning Amtrak's
    route network to meet customer demand. Based on the additional
    information received, we revised our report to characterize how
    Amtrak developed its expected financial benefits as using
    "professional judgment" rather than making "best guesses."
    Finally, Amtrak officials offered a number of technical and
    clarifying comments that we incorporated throughout the report,
    where appropriate. In commenting on our draft report, the
    Department of Transportation stated that when the goal of
    achieving operational self-sufficiency was established, the
    administration understood that meeting the goal would not be easy.
    (See app. I.) It believes that Amtrak's strategic business plan
    provides a credible path for achieving operational self-
    sufficiency. The Page 23                              GAO/RCED-99-
    181 Amtrak's Financial Condition B-282088 Department also stated
    that it believes Amtrak is moving in the right direction and is
    currently ahead of its financial targets identified in the
    corporation's strategic business plan. It stated that our report
    should recognize Amtrak's increased investment in traditional
    capital projects. As discussed above, we have added this
    information to our report. The Department also commented that the
    Taxpayer Relief Act of 1997 authorizes Amtrak to use Taxpayer
    Relief Act funds for some maintenance activities. Although the
    draft report provided to the Department included this fact, we
    have added to our report a further reference to this allowed use
    of Taxpayer Relief Act funds. Scope and      To determine the
    status of Amtrak's financial condition, we reviewed its
    Methodology    fiscal year 1998 annual report, October 1998
    strategic business plan, and fiscal year 2000 legislative report
    and federal grant request. We also interviewed Amtrak's Chief
    Financial Officer and other financial systems officials. To obtain
    a historical perspective on Amtrak's financial condition, we also
    reviewed Amtrak's annual reports for fiscal years 1994 through
    1997. To provide information on Amtrak's current strategic plan
    for obtaining operating self-sufficiency, we reviewed its current
    and previous strategic business plans and the Department of
    Transportation's Office of Inspector General's Summary Report on
    the Independent Assessment of Amtrak's Financial Needs Through
    Fiscal Year 2002. We also discussed the current strategic business
    plan with a variety of Amtrak officials, including officials in
    its Intercity and Northeast Corridor strategic business units and
    Amtrak's Chief Financial Officer. We did not independently verify
    the accuracy of Amtrak's financial data in its current strategic
    business plan. Finally, to provide information on the extent to
    which federal funding and recently enacted legislative reforms
    will help Amtrak resolve its financial problems, we first reviewed
    the Amtrak Reform and Accountability Act of 1997, the Taxpayer
    Relief Act of 1997, and Amtrak's fiscal year 1999 appropriation.
    We then discussed the likely impact of these acts with Amtrak
    officials. We also reviewed Amtrak's proposed capital plan and
    interviewed Amtrak officials about its contents. We conducted our
    review from January 1999 through June 1999 in accordance with
    generally accepted government auditing standards. Page 24
    GAO/RCED-99-181 Amtrak's Financial Condition B-282088 As agreed
    with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30
    days after the date of this letter. At that time, we will send
    copies of this report to interested congressional committees;
    George D. Warrington, the President and Chief Executive Officer of
    Amtrak; the Honorable Rodney E. Slater, the Secretary of
    Transportation; the Honorable Jolene M. Molotoris, the
    Administrator of the Federal Railroad Administration; the
    Honorable Jacob J. Lew, the Director of the Office of Management
    and Budget; and Gil Carmichael, the Chairman of the Amtrak Reform
    Council. We will also make copies available to others on request.
    If you or your staff have any questions about this report, please
    call me at (202) 512-3650. Key contributors to this report were
    Ruthann Balciunas, Catherine Colwell, David Lichtenfeld, and James
    Ratzenberger. Sincerely yours, Phyllis F. Scheinberg Associate
    Director, Transportation Issues Page 25
    GAO/RCED-99-181 Amtrak's Financial Condition Appendix I Comments
    From the Department of Transportation Page 26      GAO/RCED-99-181
    Amtrak's Financial Condition Appendix I Comments From the
    Department of Transportation (348146)    Page 27
    GAO/RCED-99-181 Amtrak's Financial Condition Ordering Information
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