SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6324
BURLINGTON NORTHERN RAILROAD COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-6034000
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2650 Lou Menk Drive
Fort Worth, Texas 76131
(Address of principal executive offices) (Zip Code)
(817) 333-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes__X__ No_____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class as of October 31, 1996
Common stock, without par value* 1,000 shares
*Burlington Northern Railroad Company is a wholly-owned subsidiary of
Burlington Northern Inc. which is a wholly-owned subsidiary of Burlington
Northern Santa Fe Corporation and there is no market data with respect to such
shares.
Registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
disclosure format permitted by General Instruction H(2).
<PAGE>
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $ 1,301 $ 1,389 $ 3,926 $ 4,027
Operating expenses:
Compensation and benefits 419 439 1,309 1,365
Purchased services 87 122 292 374
Depreciation and amortization 103 101 298 299
Equipment rents 135 130 415 391
Fuel 108 103 324 301
Materials and other 148 162 480 494
Merger, severance and asset charge - 72 - 84
------- ------- ------- --------
Total operating expenses 1,000 1,129 3,118 3,308
------- ------- ------- --------
Operating income 301 260 808 719
Interest expense 14 23 42 62
Other income, net 12 4 27 21
------- ------- ------- --------
Income before income taxes 299 241 793 678
Income tax expense 116 95 304 267
------- ------- ------- --------
Income before cumulative effect of
change in accounting method 183 146 489 411
Cumulative effect of change in
accounting method, net of tax - - - (100)
------- ------- ------ --------
Net income $ 183 $ 146 $ 489 $ 311
======= ======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 100 $ 41
Accounts receivable, net 646 567
Materials and supplies 129 136
Current portion of deferred income taxes 174 174
Other current assets 29 25
-------- --------
Total current assets 1,078 943
Property and equipment, net 6,690 6,148
Advances to parent 263 290
Investments in and advances to affiliates 136 134
Other assets 115 137
-------- --------
Total assets $ 8,282 $ 7,652
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 1,471 $ 1,398
Long-term debt and commercial paper due
within one year 99 26
-------- --------
Total current liabilities 1,570 1,424
Long-term debt and commercial paper 692 880
Deferred income taxes 1,419 1,226
Casualty and environmental reserves 371 416
Employee merger and separation costs 224 257
Other liabilities 477 409
-------- --------
Total liabilities 4,753 4,612
-------- --------
Commitments and contingencies
Stockholder's equity:
Common stock, without par value, 1,000 shares
authorized, issued and outstanding 1,191 1,191
Retained earnings 2,338 1,849
-------- --------
Total stockholder's equity 3,529 3,040
-------- --------
Total liabilities and stockholder's
equity $ 8,282 $ 7,652
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
Operating Activities:
<S> <C> <C>
Net income $ 489 $ 311
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting method - 100
Depreciation and amortization 298 299
Deferred income taxes 193 34
Merger, severance and asset charge - 84
Employee, merger and separation costs paid (87) -
Other, net (5) (73)
Changes in working capital 98 51
------ ---------
Net cash provided by operating activities 986 806
------ ---------
Investing Activities:
Cash used for capital expenditures (815) (531)
Investments in and advances to affiliates 27 (715)
Other, net (24) (10)
------ ---------
Net cash used for investing activities (812) (1,256)
------ ---------
Financing Activities:
Net increase (decrease) in commercial paper (224) 524
Proceeds from issuance of long-term debt 105 -
Payments on long-term debt (21) (22)
Dividends paid - (50)
Other, net 25 -
------ ---------
Net cash provided by (used for) financing activities (115) 452
------ ---------
Increase (decrease) in cash and cash equivalents 59 2
Cash and cash equivalents:
Beginning of period 41 27
------ ---------
End of period $ 100 $ 29
====== =========
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 31 $ 50
Income taxes paid, net of refunds 2 230
Assets financed through capital lease obligations 13 4
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Accounting policies and interim results
The consolidated financial statements should be read in conjunction with the
Burlington Northern Railroad Company (BNRR) Annual Report on Form 10-K and the
Burlington Northern Santa Fe Corporation (BNSF) Annual Report on Form 10-K for
the year ended December 31, 1995. BNRR is a wholly-owned subsidiary of
Burlington Northern Inc. (BNI).
As a result of a business combination, Santa Fe Pacific Corporation (SFP)
became an indirect wholly-owned subsidiary of BNSF on September 22, 1995.
Subsequent to that time, as permitted by the Interstate Commerce Commission
decision authorizing the business combination, BNSF has begun to consolidate
operations of BNI's and SFP's railroad subsidiaries, BNRR and The Atchison,
Topeka and Santa Fe Railway Company (ATSF), although to date, the railroad
subsidiaries have not merged. It is management's current plan to merge BNRR
and ATSF in the near future. The consolidation of operations includes a
single management team, as well as the combination of certain information
systems and certain operations. The third quarter and nine month results
presented in these financial statements include the effect of allocations of
expenses between BNI and SFP as they are no longer distinguishable by each
separate company. Management believes that these allocations are reasonable.
The results of operations for any interim period are not necessarily
indicative of the results of operations to be expected for the entire year.
In the opinion of management, all adjustments (consisting of only normal
recurring adjustments, except as disclosed) necessary to present fairly BNRR's
financial position as of September 30, 1996 and December 31, 1995 and the
results of operations for the three and nine month periods ended September 30,
1996 and 1995 and cash flows for the nine month period ended September 30,
1996 and 1995 have been included.
Certain prior year and prior period data has been reclassified to conform to
the current period presentation.
2. Employee, merger and separation costs
Current and long-term employee merger and separation liabilities totaling $295
million are included in the consolidated balance sheet at September 30, 1996.
During the first nine months of 1996, the Company paid $87 million of
employee, merger and separation costs.
At September 30, 1996, approximately $71 million of the total liability is
included within current liabilities for anticipated costs to be paid over the
next twelve months. The remaining costs are anticipated to be paid over the
next five years.
Certain merger and separation costs, primarily including relocation costs
associated with clerical employees, have been recorded as operating expenses
in 1996 and will continue to be recorded as operating expenses during the
remainder of 1996 and future periods. The ultimate timing and magnitude of
any such future expense is presently unknown.
Results for the first nine months of 1995 include $84 million of
merger-related expenses principally related to employee separations and
relocations.
3. Accounting change
Effective January 1, 1995, BNRR changed its method of accounting for periodic
major locomotive overhauls. Under the new method, costs of owned locomotives
relating to components requiring major overhaul are depreciated, on a
straight-line basis, to the first major overhaul date. The remaining cost of
the owned locomotive is depreciated, on a straight-line basis, over the
estimated economic life of the locomotive. The cost of overhauls on owned
units are then capitalized when incurred and depreciated, on a straight-line
basis, until the next anticipated overhaul. In addition, estimated costs for
major overhauls on leased units are accrued on a straight-line basis over the
life of the leases. BNRR previously expensed locomotive overhauls when the
costs were incurred. The cumulative effect of this change on years prior to
1995 was a reduction in net income of $100 million, net of a $63 million tax
benefit.
4. Environmental and other contingencies
BNRR's operations, as well as those of its competitors, are subject to
extensive federal, state and local environmental regulation. BNRR's operating
procedures include practices to protect the environment from the environmental
risks inherent in railroad operations, which frequently involve transporting
chemicals and other hazardous materials.
Additionally, many of BNRR's land holdings are and have been used for
industrial or transportation related purposes or leased to commercial or
industrial companies whose activities may have resulted in discharges onto the
property. As a result, BNRR is subject to environmental clean-up and
enforcement actions. In particular, the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980 (CERCLA), also known as the
"Superfund" law, as well as similar state laws generally impose joint and
several liability for clean-up and enforcement costs without regard to fault
or the legality of the original conduct on current and former owners and
operators of a site. BNRR has been notified that it is a potentially
responsible party (PRP) for study and clean-up costs at approximately 22
Superfund sites for which investigation and remediation payments are or will
be made or are yet to be determined (the Superfund sites) and, in many
instances, is one of several PRPs. In addition, BNRR may be considered a PRP
under certain other laws. Accordingly, under CERCLA and other federal and
state statutes, BNRR may be held jointly and severally liable for all
environmental costs associated with a particular site. If there are other
PRPs, BNRR generally participates in the clean-up of these sites through
cost-sharing agreements with terms that vary from site to site. Costs are
typically allocated based on relative volumetric contribution of material, the
amount of time the site was owned or operated, and/or the portion of the total
site owned or operated by each PRP.
Environmental costs include initial site surveys and environmental
studies of potentially contaminated sites as well as costs for remediation and
restoration of sites determined to be contaminated. Liabilities for
environmental clean-up costs are initially recorded when BNRR's liability for
environmental clean-up is both probable and a reasonable estimate of
associated costs can be made. Adjustments to initial estimates are recorded
as necessary based upon additional information developed in subsequent
periods. BNRR conducts an ongoing environmental contingency analysis, which
considers a combination of factors including independent consulting reports,
site visits, legal reviews, analysis of the likelihood of participation in and
the ability of other PRPs to pay for clean-up, and historical trend analyses.
BNRR is involved in a number of administrative and judicial proceedings
and other mandatory clean-up efforts at approximately 185 sites, including the
Superfund sites, at which it is being asked to participate in the study or
clean-up of the alleged environmental contamination. BNRR paid approximately
$22 million during the first nine months of 1996 relating to mandatory
clean-up efforts, including amounts expended under federal and state voluntary
clean-up programs. BNRR has accruals of approximately $110 million for
remediation and restoration of all known sites, including $105 million
pertaining to mandated sites, of which approximately $40 million relates to
the Superfund sites. BNRR anticipates that the majority of the accrued costs
at September 30, 1996, will be paid over the next five years. No individual
site is considered to be material.
Liabilities for environmental costs represent BNRR's best estimates for
remediation and restoration of these sites and include both asserted and
unasserted claims. Unasserted claims are not considered to be a material
component of the liability. Although recorded liabilities include BNRR's
best estimates of all costs, without reduction for anticipated recoveries from
third parties, BNRR's total clean-up costs at these sites cannot be predicted
with certainty due to various factors such as the extent of corrective actions
that may be required, evolving environmental laws and regulations, advances in
environmental technology, the extent of other PRPs' participation in clean-up
efforts, developments in ongoing environmental analyses related to sites
determined to be contaminated, and developments in environmental surveys and
studies of potentially contaminated sites. As a result, future charges to
income for environmental liabilities could have a significant effect on
results of operations in a particular quarter or fiscal year as individual
site studies and remediation and restoration efforts proceed or as new sites
arise. However, expenditures associated with such liabilities are typically
paid out over a long period; and are therefore not expected to have a material
adverse effect on BNRR's consolidated financial position or liquidity.
BNRR expects it will become subject to future requirements regulating air
emissions from diesel locomotives that may increase its operating costs.
Proposed regulations applicable to new locomotive engines are expected to be
issued by the U.S. Environmental Protection Agency by January 31, 1997, with
final regulations to be promulgated by December 17, 1997. It is anticipated
that these regulations will be effective for locomotive engines installed
after 1999. Under some interpretations of federal law, older locomotive
engines may be regulated by states based on standards and procedures which the
State of California ultimately adopts. At this time, it is unknown whether
California will adopt locomotive emission standards that may differ from
federal standards.
BNRR is a party to a number of legal actions and claims, various governmental
proceedings and private civil suits arising in the ordinary course of
business, including those related to environmental matters and personal injury
claims. While the final outcome of these items cannot be predicted with
certainty, considering among other things the meritorious legal defenses
available, it is the opinion of management that none of these items, when
finally resolved, will have a material adverse effect on the annual results of
operations, financial position or liquidity of BNRR, although an adverse
resolution of a number of these items in a single period could have a material
adverse effect on the results of operations in a particular quarter or fiscal
year.
5. Hedging activities
BNRR has a program to hedge against fluctuations in the price of its diesel
fuel purchases. This program includes forward purchases for delivery at
fueling facilities. Any gains or losses associated with changes in market
value of these hedges are deferred and recognized as a component of fuel
expense in the period in which the hedged fuel is purchased and used. To the
extent BNRR hedges portions of its fuel purchases, it may not fully benefit
from decreases in fuel prices.
As of October 31, 1996, BNRR had entered into forward purchases for
approximately 11 million gallons at an average price of approximately 49 cents
per gallon. These contracts have expiration dates of November and December
1996.
The above price does not include taxes, fuel handling costs and certain
transportation costs.
The current and future fuel delivery prices are monitored continuously and
hedge positions are adjusted from time to time. Hedge positions are also
closely monitored to ensure that they will not exceed actual fuel requirements
in any period. Unrealized gains from BNRR's fuel hedging transactions were
insignificant at September 30, 1996. BNRR monitors its hedging positions and
credit ratings of its counterparties and does not anticipate losses due to
counterparty nonperformance.
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
Management's narrative analysis relates to the financial condition and results
of operations of Burlington Northern Railroad Company and its majority-owned
subsidiaries (collectively BNRR). BNRR is a wholly-owned subsidiary of
Burlington Northern Inc. (BNI) which became a wholly-owned subsidiary of
Burlington Northern Santa Fe Corporation (BNSF) on September 22, 1995.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1995
BNRR recorded net income for the first nine months of 1996 of $489 million
compared with net income of $311 million for the first nine months of 1995.
Results for the first nine months of 1995 reflect a $84 million pre-tax
merger, severance and asset charge and a $100 million after-tax charge for the
cumulative effect of a change in accounting for locomotive overhauls.
REVENUES
The following table presents BNRR's revenue information by commodity for the
nine months ended September 30, 1996 and 1995 and includes certain
reclassifications of prior year information to conform to current year
presentation.
<TABLE>
<CAPTION>
Revenue
Revenue Per Thousand
Revenues Ton Miles Ton Miles
1996 1995 1996 1995 1996 1995
(In Millions) (In Millions)
<S> <C> <C> <C> <C> <C> <C>
Intermodal $ 493 $ 551 16,878 18,151 $29.21 $30.36
Coal 1,346 1,323 120,809 115,644 11.14 11.44
Agricultural Commodities 674 750 34,513 41,500 19.53 18.07
Chemicals 287 269 11,794 11,201 24.33 24.02
Forest Products 314 321 14,910 14,823 21.06 21.66
Consumer and Food Products 216 231 7,892 8,436 27.24 27.38
Automotive 112 112 1,440 1,593 78.47 70.31
Metals 229 206 10,954 9,772 20.91 21.08
Minerals and Ores 170 166 6,811 6,879 24.96 24.13
------ ------ -------- ------- ------ ------
Total Freight Revenues 3,841 3,929 226,001 227,999 17.00 17.23
Other Revenues 85 98 - - - -
------ ------ -------- ------- ------ ------
Total Operating Revenues $3,926 $4,027 226,001 227,999 $17.00 $17.23
====== ====== ======== ======= ====== ======
</TABLE>
Total revenues for the first nine months of 1996 were $3,926 million, a
decrease of $101 million compared with revenues of $4,027 million for the
first nine months of 1995.
Intermodal revenues were $493 million for the 1996 first nine months compared
with $551 million for the 1995 first nine months. The decrease of $58 million
was principally due to the reduction in the number of carloadings in the 1996
first quarter due to severe weather conditions in the Pacific Northwest.
Agricultural Commodities revenue of $674 million for the 1996 first nine
months were $76 million lower than revenues of $750 million for the 1995 first
nine months. The decrease is primarily due to a significant decline in corn
and wheat exports in the third quarter, compared to record corn and wheat
traffic for export market a year ago.
Chemicals revenues were $287 million for the first nine months of 1996
compared with $269 million for the first nine months of 1995. The increase is
due to continued strong petroleum products demand.
Consumer and Food Products revenues were $216 million for the 1996 first nine
months compared with revenues of $231 million for the first nine months of
1995. The decrease was principally due to lower carloadings.
Metals revenues increased $23 million for the 1996 first nine months. This
increase was due to higher volumes in 1996 compared to 1995.
EXPENSES
Total operating expenses for the first nine months of 1996 were $3,118 million
compared with operating expenses of $3,308 million for the 1995 first nine
months. Operating expenses for the nine months ended September 30, 1995
include a $84 million merger, severance and asset charge. The operating ratio
was 79.4 percent for the first nine months of 1996 compared to an operating
ratio of 80.1 percent for the 1995 first nine months excluding the merger,
severance and asset charge.
Compensation and benefits expenses for the first nine months of 1996 were
$1,309 million, a $56 million decrease from expenses of $1,365 million for the
first nine months of 1995. The decrease was due to lower costs due to a
reduction in the number of salaried employees, partially offset by increased
union employee expenses.
Purchased services expenses for the 1996 first nine months of $292 million
were $82 million lower than expenses of $374 million for the first nine months
of 1995 primarily reflecting lower intermodal-related expenses and operating
synergies gained through the business combination.
Equipment rents expenses for the first nine months of 1996 of $415 million was
$24 million higher than the $391 million for the first nine months of 1995
primarily due to an increase in lease expense on freight cars.
Fuel expenses for the first nine months of 1996 were $23 million higher than
fuel expenses for the first nine months of 1995 primarily due to an increase
in the average price paid per gallon of diesel fuel, partially offset by a
decrease in volume.
OTHER MATTERS
LABOR
Labor unions represent approximately 90 percent of BNRR employees under
collective bargaining agreements with 13 different labor organizations. BNRR
and other major railroads have been actively involved in industry-wide labor
contract negotiations since late 1994. Through this process, wages, health
and welfare benefits, work rules and other issues have now been negotiated for
substantially all BNRR rail union-represented employees. BNRR remains in
negotiations with employees represented by the American Train Dispatchers
Department (ATDD) of the Brotherhood of Locomotive Engineers. The ATDD
represents approximately 425 employees of BNRR.
The new collective bargaining agreements will remain in effect through at
least December 31, 1999, and until new agreements are reached or the Railway
Labor Act's procedures are exhausted. The new collective bargaining
agreements include provisions for retroactive wage increases, signing bonuses
and lump sum payments. Throughout the negotiation process, BNRR has been
providing reserves related to potential union agreements; therefore, payments
related to the retroactive portion of these agreements did not have a material
effect on BNRR's 1996 results of operations.
UNION PACIFIC/SOUTHERN PACIFIC MERGER
The Surface Transportation Board (STB) approved the proposed common control
and merger of rail carriers controlled by UP and SP in its written decision
dated August 12, 1996. The transaction was consummated on September 12, 1996.
As a condition of the merger, the STB imposed the provisions of the rights
agreement among BNRR, ATSF and UP/SP which grants rights to BNRR and ATSF to
more than 3,500 miles of track and will require the purchase by BNRR or ATSF
from UP and SP of more than 335 miles of track for $150 million. BNRR
acquired 28 miles of track in September 1996 for $20 million; the remaining
$130 million of track is anticipated to be purchased in the fourth quarter of
1996. The STB decision provides BNRR and ATSF with greater access to Gulf
Coast and West Coast markets. BNRR is currently evaluating the STB decision
and the impact of the UP/SP merger; presently, the ultimate effect of the
UP/SP merger is not known.
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
COAL TRANSPORTATION CONTRACT LITIGATION
Reference is made to the discussion in Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1995, and in its Reports on Form 10-Q for
the quarters ended March 31 and June 30, 1996, concerning the action filed by
Southwestern Electric Power Company ("SWEPCO") against Burlington Northern
Railroad Company ("BNRR") in the 102nd Judicial District Court for Bowie
County, Texas seeking a reduction of the coal transportation rates required to
be paid under two contracts (Southwestern Electric Power Company v. Burlington
Northern Railroad Company, No. D-102-CV-91-0720). BNRR had appealed the trial
court's judgment (which approximated $74 million and contained other relief)
to the Court of Appeals for the Sixth District of Texas, Texarkana, Texas
(Burlington Northern Railroad Company v. Southwestern Electric Power Company,
No. 06-95-00024-CV), and SWEPCO had filed a notice of cross appeal. By
decision dated April 30, 1996, the Court of Appeals reversed the judgment of
the trial court and rendered judgment in favor of BNRR. SWEPCO was assessed
costs of appeal. SWEPCO has been denied two motions for rehearing before the
Court of Appeals. On October 14, 1996, SWEPCO applied for discretionary
review of the decision by the Texas Supreme Court.
CHERRYVILLE, MISSOURI INVESTIGATION
BNRR has been advised that it is a target of a Grand Jury investigation in the
United States District Court for the Eastern District of Missouri with respect
to former railcar cleaning activities conducted by independent contractors at
Cherryville, Missouri. The proceeding relates to alleged violations of
federal environmental protection statutes with respect to lead contamination
at several sites in the Cherryville area. In addition, BNRR has received
personal injury claims from certain individuals formerly residing at or near
some of these sites. The Missouri Department of Natural Resources ("DNR")
also is investigating the matter with respect to possible violations of state
environmental protection laws and has indicated that it may seek a civil
penalty from BNRR. BNRR and another potentially responsible party had
previously prepared investigation and remediation plans in conjunction with
the DNR. BNRR modified the plans and is expediting a response and
implementing remediation with DNR approval. Based upon information currently
available, BNRR does not believe that this matter will have a material adverse
effect on its financial condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
See Index to Exhibits on page E-1 for a description of the exhibits filed as
part of this report.
B. Reports on Form 8-K
The Registrant filed the following Current Reports on Form 8-K during the
quarter ended September 30, 1996:
Registrant filed a current report on Form 8-K (Date of earliest event
reported: July 22, 1996), in which it reported under Item 5. Other Events, the
BNRR Ratio of Earnings to Fixed Charges for the Year Ended December 31, 1995
and the Three Months Ended March 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BURLINGTON NORTHERN RAILROAD COMPANY
(Registrant)
By: /s/ T. N. Hund
T. N. Hund
Vice President and Controller
(On behalf of the Registrant and as
principal accounting officer)
Schaumburg, Illinois
November 14, 1996
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Nature of Exhibit
12 Statement regarding Computation of Ratio of Earnings to
Fixed Charges.
27 Financial Data Schedule.
<TABLE>
<CAPTION>
EXHIBIT 12
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS, EXCEPT RATIO AMOUNTS)
(UNAUDITED)
Nine Months Ended
September 30,
1996 1995
-------- -------
Earnings:
<S> <C> <C>
Pre-tax income $ 793 $ 678
Add:
Interest and fixed charges,
excluding capitalized interest 42 62
Portion of rent under long-term
operating leases representative
of an interest factor 112 110
Less: Undistributed equity in earnings
of investments accounted for
under the equity method (3) -
-------- -------
Total earnings available for fixed charges $ 944 $850
======== =======
Fixed charges:
Interest and fixed charges $ 49 $ 65
Portion of rent under long-term operating
leases representative of an interest
factor 112 110
-------- -------
Total fixed charges $ 161 $ 175
======== =======
Ratio of earnings to fixed charges 5.86x 4.86x
======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Burlington Northern Railroad's Consolidated Financial Statements
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 685
<ALLOWANCES> (39)
<INVENTORY> 129
<CURRENT-ASSETS> 1078
<PP&E> 10904
<DEPRECIATION> (4214)
<TOTAL-ASSETS> 8282
<CURRENT-LIABILITIES> 1570
<BONDS> 692
<COMMON> 0
0
0
<OTHER-SE> 3529
<TOTAL-LIABILITY-AND-EQUITY> 8282
<SALES> 0
<TOTAL-REVENUES> 3926
<CGS> 0
<TOTAL-COSTS> 3118
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 793
<INCOME-TAX> 304
<INCOME-CONTINUING> 489
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 489
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
