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 June 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)
3800 Continental Plaza, 777 Main St.
Fort Worth, Texas 76102-5384
(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 July 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 Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $ 1,303 $ 1,284 $ 2,622 $ 2,631
Operating expenses:
Compensation and benefits 435 444 890 926
Purchased services 98 124 197 239
Depreciation and amortization 97 99 195 198
Equipment rents 143 132 280 261
Fuel 110 100 216 198
Materials and other 155 151 337 350
-------- ------- ------- --------
Total operating expenses 1,038 1,050 2,115 2,172
-------- ------- ------- --------
Operating income 265 234 507 459
Interest expense 13 21 28 39
Other income, net 5 13 15 17
-------- ------- ------- --------
Income before income taxes 257 226 494 437
Income tax expense 100 89 188 172
-------- ------- ------- --------
Income before cumulative effect of
change in accounting method 157 137 306 265
Cumulative effect of change in
accounting method, net of tax - - - (100)
-------- ------- ------- --------
Net income $ 157 $ 137 $ 306 $ 165
======== ======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 34 $ 41
Accounts receivable, net 609 567
Materials and supplies 136 136
Current portion of deferred income taxes 174 174
Other current assets 33 25
-------- --------
Total current assets 986 943
Property and equipment, net 6,338 6,148
Advances to parent 226 290
Investments in and advances to affiliates 135 134
Other assets 131 137
-------- --------
Total assets $ 7,816 $ 7,652
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 1,395 $ 1,398
Long-term debt and commercial paper due
within one year 97 26
-------- --------
Total current liabilities 1,492 1,424
Long-term debt and commercial paper 582 880
Deferred income taxes 1,308 1,226
Casualty and environmental reserves 390 416
Employee merger and separation costs 234 257
Other liabilities 464 409
-------- --------
Total liabilities 4,470 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 2,155 1,849
-------- --------
Total stockholder's equity 3,346 3,040
-------- --------
Total liabilities and stockholder's
equity $ 7,816 $ 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>
Six Months Ended
June 30,
1996 1995
Operating Activities:
<S> <C> <C>
Net income $ 306 $ 165
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting method - 100
Depreciation and amortization 195 198
Deferred income taxes 82 35
Other, net (3) (20)
Employee, merger and separation costs paid (54) -
Changes in working captial 18 (49)
------ ------
Net cash provided by operating activities 544 429
------ ------
Investing Activities:
Cash used for capital expenditures (387) (352)
Investments in and advances to affiliates 64 (142)
Other, net 15 (3)
------ ------
Net cash used for investing activities (308) (497)
------ ------
Financing Activities:
Net increase (decrease) in commercial paper (224) 141
Payments on long-term debt (19) (19)
Dividends paid - (50)
------ ------
Net cash provided by (used for) financing activities (243) 72
------ ------
Increase (decrease) in cash and cash equivalents (7) 4
Cash and cash equivalents:
Beginning of period 41 27
------ ------
End of period $ 34 $ 31
====== ======
Supplemental cash flow information:
Interest paid, net of amounts capitalized 25 38
Income taxes paid, net of refunds 2 142
Assets financed through capital lease obligations 13 -
</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, 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. The consolidation of operations includes a single management team, as
well as the combination of certain information systems and certain operations.
The second quarter and six 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. Until BNRR and ATSF are
merged, the allocation of costs will become more significant as more
operations and systems are combined.
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 June 30, 1996 and December 31, 1995 and the results
of operations for the three and six month periods ended June 30, 1996 and 1995
and cash flows for the six month period ended June 30, 1996 and 1995 have been
included. The results of operations for any interim period are not
necessarily indicative of the results of operations to be expected for the
entire year.
Certain prior year data has been reclassified to conform to the current year
presentation.
2. Employee, merger and separation costs
Current and long-term employee merger and separation liabilities totaling $322
million are included in the balance sheet at June 30, 1996. During the first
six months of 1996, the Company paid $54 million of employee, merger and
separation costs.
At June 30, 1996, approximately $88 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, including relocation costs associated
with clerical employees, will be recorded as operating expenses in 1996 and
future periods. The ultimate timing and magnitude of any such future expense
is presently unknown.
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
$11 million during the six months ended June 30, 1996 relating to mandatory
clean-up efforts, including amounts expended under federal and state voluntary
clean-up programs. BNRR has accruals of approximately $115 million for
remediation and restoration of all known sites, including $110 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 June 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; therefore, management believes that it is
unlikely that any identified matters, either individually or in the aggregate,
will 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.
Regulations applicable to new locomotive engines are expected to be issued by
the Environmental Protection Agency soon. 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 any locomotive emission 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. Additionally, this program includes exchange-traded
petroleum futures contracts and various commodity swap transactions which are
accounted for as hedges. Any gains or losses associated with changes in
market value of these hedges are being 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 June 30, 1996, BNRR had entered into forward purchases for approximately
35 million gallons at an average price of approximately 49 cents per gallon
and petroleum futures contracts representing approximately 17 million gallons
at an average price of approximately 48 cents per gallon. These contracts
have expiration dates ranging from July 1996 to December 1996.
The above prices do not include taxes, fuel handling costs, certain
transportation costs and, except for forward contracts, any differences which
may occur from time to time between the prices of commodities hedged and the
purchase price of BNRR's diesel fuel.
The current and future fuel delivery prices are monitored continuously and
hedge positions are adjusted accordingly. Hedge positions are also closely
monitored to ensure that they will not exceed actual fuel requirements.
Unrealized gains from BNRR's fuel hedging transactions were $1 million at June
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
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
BNRR recorded net income for the first six months of 1996 of $306 million
compared with net income of $165 million for the first six months of 1995.
Results for the first six months of 1995 were reduced by 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
six months ended June 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 $ 328 $ 367 11,235 12,136 $29.19 $30.24
Coal 879 877 78,518 76,302 11.19 11.49
Agricultural Commodities 489 464 26,440 26,519 18.49 17.50
Chemicals 192 181 8,080 7,687 23.76 23.55
Forest Products 205 212 9,856 9,942 20.80 21.32
Consumer and Food Products 143 152 5,271 5,697 27.13 26.68
Automotive 79 77 998 1,141 79.16 67.48
Metals 149 136 7,344 6,425 20.29 21.17
Minerals and Ores 103 100 4,345 4,434 23.71 22.55
------ ------ -------- ------- ------ ------
Total Freight Revenues 2,567 2,566 152,087 150,283 16.88 17.07
Other Revenues 55 65 - - - -
------ ------ -------- ------- ------ ------
Total Operating Revenues $2,622 $2,631 152,087 150,283 $16.88 $17.07
====== ====== ======== ======= ====== ======
</TABLE>
Total revenues for the first six months of 1996 were $2,622 million, a
decrease of $9 million compared with revenues of $2,631 million for the first
six months of 1995.
Intermodal revenues were $328 million for the 1996 first six months compared
with $367 million for the 1995 first six months. The decrease of $39 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 $489 million for the 1996 first six months
were $25 million greater than revenues of $464 million for the 1995 first six
months. The increase is primarily due to higher average revenue per car
reflecting stronger export demand.
Chemicals revenues were $192 million for the first six months of 1996 compared
with $181 million for the first six months of 1995. The increase is due to
continued strong petroleum products demand.
Forest Products revenues decreased $7 million for the 1996 first six months.
This decrease was due to lower traffic levels for lumber.
Consumer and Food Products revenues were $143 million for the 1996 first six
months compared with revenues of $152 million for the first six months of
1995. The decrease was due to lower carloadings, partially offset by an
increase in average revenue per car.
Metals revenues increased $13 million for the 1996 first six months. This
increase was due to higher average revenue per car.
EXPENSES
Total operating expenses for the first six months of 1996 were $2,115 million
compared with operating expenses of $2,172 million for the 1995 first six
months. The operating ratio for the first six months of 1996 was 80.7 percent
compared to 82.6 percent for the 1995 period.
Compensation and benefits expenses for the first six months of 1996 were $890
million, a $36 million decrease from expenses of $926 million for the first
six months of 1995. The decrease was due to lower costs due to a reduction in
the number of salaried employees, partially offset by increased expenses due
to severe weather incurred in the 1996 first quarter.
Purchased services expenses for the 1996 first six months of $197 million were
$42 million lower than expenses of $239 million for the first six months of
1995 primarily reflecting lower intermodal-related expenses and operating
synergies gained through the business combination.
Equipment rents expenses for the first six months of 1996 of $280 million was
$19 million higher than the first six months of 1995 primarily due to an
increase in the number of leased freight cars.
Fuel expenses for the first six months of 1996 were $18 million higher than
fuel expenses for the first six months of 1995 primarily due to an increase in
the average price paid per gallon of diesel fuel.
Materials and other expenses of $337 million for the first six months of 1996
were $13 million lower than the first six months of 1995 due to operating
synergies gained through the business combination, partially offset by higher
costs associated with severe weather and derailments in the first quarter.
OTHER MATTERS
LABOR
Labor unions represent approximately 90 percent of BNRR's 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 union-represented employees (subject to ratification,
in some instances, by union members).
Negotiated agreements covering BNRR's operating crafts reached between the
unions and BNRR's multi-employer bargaining representative, the National
Carriers' Conference Committee (NCCC), were ratified by the unions' respective
memberships in May 1996. A tentative agreement between the NCCC and the
Brotherhood of Railway Signalmen (BRS) was reached in May 1996, and the
results of the BRS membership ratification process should be known by the end
of September 1996. Labor disputes involving five other non-operating craft
unions, following their rejection of binding arbitration and subsequent
release from mediation by the National Mediation Board, were the subject of
Presidential Emergency Boards (PEBs) appointed by President Clinton in May
1996 pursuant to the Railway Labor Act.
On June 23, 1996, the PEBs issued their respective reports to the President
and made non-binding recommendations to the railroads represented by the NCCC
and the various unions regarding the settlement of their labor disputes.
Following negotiations, tentative agreements were reached between the NCCC and
the five unions in July 1996. The results of the unions' membership
ratification processes should be known by the end of September 1996. The June
23, 1996 release of the PEB reports triggered a 30-day "cooling-off" period
under the Railway Labor Act, after which the parties could engage in
"self-help" remedies (such as a strike or a lockout) absent congressional
intervention. This 30-day cooling-off period expired on July 24, 1996.
However, these five unions and the railroads represented by the NCCC have
agreed not to engage in self-help remedies at least until the ratification
processes have been concluded, and in no event while Congress is not in
session.
The outcome of the ratification processes cannot be predicted and the
potential still exists for one or more work stoppages in the railroad industry
which may affect BNRR if any of the agreements are not ratified by the unions'
respective memberships. However, the likelihood of work stoppages has been
reduced since the NCCC and the unions have reached tentative agreements. The
new collective bargaining agreements, when implemented, 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 which are effective upon ratification. Throughout the
negotiation process, the Company has been providing reserves related to
potential union agreements; therefore, payments related to the retroactive
portion of these agreements are not expected to have a material effect on the
Company's 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 Union Pacific Corporation (UP) and
Southern Pacific Corporation (SP) in its written decision dated August 12,
1996. As a condition of the merger, the STB imposed provisions of the
trackage rights agreement between 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
from UP and SP of more than 335 miles of track for $150 million which is
anticipated to occur in the fourth quarter of 1996. The STB decision allows
BNRR and ATSF greater access to Gulf Coast and West Coast markets. BNRR and
ATSF are currently evaluating the impact of the UP/SP merger; however, the
ultimate effect of the UP/SP merger is presently 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 Report on Form 10-Q for the
quarter ended March 31, 1996 concerning the action filed by Southwestern
Electric Power Company (SWEPCO) against 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 Court of Appeals
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. SWEPCO may apply for
discretionary review of the decision by the Texas Supreme Court.
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 June 30, 1996.
Registrant filed a Current Report on Form 8-K (Date of earliest event
reported: June 19, 1996), in which it reported, under Item 4, Changes
in Registrant's Certifying Accountant, the termination on June 19,
1996 of Coopers & Lybrand L.L.P. as the Registrant's independent
accountants and the appointment on June 20, 1996 of Price Waterhouse
LLP as the Registrant's new independent accountants.
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, which it included as an exhibit a statement regarding
computation of ratio of earnings to fixed charges for the year ended
December 31, 1995 and for 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 the Registrant and as
principal accounting officer)
Schaumburg, Illinois
August 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)
Six Months Ended
June 30,
1996 1995
Earnings:
<S> <C> <C>
Pre-tax income $ 494 $ 437
Add:
Interest and fixed charges,
excluding capitalized interest 28 39
Portion of rent under long-term
operating leases representative
of an interest factor 80 71
Less: Undistributed equity in earnings
of investments accounted for
under the equity method 1 -
------- -------
Total earnings available for fixed charges $ 601 $ 547
======= =======
Fixed charges:
Interest and fixed charges $ 28 $ 39
Portion of rent under long-term operating
leases representative of an interest
factor 80 71
------- -------
Total fixed charges $ 108 $ 110
======= =======
Ratio of earnings to fixed charges 5.56x 4.97x
======= =======
</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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 34
<SECURITIES> 0
<RECEIVABLES> 656
<ALLOWANCES> (47)
<INVENTORY> 136
<CURRENT-ASSETS> 986
<PP&E> 10518
<DEPRECIATION> (4180)
<TOTAL-ASSETS> 7816
<CURRENT-LIABILITIES> 1492
<BONDS> 582
<COMMON> 0
0
0
<OTHER-SE> 3346
<TOTAL-LIABILITY-AND-EQUITY> 7816
<SALES> 0
<TOTAL-REVENUES> 2622
<CGS> 0
<TOTAL-COSTS> 2115
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 494
<INCOME-TAX> 188
<INCOME-CONTINUING> 306
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 306
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
