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 MARCH 31, 1997
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
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY 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 76131-2830
(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
Shares Outstanding
Class as of April 30, 1997
Common Stock, par value $1.00* 1,000 shares
*The Burlington Northern and Santa Fe Railway Company is a wholly-owned
subsidiary of Santa Fe Pacific Corporation (SFP) which is a wholly-owned
subsidiary of Burlington Northern Santa Fe Corporation and there is no market
data with respect to registrant's 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>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
------- ------
<S> <C> <C>
Revenues $2,035 $2,027
Operating expenses:
Compensation and benefits 693 668
Purchased services 228 223
Equipment rents 215 192
Fuel 196 168
Depreciation and amortization 181 178
Materials and other 201 224
------- ------
Total operating expenses 1,714 1,653
------- ------
Operating income 321 374
Interest expense 26 23
Interest income, related parties 7 10
Other income (expense), net (1) 1
------- ------
Income before income taxes 301 362
Income tax expense 114 139
------- ------
Net income $ 187 $ 223
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
(UNAUDITED)
March 31, December 31,
1997 1996
---------- --------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 100 $ 95
Accounts receivable, net 866 757
Materials and supplies 230 222
Current portion of deferred income taxes 304 306
Other current assets 32 30
---------- --------
Total current assets 1,532 1,410
Property and equipment, net 17,262 17,164
Intercompany notes receivable 73 529
Other assets 570 559
---------- --------
Total assets $ 19,437 $19,662
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 2,087 $ 2,421
Long-term debt due within one year 88 157
---------- --------
Total current liabilities 2,175 2,578
Long-term debt 1,233 1,243
Deferred income taxes 4,527 4,473
Casualty and environmental liabilities 532 543
Employee, merger and separation costs 451 466
Other liabilities 928 957
---------- --------
Total liabilities 9,846 10,260
---------- --------
Commitments and contingencies (See note 3)
Stockholder's equity:
Common stock, $1 par value,(1,000 shares
authorized, issued and outstanding) and
paid-in capital 10,373 10,312
Retained earnings 3,098 2,910
Capital contribution receivable (3,880) (3,820)
---------- --------
Total stockholder's equity 9,591 9,402
---------- --------
Total liabilities and stockholder's
equity $ 19,437 $19,662
========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
------ ------
Operating Activities:
<S> <C> <C>
Net income $ 187 $ 223
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 181 178
Deferred income taxes 56 81
Employee, merger and separation costs paid (31) (56)
Other, net (28) 22
Changes in working capital (451) (41)
------ ------
Net cash provided by (used for) operating activities (86) 407
------ ------
Investing Activities:
Cash used for capital expenditures (252) (298)
Other, net (36) 3
------ ------
Net cash used for investing activities (288) (295)
------ ------
Financing Activities:
Net increase (decrease) in commercial paper - (224)
Proceeds from issuance of long-term debt 21 -
Payments on long-term debt (99) (23)
Net decrease in intercompany note receivable 456 168
Other, net 1 (1)
------ ------
Net cash provided by (used for) financing activities 379 (80)
------ ------
Increase in cash and cash equivalents 5 32
Cash and cash equivalents:
Beginning of period 95 54
------ ------
End of period $ 100 $ 86
====== ======
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 21 $ 18
Income taxes paid (refunded), net 174 1
Assets financed through capital lease obligations - 13
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY 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
The Burlington Northern and Santa Fe Railway Company ("Railway" or "Company")
Annual Report on Form 10-K for the year ended December 31, 1996. The Company
was formerly known as Burlington Northern Railroad Company (BNRR). The
Atchison, Topeka and Santa Fe Railway Company (ATSF) merged with and into BNRR
and the nameof the surviving entity, BNRR, was changed to The Burlington
Northern and Santa Fe Railway Company. Railway is a wholly-owned subsidiary
of Santa Fe Pacific Corporation (SFP) which in turn is a wholly-owned
subsidiary of Burlington Northern Santa Fe Corporation (BNSF). All
significant intercompany accounts and transactions have been eliminated.
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
Railway's consolidated financial position as of March 31, 1997 and December
31, 1996 and the consolidated results of operations for the three month
periods ended March 31, 1997 and 1996 have been included.
For accounting purposes, the merging of BNRR and ATSF was treated as a
combination of subsidiaries for the periods they were under common control.
Accordingly, the results of operations and cashflows for the three months
ended March 31, 1996 represent the combined results of Railway and will differ
from amounts reported in the BNRR Form 10-Q for the three months ended March
31, 1996.
Certain comparative prior year amounts in the consolidated financial
statements and notes have been reclassified to conform with the current year
presentation.
2. Employee, merger and separation costs
Current and long-term employee merger and separation liabilities totaling $551
million are included in the consolidated balance sheet at March 31, 1997.
During the first quarter of 1997, the Company paid $31 million of employee,
merger and separation costs.
At March 31, 1997, approximately $100 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, except for certain costs related to conductors, trainmen and
locomotive engineers which will be paid upon the employees' separation or
retirement, as well as certain benefits for clerical employees which may be
paid on an installment basis, generally over five to ten years.
In addition to the above, certain merger and separation costs, including
relocation costs associated with clerical employees, will be recorded as
operating expenses in 1997 and future periods. The ultimate timing and
magnitude of any such future expense is presently unknown.
3. Environmental and other contingencies
The Company's operations, as well as those of its competitors, are subject to
extensive federal, state and local environmental regulation. Railway'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
Railway'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, Railway is subject to environmental clean-up and enforcement
actions. In particular, the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, 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.
Railway is involved in a number of administrative and judicial proceedings and
other mandatory clean-up efforts at approximately 345 sites, at which it is
being asked to participate in the study and / or clean-up of alleged
environmental contamination. Railway paid approximately $13 million during
the first three months of 1997 for mandatory clean-up efforts, including
amounts expended under federal and state voluntary clean-up programs. Railway
has accruals of approximately $220 million for remediation and restoration of
all known sites. Railway anticipates that the majority of the accrued costs
at March 31, 1997 will be paid over the next five years. No individual site
is considered to be material.
Liabilities recorded for environmental costs represent Railway'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
Railway's best estimates of all costs, without reduction for anticipated
recoveries from third parties, Railway'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
parties' 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 Railway's consolidated financial position or liquidity.
The railroad industry, including Railway, will become subject to future
requirements regulating air emissions from diesel locomotives that may
increase their operating costs. Proposed regulations applicable to new
locomotive engines were issued by the Environmental Protection Agency in
early 1997, with final regulations to be promulgated by the end of the year.
It is anticipated that these regulations will be effective for new locomotive
engines installed after 1999 and through 2010 and will preempt state
regulation of locomotive emission standards. 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, the State of California has indicated to the Environmental
Protection Agency that it will support the proposed federal rule subject to
slight technical modifications.
Other claims and litigation
Railway and its subsidiaries are parties 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
Railway, although an adverse resolution of a number of these items could have
a material adverse effect on the results of operations in a particular quarter
or fiscal year.
4. Hedging activities
Fuel
Railway 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, and various commodity swap and collar transactions which
are accounted for as hedges. 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 Railway hedges portions of its fuel purchases, it may not fully
benefit from decreases in fuel prices.
As of March 31, 1997, Railway had entered into forward purchases for
approximately 77 million gallons at an average price of approximately 58 cents
per gallon, and fuel swaps for approximately 680 million gallons at an average
price of approximately 54 cents per gallon. A majority of these contracts
have expiration dates ranging from June 1997 to December 1998 with an
additional 10 million gallons expiring in 1999.
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 Railway's diesel fuel.
Railway's current fuel hedging program covers approximately 50 percent of
projected fuel purchases for the remaining nine months of 1997, approximately
30 percent of estimated 1998 fuel purchases and less than one percent of
estimated 1999 fuel purchases. Hedge positions are closely monitored to
ensure that they will not exceed actual fuel requirements in any period.
Unrecognized gains from Railway's fuel hedging transactions were approximately
$4 million at March 31, 1997. Railway also monitors its hedging positions and
credit ratings of its counterparties and does not anticipate losses due to
counterparty nonperformance.
5. Related party transactions
Railway is involved with BNSF and certain of its subsidiaries in related party
transactions in the ordinary course of business which include payments made on
each other's behalf and performance of services. During the first quarter of
1997 Railway made intercompany payments to SFP of $174 million for state and
federal income taxes, which are reflected in changes in working capital in the
consolidated statement of cashflows.
Additionally, during the first quarter of 1997 Railway had net borrowings from
BNSF of $456 million used to fund capital expenditures, payments of taxes and
other operating activities. These borrowings reduced intercompany notes
receivable from $529 million to $73 million. Interest is paid on intercompany
notes receivable at a rate of 1.0% above the monthly average of the daily
effective Federal Funds rate. Interest income is reflected in Interest
income, related parties. The notes are due on demand.
<PAGE>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY 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 The Burlington Northern and Santa Fe Railway Company
("Railway", "Registrant" or "Company"). Railway was formerly known as
Burlington Northern Railroad Company (BNRR). The Atchison, Topeka and Santa
Fe Railway Company (ATSF) merged with and into BNRR and the name of the
survivng entity, BNRR, was changed to The Burlington Northern and Santa Fe
Railway Company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Railway recorded net income for the first quarter of 1997 of $187 million
compared with first quarter 1996 net income of $223 million. The decrease in
net income is primarily due to severe weather which affected Railway
operations throughout the Northern Plains and Pacific Northwest for large
portions of first quarter 1997. The financial impact of recurring and
protracted outages on many parts of the system, the cost of repairing track,
signals and equipment, and the operating inefficiencies caused by the weather
is virtually impossible to measure with precision. However, the Company
estimates that the severe weather resulted in lost revenue opportunities of
approximately $100 million and increased operating expenses of at least $50
million.
REVENUES
The following table presents Railway's revenue information by commodity for
the three months ended March 31, 1997 and 1996 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
1997 1996 1997 1996 1997 1996
(In Millions) (In Millions)
<S> <C> <C> <C> <C> <C> <C>
Intermodal $ 527 $ 491 18,232 16,701 $28.91 $29.40
Coal 489 478 39,653 40,960 12.33 11.67
Agricultural Commodities 292 340 15,152 17,318 19.27 19.63
Chemicals 191 187 7,201 6,970 26.52 26.83
Forest Products 136 135 6,049 5,769 22.48 23.40
Consumer Goods 118 115 4,406 4,334 26.78 26.53
Automotive 107 98 1,579 1,493 67.76 65.64
Metals 101 105 4,408 4,979 22.91 21.09
Minerals 74 72 2,940 2,686 25.17 26.81
------ ------ ------ ------- ------ ------
Total Freight Revenues 2,035 2,021 99,620 101,210 20.43 19.97
Other Revenues - 6 - - - -
------ ------ ------ ------- ------ ------
Total Operating Revenues $2,035 $2,027 99,620 101,210 $20.43 $19.97
====== ====== ====== ======= ====== ======
</TABLE>
Intermodal revenues of $527 million increased $36 million or 7 percent led by
increases in direct and truckload sectors. The direct sector benefited from
increased units shipped for UPS, Roadway and Consolidated Freightways.
Truckload units increased due to higher traffic from J.B. Hunt and Schneider.
Revenue ton miles increased due to growth in the Chicago/Southeast to
California corridors.
Coal revenues of $489 million for the 1997 first quarter increased $11 million
compared to revenues of $478 million for the 1996 first quarter. Although
revenue ton miles decreased, tonnage shipped was slightly above 1996 levels.
Agricultural Commodities revenues of $292 million for the 1997 first quarter
were $48 million lower than revenues of $340 million for the 1996 first
quarter. This decrease is due primarily to weather-related service problems
in the Northern Plains and Pacific Northwest affecting shipments of wheat,
corn and soybeans, and a poor hard, red winter wheat crop.
Automotive revenues of $107 million for the 1997 first quarter increased $9
million compared to revenues of $98 million for the 1996 first quarter. The
increase reflects new business with Honda in California and increases in
General Motors shipments compared to the first quarter of 1996 when General
Motors was experiencing a strike.
EXPENSES
Total operating expenses for the first quarter of 1997 were $1,714 million, an
increase of $61 million or 4 percent, compared with operating expenses for the
1996 first quarter of $1,653 million. The operating ratio was 84.2 percent
for the first quarter of 1997, compared with an 81.5 percent operating ratio
for the first quarter 1996.
Compensation and benefits expenses of $693 million were $25 million or 4
percent higher than the first quarter of 1996. A majority of the increase was
due to higher costs associated with weather-related repairs to track and
equipment and slower operations. Additionally, wages were higher because of
wage increases to both salaried and union employees. These increases were
partially offset by lower salaried employee incentive compensation expense due
to the Company's performance relative to certain goals.
Equipment rents expenses for the first quarter of 1997 of $215 million were
$23 million or 12 percent higher than the 1996 first quarter reflecting
additional costs related to poorer rail car utilization caused by the adverse
weather.
Fuel expenses of $196 million for the 1997 first quarter were $28 million
higher than fuel expenses for the first quarter of 1996 primarily due to an 11
cent or 17% increase in the average price paid per gallon of diesel fuel.
Materials and other expenses of $201 million for the 1997 first quarter were
$23 million or 10 percent lower compared to the 1996 first quarter which
included costs associated with several major derailments.
<PAGE>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
CROW RESERVATION CROSSING ACCIDENT CASE
Reference is made to the discussion in Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1996, of the lawsuit filed in Crow Tribal
Court (Estates of Red Wolf, Red Horse and Bull Tail v. Burlington Northern
Railroad Company, Case No. 94-31) arising out of a 1993 accident at a Railway
crossing located within the boundaries of the Crow reservation in which three
members of the Crow tribe were killed. The lawsuit was filed on behalf of the
estates of the driver of the vehicle and the two passengers in the vehicle
involved. One of the passenger cases was severed and has yet to go to trial.
The other two cases proceeded to trial in January 1996. On February 6, 1996,
a Crow Tribal Court jury rendered a verdict against Railway for compensatory
damages in the total amount of $250 million. Subsequently, the plaintiffs
filed a Notice and Request with the Tribal Appellate Court requesting, among
other things, the entry of an order reducing the amount of the judgment to $25
million. On February 7, 1997, the Tribal Appellate Court issued an order
setting forth its intention to grant the motion to reduce the judgment by
remanding the matter to the trial court for the limited purpose of reducing
the judgment in accordance with the request.
On February 26, 1996, the Federal District Court for the District of Montana
entered an order enjoining any action by the Tribal Court plaintiffs to
enforce the judgment pending appeal through the tribal court and federal court
systems. Upon appeal of that decision by the Tribal Court plaintiffs to the
United States Court of Appeals for the Ninth Circuit, the Ninth Circuit on
January 29, 1997, issued an opinion which reversed the district court and
remanded the matter to the trial court with instructions to dissolve the
injunction. The basis for the appellate court's decision was that Railway had
failed to exhaust its remedies in the tribal court. On April 10, 1997, the
Ninth Circuit denied Railway's petition for rehearing and on April 17, 1997,
issued an order granting a stay of its mandate to the District Court. Railway
intends to petition the United States Supreme Court for a writ of certiorari.
As a result, the trial court's injunction against enforcement of the judgment
will stay in effect until the resolution of the petition for certiorari.
ENVIRONMENTAL PROCEEDING
Railway was issued a Notice of Violation by the Texas Natural Resource
Conservation Commission with respect to the alleged failure to timely file
wastewater discharge reports and other deficiencies at a facility in Silsbee,
Texas. Railway settled the matter with an Agreed Order (TNRCC Docket No.
96-1755-1WD-E) dated May 5, 1997, which calls for payment of $117,520,
($17,628 of which is deferred contingent upon compliance with the Agreed
Order), correction of alleged recordkeeping deficiencies, and a study of the
ditch receiving the permitted discharges.
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 March 31, 1997:
None
<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.
THE BURLINGTON NORTHERN AND SANTA FE
RAILWAY COMPANY AND SUBSIDIARIES
(Registrant)
By: /s/ THOMAS N. HUND
Thomas N. Hund
Vice President and Controller
(On behalf the Registrant and as
principal accounting officer)
Schaumburg, Illinois
May 15, 1997
<PAGE>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
12 Statement regarding computation of ratio
of earnings to fixed charges.
27 Financial Data Schedule.
E-1
<TABLE>
<CAPTION>
EXHIBIT 12
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS, EXCEPT RATIO AMOUNTS)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
------- -------
Earnings:
<S> <C> <C>
Pre-tax income $ 301 $ 362
Add:
Interest and fixed charges,
excluding capitalized interest 26 23
Portion of rent under long-term
operating leases representative
of an interest factor 53 49
Amortization of capitalized interest 1 1
Less: Undistributed equity in earnings
of investments accounted for
under the equity method 6 3
------- -------
Total earnings available for fixed charges $ 375 $ 432
======= =======
Fixed charges:
Interest and fixed charges $ 29 $ 25
Portion of rent under long-term operating
leases representative of an interest
factor 53 49
------- -------
Total fixed charges $ 82 $ 74
======= =======
Ratio of earnings to fixed charges 4.57x 5.84x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The
Burlington Northern and Santa Fe Railway Company'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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 918
<ALLOWANCES> 52
<INVENTORY> 230
<CURRENT-ASSETS> 1532
<PP&E> 21649
<DEPRECIATION> 4387
<TOTAL-ASSETS> 19437
<CURRENT-LIABILITIES> 2175
<BONDS> 1233
0
0
<COMMON> 0
<OTHER-SE> 9591
<TOTAL-LIABILITY-AND-EQUITY> 19437
<SALES> 0
<TOTAL-REVENUES> 2035
<CGS> 0
<TOTAL-COSTS> 1714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 301
<INCOME-TAX> 114
<INCOME-CONTINUING> 187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
