-
UNITED STATES
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, 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 October 31, 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).
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 Nine Months Ended
September 30, September 30,
--------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $2,145 $2,044 $6,252 $6,095
Operating expenses:
Compensation and benefits 661 633 2,006 1,939
Purchased services 225 219 673 658
Equipment rents 215 200 646 592
Depreciation and amortization 188 182 549 537
Fuel 173 173 555 525
Materials and other 153 177 520 603
------ ------ ------ ------
Total operating expenses 1,615 1,584 4,949 4,854
------ ------ ------ ------
Operating income 530 460 1,303 1,241
Interest expense 31 26 85 71
Interest income, related parties 8 7 22 24
Other income (expense), net (12) 8 (17) 7
------ ------ ------ ------
Income before income taxes 495 449 1,223 1,201
Income tax expense 180 172 454 460
------ ------ ------ ------
Net income $ 315 $ 277 $ 769 $ 741
====== ====== ====== ======
</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)
September 30, December 31,
1997 1996
------------ -----------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 118 $ 95
Accounts receivable, net 767 674
Materials and supplies 219 222
Current portion of deferred income taxes 327 306
Other current assets 43 30
------- -------
Total current assets 1,474 1,327
Property and equipment, net 18,240 17,164
Intercompany notes receivable 103 529
Other assets 585 559
------- -------
Total assets $20,402 $19,579
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 2,169 $ 2,338
Long-term debt due within one year 91 157
------- -------
Total current liabilities 2,260 2,495
Long-term debt 1,335 1,243
Deferred income taxes 4,801 4,473
Casualty and environmental liabilities 491 543
Employee, merger and separation costs 423 466
Other liabilities 918 957
------- -------
Total liabilities 10,228 10,177
------- -------
Commitments and contingencies (See note 4)
Stockholder's equity:
Common stock, $1 par value, (1,000 shares
authorized, issued and outstanding) and
paid-in capital 10,504 10,312
Retained earnings 3,679 2,910
Capital contribution receivable (4,009) (3,820)
------- -------
Total stockholder's equity 10,174 9,402
------- -------
Total liabilities and stockholder's
equity $20,402 $19,579
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
Nine Months Ended
September 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 769 $ 741
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 549 537
Deferred income taxes 307 295
Employee, merger and separation costs paid (86) (153)
Other, net (108) (22)
Sale of accounts receivable 320 5
Changes in working capital (550) 12
------- -------
Net cash provided by operating activities 1,201 1,415
------- -------
Investing Activities:
Cash used for capital expenditures (1,508) (1,328)
Other, net (124) (82)
------- -------
Net cash used for investing activities (1,632) (1,410)
------- -------
Financing Activities:
Net decrease in commercial paper - (224)
Proceeds from issuance of long-term debt 179 105
Payments on long-term debt (151) (41)
Net decrease in intercompany note receivable 426 186
Other, net - 25
------- -------
Net cash provided by financing activities 454 51
------- -------
Increase in cash and cash equivalents 23 56
Cash and cash equivalents:
Beginning of period 95 54
------- -------
End of period $ 118 $ 110
======= =======
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 68 $ 61
Income taxes paid, net of refunds 174 2
Assets financed through capital lease obligations 1 38
</TABLE>
See accompanying notes to consolidated financial statements.
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
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"). On
December 31, 1996, The Atchison, Topeka and Santa Fe Railway Company ("ATSF")
merged with and into BNRR and the name of 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 September 30, 1997 and
December 31, 1996 and the consolidated results of operations for the three and
nine month periods ended September 30, 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 in which they were under common
control. Accordingly, the results of operations and cashflows for the nine
months ended September 30, 1996 represent the combined results of Railway and
will differ from amounts reported in the BNRR Form 10-Q for the nine months
ended September 30, 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 $497
million are included in the consolidated balance sheet at September 30, 1997.
During the first nine months of 1997, the Company paid $86 million of
employee, merger and separation costs.
At September 30, 1997, approximately $74 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,
certain merger related costs, including relocation costs for clerical
employees, have been recorded as operating expenses.
The Company anticipates recording additional charges to operating expense in
the near future principally related to voluntary separations of clerical
employees. The magnitude and exact timing of such future expenses is
presently unknown; however, it is possible that this additional charge could
be taken as early as the fourth quarter of 1997.
3. Accounts receivable, net
As discussed in Note 7 to the consolidated financial statements included in
Railway's Annual Report on Form 10-K for the year ended December 31, 1996, the
Company had an accounts receivable sale agreement effective through 1999 which
allowed the sale of up to $300 million in receivables. In June 1997, this
agreement was replaced by an amended and restated agreement which allows
Railway, through a special purpose subsidiary, to sell up to $600 million of
variable rate certificates which mature in 2002 evidencing undivided interests
in an accounts receivable master trust. The master trust's assets include an
ownership interest in a revolving portfolio of Railway's accounts receivable
which are used to support the certificates. At September 30, 1997, the
maximum of $600 million of certificates sold were outstanding and were
supported by receivables of approximately $1.3 billion in the master trust.
Railway has retained the collection responsibility with respect to the
accounts receivable held in trust. Railway is exposed to credit loss related
to collection of accounts receivable to the extent that the amount of
receivables in the master trust exceeds the amount of certificates sold.
Costs related to such agreements vary on a monthly basis and are generally
related to certain interest rates. These costs are included in Other income
(expense), net.
4. 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 340 sites, at which it is
being asked to participate in the study or clean-up, or both, of alleged
environmental contamination. Railway paid approximately $36 million during
the first nine months of 1997 for mandatory clean-up efforts, including
amounts expended under federal and state voluntary clean-up programs. Railway
has accruals of approximately $206 million for remediation and restoration of
all known sites. Railway anticipates that the majority of the accrued costs
at September 30, 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.
5. 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 September 30, 1997, Railway had entered into forward purchases for
approximately 57 million gallons at an average price of approximately 57 cents
per gallon, and fuel swaps for approximately 649 million gallons at an average
price of approximately 54 cents per gallon.
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.
These contracts have expiration dates ranging from December 1997 to December
1999, with 189 million gallons expiring in 1997, 454 million gallons expiring
in 1998 and 63 million gallons expiring in 1999. Railway's current fuel
hedging program covers approximately 70 percent of projected fuel purchases
for the fourth quarter of 1997, approximately 40 percent of estimated 1998
fuel purchases and approximately 5 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 $12 million as of September 30, 1997.
Railway also monitors its hedging positions and credit ratings of its
counterparties and does not anticipate losses due to counterparty
nonperformance.
6. 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 nine months
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 nine months of 1997 Railway had net borrowings
from BNSF of $426 million used to fund capital expenditures, payments of taxes
and other operating activities. These borrowings reduced intercompany notes
receivable from $529 million to $103 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.
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"). On December 31, 1996, The
Atchison, Topeka and Santa Fe Railway Company ("ATSF") merged with and into
BNRR and the name of the surviving entity, BNRR, was changed to The Burlington
Northern and Santa Fe Railway Company.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1996
Railway net income for the nine-months ended September 30, 1997, was $769
million compared with 1996 net income for the same period of $741 million.
The increase in net income is primarily due to improved operating results in
the second and third quarters of 1997 largely offset by lower operating
results in the first quarter as a result of severe weather conditions
throughout the Northern Plains and the Pacific Northwest ("PNW"). 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 in the
first quarter of 1997 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 nine-months ended September 30, 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 $1,687 $1,528 57,994 52,370 $29.09 $29.18
Coal 1,471 1,488 124,724 127,529 11.79 11.67
Agricultural Commodities 800 845 41,205 42,528 19.42 19.87
Chemicals 599 578 22,412 21,568 26.73 26.80
Forest Products 428 419 19,040 19,181 22.48 21.84
Consumer Goods 377 353 14,434 13,822 26.12 25.54
Automotive 317 300 5,059 4,492 62.66 66.79
Metals 314 316 14,420 15,795 21.78 20.01
Minerals 260 238 10,270 9,308 25.32 25.57
------ ------ ------- ------- ------ ------
Total Freight Revenues 6,253 6,065 309,558 306,593 20.20 19.78
Other Revenues (1) 30 - - - -
------ ------ ------- ------- ------ ------
Total Operating Revenues $6,252 $6,095 309,558 306,593 $20.20 $19.78
====== ====== ======= ======= ====== ======
</TABLE>
Intermodal revenues of $1,687 million for the first nine months of 1997
increased by $159 million or 10 percent compared to revenues for the same
period of 1996 due to improved results in all segments. The direct segment
benefited from an increase in units shipped for Yellow Freight, Consolidated
Freightways and Roadway slightly offset by the UPS strike in August 1997.
Truckload revenue increased due to volume growth from J.B. Hunt and Schneider.
International revenues were up due to volume gains for OOCL, Hyundai, and
Cosco.
Agricultural Commodities revenues of $800 million for the first nine months of
1997 were $45 million or 5 percent lower than revenues for the same 1996
period. This decrease was due primarily to a decrease in shipments of wheat
for export in the first and second quarter due to United States
uncompetitiveness in the world market and first quarter weather related
service problems in the Northern Plains and PNW. Those decreases were
partially offset by a strong third quarter, led by an increase in export corn
shipments through the PNW.
Consumer Goods revenues of $377 for the first nine months of 1997 were $24
million or 7 percent higher than the first nine months of 1996 led primarily
by growth in volumes for the government and machinery, bulk food and waste
product segments.
Automotive revenues of $317 million for the nine months ended September 30,
1997 increased $17 million or 6 percent compared to the same period of 1996.
The increase was due to higher volume in the motor vehicles segment led by
increased traffic from Honda.
Minerals revenues of $260 for the first nine months of 1997 were $22 million
or 9 percent higher than the first nine months of 1996 led primarily by
increased revenues in the clay and aggregates, rock and specialty minerals and
sodium compounds segments.
EXPENSES
Total operating expenses for the first nine months of 1997 were $4,949
million, an increase of $95 million or 2 percent, compared with operating
expenses for the first nine months of 1996 of $4,854 million. The operating
ratio was 79.2 percent for the first nine months of 1997, compared with an
79.6 percent operating ratio for the same 1996 period.
Compensation and benefit expenses of $2,006 million were $67 million or 3
percent higher than the first nine months 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 due to
volume related increases in train crew costs and because of 1997 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 first quarter 1997 performance relative to certain goals.
Purchased services expenses of $673 million increased $15 million or 2 percent
from the first nine months of 1996 due to volume related increases in various
categories.
Equipment rents expenses for the first nine months of 1997 of $646 million
were $54 million or 9 percent higher than the first nine months of 1996. The
increase is due to lower rail equipment utilization, higher leased railcar
expense and increased locomotive rents.
Fuel expenses of $555 million for the first nine months of 1997 were $30
million higher than the first nine months of 1996 due to a 5 percent increase
in the average price paid per gallon of diesel fuel.
Materials and other expenses of $520 million for the first nine months of 1997
were $83 million or 14 percent lower than the first nine months of 1996. The
decrease was primarily due to lower derailment and personal injury expenses
reflecting the continuing benefits of employee safety programs.
Interest expense for the first nine months of 1997 was $85 million compared
with interest expense of $71 million for the first nine months of 1996. The
increase is primarily due to higher debt levels.
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 and in its Current Reports on
Form 10-Q for the quarter ended March 31, 1997 and June 30, 1997 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. On August 19, 1997, the Tribal Court entered an amended judgment
reducing the total amount of the judgment to $25 million. Railway's appeal
from the amended judgment is pending before the Tribal Appellate Court.
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 petitioned the United States Supreme Court for a
writ of certiorari on May 16, 1997 with respect to the Ninth Circuit's
decision. On October 6, 1997, the Supreme Court issued an order in which it
granted Railway's petition, vacated the Ninth Circuit's judgment and remanded
the case to the Ninth Circuit for further consideration in light of the
Supreme Court's recent decision in Strate v. A-1 Contractors, 117 S. Ct.
1404 (1997).
WHEAT AND BARLEY TRANSPORTATION RATES
Reference is made to the discussion in Registrant's Report on Form 10-K
for the year ended December 31, 1996 of the class action lawsuit filed
against Railway in the United States District Court for the District of
Montana challenging the reasonableness of single-line transportation rates
assessed from 1978 onward for transporting export wheat and barley from
origins in Montana to ocean ports in the Pacific Northwest. In McCarty
Farms, Inc., et al. v. Burlington Northern Inc., No. 37808 (August 14, 1997),
a proceeding before the Interstate Commerce Commission ("ICC") reopened upon
appellate court remand and transferred to the Surface Transportation Board
("STB"), successor to the ICC, the STB found that the challenged rates of
Railway for export wheat and barley were not shown to be unreasonably high.
The STB dismissed the proceeding in its entirety. Plaintiffs have appealed
the decision to the United States Court of Appeals for the District of
Columbia.
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
None
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
(Registrant)
By: /s/ THOMAS N. HUND
Thomas N. Hund
Vice President and Controller
(On behalf the Registrant and as
principal accounting officer)
Schaumburg, Illinois
November 14, 1997
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
12 Computation of ratio of earnings to fixed charges.
27 Financial Data Schedule.
E-1
EXHIBIT 12
<TABLE>
<CAPTION>
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS, EXCEPT RATIO AMOUNTS)
(UNAUDITED)
Nine Months
Ended September 30,
------------------
1997 1996
---- ----
Earnings:
<S> <C> <C>
Pre-tax income $1,223 $1,201
Add:
Interest and fixed charges,
excluding capitalized interest 85 71
Portion of rent under long-term
operating leases representative
of an interest factor 157 150
Amortization of capitalized interest 3 2
Less: Undistributed equity in earnings
of investments accounted for
under the equity method 7 9
------ ------
Total earnings available for fixed charges $1,461 $1,415
====== ======
Fixed charges:
Interest and fixed charges $ 98 $ 81
Portion of rent under long-term operating
leases representative of an interest
factor 157 150
------ ------
Total fixed charges $ 255 $ 231
====== ======
Ratio of earnings to fixed charges 5.73x 6.13x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
The Burlington Northern 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 118
<SECURITIES> 0
<RECEIVABLES> 838
<ALLOWANCES> 71
<INVENTORY> 219
<CURRENT-ASSETS> 1474
<PP&E> 22714
<DEPRECIATION> 4474
<TOTAL-ASSETS> 20402
<CURRENT-LIABILITIES> 2260
<BONDS> 1335
<COMMON> 0
0
0
<OTHER-SE> 10174
<TOTAL-LIABILITY-AND-EQUITY> 20402
<SALES> 0
<TOTAL-REVENUES> 6252
<CGS> 0
<TOTAL-COSTS> 4949
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85
<INCOME-PRETAX> 1223
<INCOME-TAX> 454
<INCOME-CONTINUING> 769
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 769
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
