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 1-11535
BURLINGTON NORTHERN SANTA FE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-1804964
(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
Class Outstanding at April 30, 1997
Common stock, $.01 par value 154,107,340 shares
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
------- -------
<S> <C> <C>
Revenues $2,036 $2,027
Operating expenses:
Compensation and benefits 693 668
Purchased services 228 223
Equipment rents 200 178
Fuel 196 168
Depreciation and amortization 190 187
Materials and other 200 218
------- -------
Total operating expenses 1,707 1,642
------- -------
Operating income 329 385
Interest expense 84 75
Other income (expense), net (3) (4)
------- -------
Income before income taxes 242 306
Income tax expense 92 119
------- -------
Net income $ 150 $ 187
======= =======
Net income per common share $ 0.95 $ 1.21
======= =======
Average shares outstanding 157.2 155.0
======= =======
Dividends declared per common share $ .30 $ .30
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BURLINGTON NORTHERN SANTA FE CORPORATION 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 $ 47 $ 47
Accounts receivable, net 793 711
Materials and supplies 230 222
Current portion of deferred income taxes 305 307
Other current assets 45 44
---------- --------
Total current assets 1,420 1,331
Property and equipment, net 17,766 17,633
Other assets 882 882
---------- --------
Total assets $ 20,068 $19,846
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 1,960 $ 2,146
Long-term debt due within one year 95 165
---------- --------
Total current liabilities 2,055 2,311
Long-term debt and commercial paper 4,898 4,546
Deferred income taxes 4,767 4,729
Casualty and environmental liabilities 532 543
Employee, merger and separation costs 451 466
Other liabilities 1,253 1,270
---------- --------
Total liabilities 13,956 13,865
---------- --------
Commitments and contingencies (See note 3)
Stockholders' equity:
Common stock, $.01 par value, 300,000,000
shares authorized; 154,472,694 shares and
154,198,088 shares issued, respectively 2 2
Additional paid-in capital 4,872 4,838
Retained earnings 1,268 1,165
Other (30) (24)
---------- --------
Total stockholders' equity 6,112 5,981
---------- --------
Total liabilities and stockholders'
equity $ 20,068 $19,846
========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BURLINGTON NORTHERN SANTA FE CORPORATION 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 $ 150 $ 187
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 190 187
Deferred income taxes 40 70
Employee, merger and separation costs paid (31) (56)
Other, net (11) 33
Changes in working capital (265) (116)
------ ------
Net cash provided by operating activities 73 305
------ ------
Investing Activities:
Cash used for capital expenditures (296) (354)
Other, net (35) 39
------ ------
Net cash used for investing activities (331) (315)
------ ------
Financing Activities:
Net increase (decrease) in commercial paper 283 (165)
Proceeds from issuance of long-term debt 121 175
Payments on long-term debt (120) (24)
Dividends paid (46) (47)
Proceeds from stock options exercised 19 56
Other, net 1 (1)
------ ------
Net cash provided by (used for) financing activities 258 (6)
------ ------
Decrease in cash and cash equivalents - (16)
Cash and cash equivalents:
Beginning of period 47 50
------ ------
End of period $ 47 $ 34
====== ======
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 74 $ 67
Income taxes refunded, net (3) (7)
Assets financed through capital lease obligations - 24
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BURLINGTON NORTHERN SANTA FE CORPORATION 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 Santa Fe Corporation ("BNSF", "Registrant" or "Company")
Annual Report on Form 10-K for the year ended December 31, 1996, including
the financial statements and notes thereto incorporated by reference from the
Registrant's 1996 Annual Report to Shareholders. The consolidated financial
statements include the accounts of Burlington Northern Santa Fe Corporation
and its majority-owned subsidiaries (collectively BNSF or Company). BNSF was
incorporated in Delaware on December 16, 1994, for the purpose of effecting a
business combination between Burlington Northern Inc. (BNI) and Santa Fe
Pacific Corporation (SFP) which was consummated on September 22, 1995. The
principal subsidiary is The Burlington Northern and Santa Fe Railway Company
(BNSF Railway). 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 BNSF'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.
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. BNSF'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 BNSF'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, BNSF 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.
BNSF 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. BNSF 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. BNSF has
accruals of approximately $220 million for remediation and restoration of all
known sites. BNSF 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 BNSF'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 BNSF's
best estimates of all costs, without reduction for anticipated recoveries from
third parties, BNSF'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 BNSF's consolidated financial position
or liquidity.
The railroad industry, including BNSF 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
BNSF 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 BNSF, 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
BNSF 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 BNSF hedges portions of its fuel purchases, it may not fully
benefit from decreases in fuel prices.
As of March 31, 1997, BNSF 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 BNSF's diesel fuel.
BNSF'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 BNSF's fuel hedging transactions were approximately $4
million at March 31, 1997. BNSF also monitors its hedging positions and
credit ratings of its counterparties and does not anticipate losses due to
counterparty nonperformance.
Interest rate
BNSF has interest rate swap transactions to fix interest rates with a total
principal amount of $875 million to fix interest rates on commercial paper
debt. The interest rate swap transactions require payment of a weighted
average fixed interest rate of approximately 5.8 percent, and the receipt of a
variable interest rate based on a commercial paper composite rate and mature
from August 1997 through December 1999. Unrecognized gains from BNSF's swap
transactions were approximately $3 million as of March 31, 1997.
<PAGE>
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis relates to the financial condition and
results of operations of Burlington Northern Santa Fe Corporation and its
majority-owned subsidiaries (collectively BNSF, Registrant or Company). The
principal subsidiary is The Burlington Northern and Santa Fe Railway Company
(BNSF Railway).
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
BNSF recorded net income for the first quarter of 1997 of $150 million or
$0.95 per common share, compared with first quarter 1996 net income of $187
million or $1.21 per common share. The decrease in net income is primarily
due to severe weather which affected BNSF 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 BNSF'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 1 6 - - - -
------ ------ ------ ------- ------ ------
Total Operating Revenues $2,036 $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 $1,707 million, an
increase of $65 million or 4 percent, compared with operating expenses for the
1996 first quarter of $1,642 million. The operating ratio was 83.8 percent
for the first quarter of 1997, compared with an 81.0 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
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.
Equipment rents expenses for the first quarter of 1997 of $200 million were
$22 million or 12 percent higher than the 1996 first quarter reflecting
additional costs primarily 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 $200 million for the 1997 first quarter were
$18 million or 8 percent lower compared to the 1996 first quarter which
included costs associated with several major derailments.
Interest expense for the first quarter of 1997 increased $9 million to $84
million reflecting both higher debt and interest rate levels.
CAPITAL RESOURCES AND LIQUIDITY
CASH FROM OPERATIONS
Cash generated from operations is BNSF's principal source of liquidity. BNSF
generally funds any additional requirements through debt issuance, including
commercial paper, or leasing of assets.
Operating activities provided cash of $73 million for the three months ended
March 31, 1997 compared with $305 million for the three months ended March 31,
1996. The decrease in cash from operations was attributable to an increase in
cash used for working capital, principally reflecting the timing of cash
receipts and payments within accounts receivable and accounts payable.
Additionally, net income before depreciation and amortization and deferred
income taxes was $64 million below 1996 levels. BNSF's cash outflows from
investing activities for the three months ended March 31, 1997 principally
relate to capital expenditures of $296 million while net sources of cash from
financing activities of $258 million principally reflect net proceeds from
borrowings used to fund capital expenditures, both of which are further
discussed below.
OTHER CAPITAL RESOURCES
BNSF issues commercial paper from time to time. These borrowings are
supported by bank revolving credit agreements. Outstanding commercial paper
balances are considered as reducing available borrowings under these
agreements. The bank revolving credit agreements allow borrowings of up to
$500 million on a short-term basis and $1.5 billion on a long-term basis.
Annual facility fees are currently 0.075 percent and 0.11 percent,
respectively, and are subject to change based upon changes in BNSF's senior
unsecured debt ratings. Borrowing rates are based upon i) LIBOR plus a spread
based upon BNSF's senior unsecured debt ratings, ii) money market rates
offered at the option of the lenders, or iii) an alternate base rate. The
commitments of the lenders to make loans are currently scheduled to expire on
November 14, 1997 and November 15, 2001, respectively.
At March 31, 1997, there were no borrowings against the long-term revolving
credit agreements and the maturity value of commercial paper outstanding was
$1,201 million, leaving a total of $299 million of the long-term revolving
credit agreement available and $500 million of the short-term credit agreement
available.
In February 1997, BNSF issued $100 million of 6.1% medium-term notes, due
February 27, 2027. The net proceeds from the sale of these notes were used
for general corporate purposes including the repayment of short-term debt.
The notes were issued under a BNSF shelf registration which has $375 million
remaining.
CAPITAL EXPENDITURES
A breakdown of cash capital expenditures is set forth in the following table
(in millions):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
----- -----
<S> <C> <C>
Maintenance of Way $ 121 $ 141
Equipment Projects 98 115
Expansion Projects 43 65
Other 34 33
----- -----
Total $ 296 $ 354
===== =====
</TABLE>
Reductions in Maintenance of Way expenditures principally reflect timing for
the Company's new and second hand rail programs. For the three months ended
March 31, 1997, the Company inserted 375,000 cross ties and laid 91 track
miles of rail compared to 360,000 cross ties inserted and 108 track miles of
rail laid for the three months ended March 31, 1996. Equipment expenditures
were $17 million below 1996 reflecting reduced locomotive and freight car
purchases and locomotive overhauls. Expansion projects were $22 million below
1996 reflecting lower capacity expansion projects compared to last year.
DIVIDENDS
Common stock dividends declared for the three months ended March 31, 1997 and
1996 were $.30 per common share. Dividends paid on common stock during the
first quarter of 1997 were $46 million. Dividends paid during the first
quarter of 1996 were $42 million on common stock and $5 million on preferred
stock. On April 1, 1997, BNSF paid to stockholders of record on March 10,
1997 a common stock dividend of $0.30 per share.
CAPITAL STRUCTURE
BNSF's ratio of total debt to total capital was 45 percent at March 31, 1997
compared with 44 percent at December 31, 1996.
OTHER MATTERS
OTHER CLAIMS AND LITIGATION
BNSF 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 BNSF, 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.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share" which
specifies the computation, presentation, and disclosure requirements for
earnings per share (EPS) for entities with publicly held common stock. The
statement is effective for periods ending after December 15, 1997 and early
adoption is prohibited. It will be effective for BNSF for the year ended
December 31, 1997. SFAS No. 128 requires the presentation of basic and
diluted earnings per share calculated pursuant to the requirements of the
standard. Had the Company adopted SFAS No. 128 in the first quarter of 1997,
basic earnings per share would have been $0.97 and $1.25 for the three months
ended March 31, 1997 and 1996, respectively. Diluted earnings per share would
have been the same as net income per common share included in the accompanying
consolidated statement of income.
<PAGE>
BURLINGTON NORTHERN SANTA FE CORPORATION 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 BNSF
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 BNSF
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 BNSF
Railway had failed to exhaust its remedies in the tribal court. On April 10,
1997, the Ninth Circuit denied BNSF Railway's petition for rehearing and on
April 17, 1997, issued an order granting a stay of its mandate to the District
Court. BNSF 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
BNSF 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. BNSF 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the April 17, 1997, annual meeting of stockholders, the Company's
stockholders elected 15 directors, each for a one-year term, and voted on one
stockholder proposal.
Election of Fifteen Directors
The stockholders elected the Company's fifteen nominees to the fifteen
directors positions by the vote shown below; one stockholder nominee
received the votes shown below but was not elected:
Nominees (Elected*) Votes For Withheld
Joseph F. Alibrandi* 138,563,401 1,270,831
Jack S. Blanton* 138,592,553 1,241,679
John J. Burns, Jr.* 138,615,838 1,218,394
George Deukmejian* 137,611,218 2,223,014
Daniel J. Evans* 138,542,816 1,291,416
Robert D. Krebs* 138,530,344 1,303,888
Bill M. Lindig* 138,629,402 1,204,830
Roy S. Roberts* 138,632,927 1,201,305
Marc J. Shapiro* 138,627,135 1,207,097
Arnold R. Weber* 138,591,978 1,242,254
Robert H. West* 138,628,823 1,205,409
J. Steven Whisler* 138,643,399 1,190,833
Edward E. Whitacre, Jr.* 138,645,912 1,188,320
Ronald B. Woodard* 138,599,612 1,234,620
Michael B. Yanney* 138,617,079 1,217,153
William S. Purdy 118 139,834,114
Stockholder Proposal
The stockholders failed to approve a stockholder proposal for the
establishment of a Burlington Northern Santa Fe Safety Education Fund
by the following vote:
For 118
Against 139,834,114
Abstentions 0
Broker Non-Votes 0
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 Report on Form 8-K during the
quarter ended March 31, 1997:
Registrant filed a Current Report on Form 8-K (Date of earliest event
reported: January 21, 1997), in which it reported, under Item 5, Other Events,
Burlington Northern Santa Fe Corporation's Fourth Quarter 1996 and Full Year
1996 earnings release.
<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 SANTA FE CORPORATION
(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>
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
11 Computation of earnings per common share.
12 Statement regarding computation of ratio
of earnings to fixed charges.
27 Financial Data Schedule.
E-1
<TABLE>
<CAPTION>
EXHIBIT 11
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
------- -------
Net income
- --------------------------------------
Primary:
<S> <C> <C>
Net income $ 150 $ 187
------- -------
Net income (loss) available for
common shareholders $ 150 $ 187
======= =======
Fully diluted:
Net income $ 150 $ 187
======= =======
Weighted average number of shares
- --------------------------------------
Primary:
Average common shares outstanding 153.9 150.2
Common share equivalents resulting
from assumed exercise of stock
options 3.3 4.8
------- -------
157.2 155.0
======= =======
Fully diluted:
Average common shares outstanding 153.9 150.2
Common share equivalents resulting
from assumed exercise of stock
options assuming full dilution 3.3 4.8
------- -------
157.2 155.0
======= =======
Net income (loss) per common share
- --------------------------------------
Primary $ 0.95 $ 1.21
Fully diluted 0.95 1.21
<FN>
Primary earnings per common share are computed by dividing net income, after
deduction of preferred stock dividends, by the weighted average number of
common shares and common share equivalents outstanding. Fully diluted
earnings per common share are computed by dividing net income by the weighted
average number of common shares and common share equivalents outstanding.
Common share equivalents are computed using the treasury stock method. An
average market price is used to determine the number of common share
equivalents for primary earnings per common share. The higher of the average
or end-of-period market price is used to determine common share equivalents
for fully diluted earnings per common share.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 12
BURLINGTON NORTHERN SANTA FE CORPORATION 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 $ 242 $ 306
Add:
Interest and fixed charges,
excluding capitalized interest 84 75
Portion of rent under long-term
operating leases representative
of an interest factor 47 44
Amortization of capitalized interest 1 1
Less: Undistributed equity in earnings
of investments accounted for
under the equity method 6 2
------- -------
Total earnings available for fixed charges $ 368 $ 424
======= =======
Fixed charges:
Interest and fixed charges $ 87 $ 79
Portion of rent under long-term operating
leases representative of an interest
factor 47 44
------- -------
Total fixed charges $ 134 $ 123
======= =======
Ratio of earnings to fixed charges 2.75x 3.45x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Burlington Northern Santa Fe Corporation'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> 47
<SECURITIES> 0
<RECEIVABLES> 844
<ALLOWANCES> 51
<INVENTORY> 230
<CURRENT-ASSETS> 1420
<PP&E> 22346
<DEPRECIATION> 4580
<TOTAL-ASSETS> 20068
<CURRENT-LIABILITIES> 2055
<BONDS> 4898
0
0
<COMMON> 2
<OTHER-SE> 6110
<TOTAL-LIABILITY-AND-EQUITY> 20068
<SALES> 0
<TOTAL-REVENUES> 2036
<CGS> 0
<TOTAL-COSTS> 1707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 242
<INCOME-TAX> 92
<INCOME-CONTINUING> 150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-PRIMARY> 0.95
<EPS-DILUTED> 0.95
</TABLE>
