<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act
Date of Report (Date of earliest event reported): December 4, 1998
Burlington Northern Santa Fe Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-11535 41-1804964
(Commission File Number) (I.R.S. Employer
Identification No.)
2650 Lou Menk Drive, Fort Worth, Texas 76131-2830
(Address of Principal Executive Offices) (Zip Code)
(817) 352-6856
(Registrant's Telephone Number, Including Area Code)
(Not Applicable)
(Former Name or Former Address, If Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
Fourth Quarter 1998 and Annual Earnings. Burlington Northern Santa Fe
Corporation announced its 1998 earnings in a January 26, 1999, press release,
which press release is attached as Exhibit 99.1 and is hereby incorporated by
reference
Termination of Environmental Proceeding. The Company disclosed in its Form
10-K for the year ended December 31, 1997, that its wholly-owned subsidiary, The
Burlington Northern and Santa Fe Railway Company ("BNSF Railway"), had been
advised that it was a target of a Grand Jury investigation in the United States
District Court for the Eastern District of Missouri with respect to former
railcar cleaning activities conducted by independent contractors hired by BNSF
Railway's predecessors at a rail siding near Cherryville, Missouri. The
Missouri Department of Natural Resources ("DNR") was also investigating the
matter as to possible violations of state environmental protection laws and BNSF
Railway has been implementing remediation plans developed in conjunction with
DNR.
On December 4, 1998, BNSF Railway entered a plea in federal district court
to one felony count under the federal Comprehensive Environmental Response,
Compensation and Liability Act for failure to immediately report to the federal
government a release of a reportable quantity of lead sulfide and one
misdemeanor count under the Clean Water Act for a negligent discharge of a
pollutant into a waterway. BNSF Railway agreed in the settlement to pay a fine
of $7 million and to make restitution payments to the State of Missouri of $3
million, and committed to spend $9 million in remediation costs in connection
with its ongoing remediation efforts. In the plea agreement, the parties agreed
that BNSF Railway had taken remedial safety and procedural actions in an effort
to reduce the likelihood of recurrence of such matters.
In addition, BNSF Railway has negotiated a settlement with the State of
Missouri that requires a payment of $900,000 in penalties and $500,000 in
natural resource damage. With the public comment period having ended January
26, 1999, BNSF Railway is executing the settlement agreement for entry by the
court as a consent decree. Implementation costs of the investigation and
remediation activities pursuant to the consent decree are not considered
material. The Company considers the federal Grand Jury matter to be terminated,
and all pending related matters, including personal injury claims received from
certain individuals residing at or near the area, are not considered material.
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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 hereunto duly authorized.
BURLINGTON NORTHERN SANTA FE
CORPORATION
(Registrant)
Date: February 4, 1999 By: /s/ Thomas N. Hund
----------------------------------
(Signature)
Thomas N. Hund
Vice President and
Controller
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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 hereunto duly authorized.
BURLINGTON NORTHERN SANTA FE
CORPORATION
(Registrant)
Date: February 4, 1999 By: _____________________________
(Signature)
Thomas N. Hund
Vice President and
Controller
4
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News Release-01/26/99
Burlington Northern Santa Fe Reports Improved Fourth Quarter Results
. Net income of $296 million or $0.63 per share--up 8 percent from fourth-
quarter 1997 net income of $274 million or $0.58 per share, adjusted to
exclude the special charge.
. Fourth-quarter operating income of $568 million--$40 million or 8
percent higher than adjusted 1997.
. Revenues of $2.3 billion, an increase of $120 million or 6 percent over
fourth-quarter 1997 revenues of $2.2 billion.
. Operating ratio for the fourth quarter improved to 75.2 percent compared
with 75.7 percent in 1997, excluding the special charge.
. Full-year net income of $1.1 billion, or $2.36 per share, excluding the
first-quarter gain on pipeline partnership sale, improved 19 percent
over adjusted 1997.
. Full-year operating income of $2.2 billion, up 16 percent over adjusted
1997.
. Revenues of $8.9 billion, an increase of $571 million or 7 percent from
full-year 1997 revenues of $8.4 billion.
. Full-year operating ratio improved to 75.9 percent compared with 77.8
percent in 1997, excluding the special charge.
FORT WORTH, Texas, January 26, 1999--Burlington Northern Santa Fe Corporation
(BNSF) (NYSE:BNI) today reported record fourth quarter 1998 net income of $296
million, or $0.63 per share on a diluted basis, an increase of 8 percent from
adjusted fourth quarter 1997 net income of $274 million, or $0.58 per share,
which excludes a $90 million pre-tax special charge. Including the special
charge in the prior year, net income was up 36 percent or $0.17 per share.
"Growth from coal, agricultural commodities and intermodal sectors contributed
to a 6 percent revenue increase for the fourth quarter compared with a year
ago," said Robert D. Krebs, BNSF chairman, president and chief executive
officer. "This increase combined with control over operating costs contributed
to our record fourth quarter earnings."
Revenues of $2.3 billion for the 1998 fourth quarter were $120 million higher
than the 1997 fourth quarter. Coal revenues improved $60 million, or 12 percent,
to $561 million, as a result of solid growth from existing customers as well as
new business. Agricultural commodity revenues increased $18 million, or 6
percent, to $306 million, due primarily to higher domestic and Mexican corn
movements and higher wheat exports through the Pacific Northwest. Intermodal
revenues reached $644 million, an increase of $22 million, or 4 percent from
last year, reflecting increases in the international, truckload and direct
marketing sectors. Merchandise revenues grew to $668 million, an increase of $12
million, or 2 percent, driven by improvements in the chemicals and consumer
goods sectors.
Operating expenses of $1.7 billion were 5 percent higher than 1997 (excluding
the fourth quarter 1997 special charge) due to higher compensation and benefits
and purchased services expenses, as a result of increased business levels.
Operating income was $568 million for the fourth quarter 1998 compared with
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$528 million for the same period in 1997, adjusted for the special charge. The
operating ratio improved to 75.2 percent for the fourth quarter 1998 compared
with an adjusted operating ratio of 75.7 percent for 1997.
Common Stock Repurchases
During the fourth quarter, BNSF repurchased 1.4 million shares at an average
price of $30.81 per share, bringing total 1998 repurchases under BNSF's share-
repurchase program to 5.0 million shares at an average price of $30.75 per
share.
Full Year 1998 Record Results
BNSF adjusted net income for the year ended December 31, 1998, was $1.1 billion,
or $2.36 per share on a diluted basis, a 19 percent increase from 1997 adjusted
net income of $942 million, or $2.00 per share. Including a first quarter 1998
pre-tax gain on pipeline partnership sale of $67 million and the special charge
in the prior year, net income increased 31 percent to $2.43 per share from $1.88
per share in the prior year. Revenues for the year were $8.9 billion, up 7
percent. Operating expenses of $6.8 billion for 1998 were $270 million, or 4
percent higher than adjusted 1997 operating expenses. Operating income was $2.2
billion for 1998 compared with $1.9 billion for adjusted 1997. The operating
ratio improved to 75.9 percent for 1998 compared with an adjusted operating
ratio of 77.8 percent a year earlier.
Krebs said, "Since merger, we have had year-over-year improvements in operating
income, net income, and earnings per share, adjusted for special items, in all
quarters except the first quarter of 1997, when severe weather throughout the
Northern Plains and Pacific Northwest snowed in approximately 4,200 miles of
our railroad. These cumulative improvements have resulted in reducing our
operating ratio by over 5 points in the last three years."
Through The Burlington Northern and Santa Fe Railway Company, BNSF operates one
of the largest railroad networks in the United States, with 34,000 route miles
covering 28 states and two Canadian provinces.
Consolidated financial statements follow
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Burlington Northern Santa Fe Corporation
Adjusted Consolidated Statement of Income
(Unaudited, In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
------------------ -----------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $2,294 $2,174 $8,941 $8,370
------ ------ ------ ------
Operating Expenses
Compensation and benefits 725 669 2,812 2,675
Purchased services 228 209 894 823
Depreciation and amortization 214 199 832 773
Equipment rents 207 219 804 820
Fuel 183 192 724 747
Materials and other 169 158 717 675
------ ------ ------ ------
Total Operating Expenses 1,726 1,646 6,783 6,513
------ ------ ------ ------
Operating Income 568 528 2,158 1,857
Interest Expense 90 89 354 344
Other Income (Expense) - Net (9) (6) (22) (19)
------ ------ ------ ------
Income Before Income Taxes 469 433 1,782 1,494
Income Tax Expense 173 159 659 552
------ ------ ------ ------
Adjusted Net Income $ 296 $ 274 $1,123 $ 942
====== ====== ====== ======
Adjusted Diluted Earnings Per Share $ 0.63 $ 0.58 $ 2.36 $ 2.00
====== ====== ====== ======
Reported Earnings
Net Income $ 296 $ 217 $1,155 $ 885
====== ====== ====== ======
Basic Earnings Per Share $ 0.63 $ 0.47 $ 2.45 $ 1.91
====== ====== ====== ======
Diluted Earnings Per Share $ 0.63 $ 0.46 $ 2.43 $ 1.88
====== ====== ====== ======
Average Shares Outstanding
Basic 469.3 467.3 470.5 464.4
====== ====== ====== ======
Diluted 474.2 473.3 476.2 471.1
====== ====== ====== ======
</TABLE>
Statement Explanation:
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Adjusted net income and diluted earnings per share for 1998 excludes first
quarter other income attributable to the gain on pipeline partnership sale of
$32 million ($67 million pre-tax) or $0.07 per share after tax. Adjusted net
income for 1997 excludes the fourth quarter special charge of $57 million ($90
million pre-tax charge) or $0.12 per share after tax. Certain prior period
amounts have been reclassified to conform with the current period presentation.
All share and per share amounts have been restated to reflect the third quarter
1998 three-for-one stock split.
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Burlington Northern Santa Fe Corporation
(Unaudited, In millions)
Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 25 $ 31
Other current assets 1,181 1,203
------- -------
Total current assets 1,206 1,234
Properties and other assets 21,484 20,102
------- -------
Total Assets $22,690 $21,336
======= =======
Liabilities and Stockholders' Equity
Current liabilities $ 2,197 $ 2,060
Long-term debt and commercial paper 5,188 5,181
Deferred income taxes 5,662 5,175
Other liabilities 1,873 2,108
Stockholders' equity 7,770 6,812
------- -------
Total Liabilities and Stockholders' Equity $22,690 $21,336
======= =======
</TABLE>
Condensed Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
------------------ --------------------
1998 1997 1998 1997
----- ----- ------- -------
<S> <C> <C> <C> <C>
Cash Provided by Operating Activities $ 666 $ 704 $ 2,218 $ 1,814
Cash Used for Capital Expenditures (589) (706) (2,147) (2,182)
Net Proceeds of Borrowings 42 48 440 590
Dividends Paid (56) (47) (197) (185)
Purchase of BNSF common stock (43) - (153) -
Cash Used for Other Activities (12) (13) (167) (53)
----- ----- ------- -------
Increase (Decrease) in Cash and Cash Equivalents $ 8 $ (14) $ (6) $ (16)
===== ===== ======= ========
</TABLE>
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Burlington Northern Santa Fe Corporation
Supplemental Data
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
------------------ -----------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues (In millions)
Intermodal $ 644 $ 622 $ 2,469 $ 2,282
Coal 561 501 2,239 1,972
Agricultural Commodities 306 288 1,077 1,087
Merchandise
Chemicals 210 199 841 812
Metals and Minerals 178 188 757 731
Forest Products 144 141 598 564
Consumer Goods 136 128 553 497
Automotive 110 107 388 422
------- ------- ------- -------
Total Freight Revenues 2,289 2,174 8,922 8,367
Other Revenues 5 -- 19 3
------- ------- ------- -------
Total Revenues $ 2,294 $ 2,174 $ 8,941 $ 8,370
======= ======= ======= =======
Adjusted operating ratio 75.2% 75.7% 75.9% 77.8%
Revenue ton miles (billions) 121.7 115.0 469.0 424.6
Freight revenue per thousand revenue ton miles $ 18.80 $ 18.90 $ 19.02 $ 19.71
Cars/Units (thousands) 2,033 1,952 7,884 7,345
Average freight revenue per car/unit $ 1,126 $ 1,114 $ 1,132 $ 1,139
Employees (average) 43,555 44,456 44,349 43,465
</TABLE>
Statement Explanation:
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Adjusted 1997 operating ratios exclude the effect of a $90 million pre-tax
charge. Certain prior period amounts have been reclassified to conform with the
current period presentation.
