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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-11535
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BURLINGTON NORTHERN SANTA FE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-1804964
(State of Incorporation) (I.R.S. Employer Identification No.)
3800 Continental Plaza
777 Main Street
Fort Worth, Texas 76102-5384
(Address of principal executive offices, including zip code)
817/333-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $0.01 par value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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 requirement for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $11.8 billion on February 29, 1996. For purposes
of this calculation only, the registrant has excluded stock beneficially owned
by directors and officers. By doing so, the registrant does not admit that
such persons are affiliates within the meaning of Rule 405 under the
Securities Act of 1933 or for any other purpose.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Common Stock, $0.01 par value, 147,503,141 shares outstanding as of January
31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents from which parts thereof have been incorporated
by reference and the part of the Form 10-K into which such information is
incorporated:
Annual
Report to
Shareholders
for the
fiscal year
ended
December
31, 1995... PARTS I, II, AND IV
Proxy
Statement
dated March
5, 1996.... PART III
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TABLE OF CONTENTS
PAGE
----
PART I
Items 1 and 2. Business and Properties.................................... 1
Rail.................................................................. 2
Pipeline Investment................................................... 10
Item 3. Legal Proceedings................................................. 11
Item 4. Submission of Matters to a Vote of Security Holders............... 16
EXECUTIVE OFFICERS OF THE REGISTRANT...................................... 16
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.................................................................. 17
Item 6. Selected Financial Data........................................... 17
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 18
Item 8. Financial Statements and Supplementary Data....................... 18
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................... 18
PART III
Item 10. Directors and Executive Officers of the Registrant............... 18
Item 11. Executive Compensation........................................... 18
Item 12. Security Ownership of Certain Beneficial Owners and Management... 18
Item 13. Certain Relationships and Related Transactions................... 18
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 19
SIGNATURES................................................................ S-1
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE................................. F-1
EXHIBITS.................................................................. E-1
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
Burlington Northern Santa Fe Corporation ("BNSF") was incorporated in the
State of Delaware on December 16, 1994. On September 22, 1995, the
stockholders of Burlington Northern Inc. ("BNI") and Santa Fe Pacific
Corporation ("SFP") became the stockholders of BNSF pursuant to a business
combination of the two companies which was approved at special meetings of
their stockholders held on February 7, 1995. In connection with the
combination, BNSF was formed to act as the parent holding company of BNI and
SFP, both of which companies are now subsidiaries of BNSF. Through BNI and
SFP, BNSF owns subsidiaries primarily engaged in the rail transportation
business: Burlington Northern Railroad Company ("BNRR") and The Atchison,
Topeka and Santa Fe Railway Company ("ATSF"). BN Leasing Corporation, a
wholly-owned subsidiary of BNI, is in the business of acquiring railroad
rolling stock and other equipment. BNSF also has an equity interest in Santa
Fe Pacific Pipeline Partners, L.P., which operates a refined petroleum
products pipeline system in six western and southwestern states.
The business combination took place pursuant to the Agreement and Plan of
Merger dated as of June 29, 1994 (as amended by amendments dated as of October
26, 1994, December 18, 1994, January 24, 1995, and September 19, 1995, the
"Merger Agreement") which provided for BNI's acquisition of SFP. In accordance
with the Merger Agreement, BNI and SFP conducted a joint tender offer in which
SFP purchased 38 million shares and BNI purchased 25 million shares of SFP
common stock at a price of $20 per share, the payment for which shares was
made on February 21, 1995 (the "Tender Offer"). Between the Tender Offer and
consummation of the business combination on September 22, 1995, SFP
repurchased an additional approximate 3.6 million shares of SFP common stock,
as permitted by the Merger Agreement.
On September 22, 1995, pursuant to the Merger Agreement, (1) each
outstanding share of BNI common stock (other than BNI common stock held by BNI
as treasury stock or owned by SFP or BNI or any subsidiary of either of them)
was converted into the right to receive one newly-issued share of BNSF common
stock (par value $0.01 per share); (2) each outstanding share of SFP common
stock (other than SFP common stock held by SFP as treasury stock or owned by
SFP or BNI or any subsidiary of either of them) was converted into the right
to receive 0.41143945 of a share of BNSF common stock; and (3) each
outstanding share of BNI or SFP common stock then held as treasury stock or
owned by BNI or SFP (other than shares of SFP common stock owned by BNI, which
remain outstanding) was cancelled. The rights of a stockholder of BNSF were
substantially identical to the rights of a stockholder of BNI, and the
business combination had the same economic effect on the stockholders of SFP
and BNI as would a direct merger of BNI and SFP. Reference is made to Note 2
to the consolidated financial statements on pages 26 through 28 of BNSF's 1995
Annual Report to Shareholders for additional information in connection with
the business combination, Tender Offer, and related financing activities,
which information is hereby incorporated by reference.
On October 13, 1994, BNI, BNRR, SFP, and ATSF filed a railroad merger and
control application with the Interstate Commerce Commission ("ICC"). On August
23, 1995, the ICC issued its written decision approving and authorizing BNI's
acquisition of control of SFP and the business combination by which BNI and
SFP became subsidiaries of BNSF, the resulting common control of BNRR and ATSF
by BNSF, the consolidation of BNRR and ATSF by BNSF, the consolidation of BNRR
and ATSF operations, and the merger of BNRR and ATSF. Pursuant to the ICC's
permissive authority, the business combination was effected on September 22,
1995. Each of BNI, SFP, BNRR, and ATSF are now direct or indirect wholly-owned
subsidiaries of BNSF.
At December 31, 1995, BNSF and its subsidiaries had approximately 45,500
employees.
1
RAIL
The rail operations of BNSF's principal operating subsidiaries--BNRR and
ATSF (collectively, "Rail")--comprise the largest railroad system in the
United States with approximately 31,000 route miles at December 31, 1995.
TRACK CONFIGURATION
BNRR and ATSF operate railroad systems collectively comprising approximately
31,000 route miles of track (excluding, among other things, second main
track), approximately 28,000 miles of which are owned route miles, including
easements, through 27 states and two Canadian provinces.
As of December 31, 1995, the total Rail system--including first, second,
third and fourth main tracks, yard tracks, and sidings--consisted of
approximately 48,500 operated miles of track, all of which were owned by or
held under easement by Rail except for approximately 4,000 miles operated
under trackage rights agreements with other parties. At December 31, 1995,
approximately 28,000 miles of Rail's track consisted of 112-pound per yard or
heavier rail, including approximately 18,300 track miles of 131-pound per yard
or heavier rail. Substantially all rail laid under rail renewal programs is
continuous welded rail.
EQUIPMENT CONFIGURATION
Rail owned or had under non-cancelable leases exceeding one year the
following units of railroad rolling stock for the periods indicated
(represents combined BNRR and ATSF amounts for all periods):
YEAR ENDED DECEMBER
31,
--------------------
1995 1994 1993
------ ------ ------
Diesel Locomotives...................................... 4,277 4,157 4,054
====== ====== ======
Freight Cars:
Box--general purpose................................... 3,202 3,527 4,126
Box--specially equipped................................ 8,987 8,973 8,485
Open Hopper............................................ 10,497 11,630 12,483
Covered Hopper......................................... 44,840 43,223 42,022
Gondola................................................ 11,467 10,665 9,889
Refrigerator........................................... 7,216 6,489 6,687
Autorack............................................... 3,600 3,567 3,578
Flat................................................... 6,178 5,921 5,598
Tank................................................... 505 552 605
Caboose................................................ 485 542 585
Other.................................................. 330 343 348
------ ------ ------
Total Freight Cars.................................... 97,307 95,432 94,406
====== ====== ======
Domestic Containers.................................... 16,230 16,793 15,310
Trailers............................................... 834 633 1,028
Domestic Chassis....................................... 5,274 7,365 7,047
Company Service Cars................................... 6,084 6,218 6,760
Commuter Passenger Cars................................ 141 141 141
In addition to the containers, trailers, and chassis shown above, Rail had
under short-term leases 4,406 containers, 4,367 trailers, and 15,551 chassis,
at December 31, 1995. In addition to the owned and leased locomotives
identified above, BNRR operated 197 freight locomotives under power purchase
agreements as of December 31, 1995. The average ages from date of manufacture
or remanufacture of the locomotive and freight car fleets at December 31, 1995
were 15.5 years and 8.3 years for BNRR and ATSF locomotives, respectively, and
18.3 years and 18.2 years for BNRR and ATSF freight cars, respectively. These
averages are not weighted to reflect the greater capacities of the newer
equipment.
2
A summary of Rail's ratios of locomotives and freight cars on line awaiting
or undergoing repairs to the total number of locomotives or freight cars in
the fleet is as follows:
YEAR ENDED
DECEMBER 31,
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1995 1994 1993
---- ---- ----
Locomotives
BNRR......................................................... 6.5% 7.7% 7.7%
ATSF......................................................... 6.8% 7.2% 7.6%
Freight Cars
BNRR......................................................... 2.7% 3.1% 3.3%
ATSF......................................................... 4.3% 7.8% 7.8%
CAPITAL EXPENDITURES AND MAINTENANCE
Capital expenditures of Rail for the periods indicated were as follows
(represents combined BNRR and ATSF amounts for all periods):
YEAR ENDED DECEMBER
31,
--------------------
(IN MILLIONS)
1995 1994 1993
------ ------ ------
Ties................................................... $ 165 $ 161 $ 141
Rail/Other Track Material.............................. 313 305 246
Ballast................................................ 139 136 113
Facilities and Other Roadway........................... 429 432 355
Locomotives............................................ 196 224 133
Freight Cars........................................... 31 53 120
Other.................................................. 106 91 114
------ ------ ------
Total Capital Expenditures......................... $1,379 $1,402 $1,222
====== ====== ======
The above expenditures do not include equipment financed through operating
leases, principally consisting of locomotives and rolling stock. In 1995,
approximately $440 million of equipment acquisitions were financed through
operating leases. BNSF expects combined 1996 capital expenditures for BNRR and
ATSF to total approximately $1.7 billion, including capital expenditures for
projects reimbursed by governmental agencies and other parties. Capital
expenditures will include capital maintenance and expansion projects such as
additional line capacity improvements at various locations, operations
consolidations expansion projects, and intermodal facility improvements at Los
Angeles and San Bernardino, California.
General Electric Company ("GE") and the Electro-Motive Division of General
Motors Corporation ("EMD") perform locomotive maintenance for each of BNRR and
ATSF under various maintenance agreements and maintained approximately 600
locomotives for BNRR and 725 locomotives for ATSF as of December 31, 1995.
Additionally, ATSF has a similar agreement with MK Rail Corporation ("MK")
that provides for the overhaul and maintenance of 277 locomotives and will
continue in effect as to each of the locomotives for a period of eight years
following its overhaul. The agreements with GE, EMD, and MK call for the work
to be done at each railroad's facilities with each railroad's respective
employees.
The majority of maintenance of way expenditures for track have been for rail
and tie refurbishment and resurfacing. The extent of Rail's track maintenance
program (representing combined BNRR and ATSF amounts for all periods) is
depicted in the following chart:
YEAR ENDED DECEMBER
31,
--------------------
1995 1994 1993
------ ------ ------
Track miles of rail laid (1)............................ 945 1,010 967
Cross ties inserted (in thousands) (1).................. 2,974 2,879 3,090
Track resurfaced miles.................................. 11,088 11,055 10,526
- --------
(1)Includes both maintenance of existing route system and expansion projects.
3
BNSF anticipates that Rail's 1996 track maintenance of way program, together
with expansion projects, will result in the installation of approximately 900
track miles of rail, the replacement of about 3.5 million cross ties, and the
resurfacing of approximately 12,000 miles of track.
OPERATING CONFIGURATION
Rail operates facilities and equipment for maintenance of track,
locomotives, and freight cars. It also owns or leases other equipment to
support rail operations, such as highway trailers, containers and vehicles.
Support facilities for rail operations include yards and terminals throughout
its rail network, system locomotive shops that perform continuous locomotive
servicing and maintenance, centralized network operations centers for train
dispatching and network operations monitoring and management in Fort Worth,
Texas, and Schaumburg, Illinois, computers, telecommunications equipment,
signal systems, and other support systems. Transfer facilities for rail-to-
rail as well as intermodal transfer of containers, trailers, and other freight
traffic are maintained. These include 43 major intermodal hubs located across
the system and nine intermodal hub centers off-line used in connection with
haulage agreements with other railroads. BNRR and ATSF also own 30 automotive
distribution facilities where automobiles are loaded or unloaded from multi-
level rail cars, and serve eight port facilities. Hobart Yard near Los
Angeles, California, Corwith Yard in Chicago, Illinois, and Chicago Hub Center
in Cicero, Illinois are Rail's largest intermodal facilities in terms of
volume, with approximately 658,000, 601,000, and 437,000 lifts, respectively,
in 1995, and Argentine Yard in Kansas City, Kansas, Barstow Yard in Barstow,
California, Northtown Yard in Minneapolis, Minnesota and Murray Yard in Kansas
City, Missouri, are the largest freight car classification yards.
Substantially all railroad property, real or personal, of BNRR is subject to
liens securing mortgage bonds. Certain locomotives and rolling stock of BNRR
and ATSF are subject to equipment obligations, as referred to in Note 12 to
the consolidated financial statements on page 33 of BNSF's 1995 Annual Report
to Shareholders, which information is hereby incorporated by reference.
EMPLOYEES AND LABOR RELATIONS
Productivity as measured by revenue ton miles per employee has risen
steadily in the last three years, and compensation and benefits expense per
revenue ton mile has declined, as shown in the table below (represents
combined BNRR and ATSF operating statistics for all periods):
YEAR ENDED DECEMBER
31,
--------------------
1995 1994 1993
------ ------ ------
Thousand revenue ton miles/average number of employees. 8,715 7,887 7,305
Compensation and benefits expense/thousand revenue ton
miles.................................................. $ 6.78 $ 7.27 $ 7.68
Labor unions represent approximately 87 percent of Rail's employees under
collective bargaining agreements with 13 different labor organizations. In
December 1994, BNRR reached an agreement with the Railroad Yardmasters
Division of the United Transportation Union ("UTU") which is effective through
1999 with respect to wages, work rules and all other matters except health and
welfare benefits. Health and welfare issues are being addressed at the
national level and will apply to BNRR's approximately 250 yardmasters.
Effective July 1, 1995, the yardmasters received a three percent base wage
increase under the agreement.
Labor agreements currently in effect for unions other than the yardmasters
include provisions which prohibited the parties from serving notices to change
wages, health and welfare benefits, work rules and working conditions prior to
November 1, 1994. BNSF's railroad operating subsidiaries joined with other
major railroads to negotiate these issues with the unions on a multi-employer
basis on November 1, 1994. At that time, all unions were served proposals for
productivity improvements as well as other changes. Thereafter, unions also
served notices on the railroads which proposed increasing wages and benefits
and restoring many of the restrictive work rules and practices that were
modified or eliminated under the current agreements. One union is also
challenging the railroads' right to negotiate on a multi-employer basis and
the issue is
4
currently pending in federal district court in Washington, D.C. Under labor
agreements currently in effect, a cost of living allowance of nine cents per
hour went into effect on July 1, 1995 for most of the unionized work force.
The cost of living allowance was dependent upon changes in the Consumer Price
Index not to exceed three percent.
In December 1995, BNRR's and ATSF's multi-employer bargaining
representative, the National Carriers' Conference Committee ("NCCC"), reached
a tentative agreement with the UTU, the largest single rail union, resolving
wage, benefit and work rule issues through 1999. A similar agreement was
reached in February 1996 with the Brotherhood of Locomotive Engineers ("BLE").
The UTU and BLE agreements are subject to membership ratification, which
process should be completed by May 1996.
At this time, the railroads and most of the other unions are proceeding in
direct negotiations on the parties' proposals with many in mediation. The
National Mediation Board has scheduled and held meetings with the parties. One
or more of the unions could be released from mediation which would likely
start a cooling-off period and possibly lead to the establishment of a
Presidential Emergency Board before the parties could engage in self-help
remedies. Although the ultimate outcome of the negotiations cannot be
predicted, the potential exists for one or more work stoppages in the railroad
industry during 1996 which may affect Rail. Existing labor agreements will
remain in effect until new agreements are reached or until the Railway Labor
Act's procedures (which include mediation, cooling-off periods, and the
possibility of Presidential intervention) have been exhausted.
BNRR and ATSF are each parties to service interruption insurance agreements
under which on a combined basis they would be required to pay premiums of up
to a maximum of approximately $106 million in the event of work stoppages on
other railroads related to ongoing national bargaining. BNRR and ATSF are also
entitled to receive payments under certain conditions if a work stoppage
occurs on either property.
With respect to the permissive authority granted in the ICC's August 23,
1995 written decision to consolidate BNRR and ATSF operations, agreements
resolving operations consolidations issues with the BLE and UTU were finalized
in February and March of 1996. Discussions with the Transportation
Communications Union ("TCU") resulted in an agreement resolving all operations
consolidations and other related issues covering BNRR's and ATSF's clerical
employees. The TCU agreement will enable BNRR and ATSF to centralize most
clerical functions. Operations consolidations negotiations are ongoing with
the carman and yardmaster unions.
Railroad industry personnel are covered by the Railroad Retirement System
instead of Social Security. Rail's contributions under the Railroad Retirement
System are approximately triple those in industries covered by Social
Security.
Railroad industry personnel are also covered by the Federal Employers'
Liability Act ("FELA") rather than by state workers' compensation systems.
FELA is a fault-based system, with compensation for injuries settled by
negotiation and litigation, not subject to specific statutory limitations on
the amount of recovery. By contrast, most other industries are covered under
state administered no-fault plans with standard compensation schedules. Rail
believes it has adequate reserves for its FELA claims. However, the future
costs of FELA claims are uncertain and such costs could be significantly
higher in the future.
BUSINESS MIX
In serving the Midwest, Pacific Northwest and the Western, Southwestern, and
Southeastern regions of the country, BNRR and ATSF transport a broad range of
commodities derived from manufacturing, agricultural, and natural resource
industries. Accordingly, their financial performance is influenced by, among
other things, general and industry economic conditions at the international,
national, and regional levels.
Major markets served directly by BNRR or ATSF include Albuquerque, Billings,
Birmingham, Cheyenne, Chicago, Dallas, Denver, Des Moines, Duluth/Superior,
Fargo/Moorhead, Fort Worth, Houston,
5
Kansas City, Lincoln, Los Angeles, Memphis, Mobile, Oklahoma City, Omaha,
Pensacola, Phoenix, Portland, the San Francisco Bay area, St. Louis, St.
Paul/Minneapolis, Seattle, Spokane, Springfield (Missouri), Tacoma, Tulsa,
Wichita, Vancouver (British Columbia), Winnipeg (Manitoba), and the United
States/Mexico crossings of El Paso and San Diego. Other major cities are
served through Intermodal Market Extension ("IMX") terminals located at
various off-line points. Major ports served include Galveston, Houston, Long
Beach, Los Angeles, Mobile, Portland, Richmond (Oakland), San Diego, Seattle,
Superior, Tacoma and Vancouver (British Columbia).
In 1995, one quarter of combined BNRR and ATSF revenues were derived from
Intermodal traffic and another quarter were derived from the transportation of
Coal. About 15 percent of combined 1995 revenues reflected the transportation
of Agricultural Commodities. The transportation of commodities in the areas
serviced by Chemicals, Forest Products, Consumer and Food Products, Metals,
Minerals and Ores, and Automotive accounted for the rest of 1995 combined
revenues.
Intermodal. The Intermodal freight business consists of the hauling of
freight containers or truck trailers by combinations of water, rail, or motor
carriers. The intermodal business is highly service-driven, and in many cases
motor carriers and railroads jointly market intermodal service. The first such
joint intermodal arrangement was Quantum, through which ATSF and J. B. Hunt
Transport provide customers full service, customized door-to-door
transportation (truck and rail), with a common communication system and
integrated billing at a single rate.
In 1994, major national Less-Than-Truckload ("LTL") carriers and the
Teamsters union signed a new National Master Freight Agreement that allows the
LTL carriers to shift up to 28 percent of their total line-haul miles to
intermodal service. BNRR and ATSF are major beneficiaries of this service-
sensitive traffic, and they provide transportation services to major LTL
carriers Yellow Freight, Roadway Express, and Consolidated Freightways.
Combined BNRR and ATSF intermodal results include revenue from four types of
business:
. Direct Marketing. Direct marketing efforts resulted in approximately 28
percent of total intermodal revenue. These center around traffic contracted
from United Parcel Service and the United States Postal Service, just-in-time
parts service for the automotive industry, and service for nationwide LTL
carriers.
. Truckload. Truckload traffic represented approximately 15 percent of total
intermodal revenue. The joint service arrangement with J.B. Hunt referred to
as Quantum represented the largest truckload component, while Schneider
National was the next largest.
. Intermodal Marketing Companies. Approximately 31 percent of total
intermodal revenue was generated through intermodal marketing companies,
primarily shipper agents and consolidators.
. International. International business consists primarily of traffic from
steamship companies and accounted for approximately 26 percent of intermodal
revenues.
Coal. Based on carloadings and tons hauled, BNRR is the largest transporter
of western low-sulfur coal in the United States. Over 90 percent of BNRR's
coal traffic originated in the Powder River Basin of Wyoming and Montana
during the three years ended December 31, 1995. These coal shipments were
destined for coal-fired electric generating stations located primarily in the
North Central, South Central and Mountain regions of the United States with
smaller quantities exported.
BNRR also handles increasing amounts of low-sulfur coal from the Powder
River Basin for delivery to markets in the eastern and southeastern portion of
the United States. The low-sulfur coal from the Powder River Basin is
abundant, inexpensive to mine and clean-burning. Because the Clean Air Act of
1990 requires power plants to reduce harmful emissions either by burning coal
with a lower sulfur content or by installing expensive scrubbing units,
opportunities for increased shipments of this low-sulfur coal still exist.
6
Coal shipments transported by ATSF originate principally in Wyoming,
Colorado, and New Mexico on the lines of ATSF and other rail carriers. These
shipments are moved to electrical generating stations and industrial plants in
the Midwest and Southwest.
Agricultural Commodities. Agricultural Commodities include barley, corn,
wheat, soybeans, oils, feeds, flour and mill products, specialty grains,
malts, and milo. Based on carloadings and tons hauled, BNRR is the largest
rail transporter of grain in North America. BNRR's system is strategically
located to serve the Midwest and Great Plains grain-producing regions where
BNRR serves most major terminal, storage, feeding and food-processing
locations. Additionally, BNRR has access to major export markets in the
Pacific Northwest, western Great Lakes and Texas Gulf regions.
ATSF also serves a large portion of the grain-producing regions of the
nation. ATSF transports wheat and feed grains including corn to points in
California, Kansas, New Mexico, Oklahoma, and Texas to be stored, milled, or
fed to livestock. ATSF also moves export wheat and feed grains to Texas ports
for shipment to foreign customers.
Chemicals. The Chemicals business is comprised of fertilizer, petroleum and
chemical commodities. Chemicals and plastics resins are transported for
industrial and agricultural use. Industrial chemicals and plastics resins are
used by the automotive, housing, and packaging industries, as well as for
feedstocks for other chemical and plastic products.
Forest Products. The primary commodities in Forest Products are lumber,
plywood, oriented strand board, paper products, pulpmill feedstock, and wood
pulp. Based on carloadings and tonnage hauled, BNRR is the largest rail
transporter of forest products in the United States. Commodity origins are
primarily from the Pacific Northwest, upper Midwest, and the Southeast for
shipment mainly into domestic markets. Customers served include the
construction, furniture, photography, publishing, newspaper, and industrial
boxes industries.
Consumer and Food Products. Beverages, canned goods, and perishables are the
principal food commodities moved by BNRR and ATSF. Other consumer products
handled include sugars and sweeteners, cotton, salt, rubber and tires,
machinery, aircraft parts, military and miscellaneous boxcar shipments. Heavy
machinery includes primary markets for aircraft, construction, farm and
railroad equipment and secondary markets for used equipment. A truck-
competitive transportation product in tank containers for customers shipping
specialty chemicals and other liquids is also offered.
Metals. The Metals business includes virtually all of the commodities
included in or resulting from the production of steel. Taconite, an iron ore
derivative produced in northern Minnesota, scrap steel, and coal coke are
BNRR's primary input products, while finished steel products range from
structural beams and steel coils to wire and nails. BNRR and ATSF haul both
ferrous and non-ferrous products including recyclable metals. ATSF links the
integrated steel mills in the East with fabricators in the West and Southwest.
Service is also provided to various mini-mills in the Southwest that feed
rebar, beams, and coiled rod to the construction industry. Various non-ferrous
products such as copper, lead, and aluminum are transported for the beverage,
automotive, and telecommunications industries.
Minerals and Ores. Commodities in this group include clays, cements,
aggregates, and other industrial ores and agricultural minerals. Both the oil
and the construction industries are serviced. Agricultural minerals include
sulphur which generally moves to the Gulf Coast and from there via vessels to
Florida and overseas markets for use in making phosphatic fertilizers. Potash
is transported to domestic markets and to export points for markets in Canada,
Mexico, and overseas. Industrial ores include various mined and processed
commodities such as cement and aggregates (sand and stone) that generally move
to domestic markets for use in general construction and public work projects,
such as highway projects. Borates and sodium compounds move to domestic points
as well as to export markets primarily through West Coast ports. Lime and non-
metallic ores most often move within domestic markets.
7
Automotive. The Automotive group is responsible for both assembled motor
vehicles and shipments of vehicle parts to numerous destinations throughout
the Midwest, Southwest, and West.
Freight Statistics. The following tables set forth certain freight
statistics relating to rail operations for the periods indicated (represents
combined BNRR and ATSF statistics for all periods):
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994 1993
------- ------- -------
Revenue ton-miles (millions)......................... 397,902 360,605 327,809
Freight revenue per thousand revenue ton-miles....... $20.11 $20.84 $21.22
Average haul per ton (miles)......................... 864 821 807
REVENUES
YEAR ENDED DECEMBER
31,
--------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS)
Intermodal............................................. $2,017 $1,943 $1,678
Coal................................................... 1,966 1,902 1,752
Agricultural Commodities............................... 1,245 938 918
Chemicals.............................................. 615 597 590
Forest Products........................................ 546 557 525
Consumer and Food Products............................. 467 471 452
Metals................................................. 390 349 338
Minerals and Ores...................................... 388 382 369
Automotive............................................. 369 376 334
------ ------ ------
Total Freight Revenue.................................. 8,003 7,515 6,956
Other Revenue.......................................... 167 161 152
------ ------ ------
Total Operating Revenues............................. $8,170 $7,676 $7,108
====== ====== ======
CARS/UNITS
YEAR ENDED
DECEMBER 31,
-----------------
1995 1994 1993
----- ----- -----
(IN THOUSANDS)
Intermodal................................................. 2,558 2,465 2,183
Coal....................................................... 1,880 1,847 1,679
Agricultural Commodities................................... 663 578 599
Chemicals.................................................. 374 362 353
Forest Products............................................ 345 357 348
Consumer and Food Products................................. 331 337 302
Metals..................................................... 397 370 357
Minerals and Ores.......................................... 308 315 305
Automotive................................................. 237 238 212
----- ----- -----
Total Car/Units.......................................... 7,093 6,869 6,338
===== ===== =====
8
AVERAGE REVENUE PER CAR/UNIT
YEAR ENDED DECEMBER
31,
--------------------
1995 1994 1993
------ ------ ------
Intermodal............................................. $ 789 $ 788 $ 769
Coal................................................... 1,046 1,030 1,043
Agricultural Commodities............................... 1,878 1,623 1,533
Chemicals.............................................. 1,644 1,649 1,671
Forest Products........................................ 1,583 1,560 1,509
Consumer and Food Products............................. 1,411 1,398 1,497
Metals................................................. 982 943 947
Minerals and Ores...................................... 1,260 1,213 1,210
Automotive............................................. 1,557 1,580 1,575
------ ------ ------
Average Revenue Per Car/Unit........................... $1,128 $1,094 $1,098
====== ====== ======
GOVERNMENT REGULATION AND LEGISLATION
Rail operations are subject to the regulatory jurisdiction of the Surface
Transportation Board of the United States Department of Transportation
("DOT"), the Federal Railroad Administration of DOT, the Occupational Safety
and Health Administration ("OSHA"), and state regulatory agencies. The Surface
Transportation Board, which is the successor to the ICC, has jurisdiction over
certain rates, routes, services, extension, sale or abandonment of rail lines,
and consolidation or merger with, or acquisition of control of, rail common
carriers. DOT and OSHA have jurisdiction under several federal statutes over a
number of safety and health aspects of rail operations. State agencies
regulate some aspects of rail operations with respect to health and safety in
areas not otherwise preempted by federal law.
Rail operations of BNRR and ATSF, as well as those of their competitors, are
subject to extensive federal, state and local environmental regulation. These
laws cover discharges to waters, air emissions, toxic substances, and the
generation, handling, storage, transportation, and disposal of waste and
hazardous materials. This regulation has the effect of increasing the cost and
liabilities associated with rail operations. Environmental risks are also
inherent in rail operations which frequently involve transporting chemicals
and other hazardous materials.
BNRR and ATSF expect to become subject to future requirements regulating air
emissions from diesel locomotives that may increase operating costs. The
United States Environmental Protection Agency ("EPA") is expected to issue
regulations nationally applicable to new locomotive engines in 1996. It is
anticipated that these regulations will be effective for locomotive engines
installed after 1999. Under some interpretations of federal law, older
locomotive engines may be regulated by states based on standards and
procedures which the State of California ultimately adopts. At this time it is
unknown whether California will adopt any locomotive emission standards.
Many of BNRR's and ATSF's land holdings are and have been used for
industrial or transportation-related purposes or leased to commercial or
industrial companies whose activities may have resulted in discharges onto the
property. As a result, BNRR and ATSF are now subject and will from time to
time continue to be subject to environmental cleanup and enforcement actions.
In particular, the federal Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), also known as the "Superfund" law, generally
imposes joint and several liability for cleanup and enforcement costs, without
regard to fault or the legality of the original conduct, on current and former
owners and operators of a site. Accordingly, BNRR and ATSF may be responsible
under CERCLA and other federal and state statutes for all or part of the costs
to clean up sites at which certain substances may have been released by BNRR
or ATSF, their current lessees, former owners or lessees of properties, or
other third parties. For further discussion, reference is made to Note 13 to
the consolidated financial statements on pages 34 and 35 of BNSF's 1995 Annual
Report to Shareholders, which information is hereby incorporated by reference.
9
COMPETITION
The business environment in which BNRR and ATSF operate remains highly
competitive. Depending on the specific market, deregulated motor carriers,
other railroads and river barges exert pressure on various price and service
combinations. The presence of advanced, high service truck lines with
expedited delivery, subsidized infrastructure and minimal empty mileage
continues to affect the market for non-bulk, time sensitive freight. The
potential expansion of longer combination vehicles could further encroach upon
markets traditionally served by railroads. In order to remain competitive,
BNRR, ATSF, and other railroads continue to develop and implement operating
efficiencies to improve productivity.
As railroads streamline, rationalize and otherwise enhance their franchises,
competition among rail carriers intensifies. BNRR's and ATSF's primary rail
competitors in the western region of the United States consist of CP Rail
Systems ("CP"), Southern Pacific Transportation Company ("SP") and Union
Pacific Railroad Company ("UP"), which now includes the former Chicago & North
Western Transportation Company ("C&NW"). Numerous regional railroads and motor
carriers also operate in parts of the same territories served by BNRR and
ATSF. Coal, one of BNRR's primary commodities, has experienced significant
pressure on rates due to competition from the joint effort of C&NW/UP and from
BNRR's effort to penetrate new markets.
An application for approval of the proposed merger of UP and SP is now
pending before the Surface Transportation Board. Approval of that transaction
would create an enhanced competitor to BNRR and ATSF. BNRR and ATSF have
entered into a settlement agreement with UP and SP under which, if the UP/SP
combination is approved as proposed, BNRR and ATSF would obtain overhead
access, and in some instances local access, through trackage rights to over
3,500 route miles of the UP/SP system, and UP and SP would sell more than 300
miles of track to BNRR or ATSF. This would provide BNRR and ATSF access to
additional shippers and would improve their route structures. A decision by
the Surface Transportation Board on the UP/SP transaction is scheduled in
1996.
PIPELINE INVESTMENT
Santa Fe Pacific Pipelines, Inc. ("SFP Pipelines"), an indirect, wholly-
owned subsidiary of BNSF, serves as the general partner of Santa Fe Pacific
Pipeline Partners, L.P. (the "Partnership"), a Delaware master limited
partnership formed in 1988 to acquire and operate the refined petroleum
products pipeline business of SFP. SFP Pipelines owns a two percent interest
as the Partnership's general partner and an approximate 42 percent interest as
limited partner. As general partner, SFP Pipelines is entitled to receive two
percent of all amounts available for distribution by the Partnership and also
an additional incentive depending upon the level of cash distributions paid to
holders of limited partner interests in the Partnership ("Partnership Units").
BNSF accounts for its interest in the Partnership on the equity basis.
In September 1990, SFP Pipeline Holdings, Inc., an indirect, wholly-owned
subsidiary of BNSF, issued $219 million principal amount of Variable Rate
Exchangeable Debentures due 2010 (the "Holdings Debentures") at an eight
percent discount. The Holdings Debentures are exchangeable under certain
circumstances at the option of the holders upon the first to occur of certain
specified events, or final maturity, for substantially all of the Partnership
Units that are owned by SFP Pipelines. The interest payable with respect to
the Holdings Debentures for a particular quarter is equal to the greater of
(i) the distributions of cash from operations declared by the Partnership on
the Partnership Units for which such Holdings Debentures are exchangeable and
(ii) two percent of the weighted average unpaid balance of such Holdings
Debentures outstanding during such quarter, provided that in no event shall
the amount of interest paid on the Holdings Debentures exceed an average
annual rate of 16 percent since their date of issuance.
The Partnership is one of the largest independent pipeline common carriers
of refined petroleum products in the United States, and the largest in the
western United States, in terms of product deliveries,
10
barrel miles, and pipeline mileage, with approximately 3,300 miles of pipeline
serving six states. The Partnership transports refined petroleum products,
including gasoline, diesel fuel, and commercial and military jet fuel,
primarily for major petroleum companies, independent refiners, the United
States military, and marketers and distributors of such products. The
Partnership also operates 14 truck loading terminals and provides pipeline
service to 44 customer-owned terminals, three commercial airports, and 12
military bases. The Partnership shipped 354.3 million barrels in 1995, up from
349.8 million barrels in 1994.
Substantially all of the Partnership's pipeline operations are common
carrier operations that are subject to federal or state rate regulation. The
Federal Energy Regulatory Commission (FERC) exercises economic regulatory
jurisdiction over interstate shipments through the Partnership's system. For a
description of certain FERC proceedings challenging certain of the
Partnership's rates and seeking refunds and prospective rate reductions, see
the section entitled "FERC Proceeding" under Item 3, Legal Proceedings, in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1995,
which section is hereby incorporated by reference. Intrastate shipments are
subject to economic regulation by the California Public Utilities Commission.
ITEM 3. LEGAL PROCEEDINGS
Set forth below is a description of certain legal proceedings involving BNSF
and its subsidiaries.
WHEAT AND BARLEY TRANSPORTATION RATES
In September 1980, a class action lawsuit was filed against BNRR in United
States District Court for the District of Montana ("Montana District Court")
challenging the reasonableness of BNRR export wheat and barley rates. The
class consists of Montana grain producers and elevators. The plaintiffs sought
a finding that BNRR single car export wheat and barley rates for shipments
moving from Montana to the Pacific Northwest were unreasonably high and
requested damages in the amount of $64 million. In March 1981, the Montana
District Court referred the rate reasonableness issue to the ICC.
Subsequently, the state of Montana filed a complaint at the ICC challenging
BNRR's multiple car rates for Montana wheat and barley movements occurring
after October 1, 1980.
The ICC issued a series of decisions in this case from 1988 to 1991. Under
these decisions, the ICC applied a revenue to variable cost test to the rates
and determined that BNRR owed $9,685,918 in reparations plus interest. In its
last decision, dated November 26, 1991, the ICC found BNRR's total reparations
exposure to be $16,559,012 through July 1, 1991. The ICC also found that
BNRR's current rates were below a reasonable maximum and vacated its earlier
rate prescription order.
BNRR appealed to the United States Court of Appeals for the District of
Columbia Circuit ("D.C. Circuit") those portions of the ICC's decisions
concerning the post-October 1, 1980 rate levels. BNRR's primary contention on
appeal was that the ICC erred in using the revenue to variable cost rate
standard to judge the rates instead of Constrained Market Pricing/Stand Alone
Cost principles. The limited portions of decisions that cover pre-October 1,
1980 rates were appealed to the Montana District Court.
On March 24, 1992, the Montana District Court dismissed plaintiffs' case as
to all aspects other than those relating to pre-October 1, 1980 rates. On
February 9, 1993, the D.C. Circuit served its decision regarding the appeal of
the several ICC decisions in this case. The court held that the ICC did not
adequately justify its use of the revenue to variable cost standard as BNRR
had argued and remanded the case to the ICC for further administrative
proceedings.
On July 22, 1993, the ICC served an order in response to the D.C. Circuit's
February 9, 1993 decision. In its order, the ICC stated it would use the
Constrained Market Pricing/Stand Alone Cost principles in assessing the
reasonableness of BNRR wheat and barley rates moving from Montana to Pacific
Coast ports from 1978 forward. The ICC assigned the case to the Office of
Hearings to develop a procedural schedule.
11
On October 28, 1994, plaintiffs filed their opening evidence arguing that the
revenue received by BNRR exceeded the stand alone costs of transporting that
traffic and that BNRR rates were unreasonably high. BNRR filed its evidence
March 29, 1995, showing that the stand alone costs of transporting the traffic
exceeded the revenue derived by BNRR on that traffic and that consequently,
its rates were not unreasonably high. The parties filed briefs simultaneously
on August 16, 1995, and the proceeding awaits decision by the Surface
Transportation Board, successor to the ICC.
COAL TRANSPORTATION CONTRACT LITIGATION
On April 26, 1991, an action was filed against BNRR in the 102nd Judicial
District Court for Bowie County, Texas, seeking a reduction of the
transportation rates required to be paid under two contracts (Southwestern
Electric Power Company v. Burlington Northern Railroad Company, No. D-102-CV-
91-0720). The plaintiff, Southwestern Electric Power Company ("SWEPCO"), was
challenging the contract rates for transportation of coal to its electric
generating facilities at Cason, Texas, and Flint Creek, Arkansas. SWEPCO
contended that productivity gains achieved by BNRR constituted unusual
economic conditions giving rise to a "gross inequity" because BNRR's costs of
providing service have been reduced over the contracts' terms. On August 2,
1994, plaintiff amended its complaint to further allege that BNRR had been
unjustly enriched by retaining differences between the rates actually charged
and those that SWEPCO alleged should have been charged. SWEPCO sought both
prospective rate relief and recovery of alleged past overcharges.
BNRR's primary contention was that both parties anticipated productivity
gains in the rail industry when negotiating the contracts and agreed that BNRR
would retain most of its productivity gains. BNRR further contended that there
was no agreement that transportation rates paid by SWEPCO would be based on
BNRR's cost of providing service.
On November 18, 1994, the jury rendered a verdict denying plaintiff's
request for prospective rate relief and that plaintiff take nothing on its
principal claims of "gross inequity." However, BNRR was assessed damages
approximating $56 million relating to plaintiff's alternative claim of unjust
enrichment. On January 20, 1995, the trial court rendered a judgment on the
verdict in an amount approximating $74 million, which included attorneys' fees
and interest. The judgment further awarded post-judgment interest at 10
percent per annum and issued declaratory orders pertaining to the two
contracts. BNRR filed its notice of appeal in the case on February 17, 1995
and posted a bond staying enforcement of the judgment in the Court of Appeals
for the Sixth Court of Appeals District of Texas, Texarkana, Texas (Burlington
Northern Railroad Company v. Southwestern Electric Power Company, No. 06-95-
00024-CV). SWEPCO has filed a notice of cross appeal and the case is awaiting
review. In the opinion of outside counsel, BNRR has a substantial likelihood
of prevailing on appeal, although no assurances can be given due to the
uncertainties inherent in litigation.
ENVIRONMENTAL PROCEEDINGS
By letter dated August 31, 1995, the Wisconsin Department of Justice, on
behalf of the State of Wisconsin, notified BNRR of its intent to file a
complaint by the end of September 1995 seeking penalties of $200 per day, a
penalty assessment, and an environmental assessment for BNRR's alleged
failure, for 964 days, to submit a remedial action plan for the Ashland
Railyard, Ashland, Wisconsin, by May 7, 1993, as established by the Wisconsin
Department of Natural Resources. BNRR undertook groundwater monitoring and
removed and disposed of all former railroad structures on the property, but
because of the existence of contamination from offsite and upgradient sources,
did not believe that it would be prudent or technically reasonable to
accomplish site remediation until all upgradient and contributing sources were
properly considered. The property had been leased for many years to another
railroad which operated the railyard facility. In State of Wisconsin v.
Burlington Northern Railroad Company and Soo Line Railroad Company (Case No.
96 CV 007), BNRR settled this matter for $106,580 pursuant to a stipulation
and order for judgment entered on January 22, 1996, by the Circuit Court for
Ashland County, Wisconsin. This matter is now considered terminated.
12
On December 18, 1995, the State of Illinois filed a Complaint captioned
People of the State of Illinois v. Burlington Northern Railroad Company,
Beazer East, Inc. and Koppers Industries, Inc. (PCB No. 96-132) before the
Illinois Pollution Control Board against BNRR, Beazer East, Inc. and Koppers
Industries, Inc. alleging violations of the Illinois Environmental Protection
Act with respect to a facility in Galesburg, Illinois. This facility is not
operated by BNRR. The proceeding may result in monetary sanctions in excess of
$100,000. BNRR and Beazer East, Inc. have made an offer to the State of
Illinois to settle this matter.
MERGER-RELATED LITIGATION
Numerous complaints were filed arising out of the Agreement and Plan of
Merger dated June 29, 1994, as amended, between BNI and SFP. On June 30, 1994,
shortly after announcement of the proposed BNI-SFP merger ("Merger"), two
purported stockholder class action suits were filed in the Court of Chancery
of the State of Delaware (Miller v. Santa Fe Pacific Corporation, C.A. No.
13587; Cosentino v. Santa Fe Pacific Corporation, C.A. No. 13588). On July 1,
1994, two additional purported stockholder class action suits were filed in
the Court of Chancery of the State of Delaware (Fielding v. Santa Fe Pacific
Corporation, C.A. No. 13591; Wadsworth v. Santa Fe Pacific Corporation, C.A.
No. 13597).
The actions named as defendants SFP, the individual members of the SFP Board
of Directors, and BNI. In general, the actions variously alleged that SFP's
directors breached their fiduciary duties to the stockholders by agreeing to
the proposed merger for allegedly "grossly inadequate" consideration in light
of recent operating results of SFP, recent trading prices of SFP's common
stock and other alleged factors, by allegedly failing to take all necessary
steps to ensure that stockholders will receive the maximum value realizable
for their shares (including allegedly failing to actively pursue the
acquisition of SFP by other companies or conducting an adequate "market
check"), and by allegedly failing to disclose to stockholders the full extent
of the future earnings potential of SFP, as well as the current value of its
assets. The Miller and Fielding cases further alleged that the proposed Merger
was unfairly timed and structured and, if consummated, would allegedly
unfairly deprive the stockholders of standing to pursue certain pending
stockholder derivative litigation. Plaintiffs also alleged that BNI was
responsible for aiding and abetting the alleged breach of fiduciary duty
committed by the SFP Board. The actions sought certification of a class action
on behalf of SFP's stockholders. In addition, the actions sought injunctive
relief against consummation of the Merger and, in the event that the Merger
was consummated, the rescission of the Merger, an award of compensatory or
rescissory damages and other damages, including court costs and attorneys'
fees, an accounting by defendants of all profits realized by them as a result
of the Merger, and various other forms of relief.
On October 6, 1994, shortly after Union Pacific Corporation ("UPC") issued a
press release in which it announced a proposal for UPC to acquire SFP (the
"UPC Proposal"), plaintiffs in the four lawsuits described above filed in the
Court of Chancery of the State of Delaware a Consolidated Amended Complaint
(Miller v. Santa Fe Pacific Corporation, C.A. No. 13587). In their
Consolidated Amended Complaint, plaintiffs repeated the allegations contained
in their earlier lawsuits and further alleged that, in light of the UPC
Proposal, SFP's directors had breached their fiduciary duties by failing to
fully inform themselves about and to adequately explore available alternatives
to the merger with BNI, including the alternative of a merger transaction with
UPC, and by failing to fully inform themselves about the value of SFP. The
Consolidated Amended Complaint sought the same relief sought in plaintiffs'
earlier lawsuits and, in addition, requested that SFP's directors be ordered
to explore alternative transactions and to negotiate in good faith with all
interested persons, including UPC.
Also, on October 6, 1994, five additional purported stockholder class action
suits relating to SFP's proposed participation in the Merger with BNI were
filed in the Court of Chancery of the State of Delaware (Weiss v. Santa Fe
Pacific Corporation, C.A. No. 13779; Lifshitz v. Krebs, C.A. No. 13780; Stein
v. Santa Fe Pacific Corporation, C.A. No. 13782; Lewis v. Santa Fe Pacific
Corporation, C.A. No. 13783; Abramson v. Lindig, C.A. No. 13784). On October
7, 1994, three more purported stockholder class action suits relating to SFP's
proposed participation in the Merger with BNI were filed in the Court of
Chancery of the State of Delaware (Graulich v. Santa Fe Pacific Corporation,
C.A. No. 13786; Anderson v. Santa Fe Pacific
13
Corporation, C.A. No. 13787; Green v. Santa Fe Pacific Corporation, C.A. No.
13788). All of these lawsuits named as defendants SFP and the individual
members of the SFP Board of Directors; the Lifshitz case further named BNI as
a defendant. In general, these actions variously alleged that, in light of
SFP's recent operating results and the UPC Proposal, SFP's directors breached
their fiduciary duties to stockholders by purportedly not taking the necessary
steps to ensure that SFP's stockholders would receive "maximum value" for
their shares of SFP stock, including purportedly refusing to negotiate with
UPC or to "seriously consider" the UPC Proposal and failing to announce any
active auction or open bidding procedures. The actions generally sought relief
that is materially identical to the relief sought in the Miller case, and in
addition sought entry of an order requiring SFP's directors to immediately
undertake an evaluation of SFP's worth as a merger/acquisition candidate and
to establish a process designed to obtain the highest possible price for SFP,
including taking steps to "effectively expose" SFP to the marketplace in an
effort to create an "active auction" in SFP. The Weiss case further sought
entry of an order enjoining SFP's directors from implementing any poison pill
or other device designed to thwart the UPC Proposal or any other person's
proposal to acquire SFP.
The Anderson lawsuit was subsequently withdrawn. On October 14, 1994, the
Chancery Court entered an order consolidating the remaining 11 purported
stockholder class action suits under the heading In Re Santa Fe Pacific
Corporation Shareholder Litigation, C.A. No. 13587 (the "Shareholder
Litigation").
On October 26, 1994, BNI filed a Motion to Dismiss the Consolidated and
Amended Complaint.
On March 6, 1995, plaintiffs in the Shareholder Litigation filed a Revised
Second Consolidated and Amended Complaint, which superseded their previously
filed complaints. The Revised Second Consolidated and Amended Complaint
generally repeated many of the same allegations, and requested relief similar
to that requested in plaintiffs' earlier complaints. In addition, the Revised
Second Consolidated and Amended Complaint alleged that SFP's directors
breached their fiduciary duties: by proceeding with and completing the joint
SFP-BNI Tender Offer; by approving and implementing the Shareholder Rights
Plan, which purportedly resulted in a "premature ending" of the "bidding
process" by allegedly deterring and defeating UPC's acquisition overtures,
exempting BNI from its provisions, and "coercing" SFP stockholders to vote in
favor of the Merger; by approving the termination fee and expense
reimbursement provisions of the Merger Agreement by authorizing the stock
repurchase provisions of the Merger Agreement, which allegedly were designed
to "lock-up" the Merger by providing stockholders with an "illusory promise"
that the Merger Agreement exchange ratio would increase, while reserving SFP's
right not to repurchase such stock; and by purportedly failing to disclose all
material facts necessary for SFP's stockholders to evaluate in an informed
manner and vote on the Merger, including purportedly failing to fully disclose
the risks that the ICC would not approve the Merger and purportedly failing to
fully disclose SFP's intentions with respect to the repurchase of SFP stock,
as permitted by the Merger Agreement, as well as whether there will be a fair
opportunity for all SFP stockholders to "participate" in any SFP stock
repurchases, and on what basis. As additional relief to that requested in the
earlier complaints, plaintiffs requested injunctive and other relief:
enjoining consummation of the Merger; ordering SFP, SFP's directors, and BNI
to make unspecified supplemental disclosures to stockholders; requiring SFP to
conduct a new vote on the Merger subsequent to such disclosures; enjoining SFP
from improperly or discriminatorily implementing the Shareholder Rights Plan
or any other "defensive" tactic; ordering SFP's directors to take all
appropriate steps to enhance SFP's value and attractiveness as a merger or
acquisition candidate, including "effectively exposing" SFP to the marketplace
by means of an active auction on a "level playing field"; and declaring the
termination fee and expense reimbursement provisions of the Merger Agreement
invalid and unenforceable.
On March 13, 1995, SFP and SFP's directors filed a motion to dismiss the
Shareholder Litigation on the grounds that the Plaintiffs failed to state a
cause of action upon which relief may be granted. BNI also filed a motion to
dismiss the Revised Second Consolidated and Amended Complaint. On May 31,
1995, the Delaware Chancery Court rendered its decision granting the motion to
dismiss that was filed by SFP and SFP's directors on March 13, 1995 and the
motion to dismiss filed by BNI. The plaintiffs appealed the dismissal to the
Delaware Supreme Court.
14
On November 22, 1995, the Delaware Supreme Court issued an opinion that
affirmed in part and reversed in part the May 31, 1995 decision of the
Delaware Chancery Court. The Delaware Supreme Court reversed the Chancery
Court's dismissal of plaintiffs' claims that, in taking the alleged
"defensive" actions identified in the Revised Second Consolidated and Amended
Complaint, including approval and implementation of the Shareholder Rights
Plan, SFP's directors violated their fiduciary duties to stockholders. The
Delaware Supreme Court affirmed the Chancery Court's dismissal of all other
claims asserted by plaintiffs in the litigation, including all claims against
BNI.
On December 11, 1995, the SFP defendants filed with the Delaware Chancery
Court a motion for summary judgment against plaintiffs' remaining claims in
the Shareholder Litigation, which motion is pending. On December 29, 1995, the
SFP defendants filed their Answer to plaintiffs' Revised Second Consolidated
and Amended Complaint.
BNSF believes this lawsuit is meritless and continues to oppose it
vigorously.
ICC MERGER CASE
On October 13, 1994, BNI, BNRR, SFP, and ATSF ("Applicants") filed a
railroad merger and control application with the ICC, Finance Docket No.
32549, Burlington Northern Inc. and Burlington Northern Railroad Company--
Control and Merger--Santa Fe Pacific Corporation and The Atchison, Topeka and
Santa Fe Railway Company. Applicants sought an order, pursuant to 49 U.S.C.
(S)(S) 11343-11347 (1988), approving and authorizing BNI's acquisition of
control of and merger with SFP, the resulting common control of BNRR and ATSF
by BNSF, the consolidation of BNRR and ATSF by BNSF, the consolidation of BNRR
and ATSF operations, and the merger of BNRR and ATSF. The ICC approved the
application in its written decision served August 23, 1995, which decision was
effective as of September 22, 1995. Several petitions for reconsideration or
to reopen the ICC's decision were filed by parties to the proceeding and all
of these have been denied. Additionally, eight parties to the proceeding filed
petitions for review of the ICC's approval decision with the United States
Court of Appeals for the District of Columbia, which petitions are now pending
before that court. Each of the petitions for reconsideration or to reopen and
for review challenge various aspects of the ICC's decision, including the
extent of conditions imposed on its approval. None of these petitions is
expected to affect materially the benefits to be realized by the acquisition
of common control of BNRR and ATSF by BNSF.
CROW RESERVATION CROSSING ACCIDENT CASE
At approximately 10:15 a.m. on November 22, 1993, there was an accident at a
BNRR railroad crossing located within the boundaries of the Crow reservation
in which three members of the Crow tribe were killed. The crossing, which is
located on a rural gravel road just south of Lodge Grass, Montana, was
protected by crossbucks and advance warning signs.
A lawsuit was filed in the Crow Tribal Court (Estates of Red Wolf, Red Horse
and Bull Tail v. Burlington Northern Railroad Company, Case No. 94-31) on
behalf of the estates of the driver and the two passengers. One of the
passenger cases was severed and has yet to go to trial. The other two cases
proceeded to trial in January 1996 and, on February 6, 1996, a Crow Tribal
Court jury rendered a verdict against BNRR for compensatory damages in the
total amount of $250 million.
BNRR has filed an appeal to the Crow Court of Appeals in and for the Crow
Indian Reservation, where it will seek, among other things, to have the case
dismissed on the basis that the Crow Tribal Court lacks subject matter
jurisdiction over these claims. If the appellate court fails to grant relief
to BNRR, BNRR will pursue its defenses in federal court. On February 26, 1996,
the Federal District Court for the District of Montana entered an order
enjoining any action by plaintiffs to enforce the judgment pending appeal
through the tribal court and federal court systems. BNRR was required to post
a $5 million bond with the federal court.
15
OTHER CLAIMS
BNSF and its subsidiaries also are parties to a number of other 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. For a description of certain
claims against SFP Pipelines and the Partnership, see the sections entitled
"East Line Civil Litigation and FERC Proceeding," "East Line Civil
Litigation," and "FERC Proceeding" under Item 3, Legal Proceedings, of the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1995,
which sections are hereby incorporated by reference. While the final outcome
of these and other legal actions cannot be predicted with certainty,
considering among other things the meritorious legal defenses available, it is
the opinion of BNSF 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.
Reference is made to Note 6 to the consolidated financial statements on
pages 29 and 30 of BNSF's 1995 Annual Report to Shareholders for information
concerning certain pending administrative appeals between BNI and SFP and the
Internal Revenue Service, which information is hereby incorporated by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted by BNSF to a vote of its securities holders during
the fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
Listed below are the names, ages, and positions of all executive officers of
BNSF (excluding one executive officer who is also a director of BNSF) and
their business experience during the past five years. Executive officers hold
office until their successors are elected or appointed, or until their earlier
death, resignation, or removal.
JOHN Q. ANDERSON, 44
Senior Vice President-Coal, Metals and Minerals Business Group since
February 1996. Prior to that, Senior Vice President-Coal Business Group since
September 1995, Executive Vice President, Coal Business Group of BNRR since
June 1994, and Executive Vice President, Marketing and Sales of BNRR since
February 1990.
DOUGLAS J. BABB, 43
Senior Vice President and Chief of Staff since September 1995. Prior to
that, Vice President and General Counsel of BNRR from December 1986.
JAMES B. DAGNON, 56
Senior Vice President-Employee Relations since September 1995. Prior to
that, Executive Vice President, Employee Relations of BNI since January 1992,
and Senior Vice President, Employee Relations of BNI since August 1991.
THOMAS N. HUND, 42
Vice President and Controller since September 1995. Prior to that, Vice
President and Controller of SFP since July 1990.
16
DONALD G. MCINNES, 55
Senior Vice President and Chief Operations Officer since September 1995.
Prior to that, Senior Vice President and Chief Operating Officer of ATSF since
January 1994, Senior Vice President-Intermodal Business Unit of ATSF since
January 1992, and Vice President-Intermodal of ATSF since July 1989.
JEFFREY R. MORELAND, 51
Senior Vice President-Law and General Counsel since September 1995. Prior to
that, Vice President-Law and General Counsel of SFP from October 1994, and
Vice President-Law and General Counsel of ATSF from June 1989.
CHARLES L. SCHULTZ, 48
Senior Vice President-Intermodal and Automotive Business Unit since February
1996. Prior to that, Vice President-Intermodal from September 1995, Vice
President-Intermodal of ATSF from January 1994, Vice President-Management
Services of ATSF from June 1991, and Vice President-Information Services of
ATSF from July 1989.
DENIS E. SPRINGER, 50
Senior Vice President and Chief Financial Officer since September 1995.
Prior to that, Senior Vice President and Chief Financial Officer of SFP from
October 1993, Senior Vice President, Treasurer and Chief Financial Officer of
SFP from January 1992, and Vice President, Treasurer and Chief Financial
Officer of SFP from January 1991.
GREGORY T. SWIENTON, 46
Senior Vice President-Consumer and Industrial Business Unit since February
1996. Prior to that, Senior Vice President-Industrial Business Unit from
September 1995, Executive Vice President, Intermodal Business of BNRR from
June 1994, and Executive Director-Europe and Africa (Brussels) of DHL
Worldwide Express (international freight company) from January 1991.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information as to the principal markets on which the common stock of BNSF is
traded, the high and low sales prices of such stock for the two years ending
December 31, 1995 (or the common stock of BNI prior to September 22, 1995) and
the frequency and amount of dividends declared on such stock during such
period, is set forth below the heading "Quarterly Financial Data-Unaudited" on
page 39 of BNSF's 1995 Annual Report to Shareholders and is hereby
incorporated by reference. The approximate number of record holders of the
common stock at January 31, 1996 was 85,000.
ITEM 6. SELECTED FINANCIAL DATA
There is disclosed on page 1 of BNSF's 1995 Annual Report to Shareholders
selected financial data of BNSF for each of the last five fiscal years. Such
data with respect to the following topics are incorporated by reference:
Revenues; Operating income (loss); Income (loss) before extraordinary item and
cumulative effect of change in accounting method; Accounting
change/Extraordinary item; Net income (loss); Primary earnings (loss) per
share; Fully diluted earnings (loss) per share; Dividends declared per common
share; Total assets; Long-term debt, including current portion and commercial
paper; and Redeemable preferred stock.
17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations appearing on pages 13 through 20 of BNSF's 1995 Annual Report to
Shareholders is hereby incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of BNSF and subsidiary companies,
together with the report thereon of Coopers & Lybrand L.L.P. dated February
15, 1996, appearing on pages 21 through 39 of BNSF's 1995 Annual Report to
Shareholders, are hereby incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of BNSF is provided on pages 2 through
5 of BNSF's proxy statement dated March 5, 1996, under the heading "Name, Age
and Business Experience of Nominees for Director" and the information under
that heading is hereby incorporated by reference.
Information concerning the executive officers of BNSF (excluding one
executive officer who is also a director of BNSF) is included in Part I of
this Report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning the compensation of directors and executive officers
of BNSF is provided on pages 6 through 7 under the heading "Directors'
Compensation" and pages 26 through 33 under the heading "EXECUTIVE
COMPENSATION AND OTHER INFORMATION" in BNSF's proxy statement dated March 5,
1996, and the information under those headings is hereby incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning the ownership of BNSF equity securities by certain
beneficial owners and management is provided on pages 8 through 10 under the
headings "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "SECURITY
OWNERSHIP OF MANAGEMENT" of BNSF's proxy statement dated March 5, 1996, and is
hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
provided on page 7 under the heading "Certain Relationships and Related
Transactions" of BNSF's proxy statement dated March 5, 1996, and the
information under that heading is hereby incorporated by reference.
18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
PAGE
--------
1. Consolidated Financial Statements:
Report of Independent Accountants..................................... [21*]
Consolidated Statements of Income for the three years ended December
31, 1995............................................................. [22*]
Consolidated Balance Sheets at December 31, 1995 and 1994............. [23*]
Consolidated Statements of Cash Flows for the three years ended
December 31, 1995.................................................... [24*]
Consolidated Statements of Changes In Stockholders' Equity for the
three years ended December 31, 1995.................................. [25*]
Notes to Consolidated Financial Statements............................ [26-39*]
- --------
(*Incorporated by reference from the indicated pages of BNSF's 1995 Annual
Report to Shareholders.)
2. Consolidated Financial Statement Schedules for the three years ended
December 31, 1995:
Report of Independent Accountants......................................... F-1
Schedule II--Valuation and Qualifying Accounts............................ F-2
Schedules other than that listed above are omitted because they are not
required or applicable, or the required information is included in the
consolidated financial statements or related notes.
3. Exhibits:
See Index to Exhibits on pages E-1-E-4 for a description of the exhibits
filed as a part of this Report.
(b) Reports on Form 8-K
BNSF filed the following Reports on Form 8-K during the quarter ended
December 31, 1995:
Registrant filed Amendment No. 1 on Form 8-K/A dated November 13, 1995 to
Current Report on Form 8-K (Date of earliest event reported: September 22,
1995) which included under Item 7.B., Financial Statements, Pro Forma
Financial Information and Exhibits, unaudited pro forma financial
information reflecting the business combination of BNI and SFP effective
September 22, 1995.
Registrant filed a Current Report on Form 8-K (Date of earliest event
reported: November 21, 1995) which referenced under Item 5, Other Events,
the establishment by the registrant on November 21, 1995 of two new credit
facilities allowing borrowings of $2.5 billion and a commercial paper
program.
Registrant filed a Current Report on Form 8-K (Date of earliest event
reported: November 30, 1995) which referenced under Item 5, Other Events,
and incorporated by reference a pro forma computation of ratio of earnings
to fixed charges for the nine months ended September 30, 1995 and the year
ended December 31, 1994, to reflect the business combination of BNI and SFP
effective September 22, 1995.
19
SIGNATURES
BURLINGTON NORTHERN SANTA FE CORPORATION, PURSUANT TO THE REQUIREMENTS OF
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, HAS DULY CAUSED
THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED.
BURLINGTON NORTHERN SANTA FE
CORPORATION
/s/ Denis E. Springer
By: _________________________________
Denis E. Springer
Senior Vice President and
Chief Financial Officer
Dated: March 29, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF BURLINGTON
NORTHERN SANTA FE CORPORATION AND IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE
--------- -----
/s/ Robert D. Krebs President and Chief Executive Officer
___________________________________________ (Principal Executive Officer), and
Robert D. Krebs Director
/s/ Denis E. Springer Senior Vice President and Chief Financial
___________________________________________ Officer (Principal Financial Officer)
Denis E. Springer
/s/ Thomas N. Hund Vice President and Controller
___________________________________________ (Principal Accounting Officer)
Thomas N. Hund
Joseph F. Alibrandi* Director
___________________________________________
Joseph F. Alibrandi
Jack S. Blanton* Director
___________________________________________
Jack S. Blanton
John J. Burns, Jr.* Director
___________________________________________
John J. Burns, Jr.
Daniel P. Davison* Chairman of the Board, Director
___________________________________________
Daniel P. Davison
George Deukmejian* Director
___________________________________________
George Deukmejian
S-1
SIGNATURE TITLE
--------- -----
Daniel J. Evans* Director
___________________________________________
Daniel J. Evans
Bill M. Lindig* Director
___________________________________________
Bill M. Lindig
Ben F. Love* Director
___________________________________________
Ben F. Love
Roy S. Roberts* Director
___________________________________________
Roy S. Roberts
Marc J. Shapiro* Director
___________________________________________
Marc J. Shapiro
Arnold R. Weber* Director
___________________________________________
Arnold R. Weber
Robert H. West* Director
___________________________________________
Robert H. West
J. Steven Whisler* Director
___________________________________________
J. Steven Whisler
Edward E. Whitacre, Jr.* Director
___________________________________________
Edward E. Whitacre, Jr.
Ronald B. Woodard* Director
___________________________________________
Ronald B. Woodard
Michael B. Yanney* Director
___________________________________________
Michael B. Yanney
/s/ Jeffrey R. Moreland
*By _________________________________
Jeffrey R. Moreland
Senior Vice President-Law and
General Counsel
Attorney in Fact
Dated: March 29, 1996
S-2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Burlington Northern Santa Fe Corporation and Subsidiaries
Our report on the consolidated financial statements of Burlington Northern
Santa Fe Corporation and Subsidiaries has been incorporated by reference in
this Form 10-K from page 21 of the 1995 Annual Report to Shareholders of
Burlington Northern Santa Fe Corporation. In connection with our audits of
such consolidated financial statements, we have also audited the related
financial statement schedule listed in the index of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information required
to be included therein.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
February 15, 1996
F-1
SCHEDULE II
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN MILLIONS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- --------- --------- -------- ---------- --------
BALANCE
BALANCE ADDITION AT END
AT ADDITIONS OF SFP OF
BEGINNING CHARGED ACCRUAL DEDUCTIONS PERIOD
DESCRIPTION OF PERIOD TO INCOME (1) (2) (3)
----------- --------- --------- -------- ---------- --------
December 31, 1995
Casualty and environmental
reserves..................... $637 $164 $320 $205 $916
==== ==== ==== ==== ====
December 31, 1994
Casualty and environmental
reserves..................... $689 $183 $-- $235 $637
==== ==== ==== ==== ====
December 31, 1993
Casualty and environmental
reserves..................... $713 $227 $-- $251 $689
==== ==== ==== ==== ====
- --------
(1) Represents SFP's recorded liability at date of Merger
(2) Principally represents cash payments
(3) Classified in the consolidated balance sheet as follows:
1995 1994 1993
---- ---- ----
Casualty and environmental reserves (current liabilities). $290 $221 $263
Casualty and environmental reserves (noncurrent
liabilities)............................................. 626 416 426
---- ---- ----
$916 $637 $689
==== ==== ====
F-2
BURLINGTON NORTHERN SANTA FE CORPORATION
INDEX OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2 Agreement and Plan of Merger dated as of June 29, 1994 between
Burlington Northern Inc. and Santa Fe Pacific Corporation as amended
by Amendments 1 and 2 thereto, together with Amendments 3 and 4
thereto. Schedules have been omitted. Schedules will be furnished
supplementally to the Securities and Exchange Commission upon request.
Incorporated by reference to Exhibit 2.1 to BNSF's Report on Form 8-K
(Date of earliest event reported: September 22, 1995).
3.1 Amended and Restated Certificate of Incorporation of BNSF (amended as
of September 11, 1995). Incorporated by reference to Exhibit 3.1 to
BNSF's Report on Form 10-Q for the quarter ended September 30, 1995.
3.2 By-Laws of BNSF (amended as of January 18, 1996).
4.1 Five-Year Revolving Credit Agreement dated as of November 21, 1995,
between Burlington Northern Santa Fe Corporation and Chemical
Securities Inc. and J.P. Morgan Securities as Co-arrangers and a
consortium of lenders. Incorporated by reference to Exhibit 4.1 to
BNSF's Current Report on Form 8-K (Date of earliest event reported:
November 21, 1995).
4.2 364-Day Revolving Credit Agreement dated as of November 21, 1995,
between Burlington Northern Santa Fe Corporation and Chemical
Securities Inc. and J.P. Morgan Securities Inc. and a consortium of
lenders. Incorporated by reference to Exhibit 4.2 to BNSF's Current
Report on Form 8-K (Date of earliest event reported: November 21,
1995).
BNSF is not filing any other instruments evidencing indebtedness
because the total amount of securities authorized under any single
such instrument does not exceed 10% of BNSF's total assets. BNSF will
furnish copies of any material instruments upon request of the
Securities and Exchange Commission.
10.1* Burlington Northern Santa Fe Corporation 1982 Stock Option Incentive
Plan. Incorporated by reference to BNSF's Registration Statement on
Form S-8 (File No. 33-62841).
10.2* Burlington Northern Santa Fe Corporation 1987 Stock Option Incentive
Plan. Incorporated by reference to BNSF's Registration Statement on
Form S-8 (File No. 33-62833).
10.3* Burlington Northern Santa Fe Corporation Incentive Compensation Plan.
Incorporated by reference to BNSF's Registration Statement on Form S-8
(File No. 33-62835).
10.4* Burlington Northern Inc. Senior Executive Survivor Benefit Plan as of
April 1, 1986. Incorporated by reference to Amendment No. 1 to BNI's
Report on Form 10-K for the fiscal year ended December 31, 1987.
10.5* Burlington Northern Inc. Deferred Compensation Plan as amended
effective January 1, 1991.
10.6* Burlington Northern Inc. Performance Share Unit Plan (1981) as of
January 1, 1988. Incorporated by reference to Amendment No. 1 to BNI's
Report on Form 10-K for the fiscal year ended December 31, 1987.
10.7* Burlington Northern Inc. 1987 Performance Share Unit Plan as of
January 1, 1988. Incorporated by reference to Amendment No. 1 to BNI's
Report on Form 10-K for the fiscal year ended December 31, 1987.
10.8* Burlington Northern Inc. Supplemental Benefits Plan (as amended and
restated effective September 21, 1995).
- --------
*Management contract or compensatory plan or arrangement.
E-1
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.9* 1989 Burlington Northern Inc. Restricted Stock Incentive Plan.
Incorporated by reference to BNI's Report on Form 10-K for the fiscal
year ended December 31, 1990.
10.10* Burlington Northern Santa Fe Corporation 1990 Directors Stock Option
Plan. Incorporated by reference to BNSF's Registration Statement on
Form S-8 (File No. 33-62825).
10.11* Burlington Northern Santa Fe Incentive Bonus Stock Program.
10.12* Burlington Northern Santa Fe Corporation 1992 Stock Option Incentive
Plan. Incorporated by reference to BNSF's Registration Statement on
Form S-8 (File No. 33-62839).
10.13* Burlington Northern Santa Fe Corporation 1993 Employee Stock Purchase
Plan. Incorporated by reference to BNSF's Registration Statement on
Form S-8 (File No. 33-62827).
10.14* Employment Agreement dated as of December 20, 1988 by and between
Burlington Northern Inc. and Gerald Grinstein. Incorporated by
reference to Amendment No. 1 to BNI's Report on Form 10-K for the
fiscal year ended December 31, 1988.
10.15* Employment Agreement dated as of April 27, 1992 by and between
Burlington Northern Inc. and Gerald Grinstein. Incorporated by
reference to Burlington Northern Inc.'s Report on Form 10-K for the
fiscal year ended December 31, 1992.
10.16* Employment Agreement dated as of August 21, 1991 by and between
Burlington Northern Inc. and David C. Anderson. Incorporated by
reference to Burlington Northern Inc.'s Report on Form 10-K for the
fiscal year ended December 31, 1991.
10.17* Employment Agreement dated as of April 18, 1994 by and between
Burlington Northern Railroad Company and Ronald A. Rittenmeyer.
Incorporated by reference to Exhibit 10.24 to Burlington Northern
Inc.'s Report on Form 10-K for the year ended December 31, 1994.
10.18* Employment Agreement by and between Burlington Northern Inc. and
Gregory T. Swienton. Incorporated by reference to Exhibit 10.23 to
BNI's Report on Form 10-K for the fiscal year ended December 31, 1994.
10.19* Employment Separation Agreement between Burlington Northern Inc. and
Gerald Grinstein dated as of December 15, 1995 and Consulting
Agreement.
10.20* Burlington Northern Inc. Nonqualified 401(k) Restoration Plan.
10.21* Burlington Northern Inc. Form of Severance Agreement and amendments
through September 18, 1995 (applicable to 25 persons as of March 28,
1996).
10.22* Burlington Northern Inc. Director's Charitable Award Program.
10.23* Burlington Northern Santa Fe Salary Exchange Option Program.
10.24* Santa Fe Pacific Corporation Supplemental Retirement Plan
("Supplemental Plan"). Incorporated by reference to Exhibit 10(d) to
SFP's Report on Form 10-K for the fiscal year ended December 31, 1984.
Supplemental Plan as amended October 1, 1989, and Amendment to
Supplemental Plan dated February 27, 1990, are incorporated by
reference to Exhibit 10(d) to SFP's Report on Form 10-K for the fiscal
year ended December 31, 1989. Amendment to Supplemental Plan dated
March 22, 1994, and effective January 1, 1994.
- --------
*Management contract or compensatory plan or arrangement.
E-2
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.25* SFP Form of Severance Agreement dated November 2, 1987 (applicable to
23 persons as of March 25, 1996), as adopted in May 1987 and amended
in October 1987. Incorporated by reference to Exhibit 10(j) to SFP's
Report on Form 10-K for the fiscal year ended December 31, 1987.
Amendment to Form of Severance Agreement dated July 24, 1990 is
incorporated by reference to SFP's Report on Form 10-Q for the Quarter
ended June 30, 1990. Amendment to Form of Severance Agreement adopted
January 25, 1994 is incorporated by reference to Exhibit 10.1 to SFP's
Report on Form 10-Q for the quarter ended June 30, 1994. Amendment to
Form of Severance Agreement dated March 28, 1995 is incorporated by
reference to Exhibit 10.5 to SFP's Report on Form 10-K for the fiscal
year ended December 31, 1994.
10.26* SFP Supplemental Deferred Compensation Plan. Incorporated by reference
to Exhibit 10(l) to SFP's Report on Form 10-K for the fiscal year
ended December 31, 1987.
10.27* Burlington Northern Santa Fe Directors' Retirement Plan.
10.28* Benefits Protection Trust Agreement dated as of January 22, 1996 by
and between BNSF and Bankers Trust Company.
10.29* Retirement Benefit Agreement dated February 26, 1992 between SFP and
R. D. Krebs. Incorporated by reference to SFP's Report on Form 10-K
for the fiscal year ended December 31, 1991.
10.30* Amended and Restated Trust Agreement dated as of April 1, 1994 by and
between SFP and The Bank of New York.
10.31* Trust Agreement dated as of July 26, 1994 by and between SFP and The
Bank of New York.
10.32* The Atchison, Topeka and Santa Fe Railway Company Incentive
Compensation Plan. Incorporated by reference to Exhibit 10(n) to SFP's
Report on Form 10-K for the fiscal year ended December 31, 1991.
10.33* Burlington Northern Santa Fe Long Term Incentive Stock Plan.
Incorporated by reference to BNSF's Registration Statement on Form S-8
(File No. 33-63247).
10.34* Santa Fe Pacific Corporation Supplemental Retirement and Savings Plan.
Incorporated by reference to Exhibit 10(s) to SFP's Report on Form 10-
K for the fiscal year ended December 31, 1993.
10.35* Burlington Northern Santa Fe Incentive Stock Compensation Plan.
Incorporated by reference to BNSF's Registration Statement on Form S-8
(File No. 33-63253).
10.36* Burlington Northern Santa Fe Non-Employee Directors' Stock Plan.
Incorporated by reference to Appendix A to BNSF's Proxy Statement
dated March 5, 1996.
10.37* Burlington Northern Santa Fe 1996 Stock Incentive Plan. Incorporated
by reference to Appendix B to BNSF's Proxy Statement dated March 5,
1996.
10.38* Burlington Northern Santa Fe Deferred Compensation Plan for Directors.
11 Computation of Earnings Per Common Share
12 Computation of Ratio of Earnings to Fixed Charges
13 1995 Annual Report to Shareholders of BNSF (Consolidated Financial
Highlights on page 1, and pages 13-39, only.)
- --------
*Management contract or compensatory plan or arrangement.
E-3
EXHIBIT
NUMBER DESCRIPTION
------- -----------
18 Letter Regarding Change in Accounting Principles
21 Subsidiaries of BNSF.
23 Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney.
27 Financial Data Schedule
99 Santa Fe Pacific Pipeline Partners, L.P. Report on Form 10-K for the
fiscal year ended December 31, 1995 (sections in Item 3, Legal
Proceedings, under the headings "East Line Litigation and FERC
Proceeding," "FERC Proceeding," and "East Line Civil Litigation,"
only).
E-4