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UNITED STATES
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
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER: 1-11535
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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.)
2650 LOU MENK DRIVE
SECOND FLOOR
FORT WORTH, TEXAS 76131-2830
(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
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Common Stock, $0.01 par value New York Stock Exchange
Chicago Stock Exchange
Pacific 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. [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $15.5 billion on February 28, 1998. 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, 156,807,093 shares outstanding as of February
28, 1998.
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, 1997..................................... PARTS I, II, AND IV
Proxy Statement dated March 9, 1998.................... PART III
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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. In order to effect the combination, BNSF was
formed to act as the parent holding company of BNI and SFP.
On October 13, 1994, BNI, Burlington Northern Railroad Company ("BNRR"),
SFP, and The Atchison, Topeka and Santa Fe Railway Company ("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.
On December 30, 1996, BNI merged with and into SFP. On December 31, 1996,
ATSF merged with and into BNRR, and BNRR changed its name to The Burlington
Northern and Santa Fe Railway Company ("BNSF Railway"). On January 2, 1998,
SFP merged with and into BNSF Railway.
Through March 6, 1998, BNSF also had an equity interest in Santa Fe Pacific
Pipeline Partners, L.P. and its operating subsidiary, which operated a 3,300-
mile refined petroleum products pipeline system in six western and
southwestern states, substantially all of which interest has now been sold.
See "PIPELINE INVESTMENT."
Through its subsidiaries, BNSF is engaged primarily in the rail
transportation business. At December 31, 1997, BNSF and its subsidiaries had
approximately 44,500 employees.
RAIL
The rail operations of BNSF Railway, BNSF's principal operating subsidiary,
comprise one of the largest railroad systems in the United States. BNSF
Railway's business and operations are described below.
TRACK CONFIGURATION
BNSF Railway operates over a railroad system consisting of, at December 31,
1997, approximately 34,000 route miles of track (excluding, among other
things, second main track), approximately 25,400 miles of which are owned
route miles, including easements, through 28 states and two Canadian
provinces. Approximately 7,800 route miles of BNSF Railway's system consist of
trackage rights which permit BNSF Railway to operate its trains with its crews
over another railroad's tracks.
As of December 31, 1997, the total BNSF Railway system--including first,
second, third and fourth main tracks, yard tracks, and sidings--consisted of
approximately 51,000 operated miles of track, all of which were owned by or
held under easement by BNSF Railway except for approximately 8,600 miles
operated under trackage rights agreements with other parties. At December 31,
1997, approximately 28,000 miles of BNSF Railway's track consisted of 112-
pound per yard or heavier rail, including approximately 18,700 track miles of
131-pound per yard or heavier rail.
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EQUIPMENT CONFIGURATION
BNSF Railway owned or had under non-cancelable leases exceeding one year the
following units of railroad rolling stock (1995 represents pro forma BNSF
Railway):
AT DECEMBER 31,
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1997 1996 1995
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Diesel Locomotives................................... 4,697 4,434 4,277
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Freight Cars:
Box--general purpose............................... 1,042 1,082 1,204
Box--specially equipped............................ 10,533 10,719 10,985
Open Hopper........................................ 10,617 10,430 10,497
Covered Hopper..................................... 43,145 44,112 44,840
Gondola............................................ 11,845 11,714 11,467
Refrigerator....................................... 6,606 6,817 7,216
Autorack........................................... 3,588 3,597 3,600
Flat............................................... 5,454 5,508 5,774
Tank............................................... 491 493 505
Caboose............................................ 389 451 485
Other.............................................. 732 732 734
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Total Freight Cars................................. 94,442 95,655 97,307
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Domestic Containers.................................. 15,513 15,595 16,230
Trailers............................................. 721 821 834
Domestic Chassis..................................... 5,152 5,273 5,274
Company Service Cars................................. 5,196 6,140 6,084
Commuter Passenger Cars.............................. 141 141 141
In addition to the containers, trailers, and chassis shown above, BNSF
Railway had under short-term leases 11,603 containers, 2,157 trailers, and
18,262 chassis, at December 31, 1997. In addition to the owned and leased
locomotives identified above, BNSF Railway operated 196 freight locomotives
under power-purchase agreements as of December 31, 1997. The average age from
date of manufacture of the locomotive fleet at December 31, 1997, was 10.45
years; the average age from date of manufacture or remanufacture of the
freight car fleet at December 31, 1997, was 19.93 years. These averages are
not weighted to reflect the greater capacities of the newer equipment.
CAPITAL EXPENDITURES AND MAINTENANCE
BNSF Railway capital expenditures for the periods indicated were as follows
(1995 represents pro forma BNSF Railway):
YEAR ENDED DECEMBER 31,
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1997 1996 1995
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(IN MILLIONS)
Maintenance of Way
Rail........................................... $ 286 $ 188 $ 164
Ties........................................... 230 191 163
Surfacing...................................... 124 130 96
Other.......................................... 334 345 215
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Total Maintenance of Way..................... 974 854 638
Equipment........................................ 572 544 284
Terminal and Line Expansion...................... 428 447 335
Merger Related and Other......................... 208 437 98
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Total Capital Expenditures....................... $ 2,182 $ 2,282 $ 1,355
Less Non-Cash Capital Expenditures(1)............ -- 48 140
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Net Cash Capital Expenditures.................... $ 2,182 $ 2,234 $ 1,215
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(1) Consists primarily of directly financed equipment acquisitions.
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The above table does not include expenditures for equipment financed through
operating leases (principally, locomotives and rolling stock). BNSF expects
1998 capital expenditures for BNSF Railway to be slightly over $2.0 billion.
Approximately $1.1 billion of these expenditures will be for maintaining
BNSF's track, signals, bridges and tunnels, and to overhaul locomotives and
freight cars. The remainder will be spent on terminal and line expansions,
information system projects and an additional 180 locomotives. In addition to
these capital expenditures on new locomotives, BNSF Railway will acquire 200
new locomotives under long-term leases in 1998.
As of December 31, 1997, General Electric Company, the Electro-Motive
Division of General Motors Corporation and Boise Locomotive Corporation
performed locomotive maintenance and overhauls for BNSF Railway under various
maintenance agreements that covered approximately 2,000 locomotives. These
agreements require the work to be done at BNSF Railway's facilities using BNSF
Railway employees.
The majority of maintenance of way expenditures for track have been for rail
and tie refurbishment and track resurfacing. The extent of the BNSF Railway
track maintenance program (1995 represents pro forma BNSF Railway) is depicted
in the following table:
YEAR ENDED DECEMBER
31,
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1997 1996 1995
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Track miles of rail laid: (1)........................ 1,035 1,139 945
Cross ties inserted (thousands)(1)................... 2,941 3,768 2,974
Track resurfaced (miles)(1).......................... 12,430 12,033 11,088
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(1) Includes expenditures for both maintenance of existing route system and
expansion projects. These expenditures are primarily capitalized.
BNSF Railway anticipates that the 1998 track maintenance of way program,
together with expansion projects, will result in the installation of
approximately 1,000 track miles of rail, the replacement of about 3 million
ties, and the resurfacing of approximately 11,000 miles of track.
PROPERTY AND FACILITIES
BNSF Railway operates facilities and equipment to maintain its 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 to perform locomotive servicing and
maintenance, a centralized network operations center for train dispatching and
network operations monitoring and management in Fort Worth, Texas, computers,
telecommunications equipment, signal systems, and other support systems.
Transfer facilities are maintained for rail-to-rail as well as intermodal
transfer of containers, trailers and other freight traffic. These include 39
major intermodal hubs located across the system and nine intermodal hub
centers off-line used in connection with haulage agreements with other
railroads. BNSF Railway's largest intermodal facilities in terms of 1997
volume are:
INTERMODAL FACILITIES UNITS
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Hobart Yard (Los Angeles)......................................... 824,000
Corwith Yard (Chicago)............................................ 663,000
Willow Springs (Illinois)......................................... 555,000
Chicago Hub Center (Cicero, Illinois)............................. 403,000
Alliance (Texas).................................................. 353,000
Seattle International Gateway (SIG)............................... 207,000
Tacoma............................................................ 195,000
BNSF Railway owns 28 automotive distribution facilities where automobiles
are loaded or unloaded from multi-level rail cars and serves eight port
facilities. Argentine Yard in Kansas City, Kansas, Barstow Yard in Barstow,
California, and Northtown Yard in Minneapolis, Minnesota are BNSF Railway's
largest freight car classification yards.
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