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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from             to            
 
Commission file number 1-11535
 
BURLINGTON NORTHERN SANTA FE CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
 
41-1804964
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
2650 Lou Menk Drive
Fort Worth, Texas
(Address of principal executive offices)
 
76131
(Zip Code)
 
(800) 795-2673
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes     ü      No           
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Shares
Outstanding at October 31, 2002

Common stock, $.01 par value
  
377,475,697 shares

1


 
PART I
FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in millions, except per share data)
(Unaudited)
 
    
Three Months Ended September 30,

  
Nine Months Ended September 30,

 
    
2002

    
2001

  
2002

      
2001

 
Revenues
  
$
2,308
    
$
2,343
  
$
6,678
 
    
$
6,907
 
    

    

  


    


Operating expenses:
                                   
Compensation and benefits
  
 
730
    
 
714
  
 
2,140
 
    
 
2,137
 
Purchased services
  
 
297
    
 
275
  
 
850
 
    
 
811
 
Depreciation and amortization
  
 
235
    
 
222
  
 
696
 
    
 
680
 
Equipment rents
  
 
182
    
 
185
  
 
537
 
    
 
562
 
Fuel
  
 
215
    
 
240
  
 
606
 
    
 
743
 
Materials and other
  
 
228
    
 
205
  
 
655
 
    
 
625
 
    

    

  


    


Total operating expenses
  
 
1,887
    
 
1,841
  
 
5,484
 
    
 
5,558
 
    

    

  


    


Operating income
  
 
421
    
 
502
  
 
1,194
 
    
 
1,349
 
Interest expense
  
 
107
    
 
117
  
 
321
 
    
 
352
 
Other (income) expense, net
  
 
7
    
 
20
  
 
(19
)
    
 
98
 
    

    

  


    


Income before income taxes and extraordinary charge
  
 
307
    
 
365
  
 
892
 
    
 
899
 
Income tax expense
  
 
115
    
 
140
  
 
334
 
    
 
339
 
    

    

  


    


Income before extraordinary charge
  
$
192
    
$
225
  
$
558
 
    
$
560
 
Extraordinary charge, net
  
 
—  
    
 
—  
  
 
—  
 
    
 
(6
)
    

    

  


    


Net income
  
$
192
    
$
225
  
$
558
 
    
$
554
 
    

    

  


    


Earnings per share:
                                   
Basic earnings per share (before extraordinary charge)
  
$
0.51
    
$
0.58
  
$
1.47
 
    
$
1.44
 
Basic earnings per share (after extraordinary charge)
  
$
0.51
    
$
0.58
  
$
1.47
 
    
$
1.43
 
Diluted earnings per share (before extraordinary charge)
  
$
0.51
    
$
0.58
  
$
1.46
 
    
$
1.43
 
Diluted earnings per share (after extraordinary charge)
  
$
0.51
    
$
0.58
  
$
1.46
 
    
$
1.41
 
    

    

  


    


Average shares (in millions):
                                   
Basic
  
 
376.4
    
 
387.3
  
 
379.5
 
    
 
388.5
 
Dilutive effect of stock awards
  
 
3.1
    
 
2.9
  
 
2.9
 
    
 
3.5
 
    

    

  


    


Diluted
  
 
379.5
    
 
390.2
  
 
382.4
 
    
 
392.0
 
    

    

  


    


Dividends declared per share
  
$
0.12
    
$
0.12
  
$
0.36
 
    
$
0.36
 
 
See accompanying notes to consolidated financial statements.

2


 
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in millions, shares in thousands)
(Unaudited)
 
ASSETS
    
September 30, 2002

      
December 31, 2001

 
Current assets:
                     
Cash and cash equivalents
    
$
47
 
    
$
26
 
Accounts receivable, net
    
 
208
 
    
 
172
 
Materials and supplies
    
 
200
 
    
 
191
 
Current portion of deferred income taxes
    
 
333
 
    
 
306
 
Other current assets
    
 
108
 
    
 
28
 
      


    


Total current assets
    
 
896
 
    
 
723
 
Property and equipment, net
    
 
23,826
 
    
 
23,110
 
Other assets
    
 
954
 
    
 
888
 
      


    


Total assets
    
$
25,676
 
    
$
24,721
 
      


    


LIABILITIES AND STOCKHOLDERS’ EQUITY
                     
Current liabilities:
                     
Accounts payable and other current liabilities
    
$
1,967
 
    
$
1,873
 
Long-term debt due within one year
    
 
143
 
    
 
288
 
      


    


Total current liabilities
    
 
2,110
 
    
 
2,161
 
Long-term debt and commercial paper
    
 
6,802
 
    
 
6,363
 
Deferred income taxes
    
 
7,060
 
    
 
6,731
 
Casualty and environmental liabilities
    
 
426
 
    
 
423
 
Employee merger and separation costs
    
 
178
 
    
 
216
 
Other liabilities
    
 
1,028
 
    
 
978
 
      


    


Total liabilities
    
 
17,604
 
    
 
16,872
 
      


    


Commitments and contingencies (see notes 2, 6, and 8)
                     
Stockholders’ equity:
                     
Common stock, $.01 par value, 600,000 shares authorized; 496,577 shares and 492,818 shares issued, respectively
    
 
5
 
    
 
5
 
Additional paid-in capital
    
 
5,664
 
    
 
5,584
 
Retained earnings
    
 
5,468
 
    
 
5,048
 
Treasury stock, at cost, 118,054 shares and 107,041 shares, respectively
    
 
(3,041
)
    
 
(2,745
)
Unearned compensation
    
 
(43
)
    
 
(34
)
Accumulated other comprehensive income (deficit)
    
 
19
 
    
 
(9
)
      


    


Total stockholders’ equity
    
 
8,072
 
    
 
7,849
 
      


    


Total liabilities and stockholders’ equity
    
$
25,676
 
    
$
24,721
 
      


    


 
See accompanying notes to consolidated financial statements.

3


 
BURLINGTON NORTHERN SANTA FE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
 
    
Nine Months Ended September 30,

 
    
2002

      
2001

 
Operating Activities:
                   
Net income
  
$
558
 
    
$
554
 
Adjustments to reconcile net income to net cash provided by operating activities:
                   
Depreciation and amortization
  
 
696
 
    
 
680
 
Deferred income taxes
  
 
286
 
    
 
206
 
Extraordinary charge
  
 
—  
 
    
 
9
 
Employee merger and separation costs paid
  
 
(48
)
    
 
(38
)
Other, net
  
 
(32
)
    
 
75
 
Changes in current assets and liabilities:
                   
Accounts receivable, net
  
 
(36
)
    
 
15
 
Materials and supplies
  
 
1
 
    
 
13
 
Other current assets
  
 
(46
)
    
 
25
 
Accounts payable and other current liabilities
  
 
100
 
    
 
27
 
    


    


Net cash provided by operating activities
  
 
1,479
 
    
 
1,566
 
    


    


Investing Activities:
                   
Capital expenditures
  
 
(1,016
)
    
 
(1,061
)
Other, net
  
 
(127
)
    
 
(4
)
    


    


Net cash used for investing activities
  
 
(1,143
)
    
 
(1,065
)
    


    


Financing Activities:
                   
Net increase (decrease) in commercial paper and bank borrowings
  
 
40
 
    
 
(320
)
Proceeds from issuance of long-term debt
  
 
300
 
    
 
400