CONSOLIDATED FINANCIAL HIGHLIGHTS
Burlington Northern Santa Fe Corporation and Subsidiaries
(Dollars in millions, except per share data)
The selected financial data shown below include BNI results for each of the five years ended December 31, 1995
and SFP results from September 22, 1995 to December 31, 1995.
1991
1993 1992
1995 1994
Year ended December 31,
FOR THE YEAR
$ 4,559
$ 4,630
$ 4,995 $ 4,699
Revenues $ 6,183
661 597
853
526 (239)
Operating income (loss)(1)
Income (loss) before extraordinary item and
296 299
426
198 (306)
cumulative effect of change in accounting method
- (14)
(10) (21)
(106)
Accounting change/Extraordinary item (2)(3)(4)(5)
278
416 296
92 $ $ (320)
$ $
$
Net income (loss)
394 274 275
71 $ $ (321)
$ $
$
Earnings (loss) available for common stockholders
Primary earnings (loss) per share:
Before extraordinary item and change in
$ 3.35
$ 4.48 $ 3.06
1.66
$ $ (3.96)
accounting method
- (.24)
(.99) (.11)
Accounting change/Extraordinary item (.18)
3.11
4.37 $ 3.06
.67 $
$ $ $ (4.14)
Primary earnings (loss) per share
77,462
90,187 89,672 88,617
106,730
Average shares (in thousands)
Fully diluted earnings (loss) per share:
Before extraordinary item and change in
3.34
4.38 3.04
1.66 $ $
$ $ $ (3.96)
accounting method
- (.18)
(.24)
(.99) (.11)
Accounting change/Extraordinary item
$ 3.10
$ 4.27 3.04 $
$
$ .67 (4.14)
Fully diluted earnings (loss) per share
89,492 77,462
97,528 97,189
106,730
Average shares (in thousands)
$ 1.20 $ 1.20
$ 1.20 $ 1.20
1.20
$
Dividends declared per common share
AT YEAR END
$ 6,324
$ 7,592
Totalassets $ 7,045 $ 6,563
$ 18,269
Long-term debt, including current portion
1,567 1,982
1,819 1,737
4,233
and commercial paper
- - - 9 11
Redeemable preferred stock
1,202
2,237 1,919 1,728
5,037
Stockholders' equity
OTHER
487 509
753 676
$ $ $
$ $
1,042
Totalcapital expenditures
362 352 338 347
520
Depreciation and amortization
86% 90%
83% 87%
80%
Operating ratio (6)
Total debt to total capital, excluding
48% 62%
45% 48%
46%
redeemable preferred stock
(1) 1995 includes $735 million before taxes related to merger, severance and asset charges as discussed in Note 3 of the financial statements.
1991 includes pre-tax charge of $708 million related to: (i) costs for reducing surplus crew positions and a management separation pay program,
(ii) increases in estimated personal injury costs and (iii) increases in estimated environmental clean-up costs.
(2) 1995 includes the cumulative effect of the change in accounting method for locomotive overhauls which decreased net income by $100 million, or
$.94 per common share. Additionally, 1995 includes an extraordinary loss on retirement of debt of $6 million (after tax), or $.05 per common share.
(3) 1994 includes the cumulative effect of the implementation of the accounting standard for postemployment benefits.
(4) 1992 includes the cumulative effect of the change in accounting method for revenue recognition and the cumulative effect of the implementation of
the accounting standard for postretirement benefits.
(5) 1991 includes extraordinary loss on retirement of debt.
(6) 1995 and 1991 operating ratios exclude the pre-tax charges discussed in note (1) above.
P AGE

FE
BURLINGTON NORTHERN SANTA
T Significant unusual items include merger, severance
o OUR SHAREHOLDERS,
CUSTOMERSAND COLLEAGUES and asset charges of $453 million after-tax for 1995.
1995 was a historic year for us. It brought together two These charges, along with reserves established at the
- time of the merger, cover the costs associated with the
successful companies Burlington Northern Inc. and
- elimination of some 3,000 positions in 1995 and over
Santa Fe Pacific Corporation and created Burlington
the next few years, the disposition of about 4,000 miles
Northern Santa Fe Corporation in September. The year
of low-density track in 14 states, the closing of offices,
1995 was also one of our better years in terms of our on-
facilities, and other operations that will not be needed
going pursuit of an injury-free workplace, on-time service,
customer satisfaction, and financial performance. as a result of combining the two railroads. There also
BNSF's well-balanced business portfolio derived was a $100 million after-tax charge associated with a
change in accounting for locomotive overhauls and
about 25 percent of its combined 1995 revenues from
another $6 million for the early retirement of debt. With
transporting a record 204 million tons of coal, most
of it from the Powder River Basin these items, BNSF net income was
of Wyoming and Montana. Another $92 million, or $0.67 per common
25 percent came from intermodal share, on an as reported basis for
shipments - more than 2.5 million 1995, compared with $416 million,
trailers and containers, another record, or $4.27 per common share, fully
were moved on flatcars in 1995. About diluted, in 1994.
15 percent of combined 1995 revenues During the fourth quarter of 1995,
reflected the movement of a record we learned that we can achieve high
663,000 carloads of agricultural levels of on-time, damage-free
commodities, like corn, wheat and service simultaneously for each of
the largest segments of our franchise
soybeans, while transportation of foods,
- agricultural commodities, coal and
beverages, forest products, chemi-
ROBERT D. KREBS
cals, minerals and metals accounted intermodal. Improving both our
BNSF President and Chief Executive Officer
for the remaining 35 percent. service performance and our safety
We entered 1996 focused on our vision: To realize the record are key to the future success of our company.
tremendous potential of the new Burlington Northern In this period, the first one in which we operated as a
and Santa Fe Railway by providing transportation merged railroad, one incredible achievement exempli-
fied the potential of the new company better than any
services that consistently meet our customers' expecta-
other: BNSF handled 27,040 trailers without one failure
tions. Our new railway, the largest in North America,
for our largest Intermodal customeI; United Parcel Service,
will provide single-line service with broad geographic
from Thanksgiving to Christmas Eve.
scope, as shown on pages 8-9, making it easier for
This streak continued until January 18, 1996, when a
shippers to use the improved services we are now
large portion of our railroad in the Midwest was snow-
capable of providing.
RECORD-SETTING PERFORMANCES bound. For 58 consecutive days, 43,709 trailers arrived
THROUGHOUT 1995 at every UPS hub for sorting on schedule to enable UPS
-
For 1995, BNSF generated $1.576 billion in combined to meet its commitments to its customers a magnifi-
operating income, excluding unusual items. This repre- cent example of thousands of BNSF people working as a
sents a 32 percent improvement over 1994. Combined team to achieve a common goal. I believe this will
revenues grew nearly $500 million year over year, while become the standard for the service we will provide
adjusted operating expenses were only $110 million customers in all segments of our business, and this will
enable us to achieve one of our goals, consistent
higher. As a result, the operating ratio was lowered to
revenue growth. For 1996, our overall on-time perfor-
80.7 percent from 84.5. For 1996, we are targeting a 78
mance target is 92 percent.
percent operating ratio.
P AG(

BURLINGTON NORTHERN SANTA FE
Kansas, will be rebuilt from the ground up at a cost of
For several years, employees of both BN and Santa Fe
about $90 million over a two-year period. The Hobart
have aggressively worked to reduce personal injuries
intermodal facility in Los Angeles is scheduled for a $25
and lost work days due to injuries. For 1995, personal
million upgrade and the final phase of the three-year San
injuries were down over 30 percent, as more than 95
Bernardino expansion will be completed this summer.
percent of our 45,000 employees worked injury-free.
Capacity will also be enhanced at our yard in Barstow,
BNSF enters 1996 as the third safest major railroad in
California, and at our Chicago Corwith yard this year.
North America with the goal of another 25 percent
In addition, BNSF is better positioned to participate
improvement in 1996.
INVESTING FOR GROWTH in NAFTA-driven growth in 1996 as a result of gaining
access to the border crossing at Eagle Pass, Texas,
In 1996, we plan a capital program approaching $1.7
through our merger trackage agreement with the
billion which will support our efforts to increase
Southern Pacific. This complements our El Paso, Texas,
revenues and reduce our operating ratio.
gateway and Canadian access into
About $1.1 billion will be spent to
\"we have a strong British Columbia and Manitoba.
maintain our franchise, as we resur-
Much of the progress made since
face more than 12,000 miles of track,
franchise, resource- last September is a result of the
and replace 700 miles of rail and 3
work and commitment of 45,000
million ties, while keeping our equip-
ful employees, employees all over BNSF and their
ment fleet at the level required to
willingness to pull together as we
and the momentum
respond to demand and customers'
build a new company. The support
expectations. BNSF will add 87 loco-
from our Board of Directors also has
motives in 1996, both alternating
to fulfill our enabled us to make rapid progress
current and direct current units,
merger promise. \" and to establish a 1996 plan that
acquire three aluminum coal sets
will demonstrate the wisdom of the
and 90 taconite cars, and remanu-
merger that created Burlington Northern Santa Fe.
facture 1,050 other freight cars.
A person who deserves much credit and my personal
More than $500 million is slated for capacity expan-
appreciation for making BNSF happen is Gerald
sion projects at key locations across our network, all of
Grinstein, our former chairman, who decided to leave
which will enable us to grow our business. The BNSF
the company at the end of 1995. All of us will miss his
route from the Midwest to the Pacific Northwest (PNW)
wisdom and his wit, and we wish him well as he pursues
is 11 percent shorter than that of our major competitor,
new challenges.
which means we can provide better service at lower
Another director who will be terribly missed is
operating cost for our grain, intermodal and merchandise
Barbara Jordan, who passed away in mid-January.
customers. To expand PNW capacity, we need a third
Although her tenure on the Board was less than five
route between eastern Washington and the coast. Several
years, her contributions will forever be a part of BNSF.
alternatives are being pursued and we expect to be in a
I'm confident that BNSF will grow successfully in the
position to start running trains over a new route in 1997.
years ahead. We have a strong franchise, resourceful
Another expansion will be the completion of 55 miles
employees, and the momentum to fulfill our merger promise.
of double track on BNSF's premier route from Chicago
to California. By year end, we will have eliminated more
than one-third of the single track that remained on a
660-mile segment of this lane when we began the
program two years ago.
Robert D. Krebs
We have scheduled several yard expansions in 1996
President and Chief Executive Officer
to accommodate intermodal growth and improve operat-
February 20, 1996
ing efficiencies. The Argentine yard in Kansas City,
P AGE

LEVERAGING FRANCHISE STRENGTHS
MODAL:THE GROWTH LEADER
INTER
There is tremendous growth potential for BNSF's
Intermodal business. BNSF has some of the fastest and
most direct intermodal routes in many of the nation's
BLENDING THE major transportation lanes. That includes the shortest
... one
route between Chicago and Seattle (2,218 miles)
of the shortest routes between Chicago and Los Angeles
(2,214 miles) ... and the best single-
BEST OF TWO line route between California and the
Southeast. Service improvements maq.e
during the fourth quarter alone in this
GREATRAILROADS largely untapped intermodallane
reduced transit times between Memphis, BNSF EMPLOYEES AVE
H
Tennessee, and Southern California by BEENSO SUCCESSFUL
. .. ATREDUCING
INJURIES
In the long history of American railroading no merger 24 hours III both dIrectIons. Overall,
THAT
THECOMPANY
NOW
has been larger, approved so quickly or demonstrated Intermodal on-time performance reached HAS THETHIRD LOWEST
greater potential. Combining Burlington Northern Inc. record highs in the third and fourth INJURY RATE AMONG
and Santa Fe Pacific Corp. created much more than the quarters on both BN and Santa Fe. MAJOR RAILROADS.
largest rail network in North America. It created a new This combination of superior routes and on-time
competitor with the market reach needed to deliver new service gives Intermodal the greatest growth opportuni-
single-line services to customers throughout two-thirds ties for the new company. To take advantage of those
of the United States as well as to Canada and Mexico. strengths, BNSF introduced Guaranteed and Premium
BN didn't reach the Southwest. Santa Fe didn't reach intermodal service in addition to regular service in the
the Pacific Northwest or the Southeast. Now BNSF fourth quarter of 1995 for customers shipping between
the Pacific Northwest and Midwest. BNSF also offers
delivers to all of those areas with 31,000 route miles in
27 states and two Canadian provinces stretching from better intermodal service through midwestern gateways
all major ports along the West Coast, to the Great Lakes like Chicago, Kansas City and St. Louis to both the
PNW and California.
and the Gulf, and from Canada to Mexico.
BN was primarily a coal, grain and merchandise railroad. To accommodate future growth, BNSF is expanding
Santa Fe was primarily an intermodal and automotive capacity at key terminals, improving on-time
carrier. Together, BNSF creates a stronger portfolio with performance and equipment utilization, offering new
a more diversified and balanced product mix. services, and modifying train schedules to meet cus-
More importantly, customers have access to shorter tomers' needs. Multi-year capacity expansion projects
routes and faster transit times using at intermodal facilities in Los Angeles (Hobart) and
BNSF, and many of the interline traffic Chicago (Corwith) will boost capacity at each to more
exchanges that delay shipments will than one million units-per-year when completed in
be eliminated, giving customers more 1997. At San Bernardino, California, the intermodal
single-line service options to more facility is being expanded to handle more than 400,000
markets than the predecessor railroads units annually after completion in mid-year 1996. The
BNSFTOOK
DEliVERY
total investment to expand capacity at these facilities
mc- could deliver independently. The great
OF 130 MOREAC
TlON LOCOMOTIVES
IN
alone is $155 million.
challenge now facing BNSF is to realize
1995 WHICH
ARENOW
. BNSF moved more intermodal traffic on a combined
its tremendous potential by continu-
PARTOF THE INOUSTRY S
ing to build on the momentum of the basis in 1995 than any other rail system in the world,
LARGEST
LOCOMOTIVE
record-settingperformancesof 1995. more than 2.5 million containers and trailers. Despite
FLEET
OF4,400 UNITS.
P AGE

the PRB. PRB coal is cheaper to mine than most other
sluggish economic conditions, BNSF
domestic sources. It also burns much cleaner, with an
posted a 4 percent increase in com-
~~~~~~~~;
average sulfur content one-sixth to one-half that of most
bined volume, mostly attributable to
7' r':\"\"-;'''':;,'~:''~'::'';;X
~.-, -~.\\: \" '. -~~~~
other coal. As a result, PRB coal is helping to bring many
growth of international and less-than
-- nil, \\~
truck-load (LTL) traffic. utilities into compliance with the 1990 Clean Air Act
,e 1',,\\
TO AUTOMOTIVE: GROWTH Amendments without having to install expensive scrubber
BNSF HASACCESS
TH R 0 UGH INN 0 VAT ION
ALLMUORWESTCOAST systems or purchase emissions credits. The PRB contains
.
PORTS, WHICHEXPECT.
Combmed BNSF automotIve carloads 73 percent of the nation's low-sulfur coal reserves. Those
COITAINER VOLUMES TO
factors, low-fuel cost, low-delivered cost, and low-sulfur
DOUBLE THE EXTdeclined
OVER N less than one-half percent
content, have driven unprecedented demand for PRB coal.
20 YEARS. despite depressed automobile sales
In 1995, Burlington Northern Santa Fe hauled a
and reduced production. While BNSF only serves a
combined total of 204 million tons of coal which takes
couple of auto-assembly plants directly, it is leveraging
into account the coal traffic interchanged between the
innovation as a means of increasing market share.
former BN and Santa Fe. Independently, BN moved
BNSF is a technological leader in the development of
183 million tons of coal, most of it from the PRB, a 7
equipment designed to improve protection for automo-
percent increase from 1994. The Santa Fe Railway.
biles in transit. The company has acquired intermodal
hauled 36 millions tons of coal, down 10 percent from
trailer and container equipment designed to ship
1994 as a result of abundant western hydroelectric
automobiles in a fully enclosed environment and has
supply and lower-than-normal natural gas prices.
helped develop a lightweight, fully enclosed, articulated
EXPANDING COAL CAPACITY
multilevel rail car to provide the same protection in
standard rail service. The record 1995 tonnage represents the kind of growth
COAL: A BRIGHT FUTURE BNSF has prepared for with its multi-year investment
Since the first unit train left the Powder River Basin strategy designed to capture the anticipated increase in
demand for Powder River Basin coal. In 1995, BNSF
(PRB) in 1969, BNSF has helped transform this remote
invested $385 million in track and equipment to boost
ranching area straddling northeastern Wyoming and
southeastern Montana into one of the nation's most impor- transportation capacity by:
. Constructing 21 miles of double and triple track on
tant fuel sources for generating electricity. Today, nearly
10 percent of the electricity produced in the United States the joint BNSF/UP Orin Line (120 miles of the 127-mile
is generated from coal hauled by BNSF, most of it from line are now double or triple tracked);
.Const ructing 25 miles of additional track between
:;:i~'\"
~~~'-
~
?--ci:~;~-., <~ i.I.IM Alliance, Neb., and Gillette, Wyo.;
:
~
.
I~~~~\"~ Expanding Alliance yard with four
'.
new receiving and departure tracks and
eight storage tracks; and
.Acqui ring 130 AC locomotives, eight
new aluminum train sets, and the Trough
Train (an extended car with 13 articu- ABOUT PERCENT
25 OF
. . BNSF's 1995 REVENUE
coa I
lated sectIOns that Increases
FROMCOAL
WASDERIVED
carrying capacity by 30 to 40 percent). TRAFFIC,25 PERCENT
Phase n of the Clean Air Act, which FROM
INTERMODAL, 15
PERCENT
FROMAGRICUL-
requires even lower sulfur emissions in
TURALCOMMODITIES
AND
the year 2000, and impending electric
35 PERCENT
FROMCON,
utility deregulation, will stimulate addi- SUMERPRODUCTS,
tional demand for PRB coal over the CHEMICALS,MINERALS
AND METALS.
next several years. To respond to these
P AGE
I

-.- ~ \"
'
-\"'''''''iIiJ.~-41 '\" JUt! ~ .
\" '~ :-'
.
t:\"'':'>~I''...!

. ~ BNSF offers businesses new international shipping
opportunities because it links all major ports on the
west Coast and the Gulf with the Midwest, Pacific
fr
Northwest, Southwest and the Southeast.
NAFTA
North American
I
shippers can
J
take better
SAFETY
advantage of
wearing proper safety equipment is an
NAFTA with
important part of BNSF's success in
BNSF's north-
making the railroad a safer place to
south direct
work. BN reduced reportable injuries by
routes between
30% in 1995. Santa Fe reduced them
Canada and
by 38%. Together, BNSF has set a
Mexico.
unified target for reducing reportable
injuries by another 25% in 1996.
FORESTRODUCTS
P
Companies in the
Northwest, Northern
Midwest and Southeast
have access to new mar-
kets in the Southwest
and west Coast.
In 1996, BNSF will invest
BURLINCTON
NORTHERN
nearly $1.7 billion to maintain
CHEMICal COMPANIES and improve its infrastructure BN's strengths in coal,
in the PNW and by adding more double grain and merchandise
combined with Santa Fe's
Canada gain access and triple track, expanding
to a new single-line yards and terminals, acquiring strengths in intermodal
route to the west more new locomotives and and automotive give BNSF
Coast via BNSF. freight car equipment. a stronger and more diver-
sified traffic base.
I
o
rrrrrrCiT , 9712 '
P AGE

OPERATING
SUERGIES
BNSF will benefit from the
consolidation of operations and
administrative functions,
disposition of about 4,000 miles of
low-density track, and the disposal
of excess office space and other
facilities, and operations.
between Chicago and the Pacific
Northwest, (2,218 miles), and one
of the shortest between Chicago and
Southern California (2,214 miles).
COAl/ELECTRICITY
Nearly 10% of the electricity produced in the
United States is generated from coal hauled by
BNSF. The new railroad's extended routes will
enable cleaner- ;:::;,
1
,
:i\"
.
1
burning, low-sulfur
~
coal to be delivered
-iW
to more markets.
~
QUIPMENT
BNSF will improve
equipment utilization of
..
.. its combined 90,000-car
,- fleet and of its combined
4,400-10comotive fleet.
INTERMOOAl NIPPERS
S
have access to new
direct routes on
BNSF between
Southern California
and the Southeast, and
combined with BN's routes in large fleet will enable
to new single-line
the Pacific Northwest, Midwest BNSF to move grain cars
north with the harvest as service options
and Southeast give BNSF
throughout most of the
extended market reach through it moves from Texas to
western United States.
the Canadian border.
most of the Western two-thirds
of the United States.
P AGE

ports. High barge rates on the Mississippi River and
BNSF's ROUTESTRUCTURENABlESIT TO ORICINATE
E MORECRAINFROMMORE
ocean freight spreads that favored exporting grain from
CRAINPRODUCINC
RECIONSTNANANY OTHERRAILROAD THE INDUSTRY.
IN
ports in the Pacific Northwest over those on the Gulf
~, ~._\" \"\"7\"\"\\.\\\\.\":... , .:l'( .,.. -\"'~<;'.,
~ . ;;r\"rf{,~l
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combined with a good crop supply on BNSF's system to
'#.; ,
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<tl \" ~'i~fli,~~.-,
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create an opportunity BNSF anticipated, planned for
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'\" \"\" \\~ ' . ,~ :--~~,\",.,z.' ,
'I' t.~, ~.Ji., f ' ~:.. ~-.\\~ ,., ,\",-'
-
and capitalized on very successfully.
:.'1~ ~~~~~\\~C,,{/
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. ., AT' ~..~~~1f.'~'t(' ...,., .-
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,
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~ BNSF is the largest rail transporter
\\~..,~,.:
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S
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,t ~ CI l\" .~ ;~;.:
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of grain in North America, in part,
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~
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~ because it connects most of the nation's
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key grain-producing areas to most of its
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~'~:ii':\"\\ I'\" major domestic consumption markets
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:'1.,.-\"(\\/ . !'It and grain export ports. BNSF serves BNSF SERVES
. .
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key grain-producing regions stretching
~,!~'.~.,.~j'/~1'-\" MOSTOF THE NATION'S
\",\" 'i.. ~';;'~I \", - ~'\\. j
LARGEST
DOMESTIC
:',~:\\):!~;,:~. :~
t:-~~
.,J.1\"~~i;~fl~~~;:'~«('~~{~'l~\\;~'{' , ,,': <'iJ from the Northern to the Southern Great
~ ~ \"\".,;~.,'
t:::1:t/\\{{ 11b!~(>'I' '~i~: 'V! ,l'.\">-' [ '0' t.\"\"\\
\".:,' GRAINMARKETSAND
,i[,~,~.\\~,.
~:(.~~;:,~ ~i,,~)q~~1t\"I:~';:Jt(~,f~'!i~J~Qr: ':.~\\~
\\)~'.'~
Plains, and from the Pacific Northwest MOSTOF ITS KEY GRAIN
to the Midwest.Com accountsfor about
growthopportunities, BNSF is continuing to focus on cus- EXPORT
PORTS.
tomer service. Innovative pricing, faster cycle times for 35 percent of BNSF's grain revenue, wheat 34 percent,
coal trains (the time it takes to move a loaded coal train feeds and minor oilseeds 8 percent, soybeans 7 per-
from the mine to the utility and back) and reduced cent, barley 5 percent, and flour, mill products, malt,
costs through new technologies are helping BNSF lay oil and specialty grains 11 percent. It is this diversity
the groundwork for long-tenn growth in the coal business. of grain-producing regions, and of the grains and grain
METALS AND MINERALS: ACCESS TO STRONG products produced in those areas that hedges BNSF's
PRODUCTION CAPACITY exposure to fluctuations in the market for specific
Improved demand for pipe, alumina and structural types of grains.
NEW OPPORTUNITIES IN GRAIN
steel helped increase metals traffic a combined total of
7 percent in 1995. BNSF has on-line access to more The USDA's long-term outlook indicates continued
than 40 percent of the nation's aluminum production strong growth in United States agricultural exports over
capacity, to the nation's largest deposit of taconite (iron the next 10 years. The greatest demand is expected to
ore) in Minnesota's 'Iron Range', and to some of the come from China, which could account for almost
most efficient steel mini-mills in the United States. one-third of the estimated increase in grain exports.
Expanded single-line service opportunities will enable BNSF is well positioned to participate in that opportunity.
BNSF to extend the market reach of many of its metal In addition, the merger has created single-line opportu-
and mineral shippers. nities to Southern California and Mexico, and for direct
AGRICULTURALCOMMODITIES: routing of spring wheat to the Gulf of Mexico. Linkages
A RECORD YEAR from Kansas and Oklahoma to the Pacific Northwest
No BNSF business segment did a and from the upper Midwest to Southern California
better job in 1995 of seizing traffic provide opportunities for opening new markets and cre-
opportunities than Agricultural ating more transportation options in existing markets.
BNSF HASON,LINE
Commodities.A record combined
ACCESS
TOSOME
OFTHE
The expanded grain market coverage and larger grain
NATION'SMOSTEFFI.
car fleet will enable BNSF to move cars in line with the
663,000 carloads of grain were
CIENTSTEEl MINI-
natural seasonal rotation of the harvest as it moves
transported by BNSF.The record
MillS, ITS LARGEST
north from Texas to the Canadian border.
grain performance was led by strong
DEPOSIT IRON ORE
OF
domestic demand and by export To help improve the productivity of that 35,000 grain-
(TACONITE)ANDA LARGE
demand for com and soybean ship- car fleet, BNSF invested in additional track sidings and
PARTOF ITS AlUMINUM
ments through the Pacific Northwest
PRODUCTION APACITY.
C yard expansions along many of its key grain routes in
P AGE 10

tI
1995, significantly expanding the rail yards at Hauser, in capital projects, including about
$5.00 million for terminal and track
Idaho, and at Pasco and Vancouver, Washington, which
handle most of BNSF's grain trains bound for the PNW capacity expansion.
CONSUMER AND INDUSTRIAL PRODUCTS: Yet investing in traditional rail
EXTENDED MARKET REACH infrastructure is not enough. BNSF
THE NOC PLACES
cannot expect to reach its service,
Strong demand for petroleum helped increase BNSF's
OPEIATiORSTEAM MEM-
growth, safety and operating cost
combined Chemical carloads by 3 percent, helping to
BERSWITHIN FEETOF
goals without the benefit of the very
offset reduced demand for lumber and canned goods in UCI OTHERTO
best real-time information and control
the Forest Products and Consumer Goods units. INCREASE
THE SPEED
Access to new markets and new direct routes will systems. BNSF is developing and ANDOORDINATION F
C O
benefit most of BNSF's chemical, consumer and forest implementing the industry's best DECISIORS.
examples of those technologies at its new operations
products customers as much as it does, grain, coal,
center in Fort Worth.
intermodal or automobile shippers.
THE NOC: A 21sT CENTURY CONTROL CENTER
In Forest Products, for example, BNSF serves more
NetworkOperations
The
of North America's primary
Center (NOC) is the largest
timber producing areas than
and most technologically
any other railroad and is con-
advanced control center
sequently one of the largest
of its kind in any industry.
carriers of lumber, paper
It has the ability to not only
products, plywood, pulpmill . ~~
view, track and help manage
feedstock and wood pulp in
the industry. BNSF's extend- day-to-day operations, but to
ed market coverage enables provide an electronic
overview of the entire system,
forest products producers in
the Southeast, Minnesota and helping to identify potential
the Pacific Northwest to reach problems in advance and
destinations in the Southwest prevent them from occurring.
The NOC is currently
with single-line service.
Chemical shippers in the PNW and Canada have providing these services for the Northern and
Burlington Lines on BNSF's system. The Systems
access to a new single-line route to the West Coast and
to Mexico, and consumer products shippers now have Operations Control Center in Schaumburg, performs
these functions for most of the Santa Fe Lines on
a new single-line alternative to virtually all of the
BNSF's network.
major consumer markets in the Western two-thirds of
the United States. SUMMARY
EXPANDING CAPACITY The new company got off to a great start in the
BNSF is continuing to make record fourth quarter of 1995, capping off what had
been a great year for the predecessor companies -
capital investments to provide the
service levels needed to win addition- a remarkable accomplishment of service improvement
al business. In 1996, BNSF will add achieved in spite of severe weather problems on many
THE MAINTENANCEND
A
TRACK,TERMINALAND parts of the system. The challenge for 1996 is to
87 new locomotives, bringing to
EQUIP.En CAPACITY
build on that momentum, to make BNSF a safer place
nearly a thousand the number of new
EXPANSION
PROJECTS
to work by reducing injuries another 25 percent, to
power units that have been added to
CDNmlE AT BNSF
the combined BNSF fleet in the reach an overall on-time performance level of 92
TO STAYIN STEP
percent, and to reduce the ratio of expenses to
1990's. In total, the new company will
WITH RElENUEGRDWTH
income to 78 percent.
invest approximately $1.7 billion
OPPORTUNITIES.
P AGE 12

BURLINGTON NORTHERN SANTA FE
FINANCIAL CONTENTS Agreement qualified as a tax-free transaction for federal income
tax purposes, the parties utilized the Holding Company Structure.
13 Management's Discussion and Analysis
Under the Holding Company Structure, BNSF created two
21 Report of Management
subsidiaries. One subsidiary merged with and into BNI, and
21 Report of Independent Accountants
the other subsidiary merged with and into SFP. Each holder of
22 Consolidated Statements of Income
one share of BNI common stock received one share of BNSF
23 Consolidated Balance Sheets
common stock and each holder of one share of SFP common
24 Consolidated Statements of Cash Flows
stock, excluding the SFP common stock acquired by BNI in
25 Consolidated Statements of Changes in the Tender Offer and the SFP common stock held by SFP as
Stockholders' Equity treasury stock, received 0.41143945 shares of BNSF common
26 Notes to Consolidated Financial Statements stock, which reflects the effects of the repurchase program
discussed below. The rights of each stockholder of BNSF are
MANAGEMENT'S DISCUSSION AND ANALYSIS
substantially identical to the rights of a stockholder of BNI,
OF FINANCIAL CONDITION
and the Holding Company Structure has the same economic
AND RESULTS OF OPERATIONS
effect with respect to the stockholders of BNI and SFP as
anagement's discussion and analysis relates to the
M financial condition and results of operations of Burlington would a direct merger of BNI and SFP.
In the Merger Agreement, the exchange ratio of BNSF
Northern Santa Fe Corporation and its majority-owned
common shares for each share of outstanding SFP common
subsidiaries (collectively BNSF or Company). The principal
stock upon consummation of the Merger was set at not less
subsidiaries are Burlington Northern Inc. (BNI), Burlington
than 0.40 shares to not more than 0.4347 shares, with
Northern Railroad Company (BNRR), Santa Fe Pacific
repurchases of SFP common stock by SFP increasing the
Corporation (SFP) and The Atchison, Topeka and Santa Fe
exchange ratio pro rata. SFP repurchased approximately
Railway Company (ATSF).
3.6 million shares which, along with the effect of SFP stock
ACQUISITION OF SFP
options exercised, resulted in the final exchange ratio of
O n June 29, 1994, BNI and SFP entered into an Agreement
0.41143945 shares.
and Plan of Merger (as amended on October 26,1994,
RESULTS OF OPERATIONS
December 18, 1994, January 24, 1995 and September 19,1995,
T he results of operations discussed below include BNI
the Merger Agreement) pursuant to which SFP would merge
results for the years ended December 31, 1995, 1994
with BNI in the manner set forth below (the Merger).
and 1993 and SFP results from September 22,1995 through
Stockholders of BNI and SFP approved the Merger Agreement
December 31, 1995.
at special stockholders' meetings held on February 7, 1995.
YEAR ENDED DECEMBER 31, 1995 COMPAREDWITH
On August 23,1995, the Interstate Commerce Commission
YEAR ENDED DECEMBER 31, 1994
(ICC) issued a written decision approving the Merger and
BNSF recorded net income for 1995 of $92 million ($.67 per
on September 22,1995 the Merger was consummated. As
common share, primary and fully diluted) compared with net
discussed in Note 2, the business combination with SFP was
income of $416 million ($4.37 per common share, primary,
accounted for by the purchase method.
and $4.27 per common share, fully diluted) for 1994. Results
Pursuant to the Merger Agreement, on December 23,1994,
for 1995 were reduced by $735 million of merger, severance
BNI and SFP commenced tender offers (together, the Tender
and asset charges (see Note 3: Merger, severance and asset
Offer) to acquire 25 million and 38 million shares of SFP
charges). The corresponding reduction in net income was
common stock, respectively, at $20 per share in cash. During
approximately $453 million, or $4.24 per common share.
the first quarter of 1995, SFP borrowed $1.0 billion under a
Results for 1995 were further reduced by $100 million (after
credit facility of which $760 million of the proceeds were
tax), or $.94 per common share, for the cumulative effect of
used to purchase the 38 million shares pursuant to the Tender
an accounting change for locomotive overhauls and $6 million
Offer. In addition, BNI borrowed $500 million under a credit
(after tax), or $.05 per common share, for an extraordinary
facility of which the proceeds were used to finance BNI's
loss on early retirement of debt. Results for 1994 were reduced
purchase of SFP common stock in the Tender Offer. The Tender
by $10 million (after tax), or $.11 per common share, for the
Offer was completed on February 21,1995.
cumulative effect of an accounting change for postemployment
Also, pursuant to the Merger Agreement, BNI and SFP were
benefits. Excluding the above items, net income for 1995 would
entitled to elect to consummate the Merger through the use
have been $651 million compared to $426 million in 1994.
of one of two possible structures: (i) a merger of SFP with and
into BNI or (ii) the Holding Company Structure described below.
To ensure that the transaction contemplated by the Merger
P AGE I3

BURLINGTON NORTHERN SANTA FE
Revenue table
The following table presents BNSF's revenue infonnation by commodity for the years ended December 31,1995,1994 and 1993
and includes certain reclassifications of prior year infonnation to confonn to current year presentation. SFP results are included
only for the period of September 22,1995 to December 31,1995.
Revenue Per
Revenue
Thousand RTM
Revenues Ton Miles (RTM)
1994 1993
1994 1993 1994 1995
1995 1993
1995
(IN MILLIONS)
(IN MILLIONS)
$12.26
$1l.85 $13.02
136,164 117,654
153,169
Coal $1,669 $1,532
$1,815
29.03 30.20 30.86
24,671 22,718
745 701 38,516
Intermodal 1,1l8
20.92
19.89 22.37
33,945
710 55,356 33,922
759
1,101
Agricultural Commodities
22.57 22.86
23.15
19,495 18,329
440 419 19,828
459
Forest Products
26.56
26.57 26.51
315 11,862
402 310 15,127 11,695
Chemicals/Plastics
29.97
28.14 29.40
9,711
291 12,332 10,341
347 304
Food
22.31 21.99 22.08
11,503
308 253 248 11,233
13,804
Metals
22.69 22.69
23.46
10,752 10,136
244 230 12,147
285
Minerals and Ores
80.53
66.50 74.84
1,751
210 152 141 3,158 2,031
Automotive
112
138 119
Other
$18.71
$18.69 $19.33
260,574 237,339
323,437
Total $4,699
$6,183 $4,995
Revenues Current year revenues for Forest Products increased $19
million and Chemicals/Plastics revenues increased $92 million
Total revenues for 1995 were $6,183 million compared with
revenues of $4,995 million for 1994. The $1,188 million when compared to 1994. The increase in Forest Product rev-
enues was due to the addition of $32 million of SFP revenues
increase reflects $802 million of SFP revenues for the period
and was partially offset by lower traffic levels for lumber. The
of September 22,1995 to December 31, 1995. Excluding SFp,
addition of $80 million of SFP revenues along with strong
revenues increased by $386 million or 8 percent primarily
petroleum products demand contributed to the increase in
due to improved Coal and Agricultural Commodities revenues.
Chemicals/Plastics revenues.
Coal revenues improved $146 million during 1995 due to
Revenue increases in all other commodity groups are
higher traffic levels caused primarily by new business,
favorable weather conditions early in the year and increased principally due to the inclusion of SFP revenues from
demand for low-sulfur coal from the Powder River Basin as September 22, 1995.
well as the addition of $58 million of SFP revenues in 1995. Expenses
As discussed in Note 3: Merger, severance and asset charges,
Revenue per thousand revenue ton miles declined as a result
the Company recorded $735 million for merger, severance and
of continuing competitive pricing pressures and a change in
traffic mix. asset charges in 1995. The principal components of the charge
were $287 million related to BNSF's plan to centralize the
Agricultural Commodities revenues during 1995 were
majority of its union clerical functions and $254 million
$342 million greater than 1994. The increase was principally
related to salaried employee costs for severance, pension and
caused by improvements in com and soybean revenues of
other employee benefits and costs for employee relocations
$259 million and $41 million, respectively. Com and soybean
during the period. Additionally, $105 million was recorded for
revenues benefited from increased crop production as well as
planned branch line dispositions, while the remaining $89
higher traffic volumes to the Pacific Northwest due to stronger
million included obligations for vacating leased facilities and
export demand during 1995. Barley and wheat revenues
the write-off of duplicate and excess assets. Additional accruals
declined primarily due to weaker export demand when compared
of $138 million were recorded through purchase accounting
with the strong demand in 1994. Additionally, Agricultural
Commodities revenues included $59 million of SFP revenues related to fonner SFP employees and assets.
When its plans are completed, BNSF expects to have elim-
during 1995. The shift in commodities to lower yielding com
inated approximately 3,000 positions and disposed of approxi-
and soybeans from higher yielding wheat led to the aggregate
decrease in revenue per thousand revenue ton miles. mately 4,000 miles of low density track. Total annual savings
Intennodal revenues increased $373 million when compared related to these plans, when fully implemented, are expected
to exceed $250 million. Insignificant savings were recognized
with 1994, almost exclusively due to the inclusion of SFP
revenues in 1995. Metals revenues increased $55 million due in 1995 due to timing of severances. A significant portion of
to increased taconite, aluminum and steel products revenues the savings will be recognized in 1996 and the full benefit of
as well as the addition of $28 million of SFP revenues in 1995. savings are anticipated to be realized by the end of 1998,
when the plan is fully implemented. Also, as described in
Note 3, costs related to union employee relocation as well as
I4
P AGE

BURLINGTON NORTHERN SANTA FE
resulting from higher traffic volumes in 1995. An increase in
certain costs for separation and severances were not included
the average price paid per gallon of 1.2 cents in 1995
in the charge; therefore, these costs will be recorded as future
contributed to the remainder of the increase.
operating expenses. Both the timing and magnitude of any
Materials expenses for 1995 decreased $5 million com-
future expense is currently unknown.
pared with 1994. A $39 million reduction was attributable to
Total operating expenses for 1995, including $664 million
the change in accounting for locomotive overhauls in 1995
of SFP operating expenses and $735 million of merger, sever-
primarily offset by $35 million of SFP expenses.
ance and asset charges, were $5,657 million compared with
Other operating expenses were $65 million higher in 1995
expenses of $4,142 million for 1994. Excluding the merger,
as compared with 1994. The increase reflects the inclusion
severance and asset charges the operating ratio for 1995 was
of SFP expenses of $60 million and $65 million of expenses
80 percent, an improvement of three percentage points over
associated with the change in accounting for locomotive over-
the operating ratio of 83 percent for 1994.
hauls, partially offset by a decrease in personal injury expenses.
Effective January 1, 1995, BNSF changed its method of
Interest expense increased $65 million compared with 1994,
accounting for periodic major locomotive overhauls. Under the
principally due to the addition of $26 million of SFP expense
new method, overhauls on owned units are capitalized and
in 1995 as well as interest on the $500 million unsecured debt
depreciated ratably until the next anticipated overhaul. In
incurred in 1995 to finance BNI's investment in SFP.
addition, estimated costs for overhauls on leased units are
Other income (expense), net was $31 million favorable in
accrued on a straight-line basis over the life of the leases.
1995 as compared with 1994. This increase was due to BNI's
BNSF previously expensed locomotive overhauls when the
equity in earnings of SFP of $16 million from February 21,
costs were incurred. The cumulative effect of this change for
1995, the date of BNI's initial investment in SFp, to
years prior to 1995 was a reduction in net income of $100
September 22, 1995, the date of merger consummation.
million (after tax) while the effect of this change for the year
Additionally, other income includes income from SFP's 44
ended December 31, 1995 was to reduce net income by $25
percent equity investment in Santa Fe Pacific Pipeline
million (after tax).
Partners, L.P. The remainder of the increase in other income
Compensation and benefits expenses of $2,065 million
was due to interest income on the settlement of a tax refund
were $286 million above 1994 and included $233 million of
and lower fees on the sale of accounts receivable in 1995.
SFP compensation and benefits expense. The remaining $53
In December 1995, BNSF defeased BNI's 9% debentures
million of the increase was due to higher traffic levels, a wage
due 2016, by placing $166 million of U.S. government secu-
increase for union represented employees effective July 1994,
rities into an irrevocable trust for the purpose ofrepaying the
an increase in health and welfare costs for union employees
debentures in April 1996. The defeasance resulted in an
due primarily to an increase in insurance premium rates, and
extraordinary charge of $6 million (after tax), principally
increased incentive compensation expense. These increases
reflecting the call premium on the debt.
were partially offset by operating efficiencies.
YEAR ENDED DECEMBER 31, 1994 COMPAREDWITH
Purchased services expenses increased $54 million for
YEAR ENDED DECEMBER 31, 1993
1995 compared with 1994, principally reflecting the addition
BNSF had net income of $416 million ($4.37 per common
of SFP expenses.
share, primary, and $4.27 per common share, fully diluted) for
Equipment rents expenses were $111 million higher than
1994 due to the inclusion of $70 million of SFP equipment the year ended December 31, 1994 compared with net income
of $296 million ($3.06 per common share, primary, and $3.04
rents expense in 1995 as well as a $46 million increase in
lease rental expense as a result of a larger fleet of leased per common share, fully diluted) for 1993. Results for 1994
included the cumulative effect of the implementation of
freight cars and an increase in the leasing of locomotives to
Statement of Financial Accounting Standards (SFAS) No. 112
meet power requirements in 1995.
\"Employers' Accounting for Postemployment Benefits\" which
Depreciation and amortization expense for 1995 was $158
decreased 1994 net income by $10 million, or $.11 per common
million higher than 1994 primarily due to the inclusion of $86
share. Results for 1993 included the effects of severe flooding
million of SFP depreciation and amortization expense for 1995.
in the Midwest, most notably in the third quarter. Net income
Additionally, the increase reflects $30 million attributable to
for 1993 also included the retroactive effects of the Omnibus
the 1995 effect of a change in accounting for locomotive
Budget Reconciliation Act of 1993 (the Act), which was passed
overhauls. The remainder of the increase was due to capital
into law during August 1993. The Act increased the corporate
additions which increased the Company's asset base.
federal income tax rate by 1 percent, effective January 1, 1993,
Fuel expenses for 1995 were $111 million higher compared
which reduced BNSF's net income by $28 million, or $.31
with 1994 primarily due to the addition of $74 million of SFP
per common share, to adjust the January 1, 1993 deferred
expenses along with a $29 million increase in consumption
tax liability.
15
P AGE

FE
NORTHERN SANTA
BURLINGTON
Revenues Compensation and benefits expenses for 1994 were $70
Total revenues for 1994 were $4,995 million compared with million greater than for 1993. Higher traffic volumes during
revenues of $4,699 million for 1993. The $296 million 1994 as well as wage increases for union represented employ-
increase was primarily attributable to improvements in Coal, ees caused an increase in excess of $50 million to wages
Agricultural Commodities and Intermo~al revenues. and related payroll taxes. Also contributing to the increase in
Coal revenues improved $137 million during 1994 as a compensation and benefits expenses were increased salaries
result of increased traffic. This increase was primarily caused and a higher pension expense, due to a reduction in the
by a rise in the demand for electricity as well as the need for discount rate (driven by lower market interest rates) used in
utilities to replenish coal stockpiles during the first half of determining the net pension cost.
1994, which were partially depleted during the 1993 summer Purchased services expenses increased $15 million
flooding. Partially offsetting the increase in 1994 traffic was compared with 1993. Higher intermodal-related costs, due
a decline in revenue per thousand revenue ton miles. These to increased volumes, and higher third party locomotive
lower yields were largely due to the transportation in 1994 of maintenance and repair costs were the most significant
greater volumes above contractual minimum tonnage require- contributing factors to this increase.
ments on which customers received lower rates. Continuing Equipment rents expenses were $34 million higher in
competitive pricing pressures in contract renegotiations also 1994. This increase was primarily attributable to higher lease
contributed to lower yields. expenses due to a larger fleet of leased rail cars as well as
Intermodal revenues increased $44 million during 1994 leasing locomotives to meet power requirements. Also con-
when compared with 1993. Intermodal-international revenues tributing to the increase were payments for failure to achieve
service commitments in the first half of 1994 under various
accounted for the majority of the increase with a $37 million
improvement over 1993 caused by both new business and transportation agreements. These increases were partially offset
growth in existing business. The traffic increases more than by decreased car hire expenses in i994 compared with 1993,
offset BNSF's withdrawal from the Texas market in April 1994. due to the adverse effects of the Midwest flooding in 1993.
Revenues from the transportation of Agricultural Commodities Depreciation and amortization expense for 1994 was
during 1994 were $49 million higher than 1993. This increase $10 million higher than 1993, due to an increase in the asset
was principally caused by a $31 million improvement in base and higher traffic levels.
barley revenues, as well as higher wheat, feeds and oilseeds Fuel expenses were $7 million higher during 1994 as
revenues. Barley revenues benefited from strong domestic and compared with 1993. The average price paid for diesel fuel
export demand caused by favorable market conditions during decreased 3.1 cents per gallon in 1994 despite the 4.3 cents
1994. Higher wheat revenues resulted from an increase in per gallon increase in the federal fuel tax, effective October 1,
yield, which is a product of commodity mix, price and length of 1993. These price savings were more than offset by a $30
haul. Feeds and oilseeds revenues grew because of increased million increase in expense due to higher traffic volumes.
domestic feed demand. Partially offsetting these increases was a Materials expenses were $5 million higher during 1994 as
decrease in corn revenues largely attributable to reduced crop compared with 1993. Track and locomotive repair materials
production and lower export demand. costs increased due to higher maintenance levels and a larger
Forest Products revenues for 1994 increased $21 million fleet size in 1994. Partially offsetting these increases were
compared with 1993 primarily due to increased housing greater scrap sales due to the higher maintenance levels and a
starts during the year, while Food revenues for 1994 were $13 reduction in expenditures for safety and protective equipment
million higher than 1993 as a result of increased export deployed in 1993.
demand. Minerals and Ores revenues rose $14 million over Other operating expenses were $37 million less when com-
1993 as a result of stronger clays and aggregates traffic caused pared with 1993. A $46 million decrease in personal injury
by increases in both domestic and export demands, and expenses and the absence in 1994 of costs associated with the
Automotive revenues were $11 million higher than 1993 as a 1993 third quarter floods were partially offset by increases in
result of increased volume in automotive-international traffic. derailment-related expenses and property taxes.
Expenses Interest expense for the year increased $10 million compared
Total operating expenses for 1994 were $4,142 million compared with 1993, primarily due to a higher average outstanding debt
balance in 1994.
with $4,038 million for 1993. The operating ratio improved
three percentage points to 83 percent from 86 percent. Other income (expense), net was $8 million lower in 1994
compared with 1993. This resulted primarily from losses
related to international ventures.
P AGE 16

BURLINGTON NORTHERN SANTA FE
In December 1995, BNSF issued $300 million of 63/8%
The effective tax rate was 38.7 percent for 1994 compared
Notes due December 15, 2005 and $350 million of 7%
with 43.2 percent for 1993. The higher effective tax rate for
Debentures due December 15, 2025 under a registration
1993 resulted from the increase in tax rates pursuant to the
statement filed by BNSF on November 22, 1995 covering the
Act and the related impact on the deferred tax liability at
issuance, from time to time, of up to $1 billion aggregate
January 1, 1993.
CAPITAL RESOURCES AND LIQUIDITY principal amount of debt securities. The net proceeds from
CASH FROM OPERATIONS the sale of the notes and debentures were primarily used for
general corporate purposes, including but not limited to the
ash generated from operations is BNSF's principal source
C of liquidity and is primarily used for dividends and repayment of commercial paper and short-term bank loans
having an average interest rate of approximately 6 percent.
capital expenditures. To the extent cash outflows exceed cash
During the course of 1995, the Company entered into various
provided by operations, BNSF would generally fund the excess
interest rate swap agreements with a principal amount of $500
through the issuance of debt or financing through capital or
million, for the purpose of establishing rates in anticipation of
operating leases. Operating activities provided cash of $1,416
debt issuances under a shelf registration statement (see Note
million in 1995, compared with $808 million in 1994 and $578
10: Debt). In conjunction with the fourth quarter 1995
million in 1993. The increase in cash from operations in 1995
issuance of 10 year 6 3/8% notes and 30 year 7% debentures,
was attributable primarily to a $421 million increase in net
the Company closed out the swap transactions which resulted
earnings excluding net noncash charges. An increase of $263
in losses of $13 million and $15 million, respectively. The
million from working capital activities, including additional
cash from the collection of accounts receivable and favorable losses were deferred and will be recognized over the term of
the borrowings.
activity in accounts payable and other current liabilities also
Additionally, in December 1995, BNSF defeased BNI's 9%
contributed to the increase. The above were partially offset
debentures due 2016, by placing $166 million of U.S. gov-
by cash used in 1995 to pay employee merger and separation
ernment securities into an irrevocable trust for the purpose of
costs. The increase in cash from operations in 1994 over
repaying the debentures in April 1996. The defeasance of
1993 was primarily attributable to increased net income and a
debt resulted in an extraordinary charge of $6 million, net of
$68 million decrease in labor-related payments. BNSF's cash
applicable income tax benefits of $3 million, principally
outflows from investing and financing activities principally
reflecting the call premium on the debt.
relate to dividends and capital expenditures. Additionally, in
CAPITAL EXPENDITURES AND RESOURCES
1995 the Company had expenditures of $500 million related
to the Tender Offer. A breakdown of cash capital expenditures is set forth in the
OTHER CAPITALRESOURCES following table (in millions):
BNSF maintains a program for the issuance, from time to time, 1995 1994 1993
Yearended December31,
of commercial paper. These borrowings are supported by bank Road,roadway structures
$706 $544 $459
and real estate
revolving credit agreements. Outstanding commercial paper
217
184 154
Equipment
balances are considered as reducing available borrowings under
$890 $698 $676
Total capital expenditures
these agreements. The bank revolving credit agreements allow
borrowings of up to $1.0 billion on a short-term basis and $1.5
The above capital expenditures exclude $136 million and $50
billion on a long-term basis. Annual facility fees are currently
million of equipment acquired under cross-border capital lease
.08 percent and .125 percent, respectively, and are subject
arrangements in 1995 and 1994, respectively. Capital roadway
to change based upon changes in BNSF's senior unsecured
expenditures in 1995 increased when compared with 1994 as
debt ratings. Borrowings are based upon LIBOR plus a spread
a result of extensive capacity expansion projects, primarily
based upon BNSF's senior unsecured debt ratings, money
located in the Powder River Basin as well as the inclusion of
market rates as offered by the lenders, or an alternate base rate.
$1l5 million of SFP capital expenditures from September 22,
The commitment of the banks to make loans are currently
1995 through December 31, 1995. Capital roadway expendi-
scheduled to expire on November 19, 1996 and November 21,
tures for 1994 increased compared with 1993 primarily due
2000, respectively. At December 31, 1995, borrowings against
to spending related to strategic initiatives for transportation
the long-term revolving credit agreement were $85 million
network management and extensive roadway improvements.
and the maturity value of commercial paper outstanding was
Capital equipment expenditures for 1995 also increased when
$996 million, leaving a total of $419 million of the long-term
compared with 1994 due to the inclusion of $34 million of
revolving credit agreement available and $1.0 billion of the
SFP capital expenditures. Capital equipment expenditures for
short-term revolving credit agreement available. The maturity
value of commercial paper outstanding at December 31, 1994
was $91 million.
P AGE 17

BURLINGTON NORTHERN SANTA FE
1994 declined when compared to 1993 primarily as a result of the jury system, resulted in significant increases in expense
acquiring more equipment through operating leases rather than in past years. For several years prior to 1992, the trend of
through purchases. Capital expenditures in 1996 are expected significant increases in BNSF's personal injury expense
to approximate $1. 7 billion, including noncash capital expen- reflected the combined effects of increasing frequency of
ditures of approximately $200 million primarily for either claims, rising medical expenses, legal judgments and settle-
directly financed or leased equipment acquisitions, and ments. To improve worker safety and counter increasing costs,
reimbursed projects. BNSF implemented a number of programs to reduce the
BNSF has a commitment to acquire 149 locomotives during number of personal injury claims and the dollar amount of
1996 and 1997. Nineteen locomotives were financed in claim settlements. The total amount of personal injury
February 1996 through a capital lease. The remaining commit- expenses were $143 million, $170 million and $216 million
ment will be financed from one or a combination of sources in 1995, 1994 and 1993, respectively, including SFP expenses
including cash from operations, capital or operating leases, from only September 22, 1995 through December 31, 1995.
debt issuances and other miscellaneous sources. The decision BNSF is also working with others, through the Association of
on the method used to finance equipment depends upon American Railroads, to seek changes in legislation to provide
current market conditions and other factors and will be based a more equitable program for injury compensation in the
upon the most appropriate alternative available at such time. railroad industry.
In both 1995 and 1994, BNSF financed new equipment BNSF's operations, as well as those of its competitors, are
subject to extensive federal, state and local environmental
through long-term capital and operating leases. During 1993,
equipment was financed through debt issuance and long-term regulation. BNSF's operating procedures include practices to
operating leases. protect the environment from the environmental risks inherent
INFLATION
in railroad operations, which frequently involve transporting
Because of the capital intensive nature of BNSF's businesses chemicals and other hazardous materials.
and because depreciation is based on historical costs, the full Additionally, many of BNSF's land holdings are and have
effect of inflation is not reflected in operating expenses. An been used for industrial or transportation-related purposes or
assumption that all operating assets were replaced at current leased to commercial or industrial companies whose activities
price levels would result in depreciation charges substantially may have resulted in discharges onto the property. As a result,
greater than historically reported amounts. BNSF is subject to environmental clean-up and enforcement
DIVIDENDS actions. In particular, the Federal Comprehensive Environmental
Common stock dividends declared were $1.20 per common Response Compensation and Liability Act of 1980 (CERCLA),
share annually for 1995, 1994 and 1993. Dividends paid on also known as the \"Superfund\" law, as well as similar state
common and preferred stock during 1995 and 1994 were $129 laws generally impose joint and several liability for clean-up
million and during 1993 were $125 million. On January 18, and enforcement costs without regard to fault or the legality of
1996, the BNSF board of directors declared a dividend of 30 the original conduct on current and former owners and opera-
cents per share upon its outstanding shares of Common Stock, tors of a site. BNSF has been notified that it is a potentially
$.01 par value, payable April 1, 1996, to stockholders of responsible party (PRP) for study and clean-up costs at
record on March 11, 1996. approximately 30 Superfund sites for which investigation and
CAPITAL STRUCTURE remediation payments are or will be made or are yet to be
BNSF's ratio of total debt to total capital was 46 percent at determined (the Superfund sites) and, in many instances, is
the end of 1995 compared with 45 and 48 percent at the end one of several PRPs. In addition, BNSF may be considered a
of 1994 and 1993, respectively. PRP under certain other laws. Accordingly, under CERCLA
OTHER MATTERS and other federal and state statutes, BNSF may be held jointly
CASUALTYAND ENVIRONMENTAL and severally liable for all environmental costs associated
P ersonal injury claims, including work-related injuries to with a particular site. If there are other PRPs, BNSF generally
employees, are a significant expense for the railroad. participates in the clean-up of these sites through cost-sharing
industry. Employees of BNSF are compensated for work-related agreements with terms that vary from site to site. Costs are
injuries according to the provisions of the Federal Employers' typically allocated based on relative volumetric contribution
Liability Act (FELA). FELA's system of requiring finding of material, the amount of time the site was owned or operated,
of fault, coupled with unscheduled awards and reliance on and/or the portion of the total site owned or operated by
each PRP.
P AGE I8

BURLINGTON NORTHERN SANTA FE
and restoration efforts proceed or as new sites arise. However,
Environmentalcostsinclude initial site surveysand environ-
expenditures associated with such liabilities are typically paid
mentalstudies of potentially contaminated sites as well as
costsfor remediation and restoration of sites determined to be out over a long period; therefore, management believes that it
is unlikely that any identified matters, either individually or
contaminated.Liabilities for environmental clean-up costs are
in the aggregate,will have a material adverse effect on BNSF's
initially recorded when BNSF's liability for environmental
consolidated financial position or liquidity.
clean-up is both probable and a reasonableestimate of
BNSF expects it will become subject to future requirements
associatedcosts can be made. Adjustments to initial estimates
regulating air emissions from diesel locomotives that may
are recorded as necessarybased upon additional information
increase its operating costs. Regulations applicable to new
developedin subsequentperiods. BNSFconducts an ongoing
locomotive engines are expected to be issued by the Environ-
environmental contingency analysis, which considers a com-
mental Protection Agency soon. It is anticipated that these
binationof factors including independent consulting repQrts,
regulations will be effective for locomotive engines installed
site visits, legal reviews, analysis of the likelihood of partici-
after 1999. Under some interpretations offederallaw, older
pation in and the ability of other PRPs to pay for clean-up,
locomotiveengines may be regulated by states basedon stan-
and historical trend analyses.
dards and procedures which the State of California ultimately
BNSF is involved in a number of administrative and judicial
adopts. At this time it is unknown whether California will
proceedings and other mandatory clean-up efforts at approxi-
adopt locomotive emission standards that may differ from
mately 320 sites, including the Superfund sites, at which it is
federal standards.
being asked to participate in the study or clean-up, or both, of
OTHER CLAIMSAND LITIGATION
alleged environmental contamination. BNSF paid approxi-
BNSF and its subsidiaries are parties to a number of legal
mately $31 million, $21 million and $27 million during 1995,
actions and claims, various governmental proceedings and
1994 and 1993, respectively relating to mandatory clean-up
private civil suits arising in the ordinary course of business,
efforts, including amounts expended under federal and state
including those related to environmental matters and personal
voluntary clean-up programs. BNSF has accruals of approxi-
injury claims. While the final outcome of these items cannot
mately $235 million for remediation and restoration of all
be predicted with certainty, considering among other things
known sites, including $225 million pertaining to mandated
the meritorious legal defenses available, it is the opinion of
sites, of which approximately $60 million relates to the Superfund
management that none of these items, when finally resolved,
sites. BNSF anticipates that the majority of the accrued costs
will have a material adverse effect on the annual results of
at December 31,1995 will be paid over the next five years.
No individualsite is considered to be material. Recoveries operations, financial position or liquidity of BNSF, although
an adverse resolution of a number of these items could have
received from third parties, net of legal costs incurred, were
a material adverse effect on the results of operationsin a
approximately $31 million during the year ended December
particular quarter or fiscal year.
31, 1995 and were not significant in prior years.
LABOR
Liabilities recorded for environmental costs represent
BNSF's best estimates for remediation and restoration of these Rail union employees represent approximately 87 percent of
BNSF's workforce. In December 1994, BNRR reached an
sites and include both asserted and unasserted claims.
Unasserted claims are not considered to be a material compo- agreement with the Railroad Yardmasters Division of the
United TransportationUnion (UTU)which is effective through
nent of the liability. Although recorded liabilities include
BNSF's best estimates of all costs, without reduction for antic- 1999 with respect to wages, work rules and all other matters
except health and welfare benefits. Health and welfare issues
ipated recoveries from third parties, BNSF's total clean-up
are being addressed at the national level and will apply to
costs at these sites cannot be predicted with certainty due to
BNRR's approximately 250 yardmasters. Effective July 1, 1995,
various factors such as the extent of corrective actions that
the yardmasters received a 3 percent base wage increase
may be required, evolvingenvironmentallaws and regula-
under the agreement.
tions, advances in environmental technology, the extent of
Labor agreements currently in effect for unions other than
other PRPs' participation in clean-up efforts,developmentsin
the yardmasters include provisions which prohibited the par-
ongoingenvironmentalanalyses related to sites determined to
ties from serving notices to change wages, benefits, rules and
be contaminated,and developmentsin environmentalsurveys
working conditions prior to November 1, 1994. BNSF's rail-
and studies of potentially contaminated sites. As a result,
road operating subsidiaries joined with the other railroads to
future charges to income for environmental liabilities could
negotiate with the unions on a multi-employer basis on
have a significant effect on results of operations in a particular
November 1, 1994. At that time, all unions were served pro-
quarter or fiscal year as individual site studies and remediation
posals for productivity improvements as well as other changes.
P AGE 19

NORTHERN SANTA
BURLINGTON FE
Thereafter, unions also served notices on the railroads which As of December 31, 1995, BNSF had entered into forward
proposed increasing wages and benefits and restoring many purchases for approximately 69 million gallons at an average
of the restrictive work rules and practices that were modified price of approximately 49 cents per gallon. In addition, BNSF
or eliminated under the current agreements. A number of the held petroleum futures contracts representing approximately
unions are also challenging the railroads' right to negotiate 60 million gallons at an average price of approximately 48
on a multi-employer basis and the issue is currently pending cents per gallon. These contracts have expiration dates ranging
in federal district court in Washington, D.C. from January 1996 to October 1996.
In December 1995, BNSF's multi-employer bargaining The above prices do not include taxes, fuel handling costs,
representative, the National Carriers' Conference Committee certain transportation costs and, except for forward contracts,
(NCCC), reached a tentative agreement with the UTU any differences which may occur from time to time between
resolving wage, benefit and work rule issues through 1999. the prices of commodities hedged and the purchase price of
BNSF's diesel fuel.
The agreement is subject to ratification, the results of which
should be known in March 1996. BNSF's current fuel hedging program covers approximately
At this time, the railroads and most of the other unions 12 percent of estimated 1996 fuel purchases. The current and
are proceeding in direct negotiations on the parties' proposals future fuel delivery prices are monitored continuously and
with many in mediation. The National Mediation Board has hedge positions are adjusted accordingly. Hedge positions are
scheduled and held meetings with the parties. The ultimate also closely monitored to ensure that they will not exceed
outcome of the negotiations cannot be predicted. actual fuel requirements. Unrealized gains or losses from
Under labor agreements currently in effect for most of the BNSF's fuel hedging transactions were not material at
unionized work force, a cost of living allowance of 9 cents per December 31, 1995 and 1994. BNSF monitors its hedging
hour went into effect on July I, 1995. The cost of living positions and credit ratings of its counterparties and does not
allowance was dependent upon changes in the Consumer Price anticipate losses due to counterparty nonperformance.
Interest rate
Index not to exceed 3 percent.
Tentative agreements resolving merger-related issues were From time to time, the Company enters into interest rate trans-
reached with the Brotherhood of Locomotive Engineers and actions for the purpose of establishing rates on anticipated
UTU in December 1995. These agreements are subject to debt transactions or fixing interest rates on floating rate debt.
ratification, the results of which should be known in March As of December 31,1995, no interest rate hedging transactions
were outstanding, although in February 1996, the Company
1996. Merger implementing negotiations are ongoing with
entered into interest rate transactions to fix interest rates on
the carman and yardmaster unions. Discussions with the
floating rate debt with a total principal amount of $225 million.
Transportation Communications Union resulted in an agree-
The transactions call for the payment of fixed rates of 4.8
ment resolving all merger-related and other issues covering
percent and receipt of a floating rate based on commercial
railroads' clerical employees.
paper rates over a period of 12 to 18 months.
BNRR and ATSF are each parties to service interruption
RECENT ACCOUNTINGPRONOUNCEMENTS
insurance agreements under which on a combined basis they
would be required to pay premiums of up to a maximum of In October 1995, the Financial Accounting Standards Board
approximately $106 million in the event of work stoppages on (FASB) issued SFAS No. 123, ''Accounting for Stock-Based
other railroads related to ongoing national bargaining. BNRR Compensation.\" The Company believes that it will continue to
and ATSF are also entitled to receive payments under certain use Accounting Principle Board Opinion No. 25 to measure
conditions if a work stoppage occurs on either property. and recognize employee stock-based transactions and will
HEDGING ACTIVITIES provide required additional disclosures commencing in 1996.
Fuel In March 1995, the FASB issued SFAS No. 121,
BNSF has a program to hedge against fluctuations in the price ''Accounting for the Impairment of Long-Lived Assets and for
of its diesel fuel purchases. This program includes forward Long-Lived Assets to Be Disposed Of,\" which establishes the
purchases for delivery at fueling facilities. Additionally, this accounting and reporting requirements for recognizing and
program includes exchange-traded petroleum futures contracts measuring impairment of long-lived assets to be either held
and various commodity swap and collar transactions which and used or held for disposal. BNSF is currently evaluating
are accounted for as hedges. Any gains or losses associated the financial impact of adopting this standard, however, the
impact is not anticipated to be significant.
with changes in market value of these hedges are deferred
and recognized as a component of fuel expense in the period
in which the hedged fuel is purchased and used. To the extent
BNSF hedges portions of its fuel purchases, it may not fully
benefit from decreases in fuel prices.
PAC E 20

REPORT OF INDEPENDENT ACCOUNTANTS
OF MANAGEMENT
REPORT
To THE STOCKHOLDERS AND
To THE STOCKHOLDERS OF
BOARD OF DIRECTORS OF BURLINGTON NORTHERN
BURLINGTON NORTHERN
SANTA FE CORPORATION AND SUBSIDIARIES
SANTA FE CORPORATION
W
T e have audited the consolidated balance sheets of
he accompanying consolidated financial statements of
Burlington Northern Santa Fe Corporation and
Burlington Northern Santa Fe Corporation and subsidiary
Subsidiaries as of December 31, 1995 and 1994, and the
companies were prepared by management, who are responsible
related consolidated statements of income, changes in stock-
for their integrity and objectivity. They were prepared in
holders' equity and cash flows for each of the three years
accordance with generally accepted accounting principles and
in the period ended December 31, 1995. These consolidated
properly include amounts that are based on management's
financial statements are the responsibility of the Company's
best judgments and estimates. Other financial information
management. Our responsibility is to express an opinion on
included in this annual report is consistent with that in the
these consolidated financial statements based on our audits.
consolidated financial statements.
We conducted our audits in accordance with generally
The Company maintains a system of internal accounting
accepted auditing standards. Those standards require that we
controls, supported by adequate documentation, to provide
plan and perform the audit to obtain reasonable assurance
reasonable assurance that assets are safeguarded and that the
about whether the financial statements are free of material
books and records reflect the authorized transactions of the
misstatement. An audit includes examining, on a test basis,
Company. Limitations exist in any system of internal account-
evidence supporting the amounts and disclosures in the
ing controls based upon the recognition that the cost of the
financial statements. An audit also includes assessing the
system should not exceed the benefits derived. The Company
accounting principles used and significant estimates made
believes its system of internal accounting controls, augmented
by management, as well as evaluating the overall financial
by its internal auditing function, appropriately balances the
statement presentation. We believe that our audits provide
cost/benefit relationship.
a reasonable basis for our opinion.
Independent accountants provide an objective assessment
In our opinion, the consolidated financial statements
of the degree to which management meets its responsibility
referred to above present fairly, in all material respects, the
for fairness of financial reporting. They regularly evaluate the
consolidated financial position of Burlington Northern Santa
system of internal accounting controls and perform such tests
Fe Corporation and Subsidiaries as of December 31, 1995
and other procedures as they deem necessary to express an
and 1994, and the consolidated results of their operations
opinion on the fairness of the consolidated financial statements.
and their cash flows for each of the three years in the period
The Board of Directors pursues its responsibility for the
ended December 31, 1995 in conformity with generally
Company's financial statements through its Audit Committee
accepted accounting principles.
which is composed solely of directors who are not officers
As discussed in Note 4 to the consolidated financial
or employees of the Company. The Audit Committee meets
statements, the Company changed its method of accounting
regularly with the independent accountants, management
for periodic major locomotive overhauls in 1995 and for
and internal auditors. The independent accountants and the
postemployment benefits and investments in debt and equity
Company's internal auditors have direct access to the Audit
securities in 1994.
Committee, with and without the presence of management
representatives, to discuss the scope and results of their work
and their comments on the adequacy of internal accounting
controls and the quality of financial reporting.
If' Coopers & Lybrand L.L.P.
Fort Worth, Texas
Robert D. Krebs
February 15, 1996
President and Chief Executive Officer
/l&;t
Denis E. Springer
Senior Vice President and Chief Financial Officer
G-L 7).-;LSJ
Thomas N. Hund
P AGE 21
Vice President and Controller

CONSOLIDATED STATEMENTS OF INCOME
Burlington Northern Santa Fe Corporation and Subsidiaries
(Dollars in millions, except per share data)
1994 1993
1995
Year ended December 31,
Revenues $ 6,183 $ 4,995 $ 4,699
Operating expenses:
Compensation and benefits 2,065 1,779 1,709
Purchased services 526 472 457
540 429 395
Equipment rents
520 362 352
Depreciation and amortization
Fuel 480 369 362
Materials 300 305 300
Other 491 426 463
735
Merger, severance and asset charges
Total operating expenses 5,657 4,142 4,038
526 853 661
Operating income
220 155 145
Interest expense
28 5
Other income (expense), net (3)
Income before income taxes 334 695 521
136 269 225
Income tax expense
Income before extraordinary item and cumulative effect
198 426 296
of change in accounting method
Extraordinary item, loss on early retirement of debt, net of tax (6)
192 426 296
Income before cumulative effect of change in accounting method
Cumulative effect of change in accounting method, net of tax (100) (10)
Net income 92
$ 416 296
$ $
Primary earnings per common share:
1.66 4.48 3.06
$ $ $
Income before extraordinary item and change in accounting method
-
Extraordinary item (.05)
Change in accounting method (.94) (.11)
.67 4.37
$ 3.06
$ $
Primary earnings per common share
Average shares (in thousands) 106,730 90,187 89,672
Fully diluted earnings per common share:
1.66 4.38
$ 3.04
$ $
Income before extraordinary item and change in accounting method
-
Extraordinary item (.05)
Change in accounting method (.94) (.11)
.67 4.27
$ 3.04
$ $
Fully diluted earnings per common share
Average shares (in thousands) 106,730 97,528 97,189
See accompanying notes to consolidated financial statements.
P AGE 22

CONSOLIDATED BALANCE SHEETS
Burlington Northern Santa Fe Corporation and Subsidiaries
(Dollars in millions)
1995 1994
December 31,
ASSETS
Current assets:
50 27
$ $
Cash and cash equivalents
620 697
Accounts receivable, net
220 100
Materials and supplies
320 156
Current portion of deferred income taxes
54 32
Other current assets
1,012
Total current assets 1,264
16,001 6,311
Property and equipment, net
269
Other assets 1,004
$7,592
Total assets $18,269
AND
LIABILITIES EQUITY
STOCKHOLDERS'
Current liabilities:
$ 2,289 $1,325
Accounts payable and other current liabilities
80 122
Long-term debt and commercial paper due within one year
Total current liabilities 2,369 1,447
4,153 1,697
Long-term debt and commercial paper
4,233 1,456
Deferred income taxes
626 416
Casualty and environmental reserves
-
530
Employee merger and separation costs
339
1,321
Other liabilities
13,232 5,355
Total liabilities
Note 12 and 13)
Commitments and contingencies (see
Stockholders' equity:
Convertible preferred stock and additional paid-in capital, $.01 par value;
25,000,000 shares authorized; 6,900,000 shares issued;
337
o shares and 6,900,000 shares outstanding, respectively
Common stock, $.01 par value, 300,000,000 shares authorized;
1 1
149,649,930 shares and 89,329,259 shares issued, respectively
4,606 1,443
Additional paid-in capital
459 485
Retained earnings
(3) (5)
Treasury stock, at cost, 44,713 shares and 105,438 shares, respectively
(26) (24)
Other
5,037 2,237
Total stockholders' equity
$18,269 $7,592
Total liabilities and stockholders' equity
See accompanying notes to consolidated financial statements.
23
P. GE

CONSOLIDATED STATEMENTS 0 F CASH FLOWS
Burlington Northern Santa Fe Corporation and Subsidiaries
(Dollars in millions)
Year ended December 31, 1995 1994 1993
OPERATING ACTIVITIES
Net income 92
$ $ 416 $ 296
Adjustments to reconcile net income to net
cash provided by operating activities:
-
100 10
Cumulative effect of change in accounting method
Depreciation and amortization 520 362 352
Deferred income taxes 126 156
(112)
735
Merger, severance and asset charges
Employee merger and separation costs paid (118)
Other, net 51 9 (117)
Changes in current assets and liabilities, excluding SFP
assets/liabilities acquired:
Accounts receivable, net 63 (108) (116)
Materials and supplies 6
(42) (13)
Other current assets (5) (5) (4)
132 11
Accounts payable and other current liabilities 5
808 578
Net cash provided by operating activities 1,416
INVESTINGACTIVITIES
Purchase of SFp, net of cash acquired (488) (18)
Cash used for capital expenditures (890) (698) (676)
Other, net 12 16 17
Net cash used for investing activities (1,366) (700) (659)
FINANCINGACTIVITIES
895 64 26
Net increase in commercial paper
Proceeds from issuance of long-term debt 310 224
1,294
Payments on long-term debt (2,071) (346) (88)
Dividends paid (129) (129) (125)
Other, net 3 4
(16)
41
Net cash flow provided by (used for) financing activities (27) (98)
23 10
Increase (decrease) in cash and cash equivalents (40)
Cash and cash equivalents:
Beginning of year 27 17 57
End of year 50 $ 27
$ $ 17
SUPPLEMENTAL CASH FLOW INFORMATION
228
Interest paid, net of amounts capitalized $ $ 149 $ 144
250 128
Income taxes paid, net of refunds 70
140 50
Assets financed through capital lease obligations
Noncash consideration for purchase of SFP:
Net assets acquired $ 3,319
Cash paid (532)
26
Cash acquired
Noncash consideration $ 2,813
See accompanying notes to consolidated financial statements.
, AGE 24

STOCKHOLDERS'
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Burlington Northern Santa Fe Corporation and Subsidiaries
(Shares in thousands. Dollars in millions, except per share data.)
Convertible Other
Preferred Common
Stock and Stock and Unearned
Additional
Additional Compensation, Minimum
Paid-in Paid-in Retained Restricted Pension
Outstanding Treasury
Stock Stock Total
Common Shares Liability
Capital Capital Earnings
30
$ 337 $ 1,386 $ $ (4) $ 1,728
Balance at December 31, 1992 88,024 $(19)
$ (2)
296 296
Net income
Dividends:
(106)
Commonstock, $1.20 per share (106)
(22)
(22)
Convertiblepreferred stock, $3.125 per share
Adjustments associated with unearned
12 6
232 (2) (4)
compensation, restricted stock
500 20 20
Exercise of stock options and related tax benefit
Equity adjustment from minimum pension
(6) (6)
liability
3
40 3
Other
337 198
88,796 1,421 1,919
Balance at December 31, 1993 (10)
(4) (23)
416 416
Net income
Dividends:
(107)
Commonstock, $1.20 per share (107)
(22) (22)
Convertiblepreferred stock, $3.125 per share
Adjustments associated with unearned
12 11
178
compensation, restricted stock (1)
8 8
184
Exercise of stock options and related tax benefit
Equity adjustment from minimum pension
9
9
liability
3
66 3
Other
337 485
Balance at December 31, 1994 1,444 2,237
89,224 (5) (23) (1)
92
Net income 92
Purchase of SFP:
Common stock issued 2,652
52,004 2,652
119 119
Value of outstanding SFP stock options
Conversionand redemption of convertible
335
7,313
preferred stock for common stock (337) (2)
Dividends:
(123)
(123)
Commonstock, $1.20 per share
(21)
(21)
Convertiblepreferred stock, $3.125 per share
Adjustments associated with unearned
2 16 31
243 13
compensation, restricted stock
39 36
778
Exercise of stock options and related tax benefit (3)
Equity adjustment from minimum pension
(18) (I8)
liability
26 26
Cost to equity investment adjustment
Other 43 5 3 8
-
$ $ 459
Balance at December 31, 1995 149,605 $4,607 $(3) $ (7) $(19) $5,037
See accompanying notes to consolidated financial statements.
P AGE 25

TO CONSOLIDATED FINANCIAL
NOTES normal sale or retirement of depreciable railroad property,
STATEMENTS cost less net salvage is generally charged to accumulated
BURLINGTON NORTHERN SANTA FE depreciation and no gain or loss is recognized. Significant
CORPORATION AND SUBSIDIARIES premature retirements are recorded as gains or losses at the
1 ACCOUNTING POLICIES time of their occurrence. Expenditures which significantly
PRINCIPLES OF CONSOLIDATION increase asset values or extend useful lives are capitalized.
The consolidated financial statements include the accounts of Repair and maintenance expenditures are charged to oper-
Burlington Northern Santa Fe Corporation and its majority- ating expense when the work is performed. Property and
owned subsidiaries (collectively BNSF or Company). BNSF was equipment are stated at cost including property values of
incorporated in Delaware on December 16,1994, for the purpose SFp, which were adjusted in applying purchase accounting.
of effecting a business combination between Burlington The weighted average annual depreciation rate in effect at
Northern Inc. (BNI) and Santa Fe Pacific Corporation (SFP). December 31,1995 was 3.7 percent for track structure, 4.8
The accompanying BNSF consolidated statements of income percent for equipment and 2.5 percent for other road properties.
REVENUE RECOGNITION
and cash flows for the years ended December 31,1995,1994
and 1993 reflect BNl's historical results and cash flows for Transportation revenues are recognized based upon the pro-
such periods and SFP's results and cash flows from September portion of service provided.
EARNINGS PER COMMONSHARE
22, 1995 (the date of its acquisition by BNI) through
December 31,1995. The accompanying BNSF consolidated Primary earnings per common share are computed by dividing
balance sheet at December 31,1994 reflects only BNI net income, after deduction of preferred stock dividends, by
historical amounts while the BNSF consolidated balance sheet the weighted average number of common shares and common
at December 31,1995 also includes the fair value adjustments share equivalents outstanding. Fully diluted earnings per
of SFP's assets and liabilities resulting from applying purchase common share are computed by dividing net income by the
accounting. The principal subsidiaries of BNSF are BNI, weighted average number of common shares and common
Burlington Northern Railroad (BNRR), SFP and The Atchison, share equivalents outstanding. Common share equivalents are
Topeka and Santa Fe Railway Company (ATSF). All significant computed using the treasury stock method. An average market
intercompany accounts and transactions have been eliminated. price is used to determine the number of common share equiv-
The preparation of financial statements in accordance with alents for primary earnings per common share. The higher of
generally accepted accounting principles requires management the average or end-of-period market price is used to determine
to make estimates and assumptions that affect the reported common share equivalents for fully diluted earnings per
amounts of assets and liabilities and disclosure of contingent common share. In addition, the if-converted method is used
assets and liabilities at the date of the financial statements for convertible preferred stock when computing fully diluted
and the reported amounts of revenues and expenses during earnings per common share. For the year ended December 31,
the periods presented. 1995, the computation of fully diluted earnings per share
RECLASSIFICATIONS was antidilutive; therefore, the amounts reported for primary
Certain comparative prior year amounts in the consolidated and fully diluted earnings per share are the same.
financial statements and notes have been reclassified to The average number of common shares used for earnings
conform with the current year presentation. per share calculations through December 31,1995 reflect the
CASH AND CASH EQUIVALENTS effect of common shares issued in connection with the merger
All short-term investments with original maturities of less than with SFP as outstanding for the period from September 22,1995
90 days are considered cash equivalents. Cash equivalents through December 31,1995. Future calculations will therefore
are stated at cost, which approximates market value. reflect a significant increase in the number of outstanding
MATERIALS AND SUPPLIES common shares.
2
Materials and supplies consist mainly of diesel fuel, repair ACQUISITION OF SFP
On June 29, 1994, BNI and SFP entered into an Agree-
parts for equipment and other railroad property and are valued
at the lower of average cost or market. ment and Plan of Merger (as amended on October 26,1994,
PROPERTY AND EQUIPMENT December 18,1994, January 24, 1995 and September 19,
Property and equipment are depreciated and amortized on a 1995, the Merger Agreement) pursuant to which SFP would
straight-line basis over their estimated useful lives. Upon merge with BNI in the manner set forth below (the Merger).
Stockholders of BNI and SFP approved the Merger Agreement
2,
PIC E

BURLINGTON NORTHERN SANTA FE
at special stockholders' meetings held on February 7, 1995. along with the effect of SFP stock options exercised, resulted
On August 23, 1995, the Interstate Commerce Commission in the final exchange ratio of 0.41143945 shares.
issued a written decision approving the Merger and on The business combination with SFP was accounted for by
September 22,1995 the Merger was consummated. the purchase method. As such, the accompanying consolidated
financial statements include assets, liabilities and financial
Pursuant to the Merger Agreement, on December 23,1994,
BNI and SFP commenced tender offers (together, the Tender results of SFP after Merger consummation. The following
Offer) to acquire 25 million and 38 million shares of SFP summarizes the purchase price (dollars in millions, except
common stock, respectively, at $20 per share in cash. During per share data, and shares in thousands):
the first quarter of 1995, SFP borrowed $1.0 billion under a BNI investment in SFP $ 516
credit facility of which $760 million of the proceeds were Shares of SFP common stock outstanding
used to purchase the 38 million shares pursuant to the Tender 151,396
at September 22, 1995
Offer.In addition, BNI borrowed $500 million under a credit (25,000)
Less SFP shares held by BNI
126,396
Remaining SFP shares outstanding
facility of which the proceeds were used to finance BNI's
.4114
Exchange Ratio
purchase of SFP common stock in the Tender Offer.
Shares of BNSF common stock issued 52,000
The Tender Offer was completed on February 21, 1995.
Per share value of BNSF common stock 51
$
Prior to consummation of the Merger, BNI accounted for
Total value of BNSF common stock issued 2,652
the $500 million investment in SFP under the cost method.
119
Value of outstanding SFP stock options
Upon consummation of the Merger, BNl's equity in earnings 32
BNI direct acquisition costs
of SFP prior to the Merger of $16 million was recorded as $3,319
Purchase price
other income.
Also, pursuant to the Merger Agreement, BNI and SFP The purchase price was calculated based on an estimated
fair value of BNSF common stock of $51 per share. The fair
were entitled to elect to consummate the Merger through the
use of one of twopossible structures: (i) a merger of SFP with value was determined from the average of the daily closing
.
prices of BNI common stock for the five trading days immedi-
and into BNI or (ii) the Holding Company Structure described
ately preceding and the five trading days immediately follow-
below. To ensure that the transaction contemplated by the
Merger Agreement qualified as a tax-free transaction for ing approval of the Merger by BNI and SFP shareholders
federal income tax purposes, the parties utilized the Holding which occurred on February 7, 1995. The effects of the
Company Structure. acquisition on the consolidated balance sheet, including the
fair value adjustments, were as follows (dollars in millions):
Under the Holding Company Structure, BNSF created two
subsidiaries. One subsidiary merged with and into BNI, and $ 9,409
Property and equipment, net
the other subsidiary merged with and into SFP. Each holder of Other assets 886
one share of BNI common stock received one share of BNSF Deferred income taxes (2,936)
Long-term debt
common stock and each holder of one share of SFP common (2,034)
Other liabilities (2,006)
stock, excluding the SFP common stock acquired by BNI in
$ 3,319
Net assets acquired
the Tender Offer and the SFP common stock held by SFP as
treasury stock, received 0.41143945 shares of BNSF common The purchase price allocation included $138 million for
stock, which reflects the effects of the repurchase program anticipated nonrecurring costs and expenses for severance
discussed below. The rights of each stockholder of BNSF are and relocation of prior SFP employees and the planned
substantially identical to the rights of a stockholder of BNI, disposition of excess SFP office space and other SFP assets.
and the Holding Company Structure has the same economic The consolidated pro forma results presented below were
effect with respect to the stockholders of BNI and SFP as prepared as if the Merger had occurred on January 1, 1994
would a direct merger of BNI and SFP. and include the historical results of BNI and SFp, excluding
In the Merger Agreement, the exchange ratio of BNSF com- the after tax effect of $309 million for merger-related charges
mon shares for each share of outstanding SFP common stock recorded by BNI in 1995. Additionally, the consolidated pro
upon consummation of the Merger was set at not less than 0.40 forma results for both periods include the estimated effects of
shares to not more than 0.4347 shares, with repurchases of purchase accounting adjustments and the Tender Offer. Pro
SFP common stock by SFP increasing the exchange ratio pro forma adjustments reflecting anticipated merger benefits are
rata. SFP repurchased approximately 3.6 million shares which, not included. This unaudited consolidated pro forma information
is not necessarily indicative of the results of operations that
might have occurred had the Merger actually taken place on
PA; E 27

NORTHERN SANTA
BURLINGTON FE
the date indicated, or of future results of operations of the Severance, pension and other employee benefit costs of $231
combined entities (dollars in millions, except per share data): million reflect the elimination of approximately 1,000 former
BNI employees. Most of these positions were eliminated in
Yearended December 31, 1995 1994
the third and fourth quarters of 1995; remaining positions will
Revenues $8,170 $7,676
Operating expenses 6,844 6,484 be eliminated in 1996. Additional components of salaried
Income before extraordinary items 605 536 employee costs include special termination benefits to be
Net income!l) 499 549
received under the Company's retirement plan and expenses
Primary earnings per share:
related to restricted stock which vested upon approval of
$ 4.00 $ 3.63
Income before extraordinary items
the Merger. Relocation expenses of $23 million reflect costs
Net income 3.27 3.72
incurred in 1995 for relocating approximately 300 former
Fully diluted earnings per share:
Income before extraordinary items $ 3.94 $ 3.59 BNI employees.
Net income 3.25 3.67
Costs of $105 million are included for branch line disposi-
(1) Pro forma results for 1995 include approximately$230million (pre-tax) tions reflecting the write-off of the net book value of the lines
related to the merger,severance and asset charge which are not considered
at the anticipated disposal date, less estimated net proceeds.
directly attributable to the Merger.Additionally,1995 pro forma net income
Approximately 75 line segments covering 3,300 miles of former
includes the $100 million cumulative effect for the change in accounting for
locomotiveoverhauls for years prior to 1995 and a $25 million reduction for BNI lines are included. Remaining costs of $89 million
the effect of the change on 1995. Also, 1995 pro formanet income includes
include obligations at leased facilities which are expected to
the $6 million extraordinarycharge for retirement of debt. Pro forma 1994
be vacated and the write-off of duplicate and excess assets
net income includes a $10 million reduction for a change in accounting.
including computer hardware and software and certain facilities.
3 MERGER, SEVERANCE AND ASSET CHARGES
Additional accruals of $138 million were recorded through
Included in the Statement of Income for 1995 are
purchase accounting related to former SFP employees and
operating expenses of $735 million related to merger,
assets. Approximately $105 million of these costs related to
severance and asset costs. Significant components included
termination of approximately 500 salaried employees for
in these costs are described below.
severance payments and special termination benefits to be
Employee-related costs of $287 million were recorded
received under the Company's retirement and health and
related to BNSF's plan to centralize the majority of its union
welfare plans. Salaried employee costs also include amounts
clerical functions which was approved in 1995. This plan
to relocate approximately 500 former SFP employees. The
includes the reduction of approximately 1,600 employees
remaining $33 million of costs relate to the sale or abandon-
which, among other things, requires installation of common
ment of 500 miles of branch lines, rents on vacated leased
information systems. The Company and the union have
facilities and the write-off of excess assets.
entered into an implementation agreement which allows the
Current and long-term employee merger and separation
Company to abolish the positions and provides separation
liabilities totaling $745 million are included in the consolidated
benefits to impacted employees. It will take several years to
balance sheet and represent employee-related components
fully implement this plan due to the geographical complexity
of the above costs, as well as remaining liabilities for actions
of the new combined rail system, and the time required to
taken by ATSF in prior periods. The majority of these prior
develop and install common systems. Most of the position
ATSF costs are associated with deferred benefits payable
reductions are expected to occur during 1996 and 1997, and
upon separation or retirement to certain active conductors and
the entire plan is expected to be completed by the end of 1998.
trainmen, incurred in connection with an agreement which,
No comparable costs were accrued in applying purchase
among other things, reduced crew sizes. Additionally, certain
accounting, as ATSF's operations had previously been
locomotive engineers are eligible for a deferred benefit payable
centralized. Also, no provision for clerical relocations was
upon separation or retirement, associated with an agreement
included in the 1995 expense as employees have yet to com- reached in 1990 with ATSF which allowed for more flexible
mit to relocate. As such, these costs, as well as any separation work rules.
and severance costs above those provided, will be recorded as
At December 31, 1995, approximately $215 million of the
operating expenses of future periods. Both the timing and
above is included within current liabilities for anticipated costs
magnitude of any such future expense is presently unknown.
to be paid in 1996. The remaining costs are anticipated to
Costs of $254 million were recorded for salaried employees
be paid over the next five years, except for certain costs related
and reflect severance, pension and other employee benefits,
to conductors, trainmen and locomotive engineers of ATSF
and costs for employee relocations incurred during the period.
will be paid upon the employees separation or retirement.
P AGE 28

NORTHERN SANTA
BURLINGTON FE
6
4 INCOME TAXES
ACCOUNTING CHANGES
Income tax expense, excluding the cumulative effect of
Effective January 1, 1995, BNSF changed its method
change in accounting method and extraordinary item, was as
of accounting for periodic major locomotive overhauls.
follows (in millions):
Under the new method, costs of owned locomotives relating
to components requiring major overhaul are depreciated, 1993
1995 1994
Yearended December31,
on a straight-line basis, to the first major overhaul date. Current:
Federal $124 $ 61
$ 216
The remaining cost of the owned locomotive is depreciated,
32 19 8
State
on a straight-line basis, over the estimated economic life of
143 69
248
the locomotive. The cost of overhauls on owned units are then
Deferred:
capitalized when incurred and depreciated, on a straight-line
109 136
Federal (101)
basis, until the next anticipated overhaul. In addition, estimated 17 20
State (II)
costs for major overhauls on leased units are accrued on a 156
126
(II2)
straight-line basis over the life of the leases. BNSF previously Total $269 $225
$ 136
expensed locomotive overhauls when the costs were incurred.
BNSF believes that this change is preferable because it Reconciliation of the federal statutory income tax rate to the
improves the matching of expenses incurred to revenues effective tax rate, excluding the cumulative effect of change in
earned. The cumulative effect of this change on years prior to accounting method and extraordinary item, was as follows:
1995 was a reduction in net income of $100 million (net of a 1995 1994 1993
Yearended December31,
$63 million income tax benefit) or $.94 per share (primary 35.0% 35.0%
35.0%
Federal statutory income tax rate
and fully diluted). The effect of this change for the year ended State income taxes,
4.0 3.4 3.4
December 31,1995, was to reduce income before extraordinary net of federal tax benefit
Effect of 1 percent federal tax rate
item and cumulative effect of change in accounting method by
increase on deferred tax balances
-
$25 million or $.23 per share (primary and fully diluted). - 5.0
at January 1, 1993
The pro forma effect of this change on 1994 and 1993 would 0.3
1.7
Other, net (.2)
have been to reduce net income to $390 million or $4.08 38.7%
Effective tax rate 40.7% 43.2%
per share (primary) and $275 million or $2.82 per share
(primary), respectively. In August 1993, the Omnibus Budget Reconciliation Act
Effective January 1, 1994, BNSF adopted Statement of of 1993 (the Act) was signed into law. The Act increased
Financial Accounting Standards (SFAS) No. 112, \"Employers' the corporate federal income tax rate by 1 percent, effective
Accounting for Postemployment Benefits.\" The cumulative January 1, 1993. BNSF recorded $28 million to income tax
effect, net of $7 million income tax benefit, of this change in expense representing the impact of the 1 percent increase on
accounting attributable to years prior to 1994, at the time of BNSF's beginning of the year deferred income tax liability.
adoption, was to decrease 1994 net income by $10 million, or The components of deferred tax assets and liabilities were
$.11 per common share. as follows (in millions):
In 1994, BNSF adopted SFAS No. 115, ''Accounting for 1995 1994
December 31,
Certain Investments in Debt and Equity Securities.\" The Deferred tax liabilities:
adoption of this standard had no effect on net income and $(1,785)
Depreciation and amortization $(5,076)
no material effect on stockholders' equity. Other (106)
(249)
5 OTHER INCOME (EXPENSE), NET Total deferred tax liabilities (1,891)
(5,325)
Other income (expense), net includes the following Deferred tax assets:
255
360
Casualty and environmental reserves
(in millions):
359
Employee merger and separation costs
1995 1994 1993
Yearended December31, 124
Non-expiring AMT credit carryforwards
BNI's equity in earnings of SFP prior to 88
Postretirement benefits
$- $-
$ 16
consummation of the Merger 49
69
Pensions
12 15 17
Gain on property dispositions 287
412
Other
- -
9
Equity in earnings of pipeline partnership 591
Total deferred tax assets 1,412
3 6
Interest income 8
-
$(1,300)
$(3,913)
Net deferred tax liability
Accounts receivable sale fees (4) (9) (9)
$(1,456)
Miscellaneous, net (12) (9) $(4,233)
(13) Noncurrent deferred income tax liability
156
320
Current deferred income tax asset
Total $5
$ 28 $ (3)
$(1,300)
$(3,913)
Net deferred tax liability
P AGE 29

BURLINGTON NORTHERN SANTA FE
BNSF maintains an allowance for doubtful accounts based
In 1995 and 1993, tax benefits of $11 million and $4 million,
respectively, related to the adjustment to recognize the minimum upon the expected collectibility of all accounts receivable,
including accounts receivable sold. Allowances for doubtful
pension liability was allocated directly to stockholders' equity.
accounts of $50 million and $20 million have been recorded
In 1994, tax expense of $6 million related to the adjustment
to reduce the minimum pension liability was allocated directly at December 31, 1995 and 1994, respectively.
8
to stockholders' equity. PROPERTY AND EQUIPMENT, NET
BNSF will file its first federal consolidated income tax Property and equipment, net was as follows (in millions):
return for 1995. BNI's and SFP's federal income tax returns 1994
1995
December 31,
have been examined through 1991 and 1990, respectively. $ 7,875
Road, roadway structures and real estate $15,951
All years prior to 1986 are closed for BNI and SFP. Issues 2,304
Equipment 4,383
Total cost 10,179
relating to the years 1986-1991 are being contested through 20,334
Less accumulated depreciation
various stages of administrative appeal. In addition, BNSF
and amortization (3,868)
(4,333)
and its subsidiaries have various state income tax returns in
$ 6,311
$16,001
Property and equipment, net
the process of examination, administrative appeal or litigation.
Management believes that adequate provision has been made
The consolidated balance sheets at December 31, 1995
for any adjustment that might be assessed for open years
and 1994 included $200 million and $77 million, respectively,
through 1995.
for property and equipment under capital leases. The related
7 ACCOUNTS RECEIVABLE, NET
depreciation was included in depreciation expense.
A special purpose subsidiary of ATSF has sold, with
Accumulated depreciation for property and equipment under
limited recourse, variable rate certificates which mature in
capital leases was $46 million and $34 million at December
December 1999 evidencing undivided interests in an accounts
31, 1995 and 1994, respectively.
receivable master trust. The master trust's assets include an
Capitalized software development costs are generally
ownership interest in a revolving portfolio of ATSF's accounts
amortized over a five- to seven-year estimated useful life
receivable which are used to support the certificates. At
using the straight-line method. Amortization expense was $9
December 31, 1995, $240 million of certificates sold were
million for the year ended December 31, 1995, $2 million for
outstanding and were supported by receivables in the master
the year ended December 31, 1994 and no amortization was
trust of $308 million. A maximum of $300 million of certifi-
recorded for the year ended December 31, 1993. Unamortized
cates can be sold if the master trust balance is increased by
capitalized software costs were $69 million and $20 million
receivables which are eligible for sale. ATSF has retained the
as of December 31, 1995 and 1994, respectively.
collection responsibility with respect to the accounts receivable ACCOUNTS PAYABLE AND OTHER
9
held in trust. ATSF is exposed to credit loss related to collec- CURRENT LIABILITIES
tion of accounts receivable to the extent that the amount of
Accounts payable and other current liabilities consisted of the
receivables in the master trust exceeds the amount of certificates
following (in millions):
sold. BNRR's agreement to sell accounts receivable with
1994
- 1995
December31,
limited recourse expired in December 1994. Costs related to
$ 264
$ 519
Accounts and wages payable
such agreements vary on a monthly basis and are generally 221
290
Casualty and environmental reserves
related to certain interest rates. Costs related to accounts
215
Employee merger and separation costs
receivable sales, which are included in Other income 118
143
Taxes other than income taxes
89
141
Accrued vacations
(expense), net were $4 million in 1995 and $9 million in
633
981
-
Other
both 1994 and 1993.
$1,325
Total $2,289
P AGE 30

NORTHERN SANTA
BURLINGTON FE
BNSF maintains a program for the issuance, from time to
10 time, of commercial paper. These borrowings are supported
DEBT outstanding was as follows (in millions):
Debt
by bank revolving credit agreements. Outstanding commercial
1994
1995
December 31,
paper balances are considered as reducing available borrowings
BNSF:
under these agreements. The bank revolving credit agreements
300 $
6 3/8% notes, due 2005 $
350 allow borrowings of up to $1.0 billion on a short-term basis
7% debentures, due 2025
85
Credit facility borrowings, 6.0% (variable) and $1.5 billion on a long-term basis. Annual facility fees are
761
Commercial paper, 6.0% (variable) currently .08 percent and .125 percent, respectively, and
BN!:
are subject to change based upon changes in BNSF's senior
200
200
8 3/4% debentures, due 2022
unsecured debt ratings. Borrowings are based upon LlBOR
150
150
7 1/2% debentures, due 2023
150 plus a spread based upon BNSF's senior unsecured debt
150
7% notes, due 2002
150
150
7.40% notes, due 1999 ratings, money market rates offered at the option of the lenders,
- 156 or an alternate base rate. Thecommitmentsof the lenders to
9% debentures
Equipment obligations, weighted average
make loans are currently scheduled to expire on November
rate of 7.20% and 7.08%, respectively,
19,1996 and November 21, 2000, respectively. At December
194
200
due serially to 2013
31,1995, borrowings against the long-term revolving credit
BNRR:
agreement were $85 million and the maturity value of com-
Consolidated mortgage bonds,
321
3 1/5% to 9 1/4%, due 2006 to 2045 321 mercial paper outstanding was $996 million, leaving a total
Capitalized lease obligations, weighted of $419 million of the long-termrevolvingcredit agreement
average rate of 6.59% and 8.01 %,
available and $1.0 billion of the short-term revolving credit
46
150
respectively, expiring 1996 to 2008
agreement available. The maturity value of commercial paper
Equipment and other obligations, weighted
outstanding at December 31,1994 was $91 million.
average rate of 8.44% and 9.30%,
91 Thefinancial covenants of the bank revolvingcredit agree-
74
respectively, due serially to 2009
General mortgage bonds, 3 1/8% and ments require that BNSF's consolidated tangible net worth, as
62
62
2 5/8%, due 2000 and 2010, respectively
defined in the agreements, be at least $4.5 billion, and that
Prior lien railway and land grant bonds,
its debt, as defined in the agreements, cannot exceed 55 per-
57
57
4%, due 1997
cent of its consolidated total capital.
General lien railway and land grant bonds,
35 In December 1995, BNSF issued $300 million of 6 3/8%
35
3%, due 2047
22
20 Notes due December 15, 2005 and $350 million of 7%
First mortgage bonds, series A, 4%, due 1997
158
Other 9
Debentures due December 15, 2025 under a registration
90
224
Commercial paper, 6.1 % (variable)
statement filed by BNSF on November 22, 1995 covering the
SFP/ATSF:
issuance, from time to time, of up to $1 billion aggregate
Equipment obligations, weighted average
principal amount of debt securities. The net proceeds from
427
rate of 8.43%, due serially to 2009
the sale of the notes and debentures were primarily used for
Pipeline exchangeable debentures,
219
10.4% (variable), due 2010 general corporate purposes, including but not limited to the
Senior notes, 8 3/8% and 8 5/8%,
repayment of commercial paper and short-term bank loans
200
due 2001 and 2004, respectively
having an average interest rate of approximately 6 percent.
32
Mortgage notes, 10.325%, due 1996 to 2014
During the course of 1995, the Companyentered into various
4
Capitalized lease obligations
114 interest rate swap agreements with a principal amount of
Unamortized purchase accounting adjustment
Unamortized discount (63)
(61) $500 million, for the purpose of establishing rates in anticipa-
Total 1,819
4,233 tion of debt issuances under a shelf registration statement.
Less: The swaps were anticipated to hedge $250 million of 10 year
Current portion of long-term debt debt and $250 million of 30 year debt. The swaps relating to
and commercial paper (122)
(80)
the 10 year issuance called for the payment of a fixed interest
$1,697
Long-term debt $4,153
rate of 6.6 percent which was based upon 10 year treasury
notes, and the receipt of a variable interest rate. The swaps
relating to the 30 year issuance called for the payment of a
fixed interest rate of 6.8 percent which was based upon 30
year treasury bonds, and the receipt of a variable interest rate.
In conjunction with the fourth quarter 1995 issuance of 10
P AGE 31

BURLINGTON NORTHERN SANTA FE
11
year 6 3/8% notes and 30 year 7% debentures, the Company DISCLOSURES ABOUT FAIR VALUE
closed out the swap transactions which resulted in losses of OF FINANCIAL INSTRUMENTS
The estimated fair values of BNSF's financial instruments at
$13 million and $15 million, respectively. The losses were
deferred and will be recognized over the term of the borrowings. December 31, 1995 and 1994 and the methods and assump-
tions used to estimate the fair value of each class of financial
in December 1995, BNSF defeased its 9%
Additionally,
debentures by placing $166 million of U.S. government instruments held by BNSF, were as follows:
securities into an irrevocable trust for the purpose of repaying CASH AND CASH EQUIVALENTS
the debentures in April 1996. The defeasance of debt resulted The carrying amount approximated fair value because of the
in an extraordinary charge of $6 million, net of applicable short maturity of these instruments.
MARKETABLE SECURITIES
income tax benefits of $3 million, principally reflecting the
call premium on the debt. Marketable securities, which are used to fund liabilities of
In 1995, BNRR completed cross-border leveraged leases certain employee benefit plans, consist of corporate bonds
of equipment for a total amount of $136 million which were (47 percent of carrying amount) and United States government
recorded as capital lease obligations. These transactions or agency issues (53 percent of carrying amount) and are
included the issuance of $108 million of equipment secured classified as available for sale. The carrying value of available
debt at a weighted average yield of 6.39 percent and the for sale securities is adjusted for changes in fair value and
receipt of an up front cash benefit. The up front benefit any unrealized gains or losses are recorded as a component of
reduces the effective interest rate on the debt to 5.76 percent. stockholders' equity. At December 31, 1995, the unrealized
In November 1994, BNRR entered into a $150 million gains and losses were immaterial. Realized gains or losses from
the sales of marketable securities were also immaterial for
three year term loan facility agreement with a group of
1995. The fair value for these securities was based on market.
commercial banks and used the proceeds to redeem $150
ACCRUED INTEREST PAYABLE
amount of Railroad
million aggregate principal Consolidated
Mortgage Bonds, 10%, Series J, due November 1, 1997. In The carrying amount approximated fair value as the majority
November 1995, this debt was repaid through the issuance of of interest payments are made semiannually.
LONG-TERM DEBT AND COMMERCIAL PAPER
paper by BNRR.
commercial
In May 1994, BNI issued $150 million of 7.4% notes due The fair value of BNSF's long-term debt was primarily based
May 15, 1999 and used the proceeds to retire $150 million on quoted market prices for the same or similar issues, or
on the current rates that would be offered to BNSF for debt
aggregate principal amount of Railroad Consolidated Mortgage
Bonds, 8 7/8%, Series I, due May 30, 1994. of the same remaining maturities. The carrying amount of
Aggregate long-term debt scheduled maturities are $80 commercial paper approximated fair value because of the
$75 million, $215 million and $1,168
million, $149 million, short maturity of these instruments.
million for 1996 through 2000, respectively. The carrying amount and estimated fair values of BNSF's
Substantially all BNRR properties and certain other assets financial instruments were as follows (in millions):
are pledged as collateral to or are otherwise restricted under 1995 1994
December31,
the various BNRR long-term debt agreements. Equipment Fair Fair
Carrying Carrying
Amount Value Amount Value
obligations are secured by the underlying equipment.
Assets:
In addition, a subsidiary of SFP is contingently liable as
Cash and cash
general partner for $355 million of long-term debt held by
50 50 27 27
$ $ $ $
equivalents
Santa Fe Pacific Pipeline Partners, L.P. (Pipeline Partnership).
Marketable securities 20
20 20 20
The SFP subsidiary holds a 44 percent interest in the Pipeline Liabilities:
Partnership which it accounts for under the equity method. The 71 71 45 45
Accrued interest payable
pipeline exchangeable debentures are exchangeable for BNSF's Long-term debt and
1,819
commercial paper 4,233 4,412 1,742
limited partnership interest in the Pipeline Partnership.
BNSFalso holds investments in, and has advances to,
several unconsolidated transportation affiliates. It was not
practicable to estimate the fair value of these financial
at their original cost of
instruments, which were carried
$45 million and $16 million in the December 31, 1995
and 1994 consolidated balance sheets.
P AGE 32

NORTHERN SANTA
BURLINGTON FE
LEASES
12 HEDGING ACTIVITIES, LEASES
BNSF has substantial lease commitments for locomotives,
AND OTHER COMMITMENTS
HEDGING ACTIVITIES freight cars, trailers, office buildings and other property. Most
Fuel of these leases provide the option to purchase the equipment
at fair market value at the end of the lease. However, some
BNSF has a program to hedge against fluctuations in the price
provide fixed price purchase options. Future minimum lease
ofits diesel fuel purchases. This program includes forward
.
payments (which reflect leases having non-cancelable lease
purchases for delivery at fueling facilities. Additionally, this
terms in excess of one year) as of December 31,1995 are
program includes exchange-traded petroleum futures contracts
summarized as follows (in millions):
and various commodity swap and collar transactions which
are accounted for as hedges. Any gains or losses associated Capital Operating
Leases Leases
Year ended December 31
with changes in market value of these hedges are deferred
$ 22
1996 $ 274
and recognized as a component of fuel expense in the period
22
1997 263
in which the hedged fuel is purchased and used. To the extent 22
1998 220
BNSF hedges portions of its fuel purchases, it may not fully 20
1999 185
benefit from decreases in fuel prices. 19
2000 159
Thereafter
As of December 31, 1995, BNSF had entered into forward 112 1,425
217
Total
purchases for approximately 69 million gallons at an average $2,526
price of approximately 49 cents per gallon. In addition, BNSF 63
Less amount representing interest
held petroleum futures contracts representing approximately $154
Present value of minimum lease payments
60 million gallons at an average price of approximately 48
Lease rental expense for all operating leases was $303
cents per gallon. These contracts have expiration dates ranging
million, $229 million and $194 million for the years ended
from January, 1996 to October, 1996.
December 31,1995,1994 and 1993, respectively. Contingent
The above prices do not include taxes, fuel handling costs,
rentals and sublease rentals were not significant.
certain transportation costs and, except for forward contracts,
OTHER COMMITMENTS
any differences which may occur from time to time between
BNSF has entered into commitments to acquire 149 locomotives
the prices of commodities hedged and the purchase price of
BNSF's diesel fuel. during 1996 and 1997. In addition, BNSF has two power pur-
chase agreements, expiring in 1998 and 2001, that currently
BNSF's current fuel hedging program covers approximately
involve 197 locomotives. Payments required by the agreements
12 percent of estimated 1996 fuel purchases. The current
are based upon usage, subject to specified take-or-pay
and future fuel delivery prices are monitored continuously
minimums. The rates specified in the two agreements are
and hedge positions are adjusted accordingly. Hedge positions
renegotiable every two years. BNSF's 1996 minimum commit-
are also closely monitored to ensure that they will not exceed
ment obligation is $51 million. Based on projected locomotive
actual fuel requirements in any period. Unrealized gains or
power requirements, BNSF's payments in 1996 are expected
losses from BNSF's fuel hedging transactions were not material
to be in excess of the minimum. Payments under the agree-
at December 31,1995 and 1994. BNSF monitors its hedging
ments totaled $49 million, $47 million and $53 million in
positions and credit ratings of its counterparties and does not
1995,1994 and 1993, respectively. In 1990, BNI entered into
anticipate losses due to counterparty nonperformance.
a letter of credit for the benefit of a vendor. This letter of
Interest rate
credit is a performance guarantee for up to $15 million for
From time to time, the Company enters into various interest
locomotive overhauls.
rate hedging transactions for the purpose of managing
In connection with the closing of the sale of rail lines in
exposure to fluctuations in interest rates and establishing
southern California in 1992 and 1993, BNSF has entered into
rates in anticipation of future debt issuances. During 1995,
various shared use agreements with the agencies, which
the Company closed out interest rate swap transactions in
require BNSF to pay the agencies approximately $6 million
conjunction with the issuance of debt (see Note 10: Debt).
annually to maintain track structure and facilities. Additionally,
No contracts were outstanding at December 31,1995.
BNSF recorded a $50 million liability in 1993 for an obligation
retained by BNSF, which under certain conditions requires a
repurchase of a portion of the properties sold.
P AGE 33

BURLINGTON NORTHERN SANTA FE
BNRR andATSF are estimate of associated costs can be made. Adjustments to
each parties to service interruption
initial estimates are recorded as necessary based upon addi-
insurance agreements under which on a combined basis they
tional information developed in subsequent periods. BNSF
would be required to pay premiums of up to a maximum of
conducts an ongoing environmental contingency analysis,
approximately $106 million in the event of work stoppages on
which considers a combination of factors including indepen-
other railroads related to ongoing national bargaining. BNRR
andATSFare also entitledto receive payments dent consulting reports, site visits, legal reviews, analysis
under certain
of the likelihood of participation in and the ability of other
conditions if a work stoppage occurs on either property.
13 ENVIRONMENTAL AND OTHER CONTINGENCIES PRPs to pay for clean-up, and historical trend analyses.
ENVIRONMENTAL BNSF is involved in a number of administrative and
judicial proceedings and other mandatory clean-up efforts at
BNSF's operations, as well as those of its competitors, are
subject to extensive federal, state and local environmental approximately 320 sites, including the Superfund sites, at
regulation. BNSF's operating procedures include practices to which it is being asked to participate in the study and/or
protect the environment from the environmental risks inherent clean-up of the environmental contamination. BNSF paid
in railroad operations, which frequently involve transporting approximately $31 million, $21 million and $27 million during
chemicals and other hazardous materials. 1995, 1994 and 1993, respectively relating to mandatory
Additionally, many of BNSF's land holdings are and have clean-up efforts, including amounts expended under federal
been used for industrial or transportation related purposes or and state voluntary clean-up programs. BNSF hasaccruals
leased to commercial or industrial companies whose activities of approximately $235 million for remediation and restoration
may have resulted in discharges onto the property. As a result, of all known sites, including $225 million pertaining to
BNSF is subject to environmental cleanup and enforcement mandated sites, of which approximately $60 million relates to
actions. In particular, the Federal Comprehensive Environ- the Superfund sites. BNSF anticipates that the majority of the
mental Response Compensation and Liability Act of 1980 accrued costs at December 31,1995 will bepaid over the
(CERCLA),also knownas the \"Superfund\" as well aslaw, next five years. No individual site is considered to be material.
similar state laws generally impose joint and several liability Recoveries received from third parties, net of legal costs
for clean-up and enforcement costs without regard to fault incurred, were approximately $31 million during the year ended
or the legality of the original conduct on current and former December 31,1995 and were not significant in prior years.
owners and operators of a site. BNSF has been notified that it Liabilities recorded for environmental costs represent
BNSF's best estimates for remediation and restoration of these
is a potentially responsible party (PRP) for study and clean-up
sites and include both asserted and unasserted claims.
costs at approximately 30 Superfund sites for which investi-
gation and remediation payments are or will be made or are Unasserted claims are not considered to be a material compo-
yet to be determined (the Superfund sites) and, in many nent of the liability. Although recorded liabilities include
BNSF's best estimates of all costs, without reduction for
instances, is one of several PRPs. In addition, BNSF may be
considered a PRP undercertain other laws. Accordingly, anticipated recoveries from third parties, BNSF's total clean-
under CERCLA and other federal and state statutes, BNSF up costs at these sites cannot bepredicted with certainty due
to various factors such as the extent of corrective actions that
may be held jointly and severally liable for all environmental
costs associated with a particular site. If there are other PRPs, may be required, evolving environmental laws and regulations,
BNSF generally participates in the clean-up of these sites advances in environmental technology, the extent of other
through cost-sharing agreements with terms that vary from PRPs' participation in clean-up efforts, developments in
site to site. Costs are typically allocated based on relative ongoing environmental analyses related to sites determined to
volumetric contribution of material, the amount of time the be contaminated, and developments in environmental surveys
site wasowned or operated, and/or the portion of the total site and studies of potentially contaminated sites. As a result,
owned or operated by each PRP. future charges to income for environmental liabilities could
Environmental costs include initial site surveys and have a significant effect on results of operations in a particular
environmental studies of potentially contaminated sites as quarter or fiscal year as individual site studies and remediation
costs for remediation and restorationof sites deter-
wellas and restoration efforts proceed or as new sites arise. However,
mined to be contaminated. Liabilities for environmental expenditures associated with such liabilities are typically paid
clean-up costs are initially recorded when BNSF's liability for out over a long period; therefore, management believes that
environmental clean-up is both probable and a reasonable it is unlikely that any identified matters, either individually or
in the aggregate, will have a material adverse effect on BNSF's
consolidated financial position or liquidity.
P AGE 34

BURLINGTON NORTHERN SANTA FE
The following table shows the reconciliation of BNI's
BNSF expects it will become subject to future requirements
funded status of the plans with amounts recorded in the
regulating air emissions from diesel locomotives that may
consolidated balance sheets (in millions):
increase its operating costs. Regulations applicable to new
locomotive engines are expected to be issued by the 1995 1994
December31,
Environmental Protection Agency soon. It is anticipated that Actuarial present value of benefit obligations:
$(641) $(481)
these regulations will be effective for locomotive engines Vested benefit obligation
installed after 1999. Under some interpretations of federal law, $(696) $(553)
Accumulated benefit obligation
older locomotive engines may be regulated by states based
$(758) $(628)
Projected benefit obligation
on standards and procedures which the State of California Plan assets at fair value, primarily marketable
534 467
ultimately adopts. At this time it is unknown whether equity and debt securities
California will adopt locomotive emission standards that may Projected benefit obligation in excess
differ from federal standards. (224) (161)
of plan assets
93 41
OTHER CLAIMSAND LITIGATION Unrecognized net loss
2 5
Unrecognized prior service cost
BNSF and its subsidiaries are parties to a number of legal 20 29
Unamortized net transition obligation
actions and claims, various governmental proceedings and
Adjustment required to recognize
private civil suits arising in the ordinary course of business, (53) (12)
minimum liability
including those related to environmental matters and personal $(162) $ (98)
Accrued pension liability
injury claims. While the final outcome of these items cannot
BNI uses a December 31 measurement date. The assumptions
be predicted with certainty, considering among other things
used in accounting for BNI's plans were as follows:
the meritorious legal defenses available, it is the opinion of
management that none of these items, when finally resolved, 1995 1993
1994
December31,
will have a material adverse effect on the annual results of 7.0% 9.0% 7.0%
Discount rate
4.0% 5.5% 5.5%
Rate of increase in compensation levels
operations, financial position or liquidity of BNSF, although
Expected long-term rate of return
an adverse resolution of a number of these items could have
9.5% 9.5% 9.5%
on plan assets
a material adverse effect on the results of operations in a
particular quarter or fiscal year. Components of net pension income for SFP's plans from
14 RETIREMENT PLANS
September 22, 1995 through December 31, 1995 were as
BNSF has noncontributory defined benefit pension follows (in millions):
plans through its subsidiaries, BNI and SFp, covering sub- $ 2
Service cost, benefits earned during the period
stantially all non-union employees. BNI and SFP also have II
Interest cost on projected benefit obligation
nonqualified defined benefit plans for certain officers and (21)
Actual return on plan assets
4
Net amortization and deferred amounts
other employees. The benefits under BNSF's plans are based
$ (4)
on years of credited service and the highest five-year average Net pension income
compensation levels. BNSF's funding policy is to contribute
The following table shows the reconciliation of SFP's funded
annually not less than the regulatory minimum, and not more
status of the plans with amounts recorded in the consolidated
than the maximum amount deductible for income tax purposes.
balance sheet at December 31, 1995 (in millions):
Components of the net pension cost for BNI's plans were
Accumulated
Assets Exceed
as follows (in millions): Benefits
Accumulated
1995 Exceed Assets
1994 1993 Benefits
Yearended December31,
- -
Actuarial present value of benefit obligations:
Service cost, benefits earned
$ (7)
$9
9 $(547)
$ $ 12 Vested benefit obligation
-
during the period
-
50
54 50
Interest cost on projected benefit obligation $(575) $ (8)
Accumulated benefit obligation
(93) (25) (57)
Actual return on plan assets
$(614) $(11)
57 24
Net amortization and deferred amounts Projected benefit obligation
(1)
10 Plan assets at fair value, primarily common
Curtailment costs
718
32 stock, and U.S. and corporate bonds
Cost of special termination benefits
$ 69 $ 36 Plan assets in excess of (less than)
$ 26
Net pension cost
104 (II)
projected benefit obligation
3
Unrecognized net loss
Prepaid (accrued) pension asset
$ 104 $ (8)
(liability)
P AGE 35

BURLINGTON NORTHERN SANTA FE
30 measurement The lifeinsurance plan is noncontributory and covers retirees
SFP uses a September date. The
assumptions used in accounting for SFP's plans for 1995 only. Components of the SFP's postretirement benefit cost
were as follows: from September 22, 1995 to December 31, 1995 relating to its
were
7.5 % medical and lifeinsurance plans as follows (inmillions):
Discount rate
4.0 %
Rate of increase in compensation levels Medical
Life Insurance
9.75% Plan
Plan
Expected long-term rate of return on plan assets
$-
Service cost $I
BNSF sponsors 40l(k) thrift and profit sharing plans through I
Interest cost 3
its subsidiaries, BNI and SFp, which cover substantially Net amortization and deferred amounts ~)
all non-union employees and certain union employees. BNI $I $2
Net postretirement benefit cost
matches 35percent of the first 6 percent of non-union
employees' contributions, which is subject to certain percentage SFP's policy is to fund benefitspayable under the medical
limits of the employees' earnings, at the end of each quarter. and life insurance plans as they come due. The following
Depending on BNI's performance, an additional matching table shows the reconciliation of the plans' obligations to
31, 1995 (in millions). SFP
contribution of 20 to 40 percent can be made following the amounts accrued at December
uses a September30 measurement date.
end of the year. SFP matches 100 percent of the first 4 percent
of non-union employees' contributions and25percent of the Life Insurance Medical
Plan Plan
first 4 percent of union employees' contributions. BNSF's
Accumulated postretirement benefit
expense was$13million, $8million and$6million in 1995,
obligation:
1994 and 1993, respectively.
Retirees $45 $130
15 OTHER POSTEMPLOYMENTBENEFIT PLANS
15
Fully eligible active participants
BNI provides life insurance benefits to eligible non- 4 40
Other active participants
union employees.The life insurance plan is noncontributory 185
49
~
and covers retirees only. Components of BNI's postretirement ~)
Unrecognized net loss
$177
$47
benefit cost were $1 million in each of three years ended Accrued postretirement benefit cost
December 31, 1995, 1994 and 1993, respectively.
For 1995, the assumed health care cost trend rate for
BNI's policy is to fund benefits payable under the life
managed care medical costsis II percent and is assumed to
insurance plan as they come due. The following table presents
to 5 percent by 2006 and remain constant
the status of BNI's insurance plan and the accrued post-
life decrease gradually
retirement benefit cost reflected in the consolidated balance thereafter. medical costsnot in managed
For care,the assumed
sheets (inmillions).BNI uses a December31 measurementdate. health care cost trend rate is 13 percent and is assumed to
by 2006 and remain constant
decrease gradually to 5 percent
1995 1994
December31,
thereafter.ncreasing the assumed health care cost trend rates
I
Accumulated postretirement benefit obligation:
$14
Retirees $11 by one percentage point would increase the accumulated
I 1 by $16
Fully eligible active participants postretirementbenefitobligationfor the medical plan
2 2
Other active participants million and the combined service and interest components
17 14 in 1995
of net periodic postretirementbenefitcost recognized
I 4
Unrecognized net gain by $2 million.
$18 $18
Accrued postretirement benefit cost
For 1995, the weighted-average discount rate assumed in
determining the accumulated postretirement benefit obligation
The discount rate used in determining the benefit obligation
was 7.5 percent and the assumed weighted-average salary
was 7 percent at December 31, 1995 and 9 percent at
increase was 4.0 percent.
December 31,1994.
OTHER PLANS
Salaried employees of SFP who have rendered 10 years
Under collective bargaining agreements, BNSF participates in
of service after attaining age 45 are eligible for both medical
multi employer benefit plans which provide certain postretire-
benefitsand lifeinsurance coverage during retirement.The
ment health care and life insurance benefits for eligible union
retireemedical plan is contributoryand provides benefitsto
employees. Insurance premiums paid attributable to retirees,
retirees,
theircovered dependents and beneficiaries. etiree
R
which are generally expensed as incurred, were $ll million
contributionsare adjusted annually.The plan also contains
in 1995 and $10 million in both 1994 and 1993.
fixed deductibles,coinsurance and out-of-pocketlimitations.
PAC E 36

BURLINGTON NORTHERN SANTA FE
16 PREFERRED CAPITALSTOCK were exchanged for the outstanding shares of BNI common
stock and 52,004,100 were exchanged for the outstanding
6 1/4% CUMULATIVECONVERTIBLE PREFERRED
shares of SFP common stock, excluding the SFP common
STOCK, SERIES A, $.01 PAR VALUE, AUTHORIZED
stock acquired by BNI in the Tender Offer.
25,000,000 SHARES-6,900,000 SHARES ISSUED
18 STOCK OPTIONS, OTHER INCENTIVE PLANS
In November 1992, BNI issued 6,900,000 shares of 61/4%
AND OTHER STOCKHOLDERS' EQUITY
Cumulative Convertible Preferred Stock, Series A, No Par
STOCK OPTIONS
Value. The convertible preferred stock was not redeemable
Under BNSF's stock option plans, options may be granted to
prior to December 26,1995. On September 22, 1995, the
officers and salaried employees at fair market value on the
outstanding BNI shares were converted to 6,878,607 shares
date of grant. Approximately 4.3 million shares were available
of BNSF 6 1/4% Cumulative Convertible Preferred Stock,
for future grant at December 31,1995. All options expire
$.01 par value.
within 10 years after the date of grant.
On October 19, 1995, the BNSF board of directors voted to
Activity in stock option plans was as follows:
redeem BNSF's 6 1/4% Cumulative Convertible Preferred
Exercise Price
Stock, Series A, $.01 par value, effective December 26,1995,
per Share
Options
at the redemption price of $52.1875 per share and declared a
Balance at
dividend which, when paid, was 74.65 cents per share (repre-
$10.32 to $44.24
December 31,1992 3,251,324
senting the normal quarterly dividend of 78.125 cents per 55.56 to 55.94
Granted 947,125
share pro rated up to the effective redemption date) to holders 10.32 to 44.24
Exercised (508,476)
ofrecord on December 7,1995. The dividend was paid on Cancelled 22.50 to 55.94
(54,882)
January 2,1996. The majority of the holders of this preferred Balance at
stock elected to convert their shares into BNSF common stock 12.49 to 55.94
December 31,1993 3,635,091
Granted 53.69 to 55.94
as BNSF's common stock price was significantly higher than 752,690
Exercised 12.49 to 55.94
(184,088)
the redemption price. As such, the cash payment for shares
Cancelled 20.48 to 55.94
(83,962)
redeemed was not significant.
CLASS A PREFERRED STOCK, $.01 PAR VALUE, Balance at
15.26 to 55.94
December 31,1994
AUTHORIZED50,000,000 SHARES-UNISSUED 4,1l9,731
52.00 to 82.25
Granted 1,026,414
At December 31, 1995, BNSF had available for issuance
Conversion of
50,000,000 shares of Class A Preferred Stock, $.01 Par Value.
73.88
7.36 to
5,342,024
SFP stock options
The Board of Directors has the authority to issue such stock 59.38
Exercised 7.36 to
(821,769)
in one or more series, to fix the number of shares and to fix 12.69 to 59.38
Cancelled (67,747)
the designations and the powers.
Balance at
17 COMMONSTOCK AND ADDITIONAL 7.36 to 82.25
December 31,1995 9,598,653
PAID-IN CAPITAL
Exercisable at December 31:
BNSF is authorized to issue 300,000,000 shares of Common
1995 $ 7.36 to $59.38
7,465,135
Stock, $.01 Par Value. At December 31, 1995, there were 1994 15.26 to 55.94
2,950,427
149,605,217 shares of common stock outstanding. Each 12.49 to 44.24
1993 2,153,170
holder of common stock is entitled to one vote per share in
Shares issued upon exercise of options may be issued from
the election of directors and on all matters submitted to a
treasury shares or from authorized but unissued shares.
vote of stockholders. Subject to the rights and preferences of
All stock options outstanding at February 7, 1995 became
any future issuance of preferred stock, each share of common
exercisable upon approval of the Merger by BNI and SFP
stock is entitled to receive dividends as may be declared by
stockholders.
the Board of Directors out of funds legally available and to
share ratably in all assets available for distribution to stock-
holders upon dissolution or liquidation. No holder of common
stock has any preemptive right to subscribe for any securities
of BNSF.
Pursuant to the terms of the Merger Agreement, on
September 22, 1995, BNSF issued 141,866,851 shares of
common stock, $.01 par value, of which 89,862,751 shares
PIG E 31

BURLINGTON NORTHERN SANTA FE
OTHER INCENTIVE PLANS plan which provides for grants of shares of BNSF's common
BNI and SFP have various other incentive plans, in addition stock to full-time employees, excluding officers, based upon
performance. A total of 100,000 shares of common stock has
to stock options, which are administered separately on behalf
of employees from each of the combined companies. been authorized for these awards. During the years ended
December 31,1995,1994 and 1993, 2,965, 3,900 and 5,540
BNI has restricted stock award plans under which up to
1,700,000 common shares may be awarded to eligible shares were awarded under this plan. The related compensa-
employees and directors. No cash payment is required by the tion expense was not signifIcant.
individual. Shares awarded under the plan may not be sold, Under the SFP Long Term Incentive Stock Plan (Long Term
Plan), 67,632 restricted shares of BNSF common stock
transferred or used as collateral by the holder until the shares
awarded become free of the restrictions, generally by one- resulted from the conversion of existing SFP restricted shares
third on the third, fourth and fIfth anniversaries of the date of upon consummation of the Merger. No new grants were
grant. All shares still subject to restrictions are generally awarded and forfeitures of 1,254 shares occurred during the
forfeited and returned to the plan if the employee or director's period from September 22,1995 to December 31,1995. The
relationship is terminated. ITthe employee or director retires, restrictions on these shares generally lapse upon attaining
becomes disabled or dies, the restrictions will lapse at that certain corporate performance objectives, completing a
time. Restricted stock awards under these plans, net of required vesting period. A total of 64,477 restricted common
forfeitures, were 243,631, 177,670 and 232,354 shares in 1995, shares were outstanding at December 31,1995.
OTHER STOCKHOLDERS' EQUITY
1994 and 1993, respectively. A total of 141,621, 780,694
and 870,525 restricted common shares were outstanding at As a result of the Merger, certain investments in third parties
held by both BNI and SFP, which were previously recorded
December 31, 1995, 1994 and 1993, respectively. As a result
of the Merger, outstanding restricted shares became fully on the cost method, were converted to the equity method due
vested in February 1995 resulting in $24 million operating to BNSF's combined ownership position and ability to exercise
signifIcant influence. As such, $26 million, which is net of
expense reflected in merger, severance and asset charges.
deferred taxes of $17 million, was recorded as an increase to
Compensation expense for 1994 and 1993 was not signifIcant.
retained earnings to reflect BNI's undistributed equity in earn-
Additionally, BNI adopted an employee stock purchase plan
in 1992, effective in 1993, as a means to encourage employee ings since initial investment. SFP's investments were adjusted
ownership of BNSF common stock. A total of 500,000 shares to fair value upon the application of purchase accounting.
of common stock were authorized for distribution under this
plan. The plan allows eligible BNSF employees to use the
proceeds of incentive compensation awards to purchase shares
of BNSF common stock at a discount from the market price
and may require that the shares purchased be held for a
specifIc time period. The difference between the market price
and the employees' purchase price is recorded as additional
compensation expense. During the years ended December 31,
1995, 1994 and 1993,39,421,31,832 and 34,629 shares
were purchased under this plan. The related compensation
expense was not signifIcant. BNI also has a stock award
PAC E 3I

BURLINGTON NORTHERN SANTA FE
-
QUARTERLY FINANCIAL DATA
19 UNAUDITED
Third Second First
Fourth
(Dollars in millions, except per sh~re data)
1995
$ 1,460 $ 1,284 $ 1,347
Revenues $ 2,092
205
254 242
(175)
Operating income (10ss)(1)(3)
Income (loss) before extraordinary item and cumulative effect
124 101
133
(160)
of change in accounting method
(6)
Extraordinary item, loss on early retirement of debt, net of tax (2)
(100)
Cumulative effect of change in accounting method, net of tax(3)
124 1
133 $ $
$
$ (166)
Net income (loss)
Primary earnings (loss) per common share: (0)
1.31 1.05
$
$
$ 1.32
$ (1.15)
Income (loss) before extraordinary item and change in accounting method
-
(0.04)
Extraordinary item
-
- (1.11)
Change in accounting method
1.31
$
$ 1.32 $ (0.06)
$ (1.19)
Primary earnings (loss) per common share
Fully diluted earnings (loss) per common share: (0)
Income (loss) before extraordinary item and change
1.26 1.05
$ $
$ 1.28
$ (1.15)
in accounting method
-
- -
(0.04)
Extraordinary item
(1.11)
Change in accounting method
1.26
$
$ 1.28 $ (0.06)
$ (1.19)
Fully diluted earnings (loss) per common share
.30
.30
.30 .30 $
$ $
$
Dividends declared per common share
Common stock price:
$60 1/8
$76 114 $63 5/8
$83 7/8
High
62 5/8 56 118 47 1/2
71 1/4
Low
1994
$ 1,210
$ 1,249 $ 1,192
$ 1,344
Revenues
182
229 178
264
Operating income
87
115 82
142
Income before cumulative effect of change in accounting method
(10)
Cumulative effect of change in accounting method, net of taxIS)
77
82 $
142 115 $
$ $
Net income
Primary earnings (loss) per common share:
.85 .90
1.22 $ $
1.51
$ $
Income before change in accounting method
(.11)
Change in accounting method
.79
1.22 .85 $
1.51
$ $ $
Primary earnings per common share
Fully diluted earnings (loss) per common share:
.84 .90
1.18 $
1.46 $
$
$
Income before change in accounting method
(.11)
Change in accounting method
.84 .79
1.18
1.46 $ $ $
$
Fully diluted earnings per common share
.30 .30 .30
.30 $ $
$ $
Dividends declared per common share
Common stock price:
$ 66
$ 60 1/8
$ 51 5/8 $ 53 5/8
High
48 1/4 52 1/2 56 3/4
46 5/8
Low
(I) Results include pre-tax charges of $587 million, $106 million, $10 million and $32 million for the fourth, third, second and first quarters of 1995,
respectively related to merger, severance and asset charges as discussed in Note 3.
Results for the fourth quarter include the loss on defeasance of BNI 9% debentures of $6 million, net of $3 million income tax benefit, or $.04 per share,
(2)
treated as an extraordinary item.
Effective January I, 1995, BNSF changed its accounting for locomotive overhauls. The cumulative effect of this change attributable to years prior to 1995
(3)
was to decrease net income by $100 million, or $1.1I per share. Additionally, first, second and third quarter results were restated for the impact of the
change on 1995 by reducing operating income, net income and both primary and fully diluted per share amounts as follows: first quarter-$I2 million,
$7 million and $.09; second quarter-$9 million, $6 million and $.06; and third quarter-$1I million, $6 million and $.06, respectively.
Fully diluted earnings per share are antidilutive for the first and fourth quarters of 1995; therefore, the amounts reported for primary and fully diluted
(4)
earnings per share are the same. Amounts may not total to the annual earnings per share because each quarter and the year are calculated separately
based on average outstanding shares and common share equivalents during that period.
(5) Effective January I, 1994, BNSF adopted Statement of Financial Accounting Standards No. 1I2, \"Employers' Accounting for Postemployment Benefits.\"
The cumulative effect of this change attributable to years prior to 1994, was to decrease net income by $10 million, or $.1I per common share.
P AGE 39

BURLINGTON NORTHERN SANTA FE OFFICERS
ROBERT D. CHARLES 1. THOMAS N. RICHARD A.
JAMES B.
KREBS. DAGNON. SCHULTZ. HUND. RUSSACK
Presidentand Senior VicePresident- Senior VicePresident- VicePresidentand Controller Vice President-Corporate
Intermodaland Automotive Relations
EmployeeRelations
Chief ExecutiveOjJicer
BusinessUnit MARSHA K.
DONALD G. MORGAN RICHARD E.
JOHN Q.
McINNES. DENIS E.
ANDERSON. Vice President-Investor WElCHER
Senior Vice President and SPRINGER. Vice President and General
Senior Vice President-Coal, Relations and Corporate
Metals and Minerals Senior Vice President and Counsel
Secretary
Chief Operations Officer
Business Unit Chief Financial Officer
JEFFREY R. PATRICK J. DANIEL J.
MORELAND. GREGORY T.
DOUGLAS J. OTTENS MEYER WESTERBECK
BABB. Senior Vice President-Law SWIENTON. Vice President-Finance and Vice President and General
Senior Vice President and and General Counsel Senior Vice President- Treasurer Tax Counsel
Consumer and Industrial
Chief of Staff
Business Unit . Executive OjJicer of
Burlington Northern
Santa Fe Corporation
BURLINGTON NORTHERN SANTA FE DIRECTORS.
R. B.
F. DANIEL P. BILL M. LINDIG ARNOLD RONALD
JOSEPH
WEBER (1)(3)
ALIBRANDI (1)(2) WOODARD (3)
DAVISON (1)(2) (1)(4)
Chairman, Chancellor, Northwestern
Chairman of the Board, President, Boeing
President and Chief Executive
University, Evanston, Illinois.
Whittaker Corporation Burlington Northern Santa Commercial Airplane Group
Officer, SYSCO Corporation
Board member since 1986.
(telecommunications) and Fe Corporation. Retired (aerospace), Seattle,
(marketer and distributor of
Chairman, BioWhittaker, Chairman and Chief Washington. Board member
foodservice products),
since 1995.
Executive OJJicer, U.S. Trust Houston, Texas. Board
Inc. (biotechnology), ROBERT H. WEST
membersince 1993.
Corporation, New York, New
Los Angeles, California.
(2)(3)
York. Board member since
Board member since 1982. MICHAEL B.
Chairman, Butler
1976.
BEN F. LOVE YANNEY (1)(2)
Manufacturing Company
JACK S. BLANTON Chairman and Chief
(manufacturer of pre-engi-
(1)(4)
GEORGE Executive Officer, America
(2)( 4) Investor, Retired Chairman neered building systems and
First Companies (invest-
DEUKMEJIAN
Chairman and Chief and Chief Executive OjJicer specially components),
ments), Omaha, Nebraska.
Executive OjJicer, Houston (1972-1989), Texas Kansas City, Missouri.
(3)(4)
Board member since 1989.
Endowment, Inc. (charitable Board member since 1980.
Commerce Bancshares, Inc.
Partner, Sidley & Austin
foundation), Houston, Texas. (banking), Houston, Texas.
(law firm) and former
Board member since 1989. . Years of Board service
Board member since 1990.\"
STEVEN
Governor of the State of J.
includes service on Boards of
California, Los Angeles,
(3)
WHISLER Burlington Northern Inc. and
Roy S. ROBERTS
JOHN J. BURNS, California. Board member
President, Phelps Dodge
Santa Fe Pacific Corporation
since 1991.
JR.(1)(2) (3)(4) Mining Company, and
and predecessor companies.
President and Chief Executive Vice President, General Senior Vice President,
DANIEL J. EVANS
Officer, Alleghany Motors Corporation and Phelps Dodge Corporation Committee Assignments:
Corporation (holding company General Manager, (mining and manufacturing),
(1)(2) (1) Executive Committee
with title insurance, investment Pontiac-GMC Division, Phoenix, Arizona. Board
Chairman, Daniel J. Evans (2) Compensation Committee
management, reinsurance, member since 1995.
Pontiac, Michigan (motor
Associates (consulting), (3) Audit Committee
industrial minerals, and steel vehicle manufacturer).
Seattle, Washington. Board (4) Directors and Corporate
Board member since 1993.
fastener operations), EDWARD E.
membersince 1991. Governance Committee
New York, New York.
WHITACRE, JR. **Also served as director of
Board member since 1995.
MARC SHAPIRO
ROBERT D. KREBS Burlington Northern Inc.
J.
(1)(4)
from 1986-1988
(3)
President and Chief Executive Chairman and Chief
OjJicer, Burlington Northern Chairman and Chief Executive Officer, SBC
Communications Inc.
Santa Fe Corporation, Fort Executive OjJicer, Texas
Worth, Texas. Board member Commerce Bank N.A. (bank- (communications), San
since 1983. Antonio, Texas. Board
ing), Houston, Texas. Board
membersince 1995. member since 1993.
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