<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2001

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from                  to

                          Commission file number 1-6324

              THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY
             (Exact name of registrant as specified in its charter)

                Delaware                               41-6034000
     (State or other jurisdiction of      (I.R.S. Employer Identification No.)
      incorporation or organization)


           2650 Lou Menk Drive
            Fort Worth, Texas                            76131
(Address of principal executive offices)               (Zip Code)


                                 (817) 333-2000
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X   No_____
                                       --

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                                        Shares
            Class                           Outstanding at October 19, 2001
            -----                           -------------------------------

Common stock, $1.00 par value                         1,000 shares

   .   The Burlington Northern and Santa Fe Railway Company is a wholly-owned
       subsidiary of Burlington Northern Santa Fe Corporation; as a result
       there is no market data with respect to registrant's shares.

   Registrant meets the conditions set forth in General Instruction H (1)(a)
   and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
   disclosure format permitted by General Instruction H (2).

                                        1

<PAGE>

                          PART I FINANCIAL INFORMATION

Item 1.  Financial Statements

      THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY and SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME
                              (Dollars in Millions)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                        Three Months Ended    Nine Months Ended
                                          September 30,          September 30,
                                        ------------------    ------------------
                                         2001       2000       2001       2000
                                        -------    -------    -------    -------
<S>                                     <C>        <C>        <C>        <C>
Revenues                                $ 2,341    $ 2,342    $ 6,902    $ 6,864
                                        -------    -------    -------    -------

Operating expenses:
 Compensation and benefits                  714        674      2,137      2,049
 Purchased services                         275        263        811        771
 Depreciation and amortization              222        225        680        669
 Equipment rents                            185        192        562        547
 Fuel                                       240        231        743        661
 Materials and other                        205        187        625        606
                                        -------    -------    -------    -------
  Total operating expenses                1,841      1,772      5,558      5,303
                                        -------    -------    -------    -------

Operating income                            500        570      1,344      1,561
Interest expense                             43         45        130        139
Interest expense, related parties            24         25         66         85
Other income (expense), net                 (12)        (2)       (45)        (2)
                                        -------    -------    -------    -------

Income before income taxes                  421        498      1,103      1,335
Income tax expense                          158        189        413        503
                                        -------    -------    -------    -------

Net income                              $   263    $   309    $   690    $   832
                                        =======    =======    =======    =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                        2

<PAGE>

      THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                              (Dollars in Millions)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                      September 30,        December 31,
ASSETS                                                                    2001                 2000
                                                                        --------             --------
<S>                                                                   <C>                  <C>
Current assets:
   Cash and cash equivalents                                            $    215             $    117
   Accounts receivable, net                                                  298                  381
   Materials and supplies                                                    207                  220
   Current portion of deferred income taxes                                  314                  299
   Other current assets                                                      141                  125
                                                                        --------             --------
     Total current assets                                                  1,175                1,142

Property and equipment, net                                               22,833               22,286
Other assets                                                                 832                1,008
                                                                        --------             --------
     Total assets                                                       $ 24,840             $ 24,436
                                                                        ========             ========

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
   Accounts payable and other current liabilities                       $  1,850             $  1,921
   Long-term debt due within one year                                        387                  232
                                                                        --------             --------
     Total current liabilities                                             2,237                2,153

Long-term debt                                                             2,105                2,408
Intercompany notes payable, net                                            1,076                1,185
Deferred income taxes                                                      6,683                6,398
Casualty and environmental liabilities                                       419                  430
Employee merger and separation costs                                         212                  262
Other liabilities                                                          1,050                1,026
                                                                        --------             --------
     Total liabilities                                                    13,782               13,862
                                                                        --------             --------
Commitments and contingencies (see notes 2, 5 and 6)

Stockholder's equity:
   Common stock, $1 par value (1,000 shares authorized, issued
   and outstanding) and paid-in capital                                    4,706                4,706
   Retained earnings                                                       6,334                5,878
   Accumulated other comprehensive income (deficit)                           18                  (10)
                                                                        --------             --------
     Total stockholder's equity                                           11,058               10,574
                                                                        --------             --------
     Total liabilities and stockholder's equity                         $ 24,840             $ 24,436
                                                                        ========             ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                        3

<PAGE>

      THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY and SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                              (Dollars in Millions)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Nine Months Ended
                                                                                                September 30,
                                                                                          -----------------------
                                                                                            2001           2000
                                                                                          -------         -------
<S>                                                                                       <C>             <C>
  Operating Activities:
   Net income                                                                             $   690         $   832
   Adjustments to reconcile net income to net cash provided by operating activities:
     Depreciation and amortization                                                            680             669
     Deferred income taxes                                                                    254             248
     Employee merger and separation costs paid                                                (38)            (47)
     Other, net                                                                                45              64
     Changes in current assets and liabilities:
       Accounts receivable, net                                                                83              10
       Materials and supplies                                                                  13              53
       Other current assets                                                                    22             (39)
       Accounts payable and other current liabilities                                         (90)           (179)
                                                                                          -------         -------
  Net cash provided by operating activities                                                 1,659           1,611
                                                                                          -------         -------
  Investing Activities:
   Capital expenditures                                                                    (1,061)           (990)
   Other, net                                                                                  (7)           (139)
                                                                                          -------         -------
  Net cash used for investing activities                                                   (1,068)         (1,129)
                                                                                          -------         -------

  Financing Activities:
   Proceeds from issuance of long-term debt                                                    --              50
   Payments on long-term debt                                                                (151)           (140)
   Net increase (decrease) in intercompany notes payable, net                                (109)           (343)
   Dividends paid                                                                            (235)             --
   Other, net                                                                                   2              --
                                                                                          -------         -------
  Net cash used for financing activities                                                     (493)           (433)
                                                                                          -------         -------

  Increase in cash and cash equivalents                                                        98              49
  Cash and cash equivalents:
   Beginning of period                                                                        117              79
                                                                                          -------         -------
   End of period                                                                          $   215         $   128
                                                                                          =======         =======

  Supplemental cash flow information:
   Interest paid, net of amounts capitalized                                              $   184         $   203
   Income taxes paid, net of refunds                                                          142             338
</TABLE>

See accompanying notes to consolidated financial statements.

                                        4

<PAGE>

      THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY and SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.  ACCOUNTING POLICIES AND INTERIM RESULTS

The consolidated financial statements should be read in conjunction with The
Burlington Northern and Santa Fe Railway Company (BNSF Railway or Company)
Annual Report on Form 10-K for the year ended December 31, 2000, including the
financial statements and notes thereto. BNSF Railway is a wholly-owned
subsidiary of Burlington Northern Santa Fe Corporation (BNSF). The consolidated
financial statements include the accounts of BNSF Railway and its majority-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.

The results of operations for any interim period are not necessarily indicative
of the results of operations to be expected for the entire year. In the opinion
of management, all adjustments (consisting of only normal recurring adjustments,
except as disclosed) necessary to present fairly BNSF Railway's consolidated
financial position as of September 30, 2001 and the consolidated results of
operations for the three and nine month periods ended September 30, 2001 and
2000 have been included.

During the first and third quarters of 2001, BNSF Railway recorded $36 million
of pretax ($22 million, net of tax) and $11 million (pre- and net of tax)
losses, respectively, related to non-rail investments in Other Income (Expense),
net. Freight revenues for the third quarter of 2001 include a $32 million
settlement related to a transportation contract. During the second quarter of
2000, BNSF Railway recorded expense of $42 million pretax ($26 million, net of
tax) primarily related to employee related severance, medical and other benefit
costs and the loss of previously earned state tax incentives in Materials and
Other.

Certain comparative prior-year amounts in the consolidated financial statements
have been reclassified to conform to the current year presentation.

2.  HEDGING ACTIVITIES

On January 1, 2001, BNSF Railway adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and recorded a cumulative transition benefit of $56 million, net of
tax, to Accumulated Other Comprehensive Income. The standard requires that all
derivatives be recorded on the balance sheet at fair value and establishes
criteria for documentation and measurement of hedging activities.

The Company currently uses derivatives to hedge against increases in diesel fuel
prices. The Company formally documents the relationship between the hedging
instrument and the hedged item, as well as the risk management objective and
strategy for the use of the hedging instrument. This documentation includes
linking the derivatives that are designated as fair value or cash flow hedges to
specific assets or liabilities on the balance sheet, commitments, or to
forecasted transactions. The Company assesses at the time a derivative contract
is entered into, and at least quarterly, whether the derivative item is
effective in offsetting the changes in fair value or cash flows. Any change in
fair value resulting from ineffectiveness, as defined by SFAS No. 133, is
recognized in current period earnings. For derivative instruments that are
designated and qualify as cash flow hedges, the effective portion of the gain or
loss on the derivative instrument is recorded in Accumulated Other Comprehensive
Income as a separate component of Stockholder's Equity and reclassified into
earnings in the period during which the hedge transaction affects earnings.

FUEL

Fuel costs represented 13 percent of total operating expenses for both
nine-month periods ending September 30, 2001 and 2000, reflecting significantly
higher than historical fuel prices. Due to the significance of diesel fuel
expenses to the operations of BNSF Railway and the historical volatility of fuel
prices, the Company maintains a program to hedge against fluctuations in the
price of its diesel fuel purchases. The intent of the program is to protect the
Company's operating margins and overall profitability from adverse fuel price
changes by entering into fuel-hedge instruments based on management's evaluation
of current and expected diesel fuel price trends. However, to the extent the
Company hedges portions of its fuel purchases, it may not realize the impact of
decreases in fuel prices. Conversely, to the extent the Company does not hedge
portions of its fuel purchases, it may be adversely

                                        5

<PAGE>

affected by increases in fuel prices. Based on annualized fuel consumption
during the first nine months of 2001 and excluding the impact of the hedging
program, each one-cent increase in the price of fuel would result in
approximately $12 million of additional fuel expense on an annual basis.

The fuel-hedging program includes the use of derivatives that are accounted for
as cash flow hedges. As of September 30, 2001, BNSF Railway had entered into
fuel swap agreements for approximately 362 million gallons of diesel fuel at an
average price of approximately 56 cents per gallon. Additionally, as of
September 30, 2001, BNSF Railway had entered into costless collar agreements
effective through 2002 for approximately 50 million gallons of diesel fuel at an
average call price of approximately 65 cents per gallon and an average put price
of approximately 57 cents per gallon. The above prices do not include taxes,
transportation costs, certain other fuel handling costs, and any differences
which may occur from time to time between the prices of commodities hedged and
the purchase price of BNSF Railway's diesel fuel. At September 30, 2001, BNSF
Railway's fuel-hedging program covered approximately 50 percent of estimated
fuel purchases for the fourth quarter of 2001. Fuel swaps and costless collars
cover 22 percent of estimated fuel purchases for 2002. Hedge positions are
closely monitored to ensure that they will not exceed actual fuel requirements
in any period. BNSF Railway also monitors its hedging positions and credit
ratings of its counterparties and does not anticipate losses due to counterparty
nonperformance.

As a result of adopting SFAS No. 133, the Company recorded a cumulative
transition benefit of $56 million, net of tax, to Accumulated Other
Comprehensive Income related to deferred gains on fuel-hedge transactions as of
January 1, 2001. Subsequent changes in fair value for the effective portion of
derivatives qualifying as hedges are recognized in other comprehensive
income (OCI) until the purchase of the related hedged item is recognized in
earnings, at which time changes in fair value previously recorded in OCI will be
reclassified to earnings and recognized in fuel expense. For the three-month
period ended September 30, 2001, the Company recognized a loss of $400 thousand
related to the ineffective portion of derivatives in fuel expense. For the
nine-month period ended September 30, 2001, the Company did not recognize any
gain or loss related to the ineffective portion of derivatives in fuel expense.
At September 30, 2001, Accumulated Other Comprehensive Income includes a pretax
gain of $44 million of which $38 million relates to derivative transactions that
will expire through the third quarter of 2002. Settled fuel hedging contracts in
Other Current Assets of $14 million and $50 million at September 30, 2001 and
December 31, 2000, respectively, are recorded in the Company's balance sheet.

3.  COMPREHENSIVE INCOME

BNSF Railway's comprehensive income, net of tax, was $258 million and $718
million for the three and nine months ended September 30, 2001, respectively,
compared with $309 million and $832 million, for the three and nine months ended
September 30, 2000, respectively. BNSF Railway's comprehensive income includes
net income and adjustments to the minimum pension liability, as well as changes
related to derivatives which qualify for cash flow hedge accounting.

The change in Accumulated Other Comprehensive Income (Deficit), net of tax, is
presented in the following table:

<TABLE>
<CAPTION>
                                                                             Three Months             Nine Months
                                                                                 Ended                   Ended
                                                                             September 30,           September 30,
                                                                             2001      2000         2001       2000
                                                                           -------------------    --------------------
                                                                             (in millions)           (in millions)
<S>                                                                        <C>         <C>          <C>       <C>
Balance at beginning of period ........................................        $ 23     $ (7)          $(10)     $ (7)
       Cumulative effect of adoption of SFAS No. 133, net .............           -        -             56         -
       Gain on derivative instruments, included in net income..........          (9)       -            (32)        -
       Change in fair value of derivative instruments..................           4        -              4         -
                                                                           -------------------    --------------------
Balance at end of period...............................................        $ 18     $ (7)          $ 18      $ (7)
                                                                           ===================    ====================
</TABLE>

4.  ACCOUNTS RECEIVABLE, NET

In the first quarter of 2001, BNSF Railway, through a special purpose
subsidiary, increased capacity to sell variable rate certificates that mature in
2002 and evidence undivided interests in an accounts receivable master trust.
The amount of variable rate certificates which can be sold under the accounts
receivable sales agreement increased by $100 million to $700 million. At
September 30, 2001, $625 million of certificates were outstanding compared to
$600 million at December 31, 2000, which provided $25 million of cash for the
first nine months of 2001. The

                                        6

<PAGE>

master trust's assets include an ownership interest in a revolving portfolio of
BNSF Railway's accounts receivable which are used to support the certificates.

5.  EMPLOYEE MERGER AND SEPARATION COSTS

Current and long-term employee merger and separation liabilities totaling $261
million are included in the consolidated balance sheet at September 30, 2001,
and principally represent: (i) employee-related severance costs for the
consolidation of clerical functions, material handlers in mechanical shops and
trainmen on reserve boards; (ii) deferred benefits payable upon separation or
retirement to certain active conductors, trainmen and locomotive engineers; and
(iii) certain salaried employee severance costs. During the first nine months of
2001, the Company made employee merger and separation payments of $38 million
and reduced its liability by $11 million to reflect a change in estimates.

Liabilities related to the consolidation of clerical functions, material
handlers in mechanical shops and trainmen on reserve boards are paid to affected
employees in the form of a lump-sum payment or payments made over five to ten
years, or in some cases, through retirement. Liabilities related to deferred
benefits payable to certain active conductors, trainmen and locomotive engineers
are paid upon the employees' separation or retirement. Liabilities principally
related to certain remaining salaried employee severances will be paid in the
form of a lump sum payment or over the next several years based on deferral
elections made by affected employees. At September 30, 2001, $49 million of the
remaining liabilities are included within current liabilities for anticipated
costs to be paid over the next twelve months.

BNSF Railway initiated a program that will reduce its workforce by approximately
400 positions in the fourth quarter of 2001. The reductions are primarily made
up of salaried positions and as a result of these reductions, a charge currently
estimated at $75 million will be recorded during the fourth quarter. In
addition, the Company will continue to reduce the size of its clerical workforce
and expects an additional reduction of approximately 250 positions over the next
15 months. No significant costs have been, or are anticipated to be incurred as
a result of eliminating these clerical positions.

6.  COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL

BNSF Railway's operations, as well as those of its competitors, are subject to
extensive federal, state and local environmental regulation. BNSF Railway's
operating procedures include practices to protect the environment from the risks
inherent in railroad operations, which frequently involve transporting chemicals
and other hazardous materials. Additionally, many of BNSF Railway's land
holdings are and have been used for industrial or transportation-related
purposes or leased to commercial or industrial companies whose activities may
have resulted in discharges onto the property. As a result, BNSF Railway is
subject to environmental clean-up and enforcement actions. In particular, the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 (CERCLA), also known as the "Superfund" law, as well as similar state laws
generally impose joint and several liability for clean-up and enforcement costs
on current and former owners and operators of a site without regard to fault or
the legality of the original conduct. BNSF Railway has been notified that it is
a potentially responsible party (PRP) for study and clean-up costs at
approximately 30 Superfund sites for which investigation and remediation
payments are or will be made or are yet to be determined (the Superfund sites)
and, in many instances, is one of several PRPs. In addition, BNSF Railway may be
considered a PRP under certain other laws. Accordingly, under CERCLA and other
federal and state statutes, BNSF Railway may be held jointly and severally
liable for all environmental costs associated with a particular site. If there
are other PRPs, BNSF Railway generally participates in the clean-up of these
sites through cost-sharing agreements with terms that vary from site to site.
Costs are typically allocated based on relative volumetric contribution of
material, the amount of time the site was owned or operated, and/or the portion
of the total site owned or operated by each PRP.

Environmental costs include initial site surveys and environmental studies of
potentially contaminated sites as well as costs for remediation and restoration
of sites determined to be contaminated. Liabilities for environmental clean-up
costs are initially recorded when BNSF Railway's liability for environmental
clean-up is both probable and a reasonable estimate of associated costs can be
made. Adjustments to initial estimates are recorded as necessary based upon
additional information developed in subsequent periods. BNSF Railway conducts an
ongoing environmental contingency analysis, which considers a combination of
factors including independent consulting reports, site visits, legal reviews,
analysis of the likelihood of participation in and the ability of other PRPs to
pay for clean-up, and historical trend analyses.

                                        7

<PAGE>

BNSF Railway is involved in a number of administrative and judicial proceedings
and other mandatory clean-up efforts at approximately 388 sites, including the
Superfund sites, at which it is participating in the study or clean-up, or both,
of alleged environmental contamination. BNSF Railway paid approximately $56
million during the first nine months of 2001 for mandatory and unasserted
clean-up efforts, including amounts expended under federal and state voluntary
clean-up programs. BNSF Railway has recorded liabilities for remediation and
restoration of all known sites of approximately $208 million at September 30,
2001. BNSF Railway anticipates that the majority of the accrued costs at
September 30, 2001 will be paid over the next five years. No individual site is
considered to be material.

Liabilities recorded for environmental costs represent BNSF Railway's best
estimates for remediation and restoration of these sites and include both
asserted and unasserted claims. Unasserted claims are not considered to be a
material component of the liability. Although recorded liabilities include BNSF
Railway's best estimates of all costs, without reduction for anticipated
recoveries from third parties, BNSF Railway's total clean-up costs at these
sites cannot be predicted with certainty due to various factors such as the
extent of corrective actions that may be required, evolving environmental laws
and regulations, advances in environmental technology, the extent of other
parties' participation in clean-up efforts, developments in ongoing
environmental analyses related to sites determined to be contaminated, and
developments in environmental surveys and studies of potentially contaminated
sites. As a result, future charges to income for environmental liabilities could
have a significant effect on results of operations in a particular quarter or
fiscal year as individual site studies and remediation and restoration efforts
proceed or as new sites arise. However, management believes that it is unlikely
that any identified matters, either individually or in the aggregate, will have
a material adverse effect on BNSF Railway's results of operations, financial
position or liquidity.

OTHER CLAIMS AND LITIGATION

BNSF Railway and its subsidiaries are parties to a number of legal actions and
claims, various governmental proceedings and private civil suits arising in the
ordinary course of business, including those related to environmental matters
and personal injury claims. While the final outcome of these items cannot be
predicted with certainty, considering among other things the meritorious legal
defenses available, it is the opinion of management that none of these items,
when finally resolved, will have a material adverse effect on the results of
operations, financial position or liquidity of BNSF Railway, although an adverse
resolution of a number of these items could have a material adverse effect on
the results of operations in a particular quarter or fiscal year.

7.  RELATED PARTY TRANSACTIONS

BNSF Railway is involved with BNSF and certain of its subsidiaries in related
party transactions in the ordinary course of business, which include payments
made on each other's behalf and performance of services. Under the terms of a
tax allocation agreement with BNSF, BNSF Railway made federal and state income
tax payments, net of refunds, of $142 million and $338 million, respectively,
during the first nine months of 2001 and 2000, which are reflected in changes in
current assets and liabilities in the consolidated statement of cash flows.

BNSF Railway had a net intercompany payable balance of $12 million and a net
intercompany receivable balance of $68 million at September 30, 2001 and
December 31, 2000, respectively, which are reflected in accounts receivable in
the consolidated balance sheet. Net intercompany receivable or payable balances
are settled in ordinary course of business.

At September 30, 2001 and December 31, 2000, BNSF Railway had $1,459 million and
$1,579 million, respectively, of intercompany notes payable to BNSF that had a
fixed interest rate of 6.90 percent. At September 30, 2001 and December 31,
2000, BNSF Railway had $195 million and $245 million, respectively, of
intercompany notes payable to BNSF that had variable interest rates of 1.00
percent above the monthly average daily effective Federal Funds rate. During the
first nine months of 2001, BNSF Railway had additional borrowings of $35 million
and repaid $85 million of the variable rate notes. During the first nine months
of 2001, BNSF Railway also repaid $120 million of the 6.90 percent fixed rate
notes. Proceeds from borrowings are primarily used to fund capital expenditures
and other investing activities. Interest is paid semi-annually on all
intercompany notes payable. Interest expense on intercompany notes payable is
reflected in interest expense, related parties in the consolidated income
statement. The intercompany notes are due on demand; however, it is not
anticipated that BNSF Railway will be required to pay these obligations in the
next twelve months.

                                        8

<PAGE>

At September 30, 2001 and December 31, 2000, BNSF Railway had $578 million and
$639 million, respectively, of intercompany notes receivable from BNSF with a
variable interest rate of 1.00 percent above the monthly average daily effective
Federal Funds rate. The $61 million decrease was due to repayments from BNSF of
$598 million and additional borrowings by BNSF of $537 million during the first
nine months of 2001. Interest is collected semi-annually on all intercompany
notes receivable. The 2001 and 2000 balances include a $130 million receivable
due to SFP Pipelines Holdings, Inc., a subsidiary of BNSF Railway, from BNSF.
The receivable is due August 15, 2010 and interest is collected semi-annually.
This receivable originated between SFP Pipelines Holdings, Inc. and Santa Fe
Pacific Corporation (SFP). During 1997, BNSF assumed the note payable from SFP
and SFP recognized the assumption as a capital contribution from BNSF. On
January 2, 1998, SFP, which was then BNSF Railway's parent, merged with and into
BNSF Railway. Interest income on intercompany notes receivable is reflected in
interest expense, related parties in the consolidated income statement.

In the BNSF Railway consolidated balance sheet, the intercompany notes payable
are presented net of the intercompany notes receivable discussed above. BNSF
Railway had net intercompany notes payable balances of $1,076 million and $1,185
million at September 30, 2001 and December 31, 2000, respectively, included in
its consolidated balance sheet.

During the second quarter of 2001, BNSF Railway paid a dividend of $235 million
to BNSF.

Item 2. Management's Narrative Analysis of Results of Operations

Management's narrative analysis relates to the results of operations of The
Burlington Northern and Santa Fe Railway Company and its majority-owned
subsidiaries (collectively BNSF Railway, Registrant or Company).

Results of Operations
---------------------

Nine months ended September 30, 2001 compared with nine months ended September
30, 2000

BNSF Railway recorded net income for the first nine months of 2001 of $690
million as compared with $832 million for the first nine months of 2000. The
decrease in net income is primarily due to a $217 million decrease in operating
income as a result of significantly higher fuel costs, and higher compensation
and benefit costs primarily due to wage rate increases and higher health and
welfare costs.

The first quarter of 2001 was impacted by more severe winter weather conditions
and losses of $36 million pretax ($22 million, net of tax) related to non-rail
investments, and the second quarter of 2001 was impacted by flooding in the
upper Midwest. In the third quarter 2001, BNSF Railway recognized a $32 million
transportation contract settlement and an $11 million loss (pre- and net of tax)
related to non-rail investments. Offsetting these decreases was a $42 million
pretax ($26 million, net of tax) charge in the second quarter 2000 for employee
related severance, medical and other benefit costs and the loss of previously
earned state tax incentives.

Revenues

The following table presents BNSF Railway's revenue information by commodity for
the nine months ended September 30, 2001 and 2000 and includes certain
reclassifications of prior year information to conform to current year
presentation:

<TABLE>
<CAPTION>
                                                                                               Average Revenue
                                            Revenues                  Cars/Units                 Per Car/Unit
                                      --------------------       --------------------        --------------------
                                        2001        2000           2001        2000            2001          2000
                                      -------     --------       --------    --------        --------     --------
                                          (In Millions)             (In Thousands)
<S>                                   <C>         <C>            <C>         <C>             <C>          <C>
Consumer                              $ 2,536     $  2,518          2,811       2,873        $    902     $    876
Industrial                              1,732        1,764          1,178       1,227           1,470        1,438
Coal                                    1,577        1,603          1,574       1,512           1,002        1,060
Agricultural Commodities                  970          910            527         501           1,841        1,816
                                      -------     --------       --------    --------        --------     --------
Total Freight Revenues                  6,815        6,795          6,090       6,113        $  1,119     $  1,112
                                                                 ========    ========        ========     ========
Other Revenues                             87           69
                                      -------     --------
Total Operating Revenues              $ 6,902     $  6,864
                                      =======     ========
</TABLE>

Total revenues of $6,902 million for the first nine months of 2001 were $38
million higher than revenues of $6,864 million for the first nine months of
2000. Freight revenues include a $32 million transportation contract settlement

                                        9

<PAGE>

in the third quarter 2001. Average revenue per car/unit increased slightly to
$1,119 as compared with $1,112 for the first nine months of 2000.

Consumer revenues of $2,536 million for the first nine months of 2001 were $18
million higher than the first nine months of 2000 as a result of the
transportation contract settlement, solid growth in truckload business,
increased international revenues, and increases in dry boxcar business due to
strong beverage shipments. Increases in the first nine months of 2001 were
partially offset by decreased loadings in the Less-Than-Truckload (LTL) sector
and the loss in late 2000 of some automotive contract business as well as
decreases in the automotive sector as a result of sluggish industry-wide sales.
Additionally, some automotive contract business was lost at the end of the third
quarter of 2001 and is expected to affect future automotive revenues.

Industrial revenues of $1,732 million for the first nine months of 2001 were $32
million, or 2 percent, lower than the first nine months of 2000, despite
increased revenue per car/unit as a result of increased length of haul and
selected price increases. Revenues for the first nine months of 2001 fell due to
continued production cutbacks affecting the chemicals, forest products and
metals sectors. These decreases were partially offset by increases in the
minerals and machinery sectors resulting from increases in government shipments
of machinery and increased demand for clay and sand in the drilling industry as
a result of high import oil prices, and increases in aggregates shipments.

Coal revenues of $1,577 million for the first nine months of 2001 decreased $26
million, or 2 percent, despite increased demand due to colder weather, tight
eastern coal supplies, and high natural gas prices. The decrease was a result of
lower revenue per car/unit on certain contract renewals that occurred at the
beginning of the year.

Agricultural products revenues of $970 million for the first nine months of 2001
were $60 million, or 7 percent, higher than revenues for the first nine months
of 2000, primarily due to an increased demand in all domestic sectors, partially
offset by a decline in wheat exports. Additionally, average revenue per car/unit
increased due to increases in length of haul.

Expenses

Total operating expenses for the first nine months of 2001 were $5,558 million,
an increase of $255 million, or 5 percent, over the first nine months of 2000,
primarily due to an increase of $82 million in fuel expense over the first nine
months of 2000 as the average cost of diesel fuel per gallon increased
approximately 9 cents. Expenses other than fuel were higher primarily due to
flooding in the upper Midwest, more severe winter weather conditions, higher
wages and increased health and welfare costs.

Compensation and benefits expenses of $2,137 million were $88 million, or 4
percent, higher than the first nine months of 2000 primarily due to wage rate
increases and higher benefit rates. In addition, scheduled wages were
significantly higher in the first and second quarters of 2001 as a result of
more severe winter weather conditions requiring increased maintenance and
additional crews. These increases were partially offset by lower employment
levels and lower incentive compensation expense compared with the same periods
in 2000.

Purchased services of $811 million for the first nine months of 2001 were $40
million, or 5 percent, higher than the first nine months of 2000 primarily due
to higher ramping expenses incurred as a result of new services added which
improve efficiency and safety at the intermodal ramp facilities, increased
drayage and other expenses as a result of flooding in the upper Midwest, higher
equipment maintenance due to more locomotives under contract, and increased
haulage expense.

Depreciation and amortization expenses of $680 million for the first nine months
of 2001 were $11 million, or 2 percent, higher than the first nine months of
2000, primarily due to a higher capital base.

Equipment rents expenses for the first nine months of 2001 of $562 million were
$15 million, or 3 percent, higher than the first nine months of 2000 as a result
of increased rental expense due to more railcars and locomotives under lease,
partially offset by higher off-line receipts and lower rental rates, as well as
a reduction in leased trailer and container equipment.

Fuel expenses of $743 million for the first nine months of 2001 were $82
million, or 12 percent, higher than the first nine months of 2000, as a result
of a 9-cent, or 11 percent, increase in the average all-in cost per gallon of
diesel fuel. Consumption was higher in the first nine months of 2001 at 881
million gallons compared with 871 million gallons in the first nine months of
2000 due to an increase in ton-miles. However, gross ton-miles per gallon
increased to 760 from 753 compared with the first nine months of 2000. This was
attributable to more fuel efficient

                                       10

<PAGE>

commodity mix, newer locomotive fleet and new fuel economy initiatives. The
increase in the average all-in cost per gallon of diesel fuel includes a 3-cent
increase in the average purchase price as well as a decrease in the hedge
benefit of 6 cents per gallon from a 12-cent hedge benefit for the first nine
months of 2000.

Materials and other expenses of $625 million for the first nine months of 2001
were $19 million, or 3 percent, higher than the first nine months of 2000
principally reflecting increased utilities as a result of higher rates and
increased consumption due to more severe winter weather conditions, lower income
from easements, increased costs caused by flooding in the upper Midwest and
higher environmental and casualty expenses. Offsetting these increases were $42
million pretax of charges in the first nine months of 2000 due to employee
related severance, medical and other benefit costs and the loss of previously
earned state tax incentives.

Interest expense with external and related parties of $196 million for the first
nine months of 2001 was $28 million, or 13 percent, lower than the first nine
months of 2000, principally reflecting lower intercompany debt levels. Total
debt decreased to $3,568 million at September 30, 2001 from $3,825 million at
December 31, 2000.

Other income (expense), net was $43 million higher than in the first nine months
of 2000 primarily due to $36 million pretax ($22 million, net of tax) of losses
recognized in the first quarter of 2001 related to non-rail investments,
principally: Pathnet, a telecommunications venture, and a portfolio of other
non-core real-estate investments. Additionally, in the third quarter of 2001,
BNSF Railway recorded an $11 million (pre- and net of tax) loss related to
non-rail investments.

Other Matters
-------------

Workforce Reductions

BNSF Railway initiated a program that will reduce its workforce by approximately
400 positions in the fourth quarter of 2001. The reductions are primarily made
up of salaried positions and as a result of these reductions, a charge currently
estimated at $75 million will be recorded during the fourth quarter. In
addition, the Company will continue to reduce the size of its clerical workforce
and expects an additional reduction of approximately 250 positions over the next
15 months. No significant costs have been, or are anticipated to be incurred as
a result of eliminating these clerical positions.

Other Claims and Litigation

BNSF Railway and its subsidiaries are parties to a number of legal actions and
claims, various governmental proceedings and private civil suits arising in the
ordinary course of business, including those related to environmental matters
and personal injury claims. While the final outcome of these items cannot be
predicted with certainty, considering among other things the meritorious legal
defenses available, it is the opinion of management that none of these items,
when finally resolved, will have a material adverse effect on the results of
operations, financial position or liquidity of BNSF Railway, although an adverse
resolution of a number of these items in a single period could have a material
adverse effect on the results of operations in a particular quarter or fiscal
year.

Labor

Labor unions represent approximately 88 percent of BNSF Railway's employees
under collective bargaining agreements with 13 different labor organizations.
The negotiating process for new, major collective bargaining agreements covering
all of BNSF Railway's union employees has been underway since the bargaining
round was initiated November 1, 1999. Wages, health and welfare benefits, work
rules, and other issues have traditionally been addressed through industry-wide
negotiations. These negotiations have generally taken place over a number of
months and have previously not resulted in any extended work stoppages. The
existing agreements have remained in effect and will continue to remain in
effect until new agreements are reached or the Railway Labor Act's procedures
(which include mediation, cooling-off periods, and the possibility of
Presidential intervention) are exhausted. The current agreements provide for
periodic wage increases until new agreements are reached. The National Carriers'
Conference Committee (NCCC), BNSF Railway's multi-employer collective bargaining
representative, has reached a final agreement with the Brotherhood of
Maintenance of Way Employees (BMWE) resolving wage, work rule and benefit issues
through 2004 which was implemented July 2001. BMWE represents BNSF Railway's
track, bridge and building maintenance employees, or about one-fourth of BNSF
Railway's unionized workforce. In June 2001, the NCCC reached a tentative
agreement with the International Brotherhood of Electrical Workers (IBEW), which
represents approximately five percent of BNSF Railway's unionized workforce,
addressing wage and work rule issues through 2004, but leaving health and
welfare benefit issues for settlement in separate talks with other railroad
unions. IBEW members failed to ratify the tentative agreement. No new talks

                                       11

<PAGE>

with IBEW are scheduled. During the third quarter of 2000, the NCCC reached a
tentative agreement with the United Transportation Union (UTU) covering wage and
work rule issues through the year 2004 for conductors, brakemen, yardmen,
yardmasters and firemen, approximately one-third of BNSF Railway's unionized
workforce. This agreement is also subject to ratification by the UTU's
membership. As in the tentative IBEW agreement, health and welfare benefit
issues were not resolved with UTU, and remain the subject of continuing
negotiations.

Accounting Pronouncements

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 141, "Business Combinations," which was
effective for all business combinations initiated after June 30, 2001 and SFAS
No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141, which is effective
for fiscal years after December 15, 2001, eliminates the pooling method of
accounting for a business combination and requires that all combinations be
accounted for using the purchase method. SFAS No. 142 addresses accounting for
identifiable intangible assets, eliminates the amortization of goodwill, and
provides specific steps for testing the impairment of goodwill. The Company's
historical consolidated financial statements will be unaffected by these new
standards.

The Financial Accounting Standards Board also issued Statement of Financial
Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement
Obligations," and SFAS No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets." SFAS No. 143, which is effective for fiscal years beginning
after June 15, 2002, addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. SFAS No. 144, which is effective for fiscal
years beginning after December 15, 2001, addresses financial accounting and
reporting for the impairment of long-lived assets, excluding goodwill and
intangible assets, to be held and used or disposed of. The Company has not
completed its analysis of the effects that these new standards will have on the
results of operations; although it does not expect the implementation of these
standards to have a significant effect on the results of operations or financial
condition.

Forward-Looking Information

To the extent that statements made by the Company relate to the Company's future
economic performance or business outlook, predictions or expectations of
financial or operational results, or refer to matters which are not historical
facts, such statements are "forward-looking" statements within the meaning of
the federal securities laws. Forward-looking statements involve a number of
risks and uncertainties, and actual results may differ materially. Factors that
could cause actual results to differ materially include, but are not limited to,
economic and industry conditions: material adverse changes in economic or
industry conditions, both within the United States and globally, customer
demand, effects of adverse economic conditions affecting shippers, adverse
economic conditions in the industries and geographic areas that produce and
consume freight, competition and consolidation within the transportation
industry, the extent to which the Company is successful in gaining new long-term
relationships or retaining existing ones, changes in fuel prices, and changes in
labor costs and labor difficulties including stoppages; legal and regulatory
factors: developments and changes in laws and regulations and the ultimate
outcome of shipper claims, environmental investigations or proceedings and other
types of claims and litigation; and operating factors: technical difficulties,
changes in operating conditions and costs, competition and commodity
concentrations, the Company's ability to achieve its operational and financial
initiatives and to contain costs, as well as natural events such as severe
weather, floods and earthquakes and other disruptions involving the Company's
infrastructure, operating systems, and equipment.

The Company cautions against placing undue reliance on forward-looking
statements, which reflect its current beliefs and are based on information
currently available to it as of the date a forward-looking statement is made.
The Company undertakes no obligation to revise forward-looking statements to
reflect future events, changes in circumstances, or changes in beliefs.

                                       12

<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, BNSF Railway utilizes various financial
instruments which inherently have some degree of market risk. The qualitative
and quantitative information presented in the Management's Narrative Analysis of
Results of Operations section and in Item 7A of the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, describes significant aspects of
BNSF Railway's financial instrument programs which have material market risk.
Presented below is updated quantitative information for those programs that have
changed significantly from the information reported in BNSF Railway's Form 10-K
for the year ended December 31, 2000.

COMMODITY PRICE SENSITIVITY

As discussed in Note 2 to the Company's consolidated financial statements, BNSF
Railway has a program to hedge against fluctuations in the price of its diesel
fuel purchases. The table below provides information about BNSF Railway's diesel
fuel hedging instruments that are sensitive to changes in diesel fuel prices.
The table presents notional amounts in gallons and the weighted average contract
price by contractual maturity date as of September 30, 2001. The prices included
in the table below do not include taxes, transportation costs, certain other
fuel handling costs and any differences which may occur from time to time
between the prices of commodities hedged and the purchase price of BNSF
Railway's diesel fuel.

<TABLE>
<CAPTION>
                                                                     September 30, 2001
                                                         --------------------------------------------
                                                           Maturity Date                      Fair
                                                         --------------------
                                                          2001        2002        Total       Value
                                                                                               (a)
                                                         --------    --------    --------    --------

<S>                                                      <C>         <C>         <C>         <C>
Diesel Fuel Swaps:
      Gallons (in millions) ...........................      148         214         362         $43
      Weighted average price per gallon ...............    $0.56       $0.56       $0.56           -
Diesel Fuel Costless Collars:
      Gallons (in millions) ...........................        -          50          50         $ 1
      Weighted average price per gallon - calls .......        -       $0.65       $0.65           -
      Weighted average price per gallon - puts ........        -       $0.57       $0.57           -
</TABLE>


(a) Represents gains (in millions) in Accumulated Other Comprehensive Income
based on the price of Gulf Coast #2 heating oil.

                                       13

<PAGE>

      THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY and SUBSIDIARIES
                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings

In September 2001, BNSF Railway was notified by the Nebraska Department of
Environmental Quality of alleged environmental violations in connection with a
November 4, 2000 derailment in Scottsbluff, Nebraska that involved hazardous
commodities. If not resolved, this matter could result in litigation brought by
the Nebraska Attorney General and monetary sanctions exceeding $100,000.

Item 6.  Exhibits and Reports on Form 8-K

A.       Exhibits

         See Index to Exhibits on page E-1 for a description of the exhibits
filed as part of this report.

                                       14

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


               THE BURLINGTON NORTHERN AND SANTA FE
               RAILWAY COMPANY
               (Registrant)

               By: /s/ Dennis R. Johnson
                   ---------------------
               Dennis R. Johnson
               Vice President and Controller
               (On behalf of the Registrant and as principal accounting officer)





Fort Worth, Texas
November 5, 2001

                                       S-1

<PAGE>

      THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY and SUBSIDIARIES

                                  Exhibit Index

12.1     Computation of Ratio of Earnings to Fixed Charges

                                       E-1