Deutsche Bank Alex Brown
Transportation Conference
February 18, 2000
Naples, Florida
E. Hunter Harrison
Executive Vice-President
and Chief Operating Officer
CN Logo
CN and North American Railways, inc. have filed a registration statement on Form
F-4/S-4 with the SEC in connection with the securities to be issued in the
combination. The registration statement has not been declared effective. This
filing also includes the preliminary proxy statement for the shareholders
meetings to be held for approval of the combination. Investors should read this
document and other documents filed with the SEC by CN, BNSF and North American
Railways about the combination because they contain important information. These
documents may be obtained for free at the SEC's Web site, www.sec.gov. Other
filings made by CN on Forms 40-F and 6-K may be obtained for free from the CN
Corporate Secretary's office at (514) 399-6569. Other filings made by BNSF on
Forms 10K, 10-Q and 8-K may be obtained for free from the BNSF Corporate
Secretary's office at (817) 352-6856. For more information concerning
participants in CN's solicitation of proxies for approval of the combination,
see "Certain Information Concerning Participants" filed by CN under Rule 14a-12.
<PAGE>
This presentation may contain forward-looking statements within the meaning of
the United States Private Securities Reform Act of 1995 and other applicable
legislation, regarding future events and the future performance of CN that
involve risks and uncertainties that could cause actual results to differ
materially. Such forward-looking statements may include, without limitation,
statements that the Company does not expect that claims, lawsuits, environmental
costs, commitments, contingent liabilities, labor negotiations or other matters
will have a material adverse effect on its consolidated financial condition,
results of operations or liquidity and other similar statements concerning
matters that are not historical facts, and projections or predictions as to the
Company's financial or operational results. Such forward-looking statements are
or will be based on information available at that time, are not guarantees of
future performance and involve known and unknown risks and uncertainties, and
other factors which may cause the outlook, the actual results or performance of
the Company or the rail industry to be materially different from any future
results or performance implied by such statements. Important factors that could
cause such differences include, but are not limited to, industry competition and
legislative and/or regulatory developments, changes in or compliance with
environmental laws and regulations, natural events such as severe weather,
floods and earthquakes, the effects of adverse general economic and business
conditions, changes in fuel prices, labor strikes, the impact of year 2000
systems problems, environmental investigations or proceedings and other types of
claims and litigation and other risks detailed from time to time in reports
filed by the Company with securities regulators in Canada and the United States.
Reference is made more specifically to "Management Discussion and Analysis" in
the Company's annual and quarterly reports filed with Canadian securities
regulators and in the Company's Form 40-F filed with U.S. securities regulators.
<PAGE>
CANADIAN NATIONAL RAILWAY COMPANY
- ----------------------------------
Map showing routes of Canadian National, Kansas City Southern and Kansas City
Southern affiliates, with background information about Canadian National.
o Public Company - Nov `95
o Merger with Illinois Central
o Marketing Alliance with
Kansas City Southern
1999 key statistics
- -----------------------------
Revenues $5.2B Cdn.
Employees 23,500
Route miles 15,800
<PAGE>
HOW FAR WE'VE COME...
- ----------------------------------
Graphic showing CN operating ration in 1992 and 1999, operating performance from
1995 to 1999, stock performance from 1995 to 1999 and earnings per share in 1996
and 1999.
<PAGE>
STRONG CASH FLOW
- ----------------------------------
Graphic showing CN cash flow from 1995 to 1999.
Cash flow before financing but after dividends
Excludes impact of IC acquisition
<PAGE>
EVOLVING SOURCES OF VALUE CREATION
- ----------------------------------
Sources Of CN Earnings Improvement
================================================================================
Graphic showing evolving sources of value creation from 1995 to 1999 with
projection through 2002.
Going forward, growth as important
as cost reduction
<PAGE>
THE SERVICE PLAN
- ----------------------------------
Graphic illustrating the CN service plan.
Service Cost
o Customer needs o Asset utilization
o Market share o Capex effectiveness
o Revenue quality
Service
Growth Plan Operating Ratio
A "Scheduled Railroad"
The PLan Creates Value
<PAGE>
LOCOMOTIVE FLEET UTILIZATION
- ----------------------------------
Graphic showing locomotive fleet utilization from 1998 through 1999.
<PAGE>
CAR FLEET UTILIZATION
- ----------------------------------
Graphic showing car fleet utilization from 1998 through 1999.
* Includes extra grain hopper cars and
cars on CSX and NS
<PAGE>
BREAKTHROUGH PRODUCTIVITY GAINS
- ----------------------------------
Graphic showing breakthrough productivity gains in 1998 and 1999.
o New service plan and best practices
o Operating and capex benefits flowing over time
o Continued productivity going forward
* CN stand-alone only
<PAGE>
CN'S GEOGRAPHIC POSITION
- ----------------------------------
o CN is positioning itself in key growth corridor - North/South
Graphic showing revenue growth and CN market share of north-south trade.
<PAGE>
NORTH AMERICAN RAILWAYS, INC.
- ----------------------------------
Map showing rail routes of CN and BNSF.
Complementary networks with superior
reach and strong franchise
<PAGE>
STRATEGIC RATIONALE
- ----------------------------------
North American
Economies Integrating
Shippers Demanding Integrated
North American Service
Seamless Service Best Way To Address
Interchange Issues
Trucking Industry Already
Fully Integrated
BNSF-CN Low Risk
End-To-End Combination
Complementary Strengths --
CN Originations Align Well With BNSF
Terminations
<PAGE>
CN/BNSF COMBINATION SHIPPER BENEFITS
- ----------------------------------
Map showing CN/BNSF combination shipper benefits.
<PAGE>
CUSTOMER BENEFITS
- ----------------------------------
o New network efficiencies
- more direct routes
- faster transit times
- by-pass bottlenecks
- easier to do business with
- greater port access
- increased equipment availability
o Commercial benefits
- links production and consumption regions
- access to new markets
<PAGE>
SERVICE GUARANTEES
- ----------------------------------
o Guaranteed Service Levels
- service levels same or better
- if not, we'll do what's right for customer
o Guaranteed Route Options
- existing gateways will remain open
- two-to-one points will be protected
We Guarantee it
<PAGE>
A DIFFERENT KIND OF MERGER
- ----------------------------------
o Service, service, service
- faster transit times, new gateways
- single-line access to four gateways into Mexico
- focus on gaining share from trucks
o Combining strengths
- industry's most efficient railroads
- two best service records - no weak player
o Low risk
- end-to-end combination
- significant capacity at interchange points
- common operating systems
o Preserves each company's unique culture
- key members at both organizations remain
- local presence maintained
- not a slash and burn story
<PAGE>
ROADMAP TO COMPLETION
- ----------------------------------
Key Activities Timeframe
- ------------------------------------------------------------------------------
Execution and Announcement o December 20, 1999
- ------------------------------------------------------------------------------
STB Pre-Notification o December 20, 1999
- ------------------------------------------------------------------------------
Proxy filed with SEC o January 12, 2000
- ------------------------------------------------------------------------------
STB Public Hearings o March 8-9, 2000
- ------------------------------------------------------------------------------
STB Filing Application o Spring 2000
- ------------------------------------------------------------------------------
Shareholder Votes o Spring 2000
- ------------------------------------------------------------------------------
STB Approval Process o Prior mergers suggest up to sixteen
months from date of announcement
- ------------------------------------------------------------------------------
Closing o Mid 2001
- ------------------------------------------------------------------------------
<PAGE>
SUMMARY
- ----------------------------------
o Well positioned for future growth
- revenue, earnings, cash flow
o Maintaining focus on core operations
o On track to achieve operating and financial targets for 2000
o CN/BNSF combination provides both companies with the strategic platform for
future success
CN/BNSF A Winning Combination
<PAGE>
CN Logo
