<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
-----------------
Filed by the Registrant {x}
Filed by a Party other than the Registrant {x}
Check the appropriate box:
{ } Preliminary Proxy Statement
{ } Definitive Proxy Statement
{x} Definitive Additional Materials
{ } Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
------------------------
BURLINGTON NORTHERN INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BURLINGTON NORTHERN INC.
(NAME OF PERSON (S) FILING PROXY STATEMENT)
------------------------
Payment of Filing Fee (Check the appropriate box): (/1/)
{ } $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
{ } $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
{x} Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: Santa Fe
Pacific Corporation common stock, par value $1.00 per share.
2) Aggregate number of securities to which transaction applies: 186,523,992,
shares of Santa Fe Pacific Corporation common stock.
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $52 3/8(/2/)
4) Proposed maximum aggregate value of transaction: $2,637,682,402(/2/)
(/1/) The filing fee previously was paid with the initial filing of the
preliminary proxy materials on August 8, 1994.
(/2/) For purposes of calculating the filing fee only. Upon consummation of the
Merger, each outstanding share of Santa Fe Pacific Corporation common
stock, par value $1.00 per share, will be converted into the right to
receive 0.27 shares of Burlington Northern Inc. common stock, no par
value. The proposed maximum aggregate value of the transaction described
in the preliminary proxy materials is equal to one-fiftieth of one percent
of $2,637,682,402 (calculated based on the number of shares of Santa Fe
Pacific Corporation common stock outstanding as of June 30, 1994, the
average of the high and low reported prices of Burlington Northern Inc.
common stock on August 5, 1994 and the exchange ratio of 0.27).
{_} Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...........................
(2) Form, Schedule or Registration Statement No.: .....
(3) Filing Party: .....................................
(4) Date Filed: .......................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
BURLINGTON NORTHERN INC.
SECURITY ANALYST PRESENTATION
[LOGO]
October 21, 1994
<PAGE>
BNI DOES NOT AS A MATTER OF COURSE PUBLICLY DISCLOSE ITS EXPECTATIONS OF ITS
FUTURE PERFORMANCE OR OF THE PERFORMANCE OF ANY PARTICULAR TRANSACTION IT MAY
UNDERTAKE. THE ESTIMATES SUBMITTED TO THE ICC AND REFERRED TO HEREIN ARE BASED
UPON A VARIETY OF ASSUMPTIONS INVOLVING JUDGMENTS WITH RESPECT TO, AMONG OTHER
THINGS, FUTURE ECONOMIC, FINANCIAL, COMPETITIVE AND REGULATORY CONDITIONS, ALL
OF WHICH ARE BEYOND THE CONTROL OF BNI. ACCORDINGLY, THERE CAN BE NO ASSURANCE
THAT THE ESTIMATED RESULTS REFERRED TO HEREIN WILL BE ACHIEVED OR REALIZED, AND
THE ACTUAL RESULTS OF THE MERGED ENTITY MAY VARY MATERIALLY FROM THE ESTIMATES
INCLUDED HEREIN. FURTHERMORE, THERE CAN BE NO ASSURANCE THAT THE ESTIMATED
RESULTS SET FORTH HEREIN WILL BE ACCEPTED BY THE ICC OR THAT THE ICC WILL NOT
IMPOSE CONDITIONS ON THE OPERATION OF THE MERGED COMPANY THAT WILL AFFECT THE
ABILITY OF THE MERGED COMPANY TO REALIZE THOSE RESULTS. IN LIGHT OF THE
UNCERTAINTIES INHERENT IN ESTIMATES OF THIS TYPE, THE INCLUSION OF SUCH
ESTIMATES HEREIN SHOULD NOT BE REGARDED AS A REPRESENTATION BY BNI OR ANY OTHER
PERSON THAT SUCH RESULTS WILL BE ACHIEVED OR REALIZED. INVESTORS ARE ADVISED
NOT TO PLACE UNDUE RELIANCE ON THESE ESTIMATES.
<PAGE>
CONTENTS
PAGE
----
Finance
Income Statements 1
Earnings Per Share 2
EPS Calculation 3
Operating Expenses 4
Balance Sheets 5
Cash Flows 6
Debt-Equity Ratio 7
Business Groups
Revenue by Business Segment 8
Coal - Third Quarter 9
Competitive Advantage of PRB Coal 10
Coal - Demand Outlook Positive 11
Intermodal - Third Quarter 12
Intermodal - Base Business - Third Quarter 13
Agricultural Commodities - Third Quarter 14
Agricultural Commodities -BN Area Supplies 15
Agricultural Commodities - Outlook 16
Other Business Units - Third Quarter 17-18
Business Units Summary 19
<PAGE>
Network Operations
Coal Trains Loaded Per Day 20
Coal Trains - Third Quarter 1994 Average Daily Loading 21
Increasing Capacity By... 22
Powder River Basin 23
Hiring and Training 24
SD70MAC Locomotive Delivery Plan 25
Merchandise and Intermodal 26
Safety Improvements - Third Quarter 27
Chairman & CEO
BN & Santa Fe Networks 28
Post-Merger Traffic Base 29
Merger Benefits 30
Summary of Financial Benefits 31
Benefits of Shareholders 32
BN/SF Merger - Timing 33
UP/CNW & Santa Fe Networks 34
ICC Pro Forma Earnings 35
First Quarter Financial & Operating Results
Report 36-37
Statements of Income 38
Balance Sheets 39
Revenues and Traffic Volume by Business Unit 40-41
Operating Expenses 42-43
Selected Statistics 44
<PAGE>
Third Quarter 1993 Flood Impacts
Revenues - Third Quarter 45
Operating Expenses - Third Quarter 46
Revenue Ton Miles - Third Quarter 47
Units - Third Quarter 48
<PAGE>
FINANCE
Dave Anderson
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
INCOME STATEMENTS
Third Quarter
($ Millions)
<TABLE>
<CAPTION>
Adjusted*
1994 1993 1993
------ --------- ------
<S> <C> <C> <C>
Revenues $1,249 $1,185 $1,141
Operating Costs 1,020 985 1,020
------ ------ ------
Operating Income 229 200 121
Interest Expense 40 38 38
Other Income (Expense) (1) 2 2
------ ------ ------
Income Before Taxes 188 164 85
Income Tax Expense 73 65 61
------ ------ ------
Net Income $ 115 $ 99 $ 24
====== ====== ======
</TABLE>
* Estimated Flood Impact and Deferred Tax Adjustment Excluded
LOGO BURLINGTON
NORTHERN
INC.
1
<PAGE>
EARNINGS PER SHARE
Third Quarter
($ Millions)
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
2
<PAGE>
EPS CALCULATION
Third Quarter 1994
(Millions Except EPS)
<TABLE>
<CAPTION>
Earnings Per Primary Fully
Common Share EPS Diluted EPS
------------ --------- -----------
<S> <C> <C> <C>
Net Income $115 $115 $115
Preferred Dividends (5) (5)
---- ---- ----
$110 $110 $115
==== ==== ====
Average Common Shares Outstanding 89.2 89.2 89.2
Common Stock Equivalents (Options) 1.0 .9
Assumed Converted Shares 7.4
---- ---- ----
89.2 90.2 97.5
==== ==== ====
Earnings Per Share $1.23 $1.22 $1.18
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
3
<PAGE>
OPERATING EXPENSES
Third Quarter
($ Millions)
<TABLE>
<CAPTION>
Adjusted* Reported
1994 1993 1993
------ --------- --------
<S> <C> <C> <C>
Compensation and Benefits $ 437 $ 425 $ 429
Fuel 95 81 83
Materials 70 69 73
Equipment Rents 97 90 100
Purchased Services 120 115 120
Depreciation 91 90 89
Other 110 115 126
------ ------ ------
$1,020 $ 985 $1,020
====== ====== ======
</TABLE>
* Estimated Flood Impact Excluded
LOGO BURLINGTON
NORTHERN
INC.
4
<PAGE>
BALANCE SHEETS
($ Millions)
<TABLE>
<CAPTION>
September 30, June 30,
1994 1994
------------- --------
<S> <C> <C>
Assets
- ------
Current Assets $1,052 $1,036
Property and Equipment - Net 6,203 6,074
Other Assets 281 284
------ ------
Total Assets $7,536 $7,394
====== ======
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities
Current Portion of Long-Term Debt
Including CP $ 103 $ 240
Other 1,445 1,300
------ ------
Total Current Liabilities 1,548 1,540
Long-Term Debt 1,688 1,694
Other Liabilities 2,184 2,130
Stockholders' Equity 2,116 2,030
------ ------
Total Liabilities and Stockholders'
Equity $7,536 $7,394
====== ======
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
5
<PAGE>
CASH FLOWS
Third Quarter 1994
($ Millions)
<TABLE>
<CAPTION>
<S> <C> <C>
Cash - Beginning of Quarter
Cash from Operations: $ 18
Net Income $115
Depreciation 91
Deferred Income Taxes 23
Working Capital and Other Changes 161 (390)
-----
Capital Expenditures (219)
Other Investing Activities 4
Financing Activities:
Decrease in Commercial Paper (134)
Payments on Long-Term Debt-Net (10)
Dividends Paid (32) (176)
----- -----
Cash - End of Quarter $ 17
=====
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
6
<PAGE>
DEBT-EQUITY RATIO
($ Millions)
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
7
<PAGE>
BUSINESS GROUPS
Ron Rittenmeyer
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
REVENUES BY BUSINESS SEGMENT
Third Quarter
($ Millions)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
BN Freight Total BN
Revenues Revenues
---------- --------
<S> <C> <C>
Third Quarter 1994: $1,295 $1,249
Third Quarter 1993:* $1,225 $1,185
Percentage Change: +5.7% +5.4%
</TABLE>
* Flood Adjusted
LOGO BURLINGTON
NORTHERN
INC.
8
<PAGE>
COAL
Third Quarter
<TABLE>
<CAPTION>
Revenues RTMs Units
(Millions) (Billions) (Thousands)
---------- ---------- -----------
[GRAPH APPEARS HERE] <S> <C> <C> <C>
1994 $418 36.1 409
1993* $402 32.7 384
% Change +4% +10% +7%
</TABLE>
* Flood Adjusted
. PRB Economics and Clean Air Compliance Driving
Demand
. Record Month in August
. Double Track and AC Traction Locomotives
LOGO BURLINGTON
NORTHERN
INC.
9
<PAGE>
COMPETITVE ADVANTAGE OF
PRB COAL
Costs per Megawatt Hour Delivered Price per Million BTU of Coal
[GRAPH APPEARS HERE] [GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
10
<PAGE>
COAL
Demand Outlook Positive
. Powerful PRB Economics
. Illinois Coal Act Declared Unconstitutional
. Clean Air Compliance Driving Demand
. Utility Deregulation Favors Low Cost Generator
LOGO BURLINGTON
NORTHERN
INC.
11
<PAGE>
INTERMODAL
Third Quarter
<TABLE>
<CAPTION>
Revenues RTMs Units
(Millions) (Billions) (Thousands)
---------- ---------- -----------
[GRAPH APPEARS HERE] <S> <C> <C> <C>
1994 $206 6.8 277
1993* $188 6.2 251
% Change +10% +10% +10%
</TABLE>
* Flood Adjusted
. Texas Market Asset Redeployment
. Recapture of Evergreen Business - July 1, 1994
. LTL/Parcel Growth +30%
. September Price Increases
LOGO BURLINGTON
NORTHERN
INC.
12
<PAGE>
AGRICULTURAL COMMODITIES
Third Quarter
<TABLE>
<CAPTION>
Revenues RTMs Units
(Millions) (Billions) (Thousands)
---------- ---------- -----------
[GRAPH APPEARS HERE] <S> <C> <C> <C>
1994 $202 8.4 113
1993* $181 8.4 99
% Change 12% NC 14%
</TABLE>
* Flood Adjusted
. Continued Strong Wheat Exports
. Increase Barley Volumes
. Pre-harvest Corn Movements
LOGO BURLINGTON
NORTHERN
INC.
14
<PAGE>
AGRICULTURAL COMMODITIES
BN Area Supplies*
CORN +37% WHEAT -6% SOYBEANS +46%
[GRAPH APPEARS HERE]
*USDA Forecasts - Millions Bushels
LOGO BURLINGTON
NORTHERN
INC.
15
<PAGE>
AGRICULTURAL COMMODITIES
Outlook
. 4th Quarter - Significant Improvement Over 1993
. Record U.S. Corn and Soybean Production
. China Corn Production Down - Korea to Return to U.S. Market
. Continued Strong Wheat Movements
. Covered Hopper Fleet Over 31,000 Cars
LOGO BURLINGTON
NORTHERN
INC.
16
<PAGE>
OTHER BUSINESS UNITS
Third Quarter
Vehicles and Machinery +4.4%
----------------------------
. Strong Automotive Demand
. New Toyota Contract
Chemical +2.0%
[GRAPH APPEARS HERE] --------------
. Fertilizer Shipments Strong
. Market Share Gains in Houston
. Diversion of SOO Line Traffic
Forest Products +3.2%
---------------------
. Weakness in Pulp Mill Markets
. Robust Lumber Markets
LOGO BURLINGTON
NORTHERN
INC.
17
<PAGE>
OTHER BUSINESS UNITS
Third Quarter
Minerals Processors +5.6%
-------------------------
. Continuing to Expand Domestic Markets
Metals +4.5%
[GRAPH APPEARS HERE] --------------
. Reopening of National Steel's Keewatin Mine
. Strength in Nucor Traffic
Consumer Products +1.5%
-----------------------
. Strong Washington Potato Movements
. Increased Corn Syrup Traffic
LOGO BURLINGTON
NORTHERN
INC.
18
<PAGE>
BUSINESS UNITS SUMMARY
. Third Quarter Strong
. Fourth Quarter Outlook Better
. 1995 Best Yet
LOGO BURLINGTON
NORTHERN
INC.
19
<PAGE>
NETWORK OPERATIONS
Don Henderson
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
COAL TRAINS LOADED PER DAY
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
20
<PAGE>
COAL TRAINS
Third Quarter 1994 Average Daily Loadings
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
21
<PAGE>
INCREASING CAPACITY BY...
. Fine Tuning Maintenance Schedule
. Adding Track Capacity
. Accelerating Hiring and Training
. Adding Locomotives
LOGO BURLINGTON
NORTHERN
INC.
22
<PAGE>
[MAP APPEARS HERE]
<PAGE>
HIRING AND TRAINING
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
24
<PAGE>
INTREMODAL
Base Business - Third Quarter
(Thousand Units)
<TABLE>
<CAPTION>
1994 1993
---- ----
<C> <C>
Actual Intermodal Units 227 248 +12%
Flood Recovery 3
Texas Units (40%)
----- -------
Base Business 227 211 +31%
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
13
<PAGE>
SD70MAC LOCOMOTIVE
DELIVERY PLAN
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
25
<PAGE>
MERCHANDISE AND INTERMODAL
1994 Operating Efficiencies
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
26
<PAGE>
SAFETY IMPROVEMENTS
Third Quarter
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
27
<PAGE>
CHAIRMAN & CEO
Jerry Grinstein
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
BN & SANTA FE NETWORKS
[MAP APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
28
<PAGE>
BURLINGTON NORTHERN/SANTA FE
MERGER BENEFITS
Diversified Traffic Base
($ Millions)
[GRAPH APPEARS HERE]
1993 Combined Freight Revenues $7,108
LOGO BURLINGTON
NORTHERN
INC.
29
<PAGE>
BURLINGTON NORTHERN/SANTA FE
MERGER BENEFITS
. Broad Geographic Coverage
. Extensive Single Line Service
. Diversified Traffic Base
. Revenue Growth
. Operating Synergies
. Overhead Reduction
. Financial Strength
LOGO BURLINGTON
NORTHERN
INC.
30
<PAGE>
BURLINGTON NORTHERN/SANTE FE
MERGER
Summary of Benefits
($ Millions)
<TABLE>
<CAPTION>
Annual Benefits Year One Year Two Year Three Normal Year
- --------------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Increased Revenues $183.9 $260.5 $291.2 $306.5
Less: Costs of Handling 119.6 169.5 189.4 199.4
------ ------ ------ ------
$ 64.3 $ 90.1 $101.8 $107.1
Operating Benefits $271.8 $385.1 $430.3 $453.0
------ ------ ------ ------
Total Annual Benefits $336.1 $476.1 $532.1 $560.1
====== ====== ====== ======
One-Time Costs
- --------------
Separation/Relocation/Training $211.6 $ 42.3 $ 28.2 -
Net Capital Expenditures $ 63.4 - - -
</TABLE>
LOGO BURLINGTON
NORTHERN Source: ICC Merger Case
INC.
31
<PAGE>
BURLINGTON NORTHERN/SANTA FE
MERGER
Summary of Benefits to Shareholders
. Likely ICC Approval
. Pro-Competitive
. Shipper Support
. Labor Impact
. Synergies of $560 Million
. Significant Growth Prospects
. Strong Financial Performance
. Enhanced Shareholder Value
LOGO BURLINGTON
NORTHERN
INC.
32
<PAGE>
BN-SF MERGER
Regulatory Process Estimated Timing
------------------ ----------------
Prefiling Notice to ICC July 8, 1994
Preliminary Proxy/S-4 to SEC August 1994
S-4 Declared Effective by SEC October 1994
Joint Proxy to Shareholders October 13, 1994
Application to Merge to ICC October 13, 1994
Shareholders Vote on Merger November 18, 1994
Earliest ICC Approval (Per Adopted Schedule) March 1996
Latest ICC Approval May 1997
LOGO BURLINGTON
NORTHERN
INC.
33
<PAGE>
UP/CNW & SANTA FE NETWORKS
[MAP APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
34
<PAGE>
BURLINGTON NORTHERN/SANTA FE
MERGER
ICC Pro Forma Earnings
($ Millions)
<TABLE>
<CAPTION>
Base Year Pro Forma Pro Forma Pro Forma Pro Forma
(1993) Year One Year Two Year Three Normal Year
------ -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Operating Income $979 $1,102 $1,411 $1,481 $1,538
Net Income $438* $ 513 $ 707 $ 763 $ 814
</TABLE>
*Excludes Gain from Santa Fe California Line Sales and Retroactive Impact of 1%
Increase in Federal Income Tax Rate.
Source: ICC Merger Case
LOGO BURLINGTON
NORTHERN
INC.
35
<PAGE>
Contact: Jeff Michell
777 Main Street-Suite 3200
Fort Worth, Texas 76102
(817) 333-1649
BURLINGTON NORTHERN INC. REPORTS THIRD QUARTER EARNINGS
ALMOST FIVE TIMES HIGHER THAN LAST YEAR
FORT WORTH, Texas, October 20, 1994 - Burlington Northern Inc. (BNI)
today reported net income of $115 million, or $1.22 per common share (primary)
or $1.18 per common share (fully diluted), on revenues of $1.249 billion for the
third quarter of 1994 ended September 30. This is a $91 million increase over
the 1993 third quarter net income of $24 million, or $.21 per common share
(primary and fully diluted), earned on revenues of $1.141 billion.
"The third quarter of 1994 was our largest revenue and operating profit
quarter ever, with each of our business units showing strong revenue increases
over the third quarter of 1993. Coal, Intermodal, and Grain and led the way
with quarterly revenue increases of 14, 11 and 10 percent, respectively. In
fact, Coal set new records for daily, weekly, and monthly carloadings during the
quarter," said Chairman and Chief Executive Officer Gerald Grinstein. "Demand
for our service has never been stronger, and we are quite optimistic about our
revenue and profit growth opportunities for the balance of this year and into
1995," he added.
Operating income in the third quarter of 1994 was $229 million, 89
percent higher than in the same quarter of 1993.
Third quarter 1993 results were adversely affected by last summer's
severe flooding in BNI's service territory, which reduced revenue by an
estimated $44 million and caused additional operating costs of $35 million.
These two
36
<PAGE>
items reduced third quarter 1993 net income by an estimated $49 million, or $.55
per common share (primary). A non-cash charge of $26 million, or $.29 per
common share (primary), to reflect the effects of a higher corporate tax rate on
the balance of deferred income taxes at year-end 1992 was also recorded in the
third quarter of 1993.
For the first nine months of 1994, BNI reported net income of $284
million, or $2.97 per common share (primary) or $2.92 per common share (fully
diluted), excluding an after-tax charge of $10 million, or $.11 per common share
(primary and fully diluted), in the first quarter for the cumulative effect of a
change in the method of accounting for postemployment benefits. Net income
reported for the first nine months of 1993 was $178 million, or $1.81 per common
share (primary) or $1.80 per common share (fully diluted). In addition to the
impact of flooding and the tax increase in the third quarter, 1993 results were
reduced by $7 to $10 million, or approximately $.06 per common share (primary),
due to flood-related expenses during the second quarter.
Headquartered in Fort Worth, Texas, BNI is the parent of Burlington
Northern Railroad, the longest rail system in terms of miles of road and second
main track, in North America, with operations in 25 states and two Canadian
provinces. Its principal sources of revenue are the transportation of coal,
grain, intermodal containers, and a wide variety of industrial, consumer,
automotive and forest products.
Condensed consolidated financial statements follow.
37
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
BURLINGTON NORTHERN INC. and SUBSIDIARIES
(Dollars In Millions, Except Per Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1994 1993 1994 1993
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues............................... $1,249 $1,141 $3,651 $3,453
Costs and expenses..................... 1,020 1,020 3,062 3,016
--------- --------- -------- --------
Operating income....................... 229 121 589 437
Interest expense....................... 40 38 118 107
Other income (expense), net............ (1) 2 (7) 2
--------- --------- -------- --------
Income before income taxes and
cumulative effect of change in
accounting method..................... 188 85 464 332
Income tax expense..................... 73 61 180 154
--------- --------- -------- --------
Income before cumulative effect of
change in accounting method........... 115 24 284 178
Cumulative effect of change in
accounting method, net of tax......... -- -- (10) --
--------- --------- -------- --------
Net income............................. $ 115 $ 24 $ 274 $ 178
--------- --------- -------- --------
Primary earnings (loss) per common
share:
Income before cumulative effect of
change in accounting method......... $ 1.22 $ .21 $ 2.97 $ 1.81
Cumulative effect of change in
accounting method................... -- -- (.11) --
--------- --------- -------- --------
Primary earnings per common share...... $ 1.22 $ .21 $ 2.86 $ 1.81
--------- --------- -------- --------
Shares used in computation (in
thousands)............................ 90,167 89,950 90,230 89,582
Fully diluted earnings (loss) per
common share:
Income before cumulative effect of
change in accounting method......... $ 1.18 $ .21 $ 2.92 $ 1.80
Cumulative effect of change in
accounting method................... -- -- (.11) --
--------- --------- -------- --------
Fully diluted earnings per common
share................................. $ 1.18 $ .21 $ 2.81 $ 1.80
--------- --------- -------- --------
Shares used in computation (in
thousands)............................ 97,507 89,851 97,571 89,651
Dividends declared per common share.... $ .30 $ .30 $ .90 $ .90
</TABLE>
38
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
BURLINGTON NORTHERN INC. and SUBSIDIARIES
(Dollars In Millions)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
<S> <C> <C>
ASSETS
Current assets .............................................. $1,052 $ 891
Property and equipment, net ................................. 6,203 5,909
Other assets ................................................ 281 245
------ ------
Total assets ........................................ $7,536 $7,045
------ ------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Commercial paper ....................................... $ 70 $ 26
Current portion of long-term debt ....................... 33 185
Other .................................................. 1,445 1,318
------ ------
Total current liabilities ........................... 1,548 1,529
Long-term debt .............................................. 1,688 1,526
Other liabilities ........................................... 2,184 2,071
Stockholders' equity ........................................ 2,116 1,919
------ ------
Total liabilities and stockholders' equity ........... $7,536 $7,045
------ ------
</TABLE>
39
<PAGE>
REVENUES AND TRAFFIC VOLUME BY BUSINESS UNIT
BURLINGTON NORTHERN INC. and SUBSIDIARIES
THIRD QUARTER ENDED SEPTEMBER 30, 1994
(% Change as Compared With Third Quarter Ended September 30, 1993)
<TABLE>
<CAPTION>
Revenues
BUSINESS UNIT % Revenue % per Revenue % % Revenues %
Revenues Change Ton Miles Change Ton Mile Change Carloadings Change Per Car Change
------------- ------ ------------- ------ ----------- ------ -------------- ------ -------- ------
(in Millions) (in Millions) (in Cents) (in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coal $ 418 13.9% 36,051 20.4% 1.16 (5.7)% 409 16.9% $1,022 (2.6)%
Agricultural
Commodities 202 10.4% 8,368 (3.2)% 2.41 13.7% 113 10.8% 1,788 (.3)%
Intermodal 206 11.4% 6,806 11.9% 3.03 (0.3)% 277 11.7% 744 (.3)%
Forest Products 128 6.7% 5,341 11.0% 2.40 (3.6)% 73 5.8% 1,753 .8%
Chemicals 102 3.0% 3,740 3.5% 2.73 (0.4)% 75 21.0% 1,360 (14.8)%
Consumer
Products 66 6.5% 2,446 8.2% 2.70 (1.5)% 37 8.8% 1,784 (2.2)%
Minerals
Processors 57 5.6% 2,304 3.5% 2.47 2.1% 54 3.8% 1,056 1.7%
Iron & Steel 43 2.4% 2,027 (1.0)% 2.12 3.4% 57 16.3% 754 (12.0)%
Vehicles &
Machinery 47 4.4% 650 16.3% 7.23 (10.2)% 32 6.7% 1,469 (2.1)%
Aluminum,
Nonferrous
Metals & Ores 26 8.3% 971 6.0% 2.68 2.3% 16 (5.9)% 1,625 15.1%
Shortlines and
other (46) (15.0)% (2,270) 12.0% -- -- -- -- -- --
------ ------ -----
Total $1,249 9.5% 68,434 13.5% 1.88 (3.6)% 1,143 12.8%
------ ------ -----
</TABLE>
40
<PAGE>
REVENUES AND TRAFFIC VOLUME BY BUSINESS UNIT
BURLINGTON NORTHERN INC. and SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 30, 1994
(% Change as Compared With Nine Months Ended September 30, 1993)
<TABLE>
<CAPTION>
Revenues
BUSINESS UNIT % Revenue % per Revenue % % Revenues %
Revenues Change Ton Miles Change Ton Mile Change Carloadings Change Per Car Change
------------- ------ ------------- ------ ----------- ------ -------------- ------ -------- ------
(in Millions) (in Millions) (in Cents) (in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coal $1,253 11.8% 103,583 16.4% 1.21 (4.0)% 1,205 12.7% $ 1,040 (.9)%
Agricultural
Commodities 556 (1.2)% 22,664 (13.3)% 2.45 14.0% 304 (2.3)% 1,829 1.0%
Intermodal 556 2.6% 18,487 4.9% 3.01 (2.3)% 744 (.7)% 747 3.2%
Forest Products 376 4.2% 15,704 6.7% 2.39 (2.4)% 215 3.4% 1,749 .7%
Chemicals 308 1.3% 11,086 .4% 2.78 1.1% 217 13.0% 1,419 (10.4)%
Consumer Products 195 3.7% 6,955 5.2% 2.80 (1.4)% 108 1.9% 1,806 1.8%
Minerals
Processors 155 6.2% 6,271 4.9% 2.47 1.2% 142 6.0% 1,092 .2%
Iron & Steel 127 (1.6)% 6,021 (1.2)% 2.11 (.5)% 165 (2.4)% 770 .9%
Vehicles &
Machinery 144 3.6% 1,943 9.0% 7.41 (5.0)% 101 13.5% 1,426 (8.7)%
Aluminum,
Nonferrous
Metals & Ores 77 -- % 2,912 (1.7)% 2.64 1.5% 49 (3.9)% 1,571 4.0%
Shortlines and
other (96) 17.9% (6,547) 18.7% -- -- -- -- -- --
------ ------- -----
Total $3,651 5.7% 189,079 8.7% 1.93 (3.0)% 3,250 5.6%
------ ------- -----
</TABLE>
41
<PAGE>
OPERATING EXPENSES
BURLINGTON NORTHERN INC. and SUBSIDIARIES
THIRD QUARTER ENDED SEPTEMBER 30, 1994 AND 1993
(Dollars in Millions)
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUE
---------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Compensation and benefits $ 437 $ 429 35.0 37.6
Fuel 95 83 7.6 7.3
Materials 70 73 5.6 6.4
Equipment rents 97 100 7.8 8.8
Purchased services 120 120 9.6 10.5
Depreciation 91 89 7.3 7.8
Other 110 126 8.8 11.0
----- ----- ---- -----
Total $1,020 $1,020 81.7 89.4
====== ====== ==== ====
</TABLE>
42
<PAGE>
OPERATING EXPENSES
BURLINGTON NORTHERN INC. and SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Dollars in Millions)
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUE
---------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Compensation and benefits $1,310 $1,286 35.9 37.2
Fuel 267 260 7.3 7.5
Materials 225 227 6.2 6.6
Equipment rents 314 288 8.6 8.3
Purchased services 352 342 9.6 9.9
Depreciation 267 261 7.3 7.6
Other 327 352 9.0 10.2
----- ----- ---- -----
Total $3,062 $3,016 83.9 87.3
====== ====== ==== ====
</TABLE>
43
<PAGE>
SELECTED STATISTICS
BURLINGTON NORTHERN INC. and SUBSIDIARIES
<TABLE>
<CAPTION>
1994 QUARTERS 1993 QUARTERS TOTAL YEAR
----------------------- --------------- ---------------
First Second Third Third Fourth 1993 1992
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
EMPLOYEES
Average during period 29,371 30,595 31,443 30,398 30,318 30,502 31,204
Compensation and
benefits/revenue
(percent) 36.9 35.7 35.0 37.6 33.9 36.4 36.9
RTM/employee
(thousands) 2,060 2,031 2,113 1,925 2,093 7,781 7,461
Revenue/employee
(dollars in
thousands) 41 39 40 38 41 154 148
------- ------- ------- ------- ------- ------- -------
TRANSPORTATION
Carloadings
(thousands) 1,052 1,055 1,143 1,013 1,097 4,175 4,178
Freight revenue per
car 1,123 1,101 1,066 1,101 1,110 1,099 1,080
Average length of haul
(miles) 779 784 790 794 785 778 764
Gross ton miles 104,064 106,475 112,703 100,971 108,555 409,808 400,917
Operating expense/GTM
(cents) 0.99 0.95 0.91 1.01 0.94 0.99 1.01
Diesel fuel gallons
used (millions) 150 154 159 143 157 588 560
Average fuel price
(cent gal.) 55.5 57.6 59.5 57.7 64.6 61.5 62.2
------- ------- ------- ------- ------- ------- -------
WAY & STRUCTURE PROGRAM
Rail (miles) 28 247 223 198 118 587 645
Surface correction
(miles) 274 3,123 3,170 3,012 1,402 8,418 7,730
Ties installed
(thousands) 54 576 579 597 221 1,919 1,976
------- ------- ------- ------- ------- ------- -------
EQUIPMENT
Percent of freight car
fleet awaiting repair 3.5 3.2 3.1 3.6 3.1 3.3 4.1
Locomotive mean time
between failure
(days) 59.9 82.0 75.4 71.6 74.4 67.9 71.0
------- ------- ------- ------- ------- ------- -------
</TABLE>
44
<PAGE>
THIRD QUARTER 1993
FLOOD IMPACTS
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
REVENUES
Third Quarter
($ Millions)
<TABLE>
<CAPTION>
% Change
Flood Adjusted Adjusted
1993 Impact 1993 1992 1993 vs. 1992
----- ------ -------- ----- -------------
<S> <C> <C> <C> <C> <C>
Coal 367 (35) 402 392 2.6
Agricultural Commodities 183 2 181 170 6.5
Intermodal 185 (3) 188 185 1.6
Vehicles & Machinery 45 0 45 41 9.8
Forest Products 120 (4) 124 118 5.1
Chemicals 99 (1) 100 97 3.1
Consumer Products 62 (3) 65 63 3.2
Minerals Processors 54 0 54 49 10.2
Iron & Steel 42 0 42 47 (10.6)
Aluminum Producers 24 0 24 28 (14.3)
----- --- ----- ----- -----
Business Unit Total 1,181 (44) 1,225 1,190 2.9
Shortlines and Other (40) 0 (40) (32) 25.0
----- --- ----- ----- -----
Total Revenues 1,141 (44) 1,185 1,158 2.3
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
45
<PAGE>
OPERATING EXPENSES
Third Quarter
($ Millions)
<TABLE>
<CAPTION>
Flood Adjusted
1993 Impact 1993 1992
------ ------ -------- ------
<S> <C> <C> <C> <C>
Compensation and Benefits $ 429 $ (4) $425 $ 423
Fuel 83 (2) 81 92
Material 73 (4) 69 68
Equipment Rents 100 (10) 90 94
Purchased Services 120 (5) 115 128
Depreciation 89 1 90 82
Other 126 (11) 115 124
------ ---- ---- ------
Total Operating Expenses $1,020 $(35) $985 $1,011
====== ==== ==== ======
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
46
<PAGE>
REVENUE TON MILES
Third Quarter
(Millions)
<TABLE>
<CAPTION>
% Change
Flood Adjusted Adjusted
1993 Impact 1993 1992 1993 vs. 1992
------ ------- -------- ------ -------------
<S> <C> <C> <C> <C> <C>
Coal 29,941 (2,789) 32,730 30,784 6.3
Agricultural Commodities 8,642 243 8,399 7,853 7.0
Intermodal 6,083 (75) 6,158 5,812 6.0
Vehicles & Machinery 568 0 568 534 6.4
Forest Products 4,810 (186) 4,996 5,050 (1.1)
Chemicals 3,605 (17) 3,622 3,503 3.4
Consumer Products 2,262 (87) 2,349 2,271 3.4
Minerals Processors 2,225 (4) 2,229 2,008 11.0
Iron & Steel 2,044 (4) 2,048 2,106 (2.8)
Aluminum Producers 918 (4) 922 1,049 (12.1)
------ ------- ------ ------ -----
Business Unit Total 61,098 (2,923) 64,021 60,970 5.0
Shortlines and Other (2,580) 0 (2,580) (2,320) 11.2
------ ------- ------ ------ -----
Total Revenue Ton Miles 58,518 (2,923) 61,441 58,650 4.8
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
47
<PAGE>
UNITS
Third Quarter
(Thousands)
<TABLE>
<CAPTION>
% Change
Flood Adjusted Adjusted
1993 Impact 1993 1992 1993 vs. 1992
------ ------- -------- ------ -------------
<S> <C> <C> <C> <C> <C>
Coal 350 (34) 384 376 2.l
Agricultural Commodities 102 3 99 104 (4.8)
Intermodal 248 (3) 251 265 (5.3)
Vehicles & Machinery 30 0 30 25 20.0
Forest Products 69 (2) 71 71 0.0
Chemicals 62 (1) 63 61 3.3
Consumer Products 35 (1) 36 37 (2.7)
Minerals Processors 51 0 51 49 4.1
Iron & Steel 49 0 49 62 (21.0)
Aluminum Producers 17 0 17 18 (5.6)
------ ------- ------ ------ -----
Business Unit Total 1,013 (38) 1,051 1,068 (1.6)
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
48
<PAGE>
Description of Graphic Materials
--------------------------------
On page 2 there appears a bar graph under the heading "Earnings Per
Share Third Quarter ($ Millions)". The graph shows (A) primary earnings per
share for the third quarter of (i) 1993 of $1.05, broken down as follows: $.21
(as reported); Floods, $.55 (as adjusted); Tax, $.29 (as adjusted) and (ii) 1994
of $1.22 (as reported) and (B) fully-diluted earnings per share for the third
quarter of (i) 1993 of $1.03 (as adjusted); and (ii) 1994 of $1.18 (as
reported).
On page 7 there appears a bar graph under the heading "Debt-Equity
Ratio ($ Millions)". The graph shows (i) debt of 2,835, equity of 918, ratio of
3.1 to 1, or 76/24% at 12/88; (ii) debt of 2,333, equity of 1,080, ratio of 2.2
to 1, or 68/32% at 12/89; (iii) debt of 2,133, equity of 1,241, ratio of 1.7 to
1, or 63/37% at 12/90; (iv) debt of 1,982, equity of 1,202, ratio of 1.6 to 1,
or 62/38% at 12/91; (v) debt of 1,567, equity of 1,728, ratio of .9 to 1, or
48/52% at 12/92; (vi) debt of 1,737, equity of 1,919, ratio of .9 to 1, or
48/52% at 12/93; and (vii) debt of 1,791, equity of 2,116, ratio of .8 to 1, or
46/54% at 9/94.
On page 8 there appears a pie chart under the heading "Revenues By
Business Segment Third Quarter ($ Millions)." The chart shows nine proportionate
sections as follows: "Coal, $418, +4.0%"; "Intermodal, $206 at +9.6%";
"Agricultural, $202, +11.6%, "Vehicles & Machinery, $47, +4.4%"; "Forest
Products, $128, +3.2%"; "Chemicals, $102, +2.0%"; Consumer Products, $66, +1.5%;
"Metals, $69, +4.5%"; and "Minerals, $57, +5.6%". The two pie section entitled
"Coal" and "Intermodal" are set apart from the other seven sections.
On page 9 there appears a pie chart under the heading "Coal Third
Quarter". The chart shows one section set apart and marked "32%". The other pie
sections are segmented in a similar manner as the pie chart that appears on page
8.
On page 10 there appears two bar graphs under the heading "Competitive
Advantage of PRB Coal." One bar graph is entitled "Costs per Megawatt Hour" and
shows Coal at $19.79, Nuclear at $21.61, Gas at $30.71, and Oil at $35.10. The
other bar graph is entitled "Delivered Price per Million BTU of Coal" and shows
Appalachian at $1.56, Interior at $1.40, and Western at $1.29.
On page 12 there appears a pie chart under the heading "Intermodal
Third Quarter". The chart shows one section set apart and marked "16%". The
other pie sections are segmented in a similar manner as the pie chart that
appears on page 8.
On page 14 there appears a pie chart under the heading "Burlington
Northern Inc. Agricultural Commodities Third Quarter". The chart shows one
section set apart and marked "16%". The other pie sections are segmented in the
same manner as the pie chart that appears on page 8.
On page 15 there appear three bar graphs under the heading
"Agricultural Commodities BN Area Supplies".* The first graph is entitled "Corn
+37%" and shows 1,837 million bushels in 1993, 2,516 million bushels in
1994 and a 19% increase in Total U.S. Production. The second graph is entitled
"Wheat -6%" and shows 1,719 million bushels in 1993, 1,623 million bushels in
1994 and no change in Total U.S. Production. The third graph is entitled
"Soybeans +46%" and shows 320 million bushels in 1993, 468 million bushels in
1994 and a 17% increase in Total U.S. Production.
On page 17 there appears a pie chart with the heading "Other Business
Units Third Quarter". The chart shows six sections collectively set apart from
the remaining three sections and the six sections are collectively marked "36%".
The pie sections are segmented in the same manner as the pie chart that appears
on page 8.
On page 18 there appears a pie chart under the heading "Other Business
Units Third Quarter". The chart is exactly identical to the chart that appears
on page 17.
On page 20 there appears a line graph under the heading "Coal Trains
Loaded Per Day". The horizontal axis of the graph shows monthly intervals from
January to December, and the vertical axis of the graph shows a range of 32 to
44, with tick marks for each 0.5 interval. The data points depicted by the line
graph at the midpoint of each month are as follows:
1993 1994
---- ----
Jan 38.0 40.5
Feb 39.0 41.2
Mar 39.2 41.2
Apr 39.2 39.0
May 37.5 41.5
Jun 38.5 39.5
Jul 34.2 39.0
Aug 34.2 43.0
Sep 39.2 40.5
Oct 41.0
Nov 42.0
Dec 42.2
On page 21 there appears a line graph under the heading "Coal Trains
Third Quarter 1994 Average Daily Loadings". The horizontal axis shows weekly
intervals beginning at July 8 and ending at September 30. The vertical axis
shows whole number intervals ranging from 37 to 45, with tick marks for each .2
interval. The graph is overlaid with lines showing that the Maintenance
Moratorium lasted from July 18 to September 19, the Seneca Derailment lasted
from September 4 to the end of the Third Quarter, and the Gillette Derailment
lasted from September 7 to approximately September 11. The data points depicted
by the graph are as follows:
week of July 8 39.6
15 39.4
22 37.8
29 38.8
Aug 5 40.4
12 42.0
19 42.8
26 44.0
Sept 2 43.6
9 41.6
16 40.2
23 40.0
30 41.0
On page 23 there appears a map captioned "Powder River Basin" showing
the juncture of South Dakota, Nebraska and Wyoming overlaid with certain
Burlington Northern track routes. Burlington Northern track appears as a thick
solid line, Joint track appears as a thin solid line, Double track appears as a
broken double line, and Track in Progress appears as a broken single line. The
map identifies the following cities served: Donkey Creek, Bill and Bridger
Junction, Wyoming; Northport and Alliance, Nebraska; and Edgemont, South Dakota.
The southernmost section of the Donkey - Bill route is labeled "Open Nov. 4,
1994"; the mid section of the Bill- Bridger Junction route is labeled "Open Dec.
31, 1994"; the southernmost sections of the Alliance - Edgemont route are
labeled "Open Jan. 10, 1995" and "Open Jan. 17, 1995".
On page 24 there appears a bar graph under the heading "Hiring and
Training". The graph shows the number of (i) "Engineers" at 92, 101, 105, 121,
165, 220, 185 and 130, and (ii) "Trainmen" at 276, 142, 220, 406, 400, 400, 300
and 200, for the first, second, third and fourth quarters of 1994 and the first,
second, third and fourth quarters of 1995, respectively.
On page 25 there appears a bar graph under the heading "SD7OMAC
Locomotive Delivery Plan". The graph shows 47, 39, 39, 39 and 13 for the fourth
quarter of 1994 and the first, second, third and fourth quarters of 1995,
respectively.
On page 26 there appears a line graph under the heading "Merchandise
and Intermodal 1994 Operating Efficiencies". The horizontal axis shows monthly
intervals from January to September 1994. The left vertical axis shows "Train
Miles" in intervals of 5,000 ranging from 140,000 to 160,000, with tick marks at
each 1,000 interval. The right vertical axis shows "Cars/Train" in whole number
intervals ranging from 53 to 60, with tick marks at each 0.2 interval. The data
points depicted by the graphs are as follows:
Train Miles Car/Train
Jan 141,500 57.6
Feb 150,000 56.0
Mar 155,000 58.8
Apr 152,000 56.6
May 156,000 54.8
Jun 151,000 54.0
Jul 151,000 54.0
Aug 152,500 58.6
Sep 155,000 59.4
On page 27 there appear two bar graphs under the heading "Safety
Improvements Third Quarter". The bar graph captioned "Injury Frequency (Per
200,000 Man Hours)" shows 13.30 in 1992, 6.38 in 1993 and 3.75 in 1994. The bar
graph captioned "Lost Day Cases" shows 719 in 1992, 265 in 1993 and 143 in 1994.
On page 28 there appears a map under the heading "BN and Santa Fe
Networks" of the 48 contiguous United States overlaid with the routes of the
Burlington Northern and the Santa Fe Railroad. Burlington Northern track is
depicted as light-toned lines and Santa Fe track is depicted as dark-toned
lines. The map identifies the following cities on the routes: Chicago, St.
Louis, Minneapolis/St. Paul, Duluth, Kansas City, Omaha, Winnipeg, Fargo,
Topeka, Dallas/Ft. Worth, Houston, Tulsa, Gillette, Denver, Albuquerque, El
Paso, Billings, Phoenix, San Diego, Los Angeles, San Francisco, Portland,
Seattle and Vancouver.
On page 29 there appears a pie chart under the heading "Burlington
Northern/Santa Fe Merger Benefits Diversified Traffic Base ($ Millions)." The
chart shows seven proportionate sections as follows: "Coal, $1,752, 25%";
Intermodal, $1,707, 24%"; "Agricultural, $1,029, 14%"; "Chemicals, $677, 10%";
Forest, $591, 8%"; "Automotive, $379, 5%", and "Other, $973, 14%".
On page 34 there appears a map under the heading "UP/CNW & Santa Fe
Networks" of the 48 contiguous United States overlaid with the routes of the
Union Pacific, CNW and Santa Fe Railroad. Union Pacific and CNW track are
depicted by light-toned lines, and Santa Fe track is depicted by dark-toned
lines. The map identifies the following cities on the routes: Chicago,
Minneapolis/St. Paul, Denver, Topeka, Tulsa, Gillette, San Antonio, El Paso,
Albuquerque, New Orleans, Phoenix, Salt Lake City, Las Vegas, San Diego, Los
Angeles, San Francisco, Portland and Seattle.
- ---------------------
* USDA Forecasts -- million bushels.
