<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 Section 240.14a-11(c) or Section 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), 14a-6(i)(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:
187,049,738 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: $49 1/2 (/2/)
(4) Proposed maximum aggregate value of transaction: $3,148,047,091 (/2/)
(/1/) The filing fee previously was paid with the initial filing of the
preliminary proxy materials on August 8, 1994 and with the filing of
two Registration Statements on Form S-4 on October 12, 1994 (Reg. No.
33-56007) and October 27, 1994 (Reg. No. 33-56183), respectively.
(/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 0.34 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 $3,148,047,091
(calculated based on the number of shares of Santa Fe Pacific
Corporation common stock outstanding as of October 19, 1994, the
average of the high and low reported prices of Burlington Northern Inc.
common stock on October 21, 1994 and the exchange ratio of 0.34). The
filing fee is one-fiftieth of that amount.
[x] 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:............................$1,145,590
(2) Form, Schedule or Registration Statement No.:......Preliminary Proxy
Statement
Registration
Statement on Form
S-4 (Reg. No. 33-
56007) Registration
Statement on Form
S-4, as amended
(Reg. No. 33-56183)
(3) Filing Party:......................................Burlington Northern
Inc./Santa Fe
Pacific Corporation
(4) Date Filed:........................................August 8, 1994
........................................October 12, 1994
........................................October 27, 1994
<PAGE>
[BURLINGTON NORTHERN INC. LOGO INVESTOR REPORT]
BURLINGTON NORTHERN INC. REPORT RECORDS FOR
FOURTH QUARTER AND FULL-YEAR RESULTS
QUARTERLY, ANNUAL EARNINGS
Burlington Northern Inc. (BNI) today announced the highest quarterly
and annual earnings ever achieved by the company. Fourth quarter 1994 net
income of $142 million, $1.51 per common share (primary) or $1.46 per common
share (fully diluted), was 20 percent greater than the $118 million, $1.25 per
common share (primary) or $1.21 per common share (fully diluted), earned in the
same 1993 quarter. Operating income of $264 million represented an 18-percent
increase over the prior year's fourth quarter. Revenues for the fourth quarter
reached $1.34 billion, also an all-time quarterly record, and were eight percent
higher than reported for the same period of 1993.
[ Graph Chart comparing Fourth Quarter results 1993 to 1994
Revenue ($ millions) '93 $1,246 - '94 $1,344
Operating Income ($ millions) '93 $224 - '94 $264
Earnings Per Share fully diluted '93 $1.21 - '94 $1.46 ]
Full-year 1994 net income for BNI was $416 million, $4.37 per common
share (primary) or $4.27 per common share (fully diluted), a 41-percent increase
over 1993. Annual operating income rose 29 percent to $853 million, while
revenues climbed six percent to nearly five billion dollars.
Included in 1994 earnings was the cumulative effect of an accounting
adjustment which reduced net income by $10 million and earnings per common share
by $.11 (primary). Reported 1993 net income included a third quarter charge of
$26 million, or $.29 per common share (primary), to reflect
<PAGE>
the effect of a one-percent increase in the corporate income tax rate on the
year-end 1992 deferred tax balance. BNI had also announced that operating
income in the second and third quarter of 1993 was reduced by a total of $88
million, or $.61 per common share (primary), due to the summer's flooding.
Agricultural commodities experienced all-time record volume and
revenues in the quarter. Abundant harvests in BNI's service territory, strong
domestic demand, and a resurgence in foreign demand combined to increase unit
volume 18 percent. Revenues grew to $274 million, 24 percent over the fourth
quarter of last year.
BN EARNINGS
Revenues from intermodal shipments grew 15 percent to $216 million as
strong import and export demand for containerized freight, and market share
gains in the domestic less-than-truckload market, drove unit volumes up 11
percent over fourth quarter 1993.
Fourth quarter 1994 coal volume of 44.8 million tons and revenues of
$416 million set all-time records, surpassing last year's fourth quarter records
established as the company made a concerted effort to replenish coal stockpiles
seriously depleted during the summer's flooding.
"While agricultural commodities, intermodal, and coal accounted for
most of the revenue growth in the quarter, most other commodity groups turned in
solid performances as
2
<PAGE>
well," said Gerald Grinstein, chairman and chief executive officer of BNI. "The
pace at which we operated during the second half of 1994 has established the
benchmark for 1995."
Record fourth quarter volumes were a challenge for BNI employees.
There were a number of locations throughout the system that operated in excess
of normal capacity for much of the quarter. Extraordinary measures were taken
to serve customers and satisfy as much of the immediate demand as possible.
In response to growing market opportunities, BNI continued to invest
in its freight-hauling capacity. By the end of the year, the company had added
more than 1,000 engineers and conductors to its work force, increased its fleet
of highly productive AC traction locomotives by 133, and built an additional 31
miles of second main track to improve service between Powder River Basin coal
producers and utility customers.
While handling record volumes of business, the company was able to
operate safely and efficiently. Personal injuries resulting in lost work days
fell 52 percent during 1994 and derailment incidents were reduced by 21 percent
over the same period.
"We reduced our fourth quarter operating ratio (the ratio of operating
expenses to operating revenues) to 80.4, its lowest point ever, and brought the
full year down to 82.9, a three point improvement over 1993," said Mr.
3
<PAGE>
Graph chart comparing 1993 to 1994
Injury Frequency '93 % 27 - '94 3.85
(per 2,000,000 man hours)
Log - Day cases '93 1,295 - '94 626
Personal Injury Expense
($ millions)
'93 $216 - '94 $170
Grinstein. "We were pleased with our performance in the second half of 1994,
particularly in the fourth quarter, and we are encouraged by the market
opportunities we see in the coming year. We are confident that we can take
advantage of these opportunities while at the same time increasing the
productivity of our system."
BN EARNINGS
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.
4
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA -- UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
1994 1993 % 1994 1993 %
Change Change
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 1,344 $ 1,246 7.9% $ 4,995 $ 4,699 6.3%
Costs and expenses 1,080 1,022 5.7% 4,142 4,038 2.6%
----------------------------------------------------------
Operating income 264 224 17.9% 853 661 29.0%
Interest expense 37 38 -2.6% 155 145 6.9%
Other income (expense), net 4 3 33.3% (3) 5 -160.0%
----------------------------------------------------------
Income before income taxes and 231 189 22.2% 695 521 33.4%
cumulative effect of change in
accounting method
Income tax expense 89 71 25.4% 269 225 19.6%
----------------------------------------------------------
Income before cumulative effect of 142 118 20.3% 426 296 43.9%
change in accounting method
Cumulative effect of change in -- -- -- (10) -- --
accounting method, net of tax
----------------------------------------------------------
Net Income $ 142 $ 118 20.3% $ 416 $ 296 40.5%
- ----------------------------------------------------------------------------------------------------
PRIMARY EARNINGS (LOSS) PER COMMON SHARE:
Income before cumulative effect of $ 1.51 $ 1.25 20.8% $ 4.48 $ 3.06 46.4%
change in accounting method
Cumulative effect of change in -- -- -- (0.11) -- --
accounting method
----------------------------------------------------------
Primary earnings per common share $ 1.51 $ 1.25 20.8% $ 4.37 $ 3.06 42.8%
==========================================================
Shares used in computation 90,095 89,919 0.2% 90,187 89,672 0.6%
(in thousands)
- ----------------------------------------------------------------------------------------------------
FULLY DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Income before cumulative effect of $ 1.46 $ 1.21 20.7% $ 4.38 $ 3.04 44.1%
change in accounting method
Cumulative effect of change in -- -- -- (0.11) -- --
accounting method
----------------------------------------------------------
Fully diluted earnings per common share $ 1.46 $ 1.21 20.7% $ 4.27 $ 3.04 40.5%
==========================================================
Shares used in computation 97,436 97,362 0.1% 97,528 97,189 0.3%
(in thousands)
- ----------------------------------------------------------------------------------------------------
Dividends declared per common share $ 0.30 $ 0.30 $ 1.20 $ 1.20
- ----------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS -- UNAUDITED)
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets $ 1,012 $ 891
Property and equipment, net 6,311 5,909
Other assets 269 245
---------------------------------------
Total assets $ 7,592 $ 7,045
- -------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Commercial paper $ 90 $ 26
Current portion of long-term debt 32 185
Other 1,325 1,318
---------------------------------------
Total current liabilities $ 1,447 $ 1,528
Long-term debt 1,697 1,526
Other liabilities 2,211 2,071
Stockholders' equity 2,237 1,919
---------------------------------------
Total liabilities and stockholders' equity $ 7,592 $ 7,045
- -------------------------------------------------------------------------------------
SUPPLEMENTAL FINANCIAL INFORMATION
FINANCIAL RATIOS
Debt to total capital 44.8% 47.5%
Return on assets (ROA) 5.8% 4.4%
Return on equity (ROE) 20.7% 16.2%
Times interest earned 5.5 4.6
- -------------------------------------------------------------------------------------
BNI STOCK PRICES (CLOSING) 4th Full Year
Quarter 1994
1994 -------
-------
High $51 5/8 $ 66
Low $46 5/8 $46 5/8
End of period $48 1/8 $48 1/8
Beginning of period $50 1/4 $57 7/8
- -------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS - UNAUDITED)
<TABLE>
<CAPTION>
Year Ended
December 31,
1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 416 $ 296
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of change in accounting method 10 --
Depreciation 362 352
Deferred income taxes 126 156
Changes in current assets and liabilities (115) (109)
Changes in long-term casualty and environmental reserves (10) (57)
Other, net -- (60)
- -----------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 789 $ 578
- -----------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property and equipment $(698) $(676)
Proceeds from property and equipment dispositions 45 35
Other, net (28) (18)
NET CASH USED IN INVESTING ACTIVITIES $(681) $(659)
- -----------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in commercial paper $ 64 $ 26
Proceeds from issuance of long-term debt 310 224
Payments on long-term debt (346) (88)
Dividends paid (129) (125)
Proceeds from exercise of common stock options 6 15
Redemption of redeemable preferred stock -- (9)
Other, net (3) (2)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ (98) $ 41
- -----------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents $ 10 $ (40)
CASH AND CASH EQUIVALENTS:
Beginning of year 17 57
- -----------------------------------------------------------------------------------------
End of year $ 27 $ 17
- -----------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
OPERATING EXPENSES AND RATIOS
FOURTH QUARTER AND FULL YEAR ENDED DECEMBER 31, 1994 AND 1993
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Operating Ratios Operating Ratios
(% of Revenue) (% of Revenue)
Three Months Twelve Months
Ended Twelve Months Ended Ended
Three Months Ended December 31, December 31, December 31,
December 31,
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$469 $ 423 34.9 33.9 Compensation and $1,779 $1,709 35.6 36.4
benefits
102 102 7.6 8.2 Fuel 369 362 7.4 7.7
80 73 6.0 5.9 Materials 305 300 6.1 6.4
115 107 8.6 8.6 Equipment rents 429 395 8.6 8.4
120 115 8.9 9.2 Purchased services 472 457 9.4 9.7
95 91 7.1 7.3 Depreciation 362 352 7.2 7.5
99 111 7.3 8.9 Other 426 463 8.6 9.8
- ---------- ------ ---- ---- ------ ------ ---- ----
$1,080 $1,022 80.4 82.0 Total Operating $4,142 $4,038 82.9 85.9
Expenses
- -------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
REVENUES AND TRAFFIC VOLUMES BY BUSINESS UNIT
FOURTH QUARTER ENDED DECEMBER 31, 1994
(% CHANGE AS COMPARED WITH FOURTH QUARTER ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
BUSINESS UNIT REVENUES % CHANGE REVENUES TON MILES % CHANGE CARLOAD % CHANGE
($ MILLIONS) (RTM-MILLIONS) UNITS
(THOUSANDS)
REVENUES PER RTM
(CENTS) % CHANGE REVENUES PER %CHANGE
CARLOAD
<S> <C> <C> <C> <C> <C> <C>
COAL $ 416 1.2 37,351 10.4 419 5.3
1,11 (8.3) $ 993 (3.9)
AGRICULTURAL COMMODITIES $ 274 24.0 12,466 33.9 132 17.9
2.20 7.2
$ 2,076 5.2
INTERMODAL $ 216 14.9 7,055 15.5 282 11.0
3.06 (0.6) $ 766 3.5
FOREST PRODUCTS $ 122 -- 5,080 1.4 69 (4.2)
2.40 (1.6) $ 1,768 4.4
CHEMICALS $ 104 2.0 3,767 4.4 74 4.2
2.76 (2.5) $ 1,405 (2.2)
CONSUMER PRODUCTS $ 72 4.3 2,522 3.4 42 7.7
2.85 0.7 $ 1,714 (3.1)
MINERALS PROCESSORS $ 53 8.2 2,128 6.1 47 4.4
2.49 2.0 $ 1,128 3.6
VEHICLES & MACHINERY $ 46 -- 671 11.1 33 --
--
6.86 (10.0) $ 1,394
IRON & STEEL $ 48 9.1 2,249 7.4 65 16.1
2.13 1.4 $ 738 (6.1)
ALUMINUM, NONFERROUS $ 25 (3.8) 939 (1.6) 16 (5.9)
METALS & ORES
2.66 (2.6) $ 1563 2.2
SHORTLINES AND OTHER ($32) -- (2,733) (8.5) -- --
-- -- -- --
TOTAL $1,344 7.9 71,495 12.7 1,179 7.5
1.88 (4.1)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
REVENUES AND TRAFFIC VOLUMES BY BUSINESS UNIT
FOURTH QUARTER ENDED DECEMBER 31, 1994
(% CHANGE AS COMPARED WITH FOURTH QUARTER
ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
BUSINESS UNIT REVENUES % CHANGE REVENUES TON MILES % CHANGE CARLOAD % CHANGE
($ MILLIONS) (RTM-MILLIONS) UNITS
(THOUSANDS)
REVENUES PER RTM
(CENTS) % CHANGE REVENUES PER %CHANGE
CARLOAD
<S> <C> <C> <C> <C> <C> <C>
COAL $1,669 8.9 140,934 14.7 1,624 10.7
1.18 (5.6) $ 1,028 (1.5)
AGRICULTURAL COMMODITIES $ 830 5.9 35,130 (0.9) 436 3.1
2.36 6.8 $ 1,904 2.8
INTERMODAL $ 772 5.8 25,542 7.7 1,026 2.3
3.02 (1.9) 752 3.3
FOREST PRODUCTS $ 498 3.1 20,784 5.4 284 1.4
2.40 (2.0) $ 1,754 1.7
CHEMICALS $ 412 1.5 14,853 1.4 291 10.6
2.77 -- $ 1,416 (8.3)
CONSUMER PRODUCTS $ 267 3.9 9,477 1.4 150 3.4
2.82 (0.7) $ 1,780 0.5
MINERALS PROCESSORS $ 208 6.7 8,399 5.2 189 5.6
2.48 1.6 $ 1,101 1.1
VEHICLES & MACHINERY $ 190 2.7 2,614 9.6 134 9.8
7.27 (6.2) $ 1,418 (6.5)
IRON & STEEL $ 175 1.2 8,270 1.0 230 2.2
2.12 0.5 $ 761 (1.0)
ALUMINUM, NONFERROUS $ 102 (1.0) 3,851 (1.7) 65 (4.4)
METALS & ORES
2.65 0.8 $ 1,569 3.6
SHORTLINES AND OTHER ($128) 14.1 (9,280) 12.2 -- --
-- -- -- --
TOTAL $4,995 6.3 260,574 9.8 4,429 6.1
1.92 (3.0)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
SELECTED STATISTICS
<TABLE>
<CAPTION>
1994 QUARTERS 1993
QUARTER
FIRST Second Third Fourth Fourth
<S> <C> <C> <C> <C> <C>
EMPLOYEES
Average during period 29,371 30,595 31,443 31,437 30,318
Compensation and benefits/revenue (percent) 36.9 35.7 35.0 34.9 33.9
RTM/employee (thousands) 2,060 2,031 2,113 2,274 2,093
Revenue/employee (dollars in thousands) 41 39 40 43 41
TRANSPORTATION
Carloadings (thousands) 1,055 1,143 1,179 1,097
1,052
Freight revenues per carload 1,101 1,066 1,114 1,110
1,123
Average length of haul (miles) 784 790 817 785
779
Gross ton miles (GTM - millions, excl. loco's.) 106,475 112,703 120,198 108,555
104,064
Operating expense/GTM (cents) 0.95 0.91 0.90 0.94
0.99
Diesel fuel gallons used (millions) 154 159 168 157
150
Average fuel price (cents)(gal.) 57.6 59.5 60.8 64.6
55.5
WAY & STRUCTURE PROGRAM
Rail (miles) 28 247 223 177 118
Surface correction (miles) 274 3,123 3,170 1,617 1,402
Ties installed (thousands) 54 576 579 264 221
EQUIPMENT
Percent of freight car fleet awaiting repair 3.5 3.2 3.1 2.5 3.1
Locomotive mean time between failure (days) 59.9 82.0 75.4 72.2 74.4
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
SELECTED STATISTICS CONTINUED
<TABLE>
<CAPTION>
TOTAL YEAR
----------
1994 1993 1992
<S> <C> <C> <C>
EMPLOYEES
Average during period 30,711 30,502 31,204
Compensation and benefits/revenue (percent) 35.6 36.4 36.9
RTM/employee (thousands) 8,485 7,781 7,461
Revenue/employee (dollars in thousands) 163 154 148
TRANSPORTATION
Carloadings (thousands) 4,429 4,175 4,178
Freight revenues per carload 1,101 1,099 1,080
Average length of haul (miles) 793 778 764
Gross ton miles (GTM - millions, excl.
loco's) 443,440 409,808 400,917
Operating expense/GTM (cents) 0.93 0.99 1.01
Diesel fuel gallons used (millions) 631 588 560
Average fuel price (cents)(gal.) 58.4 61.5 62.2
WAY & STRUCTURE PROGRAM
Rail (miles) 675 587 645
Surface correction (miles) 8,184 8,418 7,730
Ties installed (thousands) 1,473 1,919 1,976
EQUIPMENT
Percent of freight car fleet awaiting repair 3.1 3.3 4.1
Locomotive mean time between failure (days) 71.1 67.9 71.0
- --------------------------------------------- ----------------------------
</TABLE>
12
<PAGE>
BURLINGTON NORTHERN INC.
SECURITY ANALYST PRESENTATION
[LOGO]
January 23, 1995
<PAGE>
FINANCE
Dave Anderson
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
STRATEGIC OBJECTIVES
. Margin Improvement
. Targeted Investments in the Business
. Reduced Financial Leverage
LOGO BURLINGTON
NORTHERN
INC.
B-1
<PAGE>
<TABLE>
<CAPTION>
INCOME STATEMENTS
Fourth Quarter
($ Millions Except EPS)
1994 1993
------ ------
<S> <C> <C>
Revenues $1,344 $1,246
Operating Costs 1,080 1,022
------ ------
Operating Income 264 224
Interest Expense 37 38
Other Income, Net 4 3
------ ------
Income Before Taxes 231 189
Income Tax Expense 89 71
------ ------
Net Income $ 142 $ 118
====== ======
EPS - Primary $ 1.51 $ 1.25
EPS - Fully Diluted $ 1.46 $ 1.21
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-2
<PAGE>
<TABLE>
<CAPTION>
OPERATING EXPENSES
Fourth Quarter
($ Millions)
1994 1993
------- -------
<S> <C> <C>
Compensation and Benefits $ 469 $ 423
Fuel 102 102
Materials 80 73
Equipment Rents 115 107
Purchased Services 120 115
Depreciation 95 91
Other 99 111
------ ------
$1,080 $1,022
====== ======
Operating Ratio 80.4% 82.0%
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-3
<PAGE>
<TABLE>
<CAPTION>
INCOME STATEMENTS
Full Year
($ Millions Except EPS)
1994 1993
------- ------
<S> <C> <C>
Revenues $4,995 $4,699
Operating Costs 4,142 4,038
------ ------
Operating Income 853 661
Interest Expense 155 145
Other Income (Expense), Net (3) 5
------ ------
Income Before Taxes and Accounting 695 521
Change
Income Tax Expense 269 225
------ ------
Income Before Accounting Change 426 296
Cumulative Effect of Accounting Change (10) -0-
------ ------
Net Income $ 416 $ 296
====== ======
EPS - Primary $ 4.37 $ 3.06
EPS - Fully Diluted $ 4.27 $ 3.04
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-4
<PAGE>
<TABLE>
<CAPTION>
OPERATING EXPENSES
FULL YEAR
($ Millions)
1994 1993
------- -------
<S> <C> <C>
Compensation and Benefits $1,779 $1,709
Fuel 369 362
Materials 305 300
Equipment Rents 429 395
Purchased Services 472 457
Depreciation 362 352
Other 426 463
------ ------
$4,142 $4,038
====== ======
Operating Ratio 82.9% 85.9%
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-5
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
($ Millions)
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Assets
- ------
Current Assets $1,012 $ 891
Property and Equipment - Net 6,311 5,909
Other Assets 269 245
------ ------
Total Assets $7,592 $7,045
====== ======
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Current Portion of Long-Term Debt $ 122 $ 211
Including CP
Other 1,325 1,318
------ ------
Total Current Liabilities 1,447 1,529
Long-Term Debt 1,697 1,526
Other Liabilities 2,211 2,071
Stockholders' Equity 2,237 1,919
------ ------
Total Liabilities and $7,592 $7,045
Stockholders' Equity ====== ======
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-6
<PAGE>
<TABLE>
<CAPTION>
1994 CASH FLOW SUMMARY
($ Millions)
<S> <C> <C>
Cash - Beginning of Year $ 17
Cash from Operations:
Net Income $ 416
Cumulative Effect of Accounting Change 10
Depreciation 362
Deferred Income Taxes 126
Working Capital and Other Changes (125) 789
-----
Investing Activities:
Capital Expenditures (698)
Other Investing Activities 17 (681)
-----
Financing Activities:
Proceeds from Issuance of Long-Term 310
Debt
Increase in Commercial Paper 64
Payments on Long-Term Debt (346)
Dividends Paid (129)
Other - Net 3 (98)
----- -----
Cash - End of Year $ 27
=====
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-7
<PAGE>
DEBT-EQUITY RATIO
($ Millions)
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
B-8
<PAGE>
CASH CAPITAL SPENDING
($ Millions)
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
B-9
<PAGE>
<TABLE>
<CAPTION>
1995 CASH FLOW ASSUMPTIONS
($ Millions)
Source
(Use)
-------
<S> <C>
Depreciation $ 400
Deferred Taxes 110
Working Capital and Other Changes (110)
Capital Additions - Cash (749)
Dividends (134)
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-10
<PAGE>
<TABLE>
<CAPTION>
INFORMATION TECHNOLOGY INITIATIVES
<S> <C>
Mission: To Rebuild BN Systems Infrastructure
Principles: Focus on Customer Service
Support a Scheduled Railroad
Improve Business Decision Making
Timeframe: 4 Years Starting 1993
</TABLE>
LOGO BURLINGTON
NORTHERN
INC.
B-11
<PAGE>
INFORMATION TECHNOLOGY INITIATIVES
5 MAJOR INITIATIVES
Centralized Customer Support Center (1994) - Complete
- -----------------------------------------------------
. Call Management
. Problem Management
. Video Train Verification
. Imaging System
. Key Account Monitoring
Centralized Network Operations Center (1995) - On Target
- --------------------------------------------------------
. Centralized Dispatch and Line-Up
. Locomotive Management
. Crew Management
Reengineered Train Management System
(1995-1996) - On Target
- ----------------------------------------
. Service Order (1995) and Work Order (1996)
. Train Scheduling, Classification Standards
. Trip Plans, Reservations and Booking
. Terminal Operations Management
LOGO BURLINGTON
NORTHERN
INC.
B-12
<PAGE>
INFORMATION TECHNOLOGY INITIATIVES
5 MAJOR INITIATIVES (CONTINUED)
Reengineered Revenue Management System
(1994-1995) - On Target
- ----------------------------------------
. Interline Settlement
. Price Management
. Customer Billing
Account-Focused Professional Sales/Support System (1994) - Complete
- -------------------------------------------------------------------
. P&L Based Planning
. Performance Measures
LOGO BURLINGTON
NORTHERN
INC.
B-13
<PAGE>
OPERATING INCOME PER RTM
(In Cents)
[GRAPH APPEARS HERE]
Note: 1991 Results Exclude Special Charge
LOGO BURLINGTON
NORTHERN
INC.
B-14
<PAGE>
PRIMARY EARNINGS PER SHARE
Quarterly Comparison
[GRAPH APPEARS HERE]
Note: 2nd and 3rd Quarter 1993 Results Exclude Flood Impacts of $(.06)
and $(.55)
LOGO BURLINGTON
NORTHERN
INC.
B-15
<PAGE>
EVP MERCHANDISE
Ron Rittenmeyer
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
IMPROVE PROFITABILITY
Revenue Growth
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
C-16
<PAGE>
COAL
. Record Year - $1.8 Billion
Tonnage Up 12%
. Growth Driven by Market Expansion
Length of Haul Up 3%
. Completed 1994 Capacity Expansions
. 1995 Outlook Continues to Be Very Positive
Volume Growth 6 to 8%
LOGO BURLINGTON
NORTHERN
INC.
C-17
<PAGE>
GRAIN
. Strong 4th Quarter and 2nd Half
. Heavy Export Demand for U.S. Wheat and Corn
. 1995 Outlook
Good Supplies
Continued Demand
Solid Plan and Execution Strategy
Volume Growth 6 to 8%
LOGO BURLINGTON
NORTHERN
INC.
C-18
<PAGE>
INTERMODAL
. Rationalizing Produces Results - 1994 Revenue
and Margins Up
. Revenue +5%
. Contribution +30%
. 1995 Outlook
. Managed Growth 2 to 4%
. Higher Margins
LOGO BURLINGTON
NORTHERN
INC.
C-19
<PAGE>
OTHER COMMODITIES
. 1994 Performance
Revenue Up 3%
All Commondity Groups Up
Strong Second Half
Growth in Profitability
. 1995 Outlook
Modest Volume Growth
Profitability Improvements Continue
LOGO BURLINGTON
NORTHERN
INC.
C-20
<PAGE>
1994 OPERATIONS
. Coal Production/Productivity Improvements
. Non-Coal Train Productivity Up
LOGO BURLINGTON
NORTHERN
INC.
C-21
<PAGE>
[MAP APPEARS HERE]
C-22
<PAGE>
1994 OPERATIONS
. Coal Production/Productivity Improvements
. Non-Coal Train Productivity Up
. Vital Plant Capacity Expansion
. Locomotive and Rail Car Additions
. Train Crew Hiring and Training
. Outstanding Safety Performance
LOGO BURLINGTON
NORTHERN
INC.
C-23
<PAGE>
SAFETY IMPROVEMENTS
[GRAPH APPEARS HERE]
LOGO BURLINGTON
NORTHERN
INC.
C-24
<PAGE>
1995 OPERATIONS TARGETS
. Make Extensive Track and Yard Improvements
. Acquire 134 AC Traction Locomotives
. Add 550 Engineers and 450 Conductors
. Continue to Improve Safety Record
. Open Network Operations Center
LOGO BURLINGTON
NORTHERN
INC.
C-25
<PAGE>
CHAIRMAN & CEO
Jerry Grinstein
LOGO BURLINGTON
NORTHERN
INC.
<PAGE>
1995
LOGO BURLINGTON
NORTHERN
INC.
D-26
<PAGE>
Description of Graphic Materials
--------------------------------
On page 8 there appears a bar graph under the heading "Debt-Equity Ratio
($ 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 2,237, equity of 1,819, ratio of .8 to 1, or 45/55% at
12/94.
On page 9 there appears a line graph under the heading "Cash Capital
Spending ($ Millions)". The horizontal axis of the graph shows yearly intervals
from 1989 to 1995, and the vertical axis of the graph shows a range from $0 to
$800, with tick marks for each $25 million interval. The graph shows cash
capital spending of (i) $373 million for 1989, (ii) $401 million for 1990,
(iii) $509 million for 1991, (iv) $487 million for 1992, (v) $676 million for
1993, (vi) $698 million for 1994 and (vii) $749 million for 1995.
On page 14 there appears a bar graph under the heading "Operating Income
per RTM (in cents)". The graph shows operating income per RTM to be: (i) $.20
for 1991, (ii) $.26 for 1992, (iii) $.28 for 1993 and (iv) $.33 for 1994.
On page 15 there appears a bar graph under the heading "Primary Earnings
Per Share Quarterly Comparison". The graph shows (i) first quarter earnings per
share of $.80 in 1992, $.86 in 1993 and $.79 in 1994; (ii) second quarter
earnings per share of $.40 in 1992, $.80 in 1993 and $.85 in 1994; (iii) third
quarter earnings of $.68 in 1992, $.76 in 1993 and $1.22 in 1994; and (iv)
fourth quarter earnings per share of $1.23 in 1992, $1.25 in 1993 and $1.51 in
1994.
On page 16 there appears a line graph under the heading "Improve
Profitability Revenue Growth". The horizontal axis of the graph shows yearly
intervals from 1989 to 1994, and the vertical axis shows a range from $4.5
billion to $5.1 billion, with tick marks for each $20 million interval. The
graph shows revenue of (i) $4,606 for 1989, (ii) $4,674 for 1990, (iii) $4,559
for 1991, (iv) $4,630 for 1992, (v) $4,699 for 1993 and (vi) $4,995 for 1994.
On page 22 there appears a map captioned "Powder River Basin" showing
the juncture of South Dakota, Nebraska and Wyoming overlaid with certain
Burlington Northern track routes. Burlington Northern track appears as a thin
green solid line, Joint track appears as a thin gray solid line, Double track
appears as a broken double line, and 1995 Construction appears as a thick solid
line. The map identifies the following cities served: Donkey Creek, Bill and
Bridger Junction, Wyoming; Northport and Alliance, Nebraska; and Edgemont, South
Dakota.
On page 24 there appear three bar graphs under the heading "Safety
Improvements". The bar graph captioned "Injury Frequency (Per 200,000 Man
Hours)" shows 12.78 in 1992, 7.27 in 1993 and 3.85 in 1994. The bar graph
captioned "Lost Day Cases" shows 2,688 in 1992, 1,295 in 1993 and 626 in 1994.
The bar graph captioned "Personal Injury Expense ($ Millions)" shows $253
Million in 1992, $216 Million in 1993 and $170 Million in 1994.
