SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 12, 1996
BURLINGTON NORTHERN SANTA FE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-11535 41-1804964
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3800 Continental Plaza
777 Main Street
Fort Worth, Texas 76102-5384
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 333-2000
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
Included as an exhibit to this report is an unaudited Pro Forma Combined
Statement of Income for the year ended December 31, 1995 prepared as if the
business combination of Burlington Northern Inc. and Santa Fe Pacific
Corporation (consummated on September 22, 1995) took place as of January 1,
1995.
Item 7. Financial Statements and Exhibits
See Index to Exhibits on page E-1 for a description of the exhibits filed as
a part of this report.
<PAGE>
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.
Burlington Northern Santa Fe Corporation
(Registrant)
By: /s/ THOMAS N. HUND
Thomas N. Hund
Vice President and Controller
(On behalf of the Registrant and as
Principal Accounting Officer)
Schaumburg, Illinois
April 12, 1996
<PAGE>
BURLINGTON NORTHERN SANTA FE CORPORATION
INDEX OF EXHIBITS
Exhibit 13.1 1995 Annual Report to Shareholders of Burlington Northern
Santa Fe Corporation (pages 13-39 only)*
Exhibit 13.2 1994 Annual Report to Shareholders of Santa Fe Pacific
Corporation (pages 12-32 only)*
Exhibit 13.3 Santa Fe Pacific Corporation Report on Form 10-Q for the
quarter ended June 30, 1995*
Exhibit 23.1 Consent of Coopers & Lybrand L.L.P.
Exhibit 23.2 Consent of Price Waterhouse LLP
Exhibit 99.1 Pro Forma Financial Information
* Exhibit is incorported by reference as indicated.
E-1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Burlington Northern Santa Fe Corporation on Form S-8 (File Nos. 33-62823,
33-62825, 33-62827, 33-62829, 33-62831, 33-62833, 33-62835, 33-62837,
33-62839, 33-62841, 33-62943, 33-63247, 33-63249, 33-63253, 33-63255) and Form
S-3 (File No. 33-64209) of our reports dated February 15, 1996, on our audits
of the consolidated financial statements and financial statement schedule of
Burlington Northern Santa Fe Corporation as of December 31, 1995 and 1994 and
for the years ended December 31, 1995, 1994 and 1993, which reports are
included in or incorporated by reference in Burlington Northern Santa Fe
Corporation's Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
April 8, 1996
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in (i) the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-64209) and
(ii) the Registration Statements on Form S-8 (Nos. 33-62823; 33-62829;
33-62831; 33-62839; 33-62833; 33-62825; 33-62835; 33-62827; 33-62837;
33-62841; 33-62943; 33-63247; 33-63249; 33-63253; and 33-63255) of Burlington
Northern Santa Fe Corporation of our report dated February 21, 1995, related
to the consolidated financial statements of Santa Fe Pacific Corporation,
which appears on page 19 of the 1994 Annual Report to Shareholders, which is
incorporated by reference in Santa Fe Pacific Corporation's Annual Report on
Form 10-K for the year ended December 31, 1994.
PRICE WATERHOUSE LLP
Kansas City, Missouri
April 10, 1996
<PAGE>
Exhibit 99.1
BURLINGTON NORTHERN SANTA FE CORPORATION
Pro forma Financial Information
On June 29, 1994, Santa Fe Pacific Corporation (SFP) and Burlington Northern
Inc. (BNI) entered into an Agreement and Plan of Merger (as amended on
October 26, 1994, December 18, 1994, January 24, 1995 and September 19, 1995,
the Merger Agreement) pursuant to which SFP would merge with BNI in the manner
set forth below (the Merger). Stockholders of BNI and SFP approved the Merger
Agreement at special stockholders' meetings held on February 7, 1995. On
August 23, 1995, the Interstate Commerce Commission issued a written decision
approving the Merger and on September 22, 1995 the Merger was consummated.
Pursuant to the Merger Agreement, on December 23, 1994, BNI and SFP commenced
tender offers (together, the Tender Offer) to acquire 25 million and 38
million shares of SFP common stock, respectively, at $20 per share in cash.
During the first quarter of 1995 SFP borrowed $1.0 billion under a credit
facility of which $760 million of the proceeds were used to purchase the 38
million shares pursuant to the Tender Offer. In addition, BNI borrowed $500
million under a credit facility of which the proceeds were used to finance
BNI's purchase of 25 million shares of SFP common stock in the Tender Offer.
Funding of the Tender Offer was completed on February 21, 1995.
Also, pursuant to the Merger Agreement, BNI and SFP were entitled to elect to
consummate the Merger through the use of one of two possible structures: (i)
a merger of SFP with and into BNI or (ii) the Holding Company Structure
described below. To ensure that the transaction contemplated by the Merger
Agreement qualified as a tax-free transaction for federal income tax purposes,
the parties utilized the Holding Company Structure.
Under the Holding Company Structure, Burlington Northern Santa Fe Corporation
(BNSF) created two subsidiaries. One subsidiary merged with and into BNI, and
the other subsidiary merged with and into SFP. Each holder of one share of
BNI common stock received one share of BNSF common stock and each holder of
one share of SFP common stock, excluding the SFP common stock acquired by BNI
in the Tender Offer and the SFP common stock held by SFP as treasury stock,
received 0.41143945 shares of BNSF common stock. The rights of each
stockholder of BNSF are substantially identical to the rights of a stockholder
of BNI, and the Holding Company Structure has the same economic effect with
respect to the stockholders of BNI and SFP as would a direct merger of BNI and
SFP.
In the Merger Agreement, the exchange ratio of BNSF common shares for each
share of outstanding SFP common stock upon consummation of the Merger was set
at not less than 0.40 shares to not more than 0.4347 shares, with repurchases
of SFP common stock by SFP increasing the exchange ratio pro rata. SFP
repurchased approximately 3.6 million shares which, along with the effect of
SFP stock options exercised, resulted in the final exchange ratio of
0.41143945 shares.
The unaudited pro forma combined statement of income included herein has been
prepared as if the Merger had occurred on January 1, 1995, and includes
the estimated effects of purchase accounting adjustments and the Tender Offer.
The historical BNSF statement of income for the year ended December 31, 1995,
reflects the historical results of operations of BNI, and the results of
operations for SFP from September 22, 1995 through December 31, 1995.
<PAGE>
Exhibit 99.1
(continued)
The business combination with SFP was accounted for under the purchase method.
The pro forma combined adjustments do not reflect any potential increases in
operating income which may arise from the Merger. See "Notes to Pro Forma
Combined Statement of Income." The unaudited pro forma combined statement of
income is presented for illustrative purposes only and is not necessarily
indicative of the results of operations that might have occurred had the
Merger actually taken place on January 1, 1995, or of future results of
operations of the combined entities.
The unaudited pro forma combined statement of income is based on the
historical consolidated financial statements of BNSF, BNI and SFP and should
be read in conjunction with such historical financial statements and notes
thereto in the 1995 Annual Report to Shareholders of BNSF, and the 1994 Annual
Report to Shareholders and the Form 10-Q for the quarter ended June 30, 1995
of Santa Fe Pacific Corporation, which are incorporated by reference in this
Form 8-K.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99.1
(continued)
Pro Forma Combined Statement of Income
Year Ended December 31, 1995
Unaudited
(Dollars in Millions, Except Per Share Data)
Santa Fe
Pacific
Corporation Burlington
Burlington January 1 Northern
Northern through Santa Fe
Santa Fe September 21, Pro Forma Corporation
Corporation 1995 Adjustments Pro Forma
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $6,183 $1,987 $ - $8,170
------ ------ ------ ------
Operating expenses:
Compensation and benefits 2,065 604 6 (A) 2,675
Equipment rents 540 180 - 720
Purchased services 526 278 - 804
Fuel 480 183 - 663
Depreciation and
amortization 520 152 61 (B) 733
Materials 300 78 - 378
Other 491 150 - 641
Merger, severance
and asset charge 735 - (505) (C) 230
------ ------ ------ ------
Total operating expenses 5,657 1,625 (438) 6,844
------ ------ ------ ------
Operating income 526 362 438 1,326
Interest expense 220 124 (4) (D) 340
Other income (expense), net 28 (32) 10 (E) 6
------ ------ ------ ------
Income before income taxes 334 206 452 992
Income tax expense 136 81 170 (F) 387
------ ------ ------ ------
Income before
extraordinary items $ 198 $ 125 $ 282 $ 605
====== ====== ====== ======
</TABLE>
Earnings per common share
(Primary):
Income before
extraordinary items $1.66 $4.00 (G)
Shares used in computation 106.7 146.0 (G)
Earnings per common share
(Fully Diluted):
Income before
extraordinary items $1.66 $3.94 (G)
Shares used in computation 106.7 153.6 (G)
(See accompanying Notes to Pro Forma Combined Statement of Income)
<PAGE>
Exhibit 99.1
(continued)
Notes to Pro Forma Combined Statement of Income
The accompanying pro forma combined statement of income is presented for
illustrative purposes only and does not give effects to any potential
increases in operating income which may arise from the Merger. Certain
amounts in the historical financial statements of SFP have been reclassified
to conform to BNSF's historical financial statement presentation.
A. Compensation and benefits expense
Compensation and benefits expense was increased $6 million as a result of an
adjustment to SFP's pension assets and post-retirement benefits liability
based on actuarial estimates at the time of the Merger.
B. Depreciation expense
A significant portion of the fair value adjustments were allocated to
long-lived track structures as well as land used for transportation purposes.
The increase in the fair value of depreciable assets is depreciated under the
straight-line method over the remaining estimated useful lives of the
property. Depreciation expense of $61 million related to the increase in fair
value has been included in the unaudited pro forma combined statement of
income.
C. Merger, severance and asset charges
BNSF merger, severance and asset charges which were directly attributable to
the Merger of $505 million were eliminated in the pro forma combined statement
of income. Reference is made to Note 3 of the BNSF Annual Report to
Shareholders which is incorporated herein by reference.
D. Interest expense
SFP's long-term debt was adjusted to its estimated fair value as of September
22, 1995. The fair value adjustment of $141 million is amortized to offset
interest expense over the estimated lives of the instruments. Additionally,
on February 21, 1995, SFP and BNI completed the Tender Offer through
borrowings of $760 million and $500 million of debt, respectively.
Additionally, SFP borrowed $240 million to repay $200 million of outstanding
12.65% senior notes, including related costs. Interest expense has been
adjusted in the pro forma combined statement of income to reflect interest
expense as if the debt had been issued on January 1, 1995. The effects of
these adjustments are as follows (in millions):
<PAGE>
Exhibit 99.1
(continued)
Year Ended
Interest expense on: December 31, 1995
-----------------
SFP Debt $ 11
BNI Debt 6
SFP 12.65% Senior Notes (5)
Fair Value Adjustment (16)
------
Total $ (4)
======
E. Other income (expense), net
SFP incurred expenses which were directly attributable to the Merger of $34
million for the year ended December 31, 1995. These expenses were eliminated
from the pro forma combined statement of income.
Prior to consummation of the Merger, BNI accounted for its investment in SFP
under the cost method. However, upon consummation of the Merger, BNI's equity
in earnings of SFP of $16 million prior to the Merger was recorded as other
income. Other income (expense), net has been adjusted to exclude BNI's equity
in earnings of SFP.
SFP's gain on sales of real estate has been eliminated due to the write-up of
real estate to its fair value. These gains were excluded from the pro forma
combined statement of income.
In addition, certain investments, primarily SFP's pipeline investment, which
is accounted for under the equity method, were adjusted to their estimated
fair values as of September 22, 1995. Amortization of this adjustment is
reflected in the pro forma combined statement of income.
The effects of these adjustments have been included in the unaudited pro forma
combined statement of income as follows (in millions):
Year Ended
December 31, 1995
-----------------
SFP's expenses directly attributable
to the Merger $ 34
BNI's equity in earnings of SFP (16)
Gains on sales of real estate (5)
Pipeline investment amortization (3)
------
Total $ 10
======
F. Income tax expense
Income tax expense has been reduced from tax computed at BNSF's incremental
income tax rate by $14 million in the pro forma statement of income for the
year ended December 31, 1995. Tax expense on adjustments varies from BNSF's
incremental income tax rate of approximately 40 percent because certain
merger expenses were not deductible for income tax purposes.
<PAGE>
Exhibit 99.1
(continued)
G. Earnings per common share
Pro forma weighted average shares outstanding represent the conversion at an
exchange ratio of 0.41143945 shares of BNSF common stock for each share of
SFP common stock as if the Tender Offer, SFP repurchases and the Exchange
had occurred as of January 1, 1995. Primary earnings per common share are
computed by dividing income, after deduction of preferred stock dividends, by
the weighted average number of common shares and common share equivalents
outstanding. Fully diluted earnings per common share are computed by dividing
income by the weighted average number of common shares and common share
equivalents outstanding. Common share equivalents are computed using the
treasury stock method. An average market price is used to determine the
number of common share equivalents for primary earnings per common share. The
higher of the average or end-of-period market price is used to determine
common share equivalents for fully diluted earnings per common share. In
addition, the if-converted method is used for convertible preferred stock when
computing fully diluted earnings per common share. BNSF's historical fully
diluted earnings per share for the year ended December 31, 1995, were
anti-dilutive; therefore, amounts for primary and fully diluted earnings per
share are the same.
