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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-48227
Prospectus Supplement to Prospectus dated April 3, 1998.
$200,000,000
BURLINGTON NORTHERN SANTA FE CORPORATION
Puttable Reset Securities PURSSM due May 13, 2029
----------------
Until May 13, 1999, Burlington Northern Santa Fe Corporation will pay interest
on the Debentures on each of the following dates: on December 14, 1998 and on
January 14, February 16, March 16, April 16 and May 13, 1999. During this
period, the interest rate on the Debentures will be reset monthly to the One-
Month LIBOR Rate plus 0.75%.
On May 13, 1999, one of two things will happen. Either (1) Goldman, Sachs & Co.
will exercise its right to purchase all the Debentures from the holders or (2)
the Company will repurchase the Debentures from the holders. If Goldman, Sachs
& Co. exercises its right to purchase the Debentures, then the interest rate
will be reset by the Calculation Agent. The new rate will be fixed on the basis
of certain bids the Calculation Agent will request from various dealers as
described in this prospectus. The reset interest payments will be made on May
13 and November 13 of each year, beginning on November 13, 1999.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
<TABLE>
<CAPTION>
Per Debenture Total
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<S> <C> <C>
Initial public offering price...................... 100% $200,000,000
Underwriting discount.............................. 0.125% $250,000
Proceeds, before expenses, to Burlington Northern
Santa Fe Corporation.............................. 106.035% $212,070,000
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Debentures will accrue from November 13, 1998
and must be paid by the purchaser if the Debentures are delivered after
November 13, 1998. The proceeds to Burlington Northern Santa Fe Corporation set
forth above include a payment by Goldman, Sachs & Co. for the call option it
will have with respect to the Debentures.
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PURSSM is a service mark of Goldman, Sachs & Co.
----------------
Goldman, Sachs & Co. expects to deliver the Debentures in book-entry form only
through the facilities of The Depository Trust Company against payment in New
York, New York on November 13, 1998.
GOLDMAN, SACHS & CO.
----------------
Prospectus Supplement dated November 9, 1998.
<PAGE>
WHERE YOU MAY FIND MORE INFORMATION
Burlington Northern Santa Fe Corporation ("Burlington Northern Santa Fe", the
"Company" or "we") files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Our SEC filings are available to the public over the Internet at
the SEC's web site at http://www.sec.gov. You may also read and copy any
document we file with the SEC at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you simply by
referring you to documents which we have filed with the SEC. The information
incorporated by reference is an important part of this prospectus supplement,
and the information that we file later with the SEC will automatically update
and supersede this information. We incorporate by reference the following
documents and any future filings made with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until the underwriters (and
any dealers or brokers involved) complete the sale to the public:
(1) Annual Report on Form 10-K for the year ended December 31, 1997, as
amended;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
(3) Quarterly Report on Form 10-Q for the quarter ended June 30, 1998;
(4) Current Report on Form 8-K (Date of earliest event reported: February
6, 1998);
(5) Current Report on Form 8-K (Date of earliest event reported: July 16,
1998); and
(6) Current Report on Form 8-K (Date of earliest event reported: October
20, 1998).
If you would like a copy of any of the documents incorporated by reference into
this prospectus supplement, please make your request in writing or by telephone
to:
Burlington Northern Santa Fe Corporation
2650 Lou Menk Drive
Fort Worth, Texas 76131-2830
Attention: Corporate Secretary
Telephone: (817) 352-6454.
We will provide you with the copies you request free of charge (other than the
exhibits to the requested documents unless they are specifically incorporated
by reference into the documents).
Currency amounts in the prospectus and this prospectus supplement are stated in
United States dollars, unless we indicate otherwise.
THE COMPANY
We are engaged primarily in railroad transportation through our principal
operating subsidiary, The Burlington Northern and Santa Fe Railway Company
("BNSF Railway"). BNSF Railway operates one of the largest railroad networks in
the United States, with approximately 34,000 route miles as of December 31,
1997. Approximately 7,800 route miles of BNSF Railway's system consist of
trackage rights which permit BNSF Railway to operate its trains with its crews
over another railroad's tracks. BNSF Railway's system covers 28 states in the
western two-thirds of the United States and two Canadian provinces. In
particular, BNSF Railway serves all major ports in the western United States,
certain Mexican and Canadian gateways and Gulf ports and important gateways to
the eastern United States.
BNSF Railway derives a substantial portion of its revenues from intermodal
transportation (which means the transportation of freight containers and truck
trailers on flatcars) and the transportation of coal and agricultural
commodities. Other significant aspects of BNSF Railway's business include the
transportation of chemicals, forest products, consumer goods, metals and
minerals and automobiles and automobile parts.
Our principal executive offices are located at 2650 Lou Menk Drive, Fort
Worth, Texas 76131-2830, telephone number (817) 352-6454.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for the periods indicated. The ratios reflect the historical results
only for Burlington Northern Inc. in all periods before 1996, except for the
year ended December 31, 1995, which period includes Santa Fe Pacific
Corporation results from September 22, 1995 through December 31, 1995.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER
30, YEAR ENDED DECEMBER 31,
------------ --------------------------------
1998(2) 1997 1997(3) 1996 1995(3) 1994 1993
------- ---- ------- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges(1)... 4.24x 3.56x 3.52x 3.89x 1.85x 3.70x 3.19x
</TABLE>
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(1) For purposes of this ratio, we calculate earnings by adding fixed charges
(excluding capitalized interest) to pre-tax income (loss) from continuing
operations. Fixed charges consist of interest on indebtedness (including
amortization of debt discount and premium) and the portion of rental
expense under long term operating leases representative of an interest
factor.
(2) Earnings for the nine months ended September 30, 1998 include a pre-tax
gain of $67 million on the sale of substantially all of the Company's
interest in Santa Fe Pacific Pipeline Partners, L.P. Excluding this gain,
the ratio for the nine months ended September 30, 1998 would have been
4.08x.
(3) Earnings for the years ended December 31, 1997 and 1995 include special
charges of $90 million and $735 million (before tax), respectively.
Excluding these charges, the ratios for 1997 and 1995 would have been 3.68x
and 3.91x, respectively.
USE OF PROCEEDS
We will use the net proceeds from the sale of the Debentures for general
corporate purposes, including but not limited to the repayment of commercial
paper having an average interest rate of approximately 5.7%.
DESCRIPTION OF DEBENTURES
The Puttable Reset Securities PURSSM due May 13, 2029 (the "Debentures") are
a separate series of the Debt Securities described in the accompanying
prospectus. Investors should read the prospectus for a detailed summary of
other provisions of the Debentures. The description of the Debentures below
supplements the description of the Debentures contained in the prospectus. If
the descriptions contained in these documents are inconsistent, this prospectus
supplement controls. Capitalized terms used but not defined in this prospectus
supplement have the meanings given to them in the prospectus.
GENERAL
The Debentures will mature on May 13, 2029 (the "Final Maturity"), but the
Company may be required to repurchase them earlier as described in "--Put
Option" below. The Debentures may not otherwise be redeemed and are not
entitled to the benefit of any sinking fund. The aggregate principal amount of
the Debentures is limited to $200,000,000, but the Indenture does not limit the
amount of other debt securities that may be issued by the Company. The
Debentures will not be secured. The Debentures are general obligations of the
Company and will rank equally with all other unsecured and unsubordinated debt
of the Company.
The Company has agreed with Goldman, Sachs & Co., as holder of the Call
Option (as defined below), that from November 9, 1998 until the Final Dealer
(as defined below) notifies
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the Company that the remarketing of the Debentures is complete, the Company
will not cause or permit the terms of the Debentures (or the Indenture, as it
relates to the Debentures) to be modified in any way, and may not make open
market or other purchases of the Debentures except pursuant to the Put Option,
or in certain limited circumstances, without the prior written consent of
Goldman, Sachs & Co.
The Company will issue the Debentures in fully registered form in
denominations of $1,000 and in $1,000 increments above $1,000. The Trustee will
register transfers of the Debentures. Principal on the Debentures will be
payable at the Trustee's corporate trust office at One North State Street, 9th
Floor, Chicago, Illinois 60602. The Company will initially issue the Debentures
in global form. See "--Global Securities."
INTEREST
Each Debenture will accrue interest at the applicable rate as described
below, from and including November 13, 1998 (the "Original Issue Date") to but
excluding the date on which the principal amount is paid in full.
Interest accrued from the Original Issue Date to May 13, 1999 (the "Reset
Date") will be payable on December 14, 1998 and on January 14, February 16,
March 16, April 16 and May 13, 1999 (each a "Floating Interest Payment Date").
Interest will be payable in each case to the holder of record of the Debentures
on the Business Day before the Floating Interest Payment Date except that on
May 13, 1999 interest will be paid to the holders of record on that date.
During each Floating Rate Period (as defined below), the rate of interest
will be the One-Month LIBOR Rate (as defined below) plus 0.75%. The rate of
interest for each Floating Rate Period will be determined on the second London
Banking Day (as defined in the ISDA Definitions, which is defined below) prior
to the relevant LIBOR Reset Date (as defined below).
"One-Month LIBOR Rate" means a rate equal to the Floating Rate (as defined in
the ISDA Definitions) that would be determined by
Goldman, Sachs & Co. (the initial "LIBOR Calculation Agent") under an interest
rate swap transaction assuming the LIBOR Calculation Agent were acting as
Calculation Agent (as defined in the ISDA Definitions) for that swap
transaction under the terms of an agreement incorporating the ISDA Definitions
and under which:
(1) the Floating Rate Option (as defined in the ISDA Definitions) is USD-
LIBOR-BBA;
(2) the Designated Maturity (as defined in the ISDA Definitions) is one
month; and
(3) the LIBOR Reset Date is the first day of that Floating Rate Period.
"Floating Rate Period" means (i) the period from and including November 13,
1998, to but excluding the first Floating Interest Payment Date, and (ii) each
successive period from and including a Floating Interest Payment Date to but
excluding the next Floating Interest Payment Date.
"ISDA Definitions" means the 1991 ISDA Definitions, as amended and updated as
of the date hereof, published by the International Swaps and Derivatives
Association, Inc.
"LIBOR Reset Date" means the Reset Date as defined in the ISDA Definitions.
"USD-LIBOR-BBA" means that the rate for a LIBOR Reset Date will be the rate
for deposits in U.S. Dollars for a period of the Designated Maturity which
appears on the Telerate Page 3750 as of 11:00 a.m., London time, two London
Banking Days before that LIBOR Reset Date. If such rate does not appear on the
Telerate Page 3750, the rate for that LIBOR Reset Date will be determined as if
the parties had specified "USD-LIBOR-Reference Banks" as the applicable
Floating Rate Option. "USD-LIBOR-Reference Banks" means that the rate for a
LIBOR Reset Date will be determined on the basis of the rates at which deposits
in U.S. Dollars are offered by the Reference Banks (as defined in the ISDA
Definitions) at approximately 11:00 a.m., London time, two London Banking Days
before that LIBOR Reset Date to prime banks in the London interbank market for
a period of the
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Designated Maturity commencing on that LIBOR Reset Date and in a Representative
Amount (as defined in the ISDA Definitions). The LIBOR Calculation Agent will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that LIBOR Reset Date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for the LIBOR
Reset Date will be the arithmetic mean of the rates quoted by major banks in
New York City, selected by the LIBOR Calculation Agent, at approximately 11:00
a.m., New York City time, on that LIBOR Reset Date for loans in U.S. Dollars to
leading European banks for a period of the Designated Maturity commencing on
that LIBOR Reset Date and in a Representative Amount.
During each Floating Rate Period, the LIBOR Calculation Agent will notify the
Company and the Trustee of each determination of the interest rate applicable
to the Debentures. The Trustee will, if requested by the holder of any
Debenture, provide the interest rate then in effect and, if different, the
interest rate which will become effective for the next Floating Rate Period.
The Trustee will not be responsible for determining the interest rate
applicable to any Debenture.
If Goldman, Sachs & Co. exercises the Call Option then, on the Reset Date,
the Calculation Agent will reset the interest rate on the Debentures to a fixed
rate determined as described under "--Reset of Interest Rate" below. Interest
accrued on each Debenture then will be payable in arrears on May 13 and
November 13 of each year, commencing on November 13, 1999, in each case to the
holder of record of the Debentures on the May 1 or November 1 before the
interest payment date. The record date for the exercise of the Call Option and
the Put Option described below will not necessarily be the record date for any
interest payment date.
If any interest, principal or other payment required on the Debentures would
be due on a day that is not a Business Day (as defined below), the Company may
make the payment on the next day that is a Business Day, with the same effect
as if payment were made on the due date. "Business Day" means any day other
than a Saturday, a Sunday, or a day on which banking institutions in New York
City are authorized or obligated by law to close. "Market Day," as used below,
means a Business Day other than a day on which dealings are generally not being
conducted in the U.S. Treasury market.
The interest rate on the Debentures will not be reset on the Reset Date,
however, if the Company is obligated to repurchase the Debentures on such date.
A reset scheduled to occur on the Reset Date also may not occur if a Market
Disruption Event or a Failed Remarketing occurs. See "--Reset of Interest Rate"
below.
CALL OPTION
Goldman, Sachs & Co. (or any successor) may purchase all, but not less than
all, of the outstanding Debentures from the holders on the Reset Date (this
right is referred to as the "Call Option"). Goldman Sachs & Co. would purchase
the Debentures at a price equal to 100% of the principal amount of Debentures
(the "Face Value"). In order to exercise the Call Option, Goldman, Sachs & Co.
must give notice (a "Call Notice") of its intention to purchase the outstanding
Debentures as described below. In addition, the Company will remain obligated
to pay all accrued and unpaid interest on the Debentures. The Company must pay
accrued and unpaid interest on the Reset Date to the holders of record on the
Reset Date, as provided in the Debentures and the Indenture.
To exercise the Call Option, Goldman, Sachs & Co. must give a Call Notice to
the holders of outstanding Debentures no later than ten Market Days before the
Reset Date, in the manner described under "--Certain Notices" below. If
Goldman, Sachs & Co. gives the Call Notice, each holder must sell to Goldman,
Sachs & Co. all Debentures at the Face Value on the Reset Date. This purchase
and sale will occur through the Depository Trust Company ("DTC"). Each holder
will be deemed to have automatically offered its Debentures for
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sale to Goldman, Sachs & Co. on the Reset Date in accordance with applicable
DTC procedures, provided the holder receives payment of the Face Value of the
Debentures from Goldman, Sachs & Co. on the Reset Date. Even if Goldman, Sachs
& Co. exercises the Call Option, the Debentures will remain outstanding until
purchased or paid for by the Company. See "--Settlement on Exercise of Put and
Call Options."
If Goldman, Sachs & Co. exercises the Call Option, it will purchase all
Debentures outstanding on the Reset Date as described above. The Call Option
applies to every holder (and every beneficial owner) of Debentures outstanding
on the Reset Date, including those who acquire an interest in the Debentures
after the Call Notice is given or who are otherwise unaware that the Call
Notice has been given.
If an Event of Default (as defined in the Indenture) occurs and in certain
other circumstances, Goldman, Sachs & Co. can demand that the Company settle
the Call Option.
PUT OPTION
If Goldman, Sachs & Co. does not exercise the Call Option, each holder will
be deemed to have required the Company to repurchase all of its Debentures on
the Reset Date (this is referred to as the "Put Option"). In this circumstance,
the Company would purchase the holder's Debentures at a price equal to 100% of
the principal amount of the Debentures (the "Put Price"). The Company will
remain obligated to pay all accrued and unpaid interest on the Debentures on
the Reset Date to the holders of record on the Reset Date, as provided in the
Debentures and the Indenture. If the Company does not pay the Put Price on the
Reset Date, the Company must also pay the interest that accrues from the Reset
Date to the date payment is actually made by the Company and this interest will
be included in the Put Price.
On the Reset Date, each holder will be deemed to have exercised its Put
Option automatically for the full principal amount of the Debentures held of
record by it on the Reset Date unless Goldman, Sachs & Co. has purchased such
Debentures pursuant to its Call Option. This repurchase by the Company will
occur through DTC. Each holder will be deemed to have automatically offered its
Debentures for sale to the Company on the Reset Date according to applicable
DTC procedures. Even if the Company is obligated to purchase the Debentures
because of the Put Option, the Debentures will remain outstanding until the
Company pays the Put Price (with accrued interest). See "--Settlement on
Exercise of Put and Call Options."
RESET OF INTEREST RATE
If Goldman, Sachs & Co. exercises its Call Option, the Calculation Agent will
reset the interest rate on the Reset Date. The interest rate will not be reset,
however, if a Market Disruption Event or a Failed Remarketing occurs as
described below.
The Company has initially appointed Goldman, Sachs & Co. as its agent for the
purpose of resetting the interest rate (such agent or any successor agent, the
"Calculation Agent"). The Calculation Agent will reset the interest rate on the
Reset Date, if required, as follows:
Between the tenth Market Day prior to the Reset Date and 11:00 A.M., New York
City time, on the Calculation Date (as defined below), the Calculation Agent
will select at least three financial institutions (one of which will be
Goldman, Sachs & Co. if it so requests) that deal in the Company's debt
securities and have agreed to participate as reference dealers on the terms
described below (the "Reference Dealers"). Goldman, Sachs & Co. may require
that each Reference Dealer commit in writing that, if it is selected as the
Final Dealer (as defined below), it will purchase all the Debentures that
Goldman, Sachs & Co. purchases pursuant to the Call Option and tenders to the
Final Dealer for sale on the Reset Date. The Final Dealer must make this
purchase on the Calculation Date for settlement on the Reset Date. The Final
Dealer must purchase the Debentures at the Final Offer Price (as defined
below).
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<PAGE>
On a day agreed to by the Company and Goldman, Sachs & Co., which will fall
into the period beginning with and including the sixth Market Day and ending
with and including the fourth Market Day before the Reset Date (this agreed
upon Market Day is referred to as the "Calculation Date"), the Calculation
Agent will undertake the following actions to calculate a fixed rate of
interest for the Debentures. This rate will be effective from and including the
Reset Date to but excluding the Final Maturity (such period, the "Reset
Period").
At approximately 12:00 P.M. New York City time, the Calculation Agent will:
(1) obtain from Goldman, Sachs & Co. the approximate 30-year U.S.
Treasury bond yield at or about such time, which will be expressed as a
percentage (the "Designated Treasury Yield") and will be based on the then-
current, 30-year U.S. Treasury bond (the "Designated Treasury Bond");
(2) calculate and provide to the Reference Dealers, a preliminary,
hypothetical price at which the Debentures might be offered for sale to a
Reference Dealer on the applicable Reset Date (the "Offer Price"). The
Offer Price will be expressed as a percentage of the principal amount of
the Debentures and will equal 100% plus the Margin (as defined below) plus
the Commission (as defined below), if the Treasury Rate Difference (as
defined below) is positive, or 100% minus the Margin, plus the Commission,
if the Treasury Rate Difference is negative. The "Margin" will also be
expressed as a percentage of the principal amount of the Debentures and
will equal the present value of the absolute value of the Treasury Rate
Difference applied to 60 semi-annual periods (i.e., 30 years), discounted
at the Designated Treasury Yield divided by two. The "Treasury Rate
Difference" means the percentage (which may be positive or negative) equal
to (a) 5.665% (the "Initial Treasury Yield") minus (b) the Designated
Treasury Yield. "Commission" means 0.75% of the principal amount of the
Debentures; and
(3) request that each Reference Dealer provide to the Calculation Agent,
when it notifies them of the Final Offer Price as described below, a firm
bid, expressed as a percentage representing an interest rate spread (the
"Spread") over the Corporate Benchmark Treasury Yield, (as defined below)
at which such Reference Dealer would be willing to purchase on the
Calculation Date for settlement on the Reset Date, at the Final Offer
Price, all of the Debentures then outstanding. Each such firm bid is to be
given on an "all-in" basis and is to remain open for at least 30 minutes
after it is given. "Corporate Benchmark Treasury Yield" means the yield on
the appropriate U.S. Treasury bond, as determined by the Calculation Agent
and the Company.
At approximately 12:30 P.M. New York City time, the Calculation Agent will
obtain from Goldman, Sachs & Co. the Designated Treasury Yield and the
Corporate Benchmark Treasury Yield on a final basis, and will use them to
calculate the Offer Price on a final basis (the "Final Offer Price"). The
Calculation Agent will then provide the Final Offer Price to the Reference
Dealers and request that each Reference Dealer submit its bid as described
above. If the Calculation Agent receives at least two bids, the following will
occur:
(1) the Reference Dealer providing the bid representing the lowest all-in
Spread (the "Final Spread") will be the "Final Dealer";
(2) if Goldman, Sachs & Co. has exercised the Call Option, the Final
Dealer will be obligated to purchase from Goldman, Sachs & Co. at the Final
Offer Price, for settlement on the Reset Date, all the Debentures that
Goldman, Sachs & Co. purchases pursuant to the Call Option and tenders for
resale to the Final Dealer on the Reset Date (assuming that the interest
rate on the Debentures will be reset so as to equal the Adjusted Rate (as
defined below) during the Reset Period);
(3) the Calculation Agent will calculate and provide to the Company the
"Adjusted Rate," which will be the semi-annual,
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bond-equivalent, fixed interest rate on the Debentures that is required to
produce, during the Reset Period, a semi-annual, bond-equivalent yield on
the Debentures that equals the sum of the Final Spread plus the final
Corporate Benchmark Treasury Yield, assuming that the Debentures are
purchased on the Reset Date at the Final Offer Price and will be
repurchased by the Company at Face Value at maturity; and
(4) the interest rate on the Debentures will be adjusted so as to equal
the Adjusted Rate, effective from and including the Reset Date to but
excluding the Final Maturity.
All determinations of the Designated Treasury Yield, the Corporate Benchmark
Treasury Yield and the Designated Treasury Bond as described above will be made
by Goldman, Sachs & Co. even if another party acts as the Calculation Agent,
unless Goldman, Sachs & Co. has elected not to exercise its Call Option.
If the Calculation Agent determines that, on the Calculation Date, (1) a
Market Disruption Event (as defined below) has occurred and is continuing or
(2) fewer than two Reference Dealers have provided firm bids in a timely manner
pursuant to participation agreements satisfactory to Goldman, Sachs & Co.
substantially as described above (a "Failed Remarketing"), then the steps
described above will be taken on the next Market Day on which the Calculation
Agent determines that no Market Disruption Event has occurred or is continuing
and on which at least two Reference Dealers have provided qualifying bids.
If the Calculation Agent determines that a Market Disruption Event and/or a
Failed Remarketing has occurred or is continuing for the period starting on the
Calculation Date and ending with (and including) the third Market Day preceding
the Reset Date, then Goldman, Sachs & Co. will be deemed to not have exercised
its Call Option, and the Company will then be required to repurchase all the
Debentures from the holders on the Reset Date at the Put Price (and will pay
Goldman, Sachs & Co. an amount equal to the Margin, if the Treasury Rate
Difference is positive). The Calculation Agent will notify the Company if it
makes such a determination promptly after the close of business on such Market
Day. The Company will give notice to the holders that it will repurchase the
Debentures from the holders on the Reset Date at the Put Price, no later than
the second Market Day prior to the Reset Date in the manner described under
"Certain Notices" below. Goldman, Sachs & Co. will make the determinations and
notice to the Company described in this paragraph even if it is not acting as
Calculation Agent.
"Market Disruption Event" means any of the following: (1) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange or the establishment of minimum prices on the Exchange; (2) a general
moratorium on commercial banking activities declared by either federal or New
York State authorities; (3) an occurrence of a material adverse change in the
existing financial, political or economic conditions in the United States of
America; (4) an outbreak or escalation of hostilities involving the United
States of America or the declaration of a national emergency or war by the
United States of America; or (5) an occurrence of a material disruption of the
U.S. government securities market, U.S. corporate bond market and/or U.S.
federal wire system.
The Calculation Agent (or Goldman, Sachs & Co., as applicable) in its sole
discretion will make all determinations regarding Market Disruption Events and
Failed Remarketings, including whether or not any such event has occurred or is
continuing.
All of the Calculation Agent's (or Goldman, Sachs & Co.'s) determinations
regarding the matters described above will be final, conclusive and binding on
all concerned and will not give rise to any liability on the part of the
Calculation Agent (or Goldman, Sachs & Co.), the Trustee or the Company.
SETTLEMENT ON EXERCISE OF THE PUT AND CALL OPTIONS
If the Call Option is exercised, then, on the Reset Date, all beneficial
interests in the
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Debentures will be transferred to a DTC account designated by Goldman, Sachs &
Co. The transfers will occur automatically, without any action on the part of
any beneficial owner, by book entry through DTC. By the close of business on
the Reset Date, Goldman, Sachs & Co. will transfer to DTC the Face Value of the
Debentures, for DTC to credit to the accounts of the DTC participants through
which beneficial interests in the Debentures are held. Each transfer will occur
against the corresponding payment, and each payment will occur against the
corresponding transfer, in accordance with applicable DTC procedures.
If Goldman, Sachs & Co. does not pay the Face Value of the Debentures on the
applicable Reset Date, (1) the Call Option will be deemed not to have been
exercised and (2) the Put Option will be deemed to have been exercised with
respect to all of the outstanding Debentures. In this circumstance, the Company
must pay the Put Price for the Debentures plus accrued interest from the Reset
Date to the date payment is made. This payment will be made no later than two
Business Days after the Reset Date, and settlement will occur as described in
the next paragraph. In any event, the Company will remain obligated to pay
accrued and unpaid interest due on the Debentures on the Reset Date to the
holders of record on the Reset Date as provided in the Debentures and in the
Indenture.
If the Put Option is exercised, then, on the Reset Date, all beneficial
interests in the Debentures to be purchased will be transferred to a DTC
account designated by the Company. The transfers will occur automatically,
without any action on the part of any beneficial owner, by book entry through
DTC. By the close of business on the Reset Date, the Company will pay DTC the
Put Price of the relevant Debentures, for credit to the accounts of the DTC
participants through which beneficial interests in the Debentures are held.
Each transfer will occur against the corresponding payment, and each payment
will occur against the corresponding transfer, in accordance with applicable
DTC procedures. If the Company does not pay the Put Price of the Debentures on
the Reset Date, the Put Price will include accrued interest from the Reset Date
to the date the payment is made. The Company must pay accrued and unpaid
interest due on the Debentures, whether or not purchased pursuant to the Put
Option, on the Reset Date to the holders of record on the Reset Date, as
provided in the Debentures and in the Indenture.
The transactions described above will occur on the Reset Date through DTC in
accordance with the procedures of DTC. The accounts of the respective DTC
participants will be debited and credited and the Debentures will be delivered
by book entry as necessary to effect the purchases and sales. The transactions
will settle in immediately available funds through DTC's Same-Day Funds
Settlement System.
The settlement procedures described above, including those for payment for
and delivery of Debentures purchased by Goldman, Sachs & Co. or the Company on
the Reset Date, may be modified, despite any contrary terms in the Indenture,
if required by DTC. In addition, these settlement procedures may be modified if
the book-entry system is no longer available for the Debentures at the relevant
time, to the extent required to accomplish these transactions with certificated
Debentures. In addition, Goldman, Sachs & Co. and the Company may,
notwithstanding any contrary terms of the Indenture, modify the settlement
procedures referred to above in order to facilitate the settlement process.
The Company has agreed that, from November 9, 1998 until the Final Dealer
notifies the Company that the remarketing of the Debentures is complete, (1) it
will use its best efforts to maintain the Debentures in book-entry form with
DTC or any successor to DTC and to appoint a successor depository to the extent
necessary to maintain the Debentures in book-entry form and (2) it will not
exercise any discretionary right it may have under the Indenture to cause the
Debentures to be issued in certificated form.
For further information with respect to payments, transfers and settlement
through DTC, see "--Global Securities" below.
S-9
<PAGE>
GLOBAL SECURITIES
When the Debentures are initially issued, one or more global securities (the
"Global Securities") will represent the Debentures. These Global Securities
will have an aggregate principal amount equal to that of the Debentures they
represent. Each Global Security will be deposited with, or on behalf of, DTC,
as depository (the "Depository"), and registered in the name of Cede & Co., a
nominee of the Depository. The Global Securities will bear legends stating the
restrictions on exchanges and registration of transfer referred to below and
any other matters provided for by the Indenture.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of section 17A of the Securities
Exchange Act of 1934. The Depository was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depository's participants include
securities brokers and dealers (including Goldman, Sachs & Co.), banks, trust
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depository. Access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
Unless otherwise provided by any provision of the Indenture or the Debentures
described in this prospectus, no Global Security may be exchanged in whole or
in part for registered Debentures, and no transfer of a Global Security in
whole or in part may be registered, in the name of any person other than the
Depository for such Global Security or any nominee of the Depository unless (1)
the Depository has notified the Company that it is unwilling or unable to
continue as Depository for the Global Security or has ceased to be qualified to
act as Depository as required pursuant to the Indenture or (2) there shall have
occurred and be continuing an Event of Default with respect to the Debentures
represented by such Global Security. All Debentures issued in exchange for a
Global Security or any portion of a Global Security will be registered in such
names as the Depository may direct.
As long as the Depository, or its nominee, is the registered holder of a
Global Security, the Depository or its nominee, as the case may be, will be
considered the sole owner and holder of such Global Security and the Debentures
represented thereby for all purposes under the Debentures and the Indenture.
Except in the limited circumstances referred to above, owners of beneficial
interests in a Global Security (1) will not be entitled to have such Global
Security or any Debentures represented by the Global Security registered in
their names, (2) will not receive or be entitled to receive physical delivery
of certificated Debentures in exchange for the Global Security and (3) will not
be considered to be the owners or holders of such Global Security or any
Debentures represented by the Global Security for any purpose under the
Debentures or the Indenture. The Company will make all payments of principal of
and interest on a Global Security to the Depository or its nominee, as the case
may be, as the holder thereof. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability of holders to transfer
beneficial interests in a Global Security.
Institutions that have accounts with the Depository or its nominee
("participants") and persons that may hold beneficial interests through
participants are the only holders who may own beneficial interests in a Global
Security. In connection with the issuance of any Global Security, the
Depository will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debentures
S-10
<PAGE>
represented by the Global Security to the accounts of its participants.
Ownership of beneficial interests in a Global Security will be shown only on,
and the transfer of those ownership interests will occur only through, records
maintained by the Depository (with respect to participants' interests) or any
such participant (with respect to interests of persons held by such
participants on their behalf). Payments, transfers, exchanges, notices and
others matters relating to beneficial interests in a Global Security may be
subject to various policies and procedures adopted by the Depository. None of
the Company, the Trustee, the Calculation Agent (or Goldman, Sachs & Co.) or
any of their respective agents will have any responsibility or liability (1)
for any aspect of the Depository's or any participant's records relating to, or
for payments or notices on account of, beneficial interests in a Global
Security or (2) for maintaining, supervising or reviewing any records relating
to such beneficial interests.
CERTAIN NOTICES
If Debentures are represented by a Global Security, then Call Notices and any
other notices to be given to the holders of the Debentures will be deemed to
have been duly given to the holders when given to DTC, or its nominee, in
accordance with DTC's policies and procedures. The Company believes that DTC's
practice is to inform its participants of any such notice it receives in
accordance with its policies and procedures. Persons who hold beneficial
interests in the Debentures through DTC or its direct or indirect participants
may wish to consult with them about how notices and other communications
relating to the Debentures may be given and received through the facilities of
DTC. Neither the Company, the Calculation Agent (nor Goldman, Sachs & Co.) nor
the Trustee will have any responsibility with respect to those policies and
procedures or for any notices or other communications among DTC, its direct and
indirect participants and the beneficial owners of the Debentures in global
form.
If Debentures are not represented by a Global Security, then Call Notices and
any other notices to be given to the holders of the Debentures will be deemed
to have been duly given to the holders upon the mailing of such notices to the
holders at their respective addresses as they appear on the Debenture Register
maintained by the Company or its agent as of the close of business before the
day notice is given.
Neither the failure to give any notice nor any defect in any notice given to
a particular holder will affect the sufficiency of any notice given to another
holder.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States Federal income tax
considerations relating to the purchase, ownership and disposition of the
Debentures by an initial holder of the Debentures who purchases the Debentures
on the Original Issue Date. This summary is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury regulations promulgated thereunder and current administrative
rulings and court decisions currently in effect, all of which are subject to
change, possibly with retroactive effect. The discussion does not deal with all
Federal tax considerations applicable to all categories of investors (including
insurance companies, tax-exempt organizations, financial institutions or
broker-dealers) some of which may be subject to special rules. In addition,
this summary is limited to holders who will hold the Debentures as "capital
assets" (generally, property held for investment) within the meaning of Section
1221 of the Code. This summary only addresses the United States Federal income
tax considerations of the Debentures until the Reset Date.
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES RELATING TO THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE DEBENTURES.
Prospective investors should note that no rulings have been or are expected
to be sought
S-11
<PAGE>
from the Internal Revenue Service (the "Service") with respect to any of the
Federal income tax considerations discussed below, and no assurance can be
given that the Service will not take contrary positions.
TREATMENT OF DEBENTURES
Although there is no authority on point characterizing instruments such as
the Debentures, and the matter is not free from doubt, the Company intends to
treat the Debentures as debt instruments that mature on the Reset Date for
United States Federal income tax purposes. The issue price of the Debentures
will be equal to the first price at which a substantial amount of the
Debentures are sold for money (excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity as underwriters,
placement agents or wholesalers) without regard to any amount paid by the
holder of the Call Option as option premium with respect to the Call Option. So
viewed, the Debentures will be "short-term obligations" subject to the rules
for the accrual of "acquisition discount" (as defined below). In general, an
individual or other cash basis holder of a Debenture is not required to accrue
acquisition discount for United States Federal income tax purposes unless it
elects to do so (but may be required to include any stated interest in income
as the interest is received), and accrual basis holders and certain other
holders, including banks, regulated investment companies, dealers in
securities, common trust funds, holders who hold Debentures as part of certain
identified hedging transactions, certain pass-through entitles and cash basis
holders who so elect, are required to accrue acquisition discount on Debentures
on either a straight-line basis or, at the election of the holder, under the
constant-yield method (based on daily compounding). "Acquisition discount" is
the excess of the stated redemption price at maturity over the taxpayer's basis
in the Debenture. For purposes of determining the amount of acquisition
discount subject to these rules, no interest on a Debenture is treated as
qualified stated interest; thus, all interest is included in acquisition
discount and no de minimis rule applies.
Upon the sale, exchange, redemption or other disposition by a holder of
Debentures, the holder should recognize short-term capital gain or loss equal
to the difference between the amount realized from the disposition of the
Debentures (exclusive of amounts attributable to the payment of accrued
interest not previously included in income, which will be taxable as ordinary
income) and the holder's adjusted tax basis in the Debentures at the time of
the sale, exchange, redemption or other disposition. A holder's adjusted tax
basis in the Debentures generally will equal the holder's purchase price for
such Debentures. In the case of a holder not required and not electing to
include acquisition discount in income currently, any gain realized on the sale
or retirement of the Debenture will be ordinary income to the extent of the
acquisition discount accrued on a straight-line basis (unless an election is
made to accrue the acquisition discount under the constant-yield method)
through the date of sale or retirement. The ability to use capital losses to
offset ordinary income in determining taxable income is generally limited.
Holders who are not required and do not elect to accrue acquisition discount on
Debentures will be required to defer deductions for net direct interest expense
related to Debentures in an amount not exceeding the deferred income until the
deferred income is realized.
It is possible that the Service will disagree with or that a court will not
uphold the foregoing treatment of the Debentures. In particular, the Service
could seek to treat the Debentures as maturing on the Final Maturity rather
than the Reset Date, in which case (1) the issue price of the Debentures would
include the premium paid by the holder of the Call Option with respect to the
Call Option, and (2) the holder would be treated as selling a Call Option to
the holder of the Call Option for an amount equal to the premium paid by the
holder of the Call Option for the Call Option. The amount deemed received as
consideration for sale of the Call Option would be treated as an option premium
paid to such holder (and consequently would not be recognized as income on the
writing of the Call Option). Because of the Reset Process, if the Debentures
were treated as
S-12
<PAGE>
maturing on the Final Maturity, holders would be subject to certain Treasury
Regulations dealing with contingent payment debt instruments (the "Contingent
Debt Regulations"). Under the Contingent Debt Regulations, each holder would be
required (regardless of such holder's usual method of accounting) to include in
gross income original issue discount for each interest accrual period in an
amount equal to the product of the adjusted issue price of the Debentures at
the beginning of each interest accrual period and a projected yield to maturity
of the Debentures. The projected yield to maturity would be based on the
"comparable yield" (i.e., the yield at which the Company would issue a fixed
rate debt instrument maturing on the Final Maturity, with terms and conditions
otherwise similar to those of the Debentures), which would likely be
substantially equivalent to the stated interest rate on the Debentures prior to
the Reset Date. In addition, the character of any gain or loss recognized on
the sale, exchange, retirement or other disposition of the Debentures could
differ from that set forth in the preceding paragraph. For example, if the
Contingent Debt Regulations applied, any gain recognized on the sale of the
Debentures would be treated as interest income, while any losses would
generally be ordinary to the extent of previously accrued original issue
discount, and any excess would be capital loss. The ability to use capital
losses to offset ordinary income in determining taxable income is generally
limited.
FOREIGN HOLDERS OF DEBENTURES
Interest paid with respect to the Debentures to a holder that is not a United
States person (a "Foreign Holder") generally will not be subject to the 30%
withholding tax generally imposed with respect to U.S. source interest paid to
such persons, provided that such holder is not engaged in a trade or business
in the United States in connection with which it holds such Debentures, does
not bear certain relationships to the Company and fulfills certain
certification requirements. Under such certification requirements, the holder
must certify, under penalties of perjury, that it is not a "United States
person" and is the beneficial owner of the Debentures, and must provide its
name and address. For this purpose, "United States person" means a citizen or
resident of the United States, a corporation, partnership, or other entity
created or organized in or under the laws of the United States or any State
thereof (including the District of Columbia), an estate the income of which is
includible in gross income for United States Federal income tax purposes,
regardless of its source, or a trust subject to the primary supervision of a
court within the United States and the control of one or more U.S. persons with
respect to all substantial decisions.
A Foreign Holder generally will not be subject to United States Federal
income tax with respect to any gain recognized upon the disposition of
Debentures unless (1) such gain is effectively connected with the conduct by
the Foreign Holder of a trade or business in the United States, (2) in the case
of any individual holder, such Foreign Holder is present in the United States
for 183 days or more in the taxable year during which the disposition occurs
and certain other conditions are met or (3) the Debentures are treated as
subject to the Contingent Debt Regulations and the holder fails to satisfy the
certification requirements of the preceding paragraph.
BACKUP WITHHOLDING
Payments made on the Debentures and proceeds from the sale of Debentures will
not be subject to a "backup" withholding tax of 31% unless, in general, the
holder fails to comply with certain reporting procedures and is not an exempt
recipient under applicable provisions of the Code.
S-13
<PAGE>
UNDERWRITING
The Company and Goldman, Sachs & Co. have entered into an underwriting
agreement and a pricing agreement with respect to the Debentures. Subject to
certain conditions Goldman, Sachs & Co. has agreed to purchase all the
Debentures.
Debentures sold by Goldman, Sachs & Co. to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus supplement. Any Debentures sold by Goldman, Sachs & Co. to
securities dealers may be sold at a discount from the initial public offering
price of up to 0.075% of the principal amount of the Debentures. If all the
Debentures are not sold at the initial offering price, Goldman, Sachs & Co. may
change the offering price and the other selling terms.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by Goldman, Sachs & Co. that Goldman,
Sachs & Co. intends to make a market in the Debentures but is not obligated to
do so and may discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Debentures.
In connection with the offering, Goldman, Sachs & Co. may purchase and sell
Debentures in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by Goldman, Sachs & Co. of a greater number
of Debentures than it is required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Debentures while
the offering is in progress.
These activities by Goldman, Sachs & Co. may stabilize, maintain or otherwise
affect the market price of the Debentures. As a result, the price of the
Debentures may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by Goldman,
Sachs & Co. at any time. These transactions may be effected in the over-the-
counter market or otherwise.
The Company estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$150,000.
The Company has agreed to indemnify Goldman, Sachs & Co. against certain
liabilities, including liabilities under the Securities Act of 1933.
Concurrently with the issuance of the Debentures, Goldman, Sachs & Co. will
purchase from the Company the Call Option for consideration in an amount equal
to 6.16% of the principal amount of the Debentures. Goldman, Sachs & Co. will
make this payment when it purchases the Debentures. The Company will pay
Goldman, Sachs & Co. a fee of 0.125% of the principal amount of the Debentures
offered hereby in connection with this offering of the Debentures. In addition,
Goldman, Sachs & Co. will receive a fee of 0.75% of the principal amount of the
Debentures if Goldman, Sachs & Co. exercises the Call Option and remarkets the
Debentures. This additional fee will be calculated as part of the Final Offer
Price and may be applied by Goldman, Sachs & Co., as holder of the Call Option,
to one or more agents as agreed to between Goldman, Sachs & Co. and the Company
in an amount up to 0.25% of the principal amount of the Debentures.
In the ordinary course of its business, Goldman, Sachs & Co. and its
affiliates engage and may in the future engage in investment banking and
commercial banking transactions with the Company and its subsidiaries.
VALIDITY OF DEBENTURES
The validity of the Debentures offered by this Prospectus Supplement will be
passed upon for the Company by the law firm of Mayer, Brown & Platt, Chicago,
Illinois, and for Goldman, Sachs & Co. by the law firm of Sullivan & Cromwell,
New York, New York.
S-14
<PAGE>
PROSPECTUS
BURLINGTON NORTHERN SANTA FE CORPORATION
DEBT SECURITIES
----------------
Burlington Northern Santa Fe Corporation ("BNSF" or the "Company") may from
time to time offer debt securities consisting of bonds, debentures, notes
(including notes commonly known as medium-term notes), or other evidences of
indebtedness in one or more series at an aggregate initial offering price not
to exceed $750,000,000 or its equivalent in any other currency or composite
currency ("Debt Securities"). The Debt Securities may be offered as separate
series in amounts, at prices, and on terms to be determined at the time of
sale. The accompanying Prospectus Supplement sets forth with regard to the
series of Debt Securities in respect of which this Prospectus is being
delivered the title, aggregate principal amount, denominations (which may be
in United States dollars, in any other currency or in a composite currency),
maturity, rate, if any (which may be fixed or variable), and time of payment
of any interest, any terms for redemption at the option of the Company or the
holder, any terms for sinking fund payments, any listing on a securities
exchange, and the initial public offering price and any other terms in
connection with the offering and sale of such Debt Securities.
The Company may sell Debt Securities to or through one or more underwriters
or dealers, and also may sell Debt Securities directly to other purchasers or
through agents. The accompanying Prospectus Supplement sets forth the names of
any underwriters or agents involved in the sale of the Debt Securities in
respect of which this Prospectus is being delivered, the principal amounts, if
any, to be purchased by underwriters and the compensation, if any, of such
underwriters or agents. See "Plan of Distribution" for possible
indemnification arrangements for underwriters, agents, and their controlling
persons.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
THE DATE OF THIS PROSPECTUS IS APRIL 3, 1998
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE DEBT
SECURITIES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy material and other information
filed with the Commission can be inspected and copied at the offices of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
should be available at its regional offices, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, Thirteenth Floor, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates and from the Commission's worldwide web site at
http://www.sec.gov. Such reports, proxy material and other information
concerning the Company also may be inspected at the offices of the New York
Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005,
the Chicago Stock Exchange Incorporated, One Financial Place, 440 South
LaSalle Street, Chicago, Illinois 60605, and the Pacific Exchange, 301 Pine
Street, San Francisco, California 94104.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"). This
prospectus ("Prospectus"), which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Statements made in this Prospectus as to the content of any
contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1997, as
amended; and
(b) Current Report on Form 8-K (Date of earliest event reported: February
6, 1998).
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering shall be deemed to be incorporated herein by reference and shall be
deemed a part hereof from the date of filing of such documents. All documents
filed by the Company after the date of the initial Registration Statement but
prior to the effectiveness of the Registration Statement shall be deemed to be
incorporated herein by reference and shall be deemed a part hereof from the
date of filing of such documents. Any statement contained
2
<PAGE>
in a document incorporated or deemed to be incorporated by reference herein
will be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein modifies or supersedes any such statement. Any such statement so
modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of such
person, a copy of any of the foregoing documents incorporated herein by
reference (other than the exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Written or
telephone requests should be directed to Burlington Northern Santa Fe
Corporation, 2650 Lou Menk Drive, Fort Worth, Texas 76131-2830, Attention:
Corporate Secretary (telephone (817) 352-6454).
Unless otherwise indicated, currency amounts in the Prospectus and any
Prospectus Supplement are stated in United States dollars ("$" or "dollars").
THE COMPANY
On September 22, 1995, Burlington Northern Inc. ("BNI") and Santa Fe Pacific
Corporation ("SFP") effected a business combination (the "Merger") pursuant to
which each became a direct or indirect wholly owned subsidiary of the Company.
As a result of the Merger, Burlington Northern Railroad Company ("BN") and The
Atchison, Topeka and Santa Fe Railway Company ("ATSF") also became indirect
wholly owned subsidiaries of the Company.
On December 30, 1996, BNI merged with and into SFP. On December 31, 1996,
ATSF merged with and into BN and BN changed its name to The Burlington
Northern and Santa Fe Railway Company ("BNSF Railway"). On January 2, 1998,
SFP merged with and into BNSF Railway.
Through its principal operating subsidiary, BNSF Railway, the Company is
engaged primarily in railroad transportation. BNSF Railway operates one of the
largest railroad networks in the United States, with approximately 34,000
route miles as of December 31, 1997. Approximately 7,800 route miles of BNSF
Railway's system consist of trackage rights which permit BNSF Railway to
operate its trains with its crews over another railroad's tracks. BNSF
Railway's system reaches 28 states and two Canadian provinces.
BNSF Railway serves all major ports in the western United States, certain
Mexican and Canadian gateways and Gulf ports, important gateways to the
eastern United States and most major cities in the Pacific Northwest and West
and in the midwestern and southwestern United States. The principal cities
served by BNSF Railway include Albuquerque, Amarillo, Billings, Birmingham,
Cheyenne, Chicago, Corpus Christi, Dallas, Denver, Des Moines,
Duluth/Superior, Fargo/Moorhead, Fort Worth, Galveston, Houston, Kansas City,
Little Rock, Lincoln, Los Angeles, Memphis, Mobile, New Orleans, Oklahoma
City, Omaha, Phoenix, Portland, Reno, Salt Lake City, San Antonio, St. Louis,
St. Paul/Minneapolis, the San Francisco Bay area, Seattle, Spokane,
Springfield (Missouri), Tacoma, Tulsa, Wichita, Vancouver (British Columbia),
Winnipeg (Manitoba) and the United States/Mexico crossings of Brownsville, El
Paso and Eagle Pass, Texas and San Diego.
BNSF Railway derives a substantial portion of its revenues from intermodal
transportation and the transportation of coal and agricultural commodities.
Other significant aspects of BNSF Railway's business include the
transportation of commodities in the following areas: chemicals, forest
products, consumer goods, automotive, metals, and minerals.
The Company's principal executive offices are located at 2650 Lou Menk
Drive, Fort Worth, Texas 76131- 2830, telephone number (817) 352-6454.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for each of the five years ended December 31, 1997. The ratios reflect
the historical results for BNI only in all periods reported prior to 1996,
except for the year ended December 31, 1995, which period also includes SFP
results from September 22, 1995 through December 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1997(2) 1996 1995(2) 1994 1993
------- ----- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges(1).................. 3.52x 3.89x 1.85x 3.70x 3.19x
</TABLE>
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(1) For purposes of this ratio, earnings are calculated by adding fixed
charges (excluding capitalized interest) to income (loss) from continuing
operations. Fixed charges consist of interest on indebtedness (including
amortization of debt discount and premium) and the portion of rental
expense under long term operating leases representative of an interest
factor.
(2) Earnings for the years ended December 31, 1997 and 1995 include special
charges of $90 million and $735 million (before tax), respectively.
Excluding these charges, the ratios for 1997 and 1995 would have been
3.68x and 3.91x, respectively.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, net
proceeds from the sale of the Debt Securities will be used for general
corporate purposes, including working capital, capital expenditures, and debt
repayment, and for the repurchase of the Company's common stock from time to
time.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (the "Indenture"),
between the Company and The First National Bank of Chicago, as Trustee (the
"Trustee"), a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Debt Securities may be
issued from time to time in one or more series. The particular terms of each
series, or of Debt Securities forming a part of a series which are offered by
a Prospectus Supplement, will be described in such Prospectus Supplement.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indenture, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
The Company is a holding company, conducting its operations through its
operating subsidiaries. Accordingly, the Company's ability to service the Debt
Securities is dependent, in part, on its ability to obtain dividends or loans
from such operating subsidiaries which may be subject to contractual
restrictions. In addition, the rights of the Company and the rights of its
creditors, including holders of the Debt Securities, to participate in any
distribution of the assets of a subsidiary upon the liquidation or
recapitalization of such subsidiary will be subject to the prior claims of the
subsidiary's creditors, except to the extent the Company itself may be a
creditor with recognized claims against the subsidiary.
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The covenants in the Indenture would not necessarily afford the holders of
the Debt Securities protection in the event of a decline in the Company's
credit quality resulting from highly leveraged or other transactions involving
the Company.
GENERAL
The Indenture provides that separate series of Debt Securities may be issued
under the Indenture from time to time without limitation as to aggregate
principal amount. The Company may specify a maximum aggregate principal amount
for the Debt Securities of any series. (Section 301) The Debt Securities are
to have such terms and provisions which are not inconsistent with the
Indenture, including as to maturity, principal and interest, as the Company
may determine. Except as provided in Section 1008, the Debt Securities will be
unsecured obligations of the Company and will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Company.
The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities: (1) the title of such Debt
Securities; (2) any limit on the aggregate principal amount of the particular
series of Debt Securities; (3) the date or dates on which the principal of any
of such Debt Securities will be payable or the method by which such date or
dates will be determined or extended; (4) the rate or rates at which any of
such Debt Securities will bear interest, if any, or the method by which such
rate or rates shall be determined, the date or dates from which any such
interest will accrue, the Interest Payment Dates on which any such interest
will be payable and the Regular Record Date for any such interest payable on
any Interest Payment Date, or the method by which such date or dates shall be
determined, and the basis upon which interest shall be calculated if other
than that of a 360-day year of twelve 30- day months; (5) the place or places
where the principal of and any premium and interest on any of such Debt
Securities will be payable; (6) the period or periods within which, the price
or prices at which and the terms and conditions upon which any of such Debt
Securities may be redeemed, in whole or in part, at the option of the Company
and the manner in which any election by the Company to redeem such Debt
Securities shall be evidenced (if other than by a Board Resolution); (7) the
obligation, if any, of the Company to redeem or purchase any of such Debt
Securities pursuant to any sinking fund or analogous provision or at the
option of the Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions on which any of such
Debt Securities will be redeemed or purchased, in whole or in part, pursuant
to any such obligation; (8) the denominations in which any of such Debt
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof; (9) if the amount of principal of or any premium or
interest on any of such Debt Securities may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts will be
determined; (10) if other than the currency of the United States of America,
the currency, currencies or currency units in which the principal of or any
premium or interest on any of such Debt Securities will be payable (and the
manner in which the equivalent of the principal amount thereof in the currency
of the United States of America is to be determined for any purpose, including
for the purpose of determining the principal amount deemed to be Outstanding
at any time); (11) if the principal of or any premium or interest on any of
such Debt Securities is to be payable, at the election of the Company or the
Holder thereof, in one or more currencies or currency units other than those
in which such Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of any such amount as to which
such election is made will be payable, the periods within which and the terms
and conditions upon which such election is to made and the amount so payable
(or the manner in which such amount is to be determined); (12) the percentage
of the principal amount at which such Debt Securities will be issued and, if
other than the entire principal amount thereof, the portion of the principal
amount of any of such Debt Securities which will be payable upon declaration
of acceleration of the Maturity thereof or the method by which such portion
shall be determined; (13) if the principal amount payable at the Stated
Maturity of any of such Debt Securities will not be determinable as of any one
or more dates prior to the Stated Maturity, the amount which will be deemed to
be such principal amount as of any
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such date for any purpose, including the principal amount thereof which will
be due and payable upon any Maturity other than the Stated Maturity or which
will be deemed to be Outstanding as of any such date (or, in any such case,
the manner in which such deemed principal amount is to be determined); (14)
any variation from the application of the provisions of the Indenture
described under "Defeasance and Covenant Defeasance--Defeasance and Discharge"
or "Defeasance and Covenant Defeasance--Defeasance of Certain Covenants" or
under both such captions and the manner in which any election of the Company
to defease such Debt Securities shall be evidenced (if other than by a Board
Resolution); (15) whether any of such Debt Securities will be issuable in
whole or in part in the form of one or more Global Securities and, if so, the
respective Depositaries for such Global Securities, the form of any legend or
legends to be borne by any such Global Securities in addition to or in lieu of
the legend referred to under "Form, Exchange and Transfer--Global Securities"
and, if different from those described under such caption, any circumstances
under which any such Global Securities may be exchanged in whole or in part
for Debt Securities registered, and any transfer of such Global Securities in
whole or in part may be registered, in the names of Persons other than the
Depositary for such Global Securities or its nominee; (16) whether any of such
Debt Securities will be subject to certain optional interest rate reset
provisions; (17) whether any of such Debt Securities will be subject to
certain optional extensions of maturity provisions; (18) any addition to or
change in the Events of Default applicable to any of such Debt Securities and
any change in the right of the Trustee or the Holders of any of such Debt
Securities to declare the principal amount of any of such Debt Securities and
any change in the right of the Trustee or the Holders of any of such Debt
Securities to declare the principal amount thereof, due and payable; (19) any
addition to or change in the covenants in the Indenture applicable to any of
such Debt Securities; and (20) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States income tax considerations (if any) applicable to Debt Securities sold
at an original issue discount may be described in the applicable Prospectus
Supplement. In addition, certain special United States federal income tax or
other considerations (if any) applicable to any Debt Securities which are
denominated in a currency or currency unit other than United States dollars
may be described in the applicable Prospectus Supplement.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any Debt
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Securities will be named in the applicable Prospectus Supplement. (Section
305) The Company may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Debt Security of that series (or of
that series and specified tenor, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing or (ii) register
the transfer of or exchange any Debt Security so selected for redemption, in
whole or in part, except the unredeemed portion of any such Debt Security
being redeemed in part. (Section 305)
GLOBAL SECURITIES
Unless otherwise provided in the Prospectus Supplement, some or all of the
Debt Securities of any series may be represented, in whole or in part, by one
or more Global Securities which will have an aggregate principal amount equal
to that of the Debt Securities represented thereby. Unless otherwise provided
in the Prospectus Supplement, the Global Security representing Debt Securities
will be deposited with, or on behalf of, The Depository Trust Company ("DTC"),
or other successor depository appointed by the Company (DTC or such other
depository is herein referred to as the "Depositary") and registered in the
name of the Depositary or its nominee and such Global Security will bear a
legend regarding the restrictions on exchange and registration of transfer
thereof referred to below and any such other matters as may be provided for
pursuant to the Indenture. Unless otherwise provided in the Prospectus
Supplement, Debt Securities will not be issued in definitive form.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or
in part may be registered, in the name of any Person other than the Depositary
for such Global Security or any nominee of such Depositary unless (i) the
Depositary has notified the Company that it is unwilling or unable to continue
as Depositary for such Global Security or has ceased to be qualified to act as
such as required by the Indenture, (ii) there shall have occurred and be
continuing an Event of Default with respect to the Debt Securities represented
by such Global Security or (iii) there shall exist such circumstances, if any,
in addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All Debt Securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305)
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to DTC's book-entry system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Direct
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Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Upon the issuance by the Company of Debt Securities represented by a Global
Security, purchases of Debt Securities under the DTC System must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser
of each Debt Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Debt Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Debt Securities, except in the event
that use of the book-entry system for the Debt Securities is discontinued. The
laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for the Global Security, or its nominee, is the
registered owner of the Global Security, the Depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as described above, Beneficial Owners will not be entitled
to have Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities in definitive form and will not be considered the owners or
holders thereof under the Indenture.
To facilitate subsequent transfers, all Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debt Securities with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Debt Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers. Conveyance of notices and other
communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to Debt
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Debt Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Payments of principal of and interest, if any, on the Debt Securities
represented by the Global Security registered in the name of the Depositary or
its nominee will be made by the Company through the Trustee under the
Indenture or a paying agent (the "Paying Agent"), which may also be the
Trustee under the Indenture, to the Depositary or its nominee, as the case may
be, as the registered owner of the Global Security. Neither the Company, the
Trustee, nor the Paying Agent will have any responsibility or liability for
any aspect of the records relating to or payments made on account of
beneficial ownership interests of the Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company has been advised that DTC will credit Direct Participants'
accounts on the payable date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to
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believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as in the case with securities held for the accounts
of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Paying Agent, or the
Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Company or the Paying Agent, disbursement of such
payments to Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to
the Person in whose name such Debt Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears
in the Security Register. Unless otherwise indicated in the applicable
Prospectus Supplement, the corporate trust office of the Trustee in Chicago,
Illinois will be designated as the Company's sole Paying Agent for payments
with respect to Debt Securities of each series. Any other Paying Agents
initially designated by the Company for the Debt Securities of a particular
series will be named in the applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the designation of
any Paying Agent or approve a change in the office through which any Paying
Agent acts, except that the Company will be required to maintain a Paying
Agent in each Place of Payment for the Debt Securities of a particular series.
(Section 1002)
Any money paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remains
unclaimed at the end of two years after such principal, premium or interest
has become due and payable may be repaid to the Company at the Company's
request. (Section 1003)
NEGATIVE PLEDGE
In the Indenture, the Company covenants that it will not, and it will not
permit any subsidiary to, create, assume, incur or suffer to exist any Lien
upon the stock of BNSF Railway (or any successor or assign thereof, whether by
merger or otherwise) to secure any obligation (other than the Debt Securities)
of the Company, any Subsidiary or other Person, unless all of the Outstanding
Debt Securities are directly secured equally and ratably with such obligation.
(Section 1008)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into, or convey, transfer or
lease its properties and assets substantially as an entirety to, any Person (a
"successor Person"), and may not permit any Person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to,
the Company, unless (i) the successor Person (if any) is a corporation,
partnership, trust or other entity organized and validly existing under the
laws of any domestic jurisdiction and assumes the
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Company's obligations on the Debt Securities and under the Indenture and (ii)
immediately after giving effect to the transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an Event
of Default, shall have occurred and be continuing. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due; (b)
failure to pay any interest on any Debt Securities of that series when due,
continued for 30 days; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Security of that series; (d) failure to perform,
or breach of, any other covenant or warranty of the Company in the Indenture
with respect to Debt Securities of that series (other than a covenant included
in the Indenture solely for the benefit of a series other than that series),
continued for 90 days after written notice has been given to the Company by
the Trustee or the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series, as provided in the Indenture; and
(e) certain events involving bankruptcy, insolvency or reorganization.
(Section 501)
If an Event of Default (other than an Event of Default described in clause
(d) above that is applicable to all Outstanding Debt Securities) with respect
to the Debt Securities of any series at the time Outstanding Debt shall occur
and be continuing, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Debt Securities of that series
by notice as provided in the Indenture may declare the principal amount of the
Debt Securities of that series (or, in the case of any Debt Security that is
an Original Issue Discount Security or the principal amount of which is not
then determinable, such portion of the principal amount of such Debt Security,
or such other amount in lieu of such principal amount, as may be specified in
the terms of such Debt Security) to be due and payable immediately. If an
Event of Default described in clause (d) above that is applicable to all
Outstanding Debt Securities shall occur and be continuing, either the Trustee
or the Holders of at least 25% in aggregate principal amount of all the Debt
Securities then Outstanding (treated as one class) by notice as provided in
the Indenture may declare the principal amount (or, if any Debt Securities are
Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms thereof) of all the Debt Securities then
Outstanding to be due and payable immediately. After any such acceleration of
a series, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of
accelerated principal (or other specified amount), have been cured or waived
as provided in the Indenture. (Section 502) For information as to waiver of
defaults, see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of that series, (ii) the
Holders of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series have made written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute
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such proceeding and (iii) the Trustee has failed to institute such proceeding,
and has not received from the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507) However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of
the principal of or any premium or interest on such Debt Security on or after
the applicable due date specified in such Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the Indenture and, if so, specifying all such
known defaults. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, (b)
reduce the principal amount of, or any premium or interest on, any Debt
Security, (c) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of the Maturity
thereof, (d) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security, (e) impair the right to institute
suit for the enforcement of any payment on or with respect to any Debt
Security, (f) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indenture, (g) reduce the percentage in
principal amount of Outstanding Debt Securities of any series necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, or (h) make certain modifications to such provisions with
respect to modification and waiver. (Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of any series may waive any past default or compliance with
certain restrictive provisions under the Indenture, except a default in the
payment of principal, premium or interest and certain covenants and provisions
of the Indenture which cannot be amended without the consent of the Holder of
each Outstanding Debt Security of such series affected. (Sections 513 and
1009)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the
Indenture as of any date, (i) the principal amount of an Original Issue
Discount Security that will be deemed to be Outstanding will be the amount of
the principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (ii) if, as of such date,
the principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be
an amount determined in the manner prescribed for such Debt Security and (iii)
the principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that will be deemed to be Outstanding will be the
U.S. dollar equivalent, determined as of such date in the manner prescribed
for such Debt Security, of the principal amount of such Debt Security (or, in
the case of a Debt Security described in clause (i) or (ii) above, of the
amount described in such clause). Certain Debt Securities, including those for
whose payment or redemption money has been deposited or set aside in trust for
the Holders and those that have been fully defeased pursuant to Section 1402,
will not be deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled
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to give or take any direction, notice, consent, waiver or other action under
the Indenture, in the manner and subject to the limitations provided in the
Indenture. In certain limited circumstances, the Trustee will be entitled to
set a record date for action by Holders. If a record date is set for any
action to be taken by Holders of a particular series, such action may be taken
only by persons who are Holders of Outstanding Debt Securities of that series
on the record date. To be effective, such action must be taken by Holders of
the requisite principal amount of such Debt Securities within a specified
period following the record date. For any particular record date, this period
will be 180 days or such shorter period as may be specified by the Company (or
the Trustee, if it set the record date) and may be shortened or lengthened
(but not beyond 180 days) from time to time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise provided in the applicable Prospectus Supplement, the
provisions of Section 1402, relating to defeasance and discharge of
indebtedness, or Section 1403, relating to defeasance of certain restrictive
covenants in the Indenture, shall apply to the Debt Securities of any series
or to any specified part of a series. (Section 1401)
Defeasance and Discharge. Section 1402 of the Indenture provides that the
Company will be discharged from all its obligations with respect to such Debt
Securities (except for certain obligations to exchange or register the
transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the Indenture and such Debt
Securities. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling, or there has been a change in
tax law, in either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1402 and 1404)
Defeasance of Certain Covenants. Section 1403 of the Indenture provides
that, in certain circumstances, the Company may omit to comply with certain
restrictive covenants, including those described under "Certain Covenants" and
any that may be described in the applicable Prospectus Supplement, and that in
those circumstances the occurrence of certain Events of Default, which are
described above in clause (d) (with respect to such restrictive covenants)
under "Events of Default" and any that may be described in the applicable
Prospectus Supplement, will be deemed not to be or result in an Event of
Default, in each case with respect to such Debt Securities. The Company, in
order to exercise such option, will be required to deposit, in trust for the
benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an
amount sufficient to pay the principal of and any premium and interest on such
Debt Securities on the respective Stated Maturities in accordance with the
terms of the Indenture and such Debt Securities. The Company will also be
required, among other things, to deliver to the Trustee an Opinion of Counsel
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance were not to occur. In the event the
Company exercised this option with respect to any Debt Securities and such
Debt Securities were declared due and payable because of the occurrence of any
Event of Default, the amount of money
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and U.S. Government Obligations so deposited in trust would be sufficient to
pay amounts due on such Debt Securities at the time of their respective Stated
Maturities but might not be sufficient to pay amounts due on such Debt
Securities upon any acceleration resulting from such Event of Default. In such
case, the Company would remain liable for such payments. (Sections 1403 and
1404)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the
purpose of making payment and for all other purposes. (Section 309)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The First National Bank of Chicago has lending and other customary banking
relationships with the Company.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (i) through an underwriter or
underwriters, (ii) through dealers, (iii) through agents, (iv) directly to
purchasers, including affiliates of the Company, or (v) through a combination
of any such methods of sale. The applicable Prospectus Supplement will set
forth the terms of the offerings of any Debt Securities, including the method
of distribution, the name or names of any underwriters, dealers or agents, any
managing underwriter or underwriters, the purchase price of the Debt
Securities and the proceeds to the Company from the sale, any underwriting
discounts, agency fees and other items constituting underwriters' compensation
and any discounts and concessions allowed, reallowed or paid to dealers or
agents. The initial public offering price and any discount or concessions
allowed or reallowed to dealers may be changed from time to time. The expected
time of delivery of the Debt Securities in respect of which this Prospectus is
delivered will be set forth in the applicable Prospectus Supplement.
If underwriters are used in the sale of the Debt Securities, the
underwriting agreement will provide that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters with
respect to a sale of Debt Securities will be obligated to purchase all such
Debt Securities if any are purchased. In connection with the sale of Debt
Securities, underwriters may receive compensation from the Company or from
purchasers of Debt Securities for whom they may act as agents in the form of
discounts, concessions or commissions. Underwriters may sell Debt Securities
to or through dealers, and such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Underwriters, agents or dealers participating in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by
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<PAGE>
them on resale of the Debt Securities may be deemed to be underwriting
discounts and commissions under the Securities Act.
The Debt Securities may be sold in one or more transactions either at a
fixed price or prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company may also offer and sell the Debt Securities in
exchange for one or more of its outstanding issues of debt or convertible debt
securities or in the satisfaction of indebtedness.
Underwriters, agents or dealers who participate in the distribution of Debt
Securities may be entitled, under agreements which may be entered into with
the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution by the
Company to payments that such underwriters, dealers or agents or any of their
controlling persons may be required to make in respect thereof. Underwriters,
agents or dealers may be customers of, engage in transactions with or perform
services for the Company or subsidiaries of the Company in the ordinary course
of business.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase Debt Securities from the Company pursuant to delayed delivery
contracts providing for payment and delivery on the date stated in the
Prospectus Supplement. Such contracts will be subject only to those conditions
set forth in the Prospectus Supplement. The Prospectus Supplement will also
set forth the commission payable for solicitation of such contracts.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating thereto. Except
as set forth in the applicable Prospectus Supplement, no director, officer or
employee of the Company will solicit or receive a commission in connection
with direct sales by the Company of the Debt Securities, although such persons
may respond to inquiries by potential purchasers and perform ministerial and
clerical work in connection with any such direct sales.
VALIDITY OF SECURITIES
The validity of the Debt Securities being offered hereby will be passed upon
for the Company by Mayer, Brown & Platt, Chicago, Illinois, and for the
underwriters, dealers, or agents, if any, by Sullivan & Cromwell, New York,
New York.
EXPERTS
The consolidated financial statements and the financial statement schedule
as of December 31, 1997 and 1996 and for each of the two years in the period
ended December 31, 1997 incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 have
been so incorporated in reliance on the reports of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements and the financial statement schedule
for the year ended December 31, 1995 incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been so incorporated in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
said firm as experts in accounting and auditing.
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely
on any unauthorized information or representations. This prospectus is an
offer to sell only the Debentures offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
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<S> <C>
Where You May Find More Information........................................ S-2
The Company................................................................ S-2
Ratio of Earnings to Fixed Charges......................................... S-3
Use of Proceeds............................................................ S-3
Description of Debentures.................................................. S-3
Certain Federal Income Tax Considerations.................................. S-11
Underwriting............................................................... S-14
Validity of Debentures..................................................... S-14
Prospectus
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 13
Validity of Securities..................................................... 14
Experts.................................................................... 14
</TABLE>
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$200,000,000
BURLINGTON NORTHERN
SANTA FE CORPORATION
Puttable Reset Securities PURSSM
due May 13, 2029
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BNSF
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GOLDMAN, SACHS & CO.
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