<PAGE>
Filed pursuant to Rule 424(b)5
Registration Numbers 333-48227, 333-72013
Prospectus Supplement to Prospectus Dated March 1, 1999
$200,000,000
Burlington Northern Santa Fe Corporation
Puttable Reset Securities PURSSM due May 13, 2029
Reset Interest Rate: 7.082%
Maturity
. The Debentures will mature on May 13, 2029.
Interest
. Interest on the Debentures is payable on May 13 and November 13 of each
year. The first interest payment date after the reset interest rate takes
effect will be November 13, 1999.
. Interest on the Debentures will accrue at the reset interest rate stated
above from May 13, 1999 through May 12, 2029.
Redemption
. We may not redeem the Debentures.
. There is no sinking fund.
Ranking
. The Debentures are unsecured. The Debentures rank equally with all of our
existing and future unsubordinated debt.
Listing
. The Debentures are not listed on any securities exchange and we do not
intend to list the Debentures on any securities exchange.
The Company
. Our principal executive offices are located at 2650 Lou Menk Drive, Fort
Worth, Texas 76131-2830. Our telephone number is (817) 352-6454.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Debentures or determined that
this Prospectus Supplement or the attached Prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
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We issued the Debentures on November 13, 1998. Goldman, Sachs & Co. has
exercised an option to purchase the Debentures from their holders, subject to
certain conditions, on May 13, 1999. If Goldman, Sachs & Co. purchases the
Debentures, it will sell them to Chase Securities Inc. at a price of 99.359% of
the principal amount of the Debentures. Chase Securities Inc. will offer the
Debentures pursuant to this prospectus supplement from time to time in one or
more negotiated transactions or otherwise at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. See "Plan of Distribution." We will not receive any proceeds
from the resale of the Debentures by Chase Securities Inc.
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PURSSM is a service mark of Goldman, Sachs & Co.
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If Goldman, Sachs & Co. purchases the Debentures and sells the Debentures to
Chase Securities Inc. on May 13, 1999, Chase Securities Inc. will deliver the
Debentures to you in global form through the book-entry delivery system of The
Depository Trust Company on May 13, 1999.
Chase Securities Inc.
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The date of this Prospectus Supplement is May 6, 1999.
<PAGE>
In making your investment decision, you should rely only on the information
contained or incorporated by reference in this Prospectus Supplement and the
attached Prospectus. We have not authorized anyone to provide you with any
other information. If you receive any unauthorized information, you must not
rely on it.
Chase Securities Inc. is offering to sell the Debentures only in places
where sales are permitted.
You should not assume that the information contained or incorporated by
reference in this Prospectus Supplement or the attached Prospectus is accurate
as of any date other than its respective date.
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TABLE OF CONTENTS
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Page
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Prospectus Supplement
The Company......................... S-3
Ratio of Earnings to Fixed Charges.. S-3
Use of Proceeds..................... S-3
Description of Debentures........... S-4
Certain Federal Income Tax
Considerations..................... S-5
Plan of Distribution................ S-7
Where You May Find More
Information........................ S-8
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Page
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<S> <C>
Prospectus
Where You May Find More
Information.................... 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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THE COMPANY
Burlington Northern Santa Fe Corporation ("BNSF" or "we") is engaged
primarily in railroad transportation through its 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, 1998.
Approximately 7,700 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 commercial products, chemicals, industrial products, 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.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth BNSF's ratio of earnings to fixed charges for
the periods shown. The ratio for 1994 reflects the historical results for
Burlington Northern Inc. only. The ratio for 1995 includes Burlington Northern
Inc. results and also includes Santa Fe Pacific Corporation results from
September 22, 1995 through December 31, 1995.
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Three Months
Ended March 31, Year Ended December 31,
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1999 1998(2) 1998(2) 1997(3) 1996 1995(3) 1994
-------- --------- ------- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed
Charges(1)............. 3.55x 4.17x 4.17x 3.52x 3.89x 1.85x 3.70x
</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 or 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 three months ended March 31, 1998 and the year ended
December 31, 1998 include a pre-tax gain of $67 million on the sale of
substantially all of BNSF's interest in Santa Fe Pacific Pipeline Partners,
L.P. Excluding this gain, the ratios for the three months ended March 31,
1998 and the year ended December 31, 1998 would have been 3.68x and 4.06x,
respectively.
(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 receive no proceeds from the resale of the Debentures by Chase
Securities Inc. to the public. We issued the Debentures on November 13, 1998,
and received proceeds at that time of $212,070,000 (including a payment by
Goldman, Sachs & Co. for the call option).
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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
We previously issued the Debentures on November 13, 1998, under an Indenture
dated as of December 1, 1995 between us and The First National Bank of Chicago,
as Trustee. (For a more complete description of the Indenture, please see
"Description of Debt Securities" in the accompanying Prospectus.)
The Debentures contained an option that permitted Goldman, Sachs & Co. to
call the Debentures from their holders. Goldman, Sachs & Co. has exercised the
call option. As a result of the exercise of the call option and subject to
certain conditions, on May 13, 1999, the interest rate on the Debentures will
be reset to 7.082% per year. The reset interest rate was established on the
basis of bids from various dealers (in accordance with the terms of the
Debentures).
The Debentures will mature on May 13, 2029. The Debentures will bear
interest from May 13, 1999 or from the most recent interest payment date to
which interest has been paid or provided for at the reset interest rate. We
will pay interest on the Debentures semiannually in arrears on May 13 and
November 13 of each year to the persons in whose name the Debentures are
registered at the close of business on the May 1 or November 1 before the
interest payment date.
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 BNSF. The Debentures are not secured. The Debentures are general
obligations of BNSF and rank equally with all of our existing and future
unsubordinated debt and senior to all of our existing and future subordinated
debt.
BNSF issued the Debentures in fully registered form in denominations of
$1,000 and in $1,000 increments above $1,000. The Debentures exist in global
form. See "--Global Securities."
Redemption and Sinking Fund
We may not redeem the Debentures. There is no sinking fund.
Global Securities
The Debentures are represented by one or more global securities that have
previously been deposited with, or on behalf of, The Depository Trust Company,
New York, New York. The global securities representing the Debentures are
registered in the name of a nominee of The Depository Trust Company. Except
under the circumstances described in the accompanying Prospectus under
"Description of Debt Securities--Global Securities," we will not issue the
Debentures in the names of any beneficial owners.
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You can find a more detailed description of The Depository Trust Company's
procedures for the global securities in the accompanying Prospectus under
"Description of Debt Securities--Global Securities." In connection with the
initial issuance of the Debentures, The Depository Trust Company confirmed to
us, Goldman, Sachs & Co. and the Trustee that it intends to follow these
procedures for the Debentures.
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 those persons who purchase the Debentures in the May 13, 1999
resale of those Debentures. 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.
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 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, BNSF intends to treat
the Debentures as 30 year debt instruments issued on May 13, 1999 for United
States Federal income tax purposes. Interest payable on the Debentures will be
includible in the income of a holder in accordance with such holder's regular
method of accounting. The Debentures may be purchased for an amount in excess
of their principal amounts. A holder that purchases a Debenture for an amount
in excess of its principal amount may elect to treat such excess as
"amortizable bond premium," in which case the amount required to be included in
the holder's income each year with respect to interest on the Debentures will
be reduced by the amount of amortizable bond premium allocable (based on the
Debenture's yield to maturity) to such year. Any election to amortize bond
premium will apply to all debt instruments (other than debt instruments the
interest on which is excludable from gross income) held by the holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the holder, and is irrevocable without the consent of the Service.
A holder electing to amortize bond premium must reduce its basis in the
Debentures to the extent of amortizable bond premium used to reduce interest
income on such Debentures. If a Debenture is redeemed, sold or otherwise
disposed of, a holder generally will recognize gain or loss equal to the
difference between the amount realized on the sale or other disposition of such
Debenture (to the extent such amount does not represent accrued but unpaid
interest) and such holder's tax basis in the Debenture. A holder's tax basis in
a Debenture will be the purchase price of such Debenture reduced by the amount
of any amortizable bond premium applied to reduce interest income on such
Debenture. Such gain or loss generally will be capital gain or loss, provided
that the holder has held the Debenture as a capital asset. A capital gain or
loss will be a long-term capital gain or loss if the holder's holding period is
more than 12
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months. For individual holders, long-term capital gains are subject to a
maximum Federal income tax rate of 20 percent. The deduction of capital losses
may be subject to limitation. In addition, a holder will recognize interest
income to the extent of any accrued but unpaid interest on the Debentures not
previously recognized by the holder at the time of the redemption or sale.
It is possible that the Service will disagree with or that a court will not
uphold the treatment of the Debentures as 30 year Debentures issued on May 13,
1999. In particular, the Service could seek to treat the Debentures as 30 and
one-half year debt instruments issued on November 13, 1998 for United States
Federal income tax purposes. Because of the interest rate reset process, if the
Debentures were treated as 30 and one-half year debt instruments issued on
November 13, 1998, 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 BNSF would have issued on November
13, 1998 a fixed rate debt instrument with terms and conditions otherwise
similar to those of the Debentures). If the Debentures are subject to the
Contingent Debt Regulations, a holder that purchases a Debenture for an amount
in excess of its adjusted issue price would treat such excess as "acquisition
premium," in which case the amount required to be included in the holder's
income each year with respect to interest on the Debentures would be reduced by
a fixed percentage of the income otherwise recognizable in that year with
respect to the Debenture. However, a holder that purchases a Debenture at an
acquisition premium may elect to treat the purchase of the Debenture as a
purchase at original issuance and accordingly may reduce the amount required to
be included in the holder's income each year with respect to interest on the
Debentures by the amount of acquisition premium allocable (based on the
constant yield method) to such year. A holder must reduce its basis in the
Debentures to the extent of acquisition premium used to reduce interest income
on such Debentures. In addition, if the Debentures are subject to the
Contingent Debt Regulations, 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, 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 BNSF 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
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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.
PLAN OF DISTRIBUTION
BNSF sold the Debentures to Goldman, Sachs & Co. on November 13, 1998,
pursuant to an underwriting agreement and a pricing agreement, and Goldman,
Sachs & Co. then resold the Debentures to the public. The Debentures contained
an option which permitted Goldman, Sachs & Co. to call the Debentures from the
holders. Goldman, Sachs & Co. exercised the call option on April 29, 1999.
Pursuant to the call option and subject to certain conditions, on May 13,
1999, Goldman, Sachs & Co. will purchase the Debentures from the persons who
are holders on that date at a price equal to 100% of the principal amount of
the Debentures. If Goldman, Sachs & Co. purchases the Debentures from the
holders on May 13, 1999, the Debentures will be sold by Goldman, Sachs & Co. to
Chase Securities Inc. at a price of 99.359%, and Chase Securities Inc. will
resell the Debentures to the public.
Chase Securities Inc. has advised us that it proposes to offer the
Debentures from time to time for sale in one or more negotiated transactions or
otherwise, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Chase Securities Inc.
may effect these transactions by selling the Debentures to or through dealers,
and the dealers may receive compensation in the form of concessions or
commissions from Chase Securities Inc. and/or the purchasers of the Debentures.
The Debentures are not listed on any securities exchange or quoted on any
quotation system, and we do not intend to apply for the Debentures to be listed
on any securities exchange or to arrange for the Debentures to be quoted on any
quotation system. Chase Securities Inc. has advised us that it intends to make
a market in the Debentures, but is not obligated to do so. Chase Securities
Inc. may discontinue any market making in the Debentures at any time in its
sole discretion. Accordingly, we cannot assure you that a liquid trading market
will develop for the Debentures, that you will be able to sell your Debentures
at a particular time or that prices that you receive when you sell will be
favorable.
In connection with the offering of the Debentures, Chase Securities Inc. may
engage in overallotment and short covering transactions. Overallotment involves
sales in excess of the offering size, which creates a short position for Chase
Securities Inc. Short covering transactions involve purchases of the Debentures
in the open market after the distribution has been completed in order to cover
short positions. Short covering transactions may cause the price of the
Debentures to be higher than it would otherwise be in the absence of those
transactions. If Chase Securities Inc. engages in short covering transactions,
it may discontinue them at any time.
We estimate that we have incurred expenses of $150,000 for this offering,
including certain expenses of Chase Securities Inc., Goldman, Sachs & Co. and
their counsel.
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We have agreed to indemnify Chase Securities Inc. against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The price at which Chase Securities Inc. has agreed to purchase the
Debentures from Goldman, Sachs & Co., as holder of the Debentures after
exercise of the call option, includes an amount equal to 0.75% of the principal
amount of the Debentures. This amount represents compensation to Goldman, Sachs
& Co. for exercising the call option and remarketing the Debentures. This
amount may be applied by Goldman, Sachs & Co., as holder of the call option, to
one or more dealers as agreed to between Goldman, Sachs & Co. and BNSF in an
amount up to 0.25% of the principal amount of the Debentures.
In the ordinary course of its business, Chase Securities Inc. and its
affiliates engage and may in the future engage in investment banking and
general financing and banking transactions with BNSF and its subsidiaries. Marc
J. Shapiro, a director of BNSF, is also an executive officer of The Chase
Manhattan Corporation, an affiliate of Chase Securities Inc.
WHERE YOU MAY FIND MORE INFORMATION
BNSF files annual, quarterly and special reports, proxy statements and other
information with 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 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 completion of the
resale to the public:
(1) Annual Report on Form 10-K for the year ended December 31, 1998, as
amended;
(2) Current Report on Form 8-K (Date of earliest event reported:
December 4, 1998);
(3) Current Report on Form 8-K (Date of earliest event reported:
February 8, 1999), as amended; and
(4) Current Report on Form 8-K (Date of earliest event reported: April
20, 1999).
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
(817) 352-6454.
We will provide you free of charge with the copies you request (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.
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PROSPECTUS
Burlington Northern Santa Fe Corporation
Debt Securities
----------------
Burlington Northern Santa Fe Corporation ("BNSF" or "we") 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 debt in one
or more series at an aggregate initial offering price not to exceed
$1,100,000,000 or its equivalent in any other currency or composite currency
("Debt Securities"). We may offer the Debt Securities as separate series in
amounts, at prices, and on terms to be determined at the time of sale. For each
offering, a prospectus supplement will accompany this prospectus and will set
forth all the terms of the series of Debt Securities for which this prospectus
is being delivered.
BNSF 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 information
regarding the underwriters or agents involved in the sale of the Debt
Securities for which this prospectus is being delivered. See "Plan of
Distribution" for possible indemnification arrangements for underwriters,
agents, and their controlling persons.
This prospectus may not be used for sales of securities unless it is
accompanied by a prospectus supplement.
----------------
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.
----------------
The date of this Prospectus is March 1, 1999.
<PAGE>
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 Debt Securities described in this prospectus and
accompanying prospectus summary, 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.
----------------
WHERE YOU MAY FIND MORE INFORMATION
BNSF 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, including copying fees.
BNSF has filed with the SEC a registration statement (together with all
amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933. This prospectus, which is a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement;
certain items are contained in exhibits to the Registration Statement, as
permitted by the rules and regulations of the SEC. Statements that we make in
this prospectus about the content of any contract, agreement or other document
are not necessarily complete. With respect to each contract, agreement or
other document filed as an exhibit to the Registration Statement, we refer you
to the exhibit for a more complete description of the matter involved, and
each such statement that we make is qualified in its entirety by such
reference.
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,
and the information that we file later with the SEC will automatically update
and supersede this information. We incorporate by reference all documents
filed by us after the date of the initial Registration Statement but prior to
the effectiveness of the Registration Statement, 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 completion of the sale to the public of the Debt Securities
and the following documents:
(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) Quarterly Report on Form 10-Q for the quarter ended September 30,
1998;
(5) Current Report on Form 8-K (Date of earliest event reported:
February 6, 1998);
(6) Current Report on Form 8-K (Date of earliest event reported: July
16, 1998);
(7) Current Report on Form 8-K (Date of earliest event reported: October
20, 1998); and
(8) Current Report on Form 8-K (Date of earliest event reported December
4, 1998).
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<PAGE>
If you would like a copy of any of the documents incorporated by reference
into this prospectus, 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 this prospectus are stated in United States dollars,
unless we indicate otherwise.
THE COMPANY
BNSF is engaged primarily in railroad transportation through its 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,
1998. Approximately 7,700 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 Gulf ports and Mexican and Canadian gateways 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, 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
BNSF 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>
- --------
(1) For purposes of this ratio, we calculate earnings by adding fixed charges
(excluding capitalized interest) to pre-tax income or 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 BNSF'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
Unless we specify otherwise in the applicable prospectus supplement, we will
use the net proceeds from the sale of the Debt Securities for general corporate
purposes, including working capital, capital expenditures, and debt repayment,
and to repurchase our common stock from time to time.
DESCRIPTION OF DEBT SECURITIES
BNSF will issue the Debt Securities under an Indenture (the "Indenture"),
between BNSF and The First National Bank of Chicago, as Trustee (the
"Trustee"). A copy of the Indenture is filed as an exhibit to the Registration
Statement of which this prospectus is a part. BNSF may issue the Debt
Securities from time to time in one or more series. The particular terms of
each series will be described in a prospectus supplement and may be different
than those described here.
The summaries of certain provisions of the Indenture described here are not
complete and are qualified in their entirety by reference to all the provisions
of the Indenture. If we refer to particular sections or defined terms of the
Indenture, such sections or defined terms are incorporated by reference into
this prospectus or the prospectus supplement.
BNSF is a holding company, conducting its operations through its operating
subsidiaries. Accordingly, BNSF's ability to pay principal and interest on the
Debt Securities depends, in part, on its ability to obtain dividends or loans
from its operating subsidiaries which may be subject to contractual
restrictions. In addition, the rights of BNSF 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 BNSF itself may be a creditor with recognized claims
against the subsidiary.
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<PAGE>
The covenants in the Indenture will not necessarily afford the holders of
the Debt Securities protection in the event of a decline in BNSF's credit
quality resulting from highly leveraged or other transactions involving BNSF.
General
BNSF may issue separate series of Debt Securities under the Indenture from
time to time without limitation on the aggregate principal amount. BNSF may
specify a maximum aggregate principal amount for the Debt Securities of any
series. (Section 301) Except as provided in Section 1008, the Debt Securities
will be unsecured obligations of BNSF and will rank on a parity with all other
unsecured and unsubordinated indebtedness of BNSF.
The applicable prospectus supplement will describe the following terms of
the Debt Securities:
(1) the price of the Debt Securities;
(2) the title of the Debt Securities;
(3) any limit on the aggregate principal amount of the particular series
of Debt Securities;
(4) the principal payment date or dates;
(5) the interest rate at which the Debt Securities will bear interest,
the date or dates from which interest will accrue, the Interest Payment
Dates and the associated Regular Record Date for payment of interest.
(6) the place where we will pay the principal and interest on the Debt
Securities;
(7) whether and how Debt Securities may be redeemed;
(8) whether BNSF is obligated to redeem or purchase such Debt Securities
pursuant to any sinking fund or similar arrangement and if so, the terms of
such arrangement;
(9) the denominations of the Debt Securities, if other than
denominations of $1,000;
(10) whether the amount of principal or interest on the Debt Securities
may be determined with reference to an index or pursuant to a formula and
how such amounts will be determined;
(11) any foreign currency in which we may pay the principal or interest
on the Debt Securities and the manner in which the principal amount thereof
would be translated into the currency of the United States of America for
any purpose, including for the purpose of determining the principal amount
deemed to be Outstanding at any time;
(12) any alternate currency in which the principal or interest on the
Debt Securities is to be payable and the periods and the terms for payment;
(13) how much of the principal amount of the Debt Securities will be
payable upon declaration of acceleration of the Maturity of the Debt
Securities if more or less than the entire amount;
(14) if the principal amount payable at the Stated Maturity of the Debt
Securities will not be known any time prior to the Stated Maturity, the
amount deemed to be such principal amount as of any such date for any
purpose (or, the manner in which such deemed principal amount is to be
determined), including the principal amount 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;
(15) the applicability of the provisions of the Indenture described
under "Defeasance and Covenant Defeasance--Defeasance and Discharge" or
"Defeasance and Covenant Defeasance--Defeasance of Certain Covenants";
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<PAGE>
(16) whether any Debt Securities will be issued in the form of one or
more Global Securities and, if so, the Depositaries for the Global
Securities, the form of any legend to be placed on any such Global
Securities in addition to or instead of the legend referred to under
"Global Securities" and, if different from those described under "Global
Securities", any circumstances under which the Global Securities may be
exchanged for registered Debt Securities, and how any transfer of the
Global Securities may be registered, in the names of Persons other than the
Depositary for the Global Securities or its nominee;
(17) whether the Debt Securities will be subject to optional interest
rate reset provisions;
(18) whether the Debt Securities will be subject to optional extensions
of maturity provisions;
(19) any addition to or change in the Events of Default applicable to
the Debt Securities and any change in the right of the Trustee or the
Holders to declare the principal amount of such Debt Securities due and
payable;
(20) any addition to or change in the covenants in the Indenture
applicable to the Debt Securities; and
(21) any other terms of the Debt Securities. (Section 301)
Debt 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 foreign currency
may be described in the applicable Prospectus Supplement.
Form, Exchange and Transfer
We will issue the Debt Securities of each series 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
of $1,000. (Section 302)
Holders may, at their option, but subject to the terms of the Indenture and
the limitations that apply to Global Securities, exchange their Debt
Securities 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 that apply to
Global Securities, Holders may exchange Debt Securities as provided above or
present for registration of transfer at the office of the Security Registrar
or at the office of any transfer agent designated by BNSF. No service charge
applies for any registration of transfer or exchange of Debt Securities, but
the Holder may have to pay any tax or other governmental charge associated
with registration of transfer or exchange. The transfer or exchange will be
made after the Security Registrar or such transfer agent, as the case may be,
is satisfied with the documents of title and identity of the person making the
request. BNSF has appointed the Trustee as Security Registrar. Any transfer
agent (in addition to the Security Registrar) initially designated by BNSF for
any Debt Securities will be named in the applicable prospectus supplement.
(Section 305) BNSF may at any time designate additional transfer agents or
cancel the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that BNSF will be required to
maintain a transfer agent in each Place of Payment for the Debt Securities of
each series. (Section 1002)
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<PAGE>
If the Debt Securities are to be redeemed in part, BNSF will not be required
to (1) issue or register the transfer of or exchange any Debt Security during a
period beginning 15 days before the day of mailing of a notice of redemption
and ending on the day of such mailing, or (2) register the transfer of or
exchange any Debt Security so selected for redemption, in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part.
(Section 305)
Global Securities
Any of the Debt Securities may be represented by one or more Global
Securities which will have an aggregate principal amount equal to that of the
Debt Securities they represent. 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 BNSF (DTC or such other depository is referred to in
this prospectus as the "Depositary") and registered in the name of the
Depositary or its nominee. The Global Security will bear a legend regarding the
restrictions on exchange and registration of transfer referred to below and any
other matters as may be provided for pursuant to the Indenture. Debt Securities
will not be issued in definitive form unless the prospectus supplement states
otherwise.
No Global Security may be exchanged for registered Debt Securities, and no
transfer of a Global Security may be registered in the name of any Person other
than the Depositary for such Global Security or any nominee of such Depositary
unless (1) the Depositary has notified BNSF that it is unwilling or unable to
continue as Depositary or has ceased to be qualified to act as Depository as
required by the Indenture, (2) an Event of Default has occurred and is
continuing with respect to the Debt Securities represented by the Global
Security, or (3) there exists any other circumstances described in the
applicable prospectus supplement. All Debt Securities issued in exchange for a
Global Security or any portion of a Global Security will be registered in such
names as the Depositary may direct. (Sections 204 and 305)
The Depository has advised BNSF as follows: DTC 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. 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. This eliminates the
need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depository. Access to DTC'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 Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable
to DTC and its Participants are on file with the SEC.
Upon the issuance by BNSF 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
7
<PAGE>
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 (1) will not be entitled to have
Debt Securities represented by such Global Security registered in their names,
(2) will not receive or be entitled to receive physical delivery of Debt
Securities in definitive form, and (3) will not be considered the owners or
holders of such Global Security or any Debt Securities represented by the
Global Security for any purpose 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 BNSF 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 BNSF, 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.
BNSF 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 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 BNSF, 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 BNSF 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.
8
<PAGE>
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that BNSF
believes to be reliable, but BNSF takes no responsibility for the accuracy
thereof.
Payment and Paying Agents
BNSF will pay interest on a Debt Security on any Interest Payment Date to
the Person in whose name the Debt Security is registered at the close of
business on the Regular Record Date for such interest. (Section 307)
BNSF will pay principal of and any premium and interest on the Debt
Securities at the office of the Paying Agent or Paying Agents as BNSF may
designate for such purpose from time to time. BNSF may pay interest by check
mailed to the address of the Person entitled to such payment as such address
appears in the Security Register. BNSF has designated the corporate trust
office of the Trustee in Chicago, Illinois as BNSF's sole Paying Agent for
payments with respect to Debt Securities. Any other Paying Agents initially
designated by BNSF for the Debt Securities will be named in the applicable
prospectus supplement. BNSF 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 BNSF must maintain a
Paying Agent in each Place of Payment for the Debt Securities of a particular
series. (Section 1002)
Any money paid by BNSF 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 BNSF at BNSF's request. (Section 1003)
Negative Pledge
In the Indenture, BNSF 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 of BNSF Railway, whether by
merger or otherwise) to secure any obligation of BNSF, 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
BNSF may not consolidate or merge with any Person, or convey, transfer or
lease its properties and assets substantially as an entirety to any Person,
and may not permit any Person to convey, transfer or lease its properties and
assets substantially as an entirety to BNSF, unless (1) 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
BNSF's obligations on the Debt Securities and under the Indenture and (2)
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:
(1) failure to pay principal of or any premium on any Debt Security of
that series when due;
(2) failure to pay any interest on any Debt Securities of that series
when due, continued for 30 days;
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<PAGE>
(3) failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series;
(4) failure to perform, or breach of, any other covenant or warranty of
BNSF 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
particular series other than that series), continued for 90 days after
written notice has been given to BNSF 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
(5) certain events involving bankruptcy, insolvency or reorganization.
(Section 501)
If an Event of Default (other than an Event of Default described in clause
(4) above that applies to all Outstanding Debt Securities) with respect to the
Debt Securities of any series at the time Outstanding 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 to be due and payable immediately. If an Event of
Default described in the preceding sentence applies to 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, may be declared to be due and payable
immediately as provided in the preceding sentence. If an Event of Default
described in clause (4) above that applies 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 of all the Debt Securities then Outstanding to be due and
payable immediately. If an Event of Default described in the preceding sentence
applies to any Debt Security that is an Original Issue Discount Security, such
portion of the principal amount of such Debt Security as may be specified in
the terms of such Debt Security may be declared to be due and payable
immediately as provided in the preceding sentence. 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".
In case an Event of Default occurs and is continuing, generally the Trustee
will be under no obligation to exercise any of its rights under the Indenture
at the request 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 under the Indenture, unless (1)
the Holder has previously given to the Trustee written notice of a continuing
Event of Default, (2) the Holders of at least 25% in aggregate principal amount
of the Outstanding Debt Securities of the relevant series have made written
request, and the Holder or Holders have offered reasonable indemnity, to the
Trustee to institute such proceeding, and (3) 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 the
relevant series a direction
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<PAGE>
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507) However, the 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)
BNSF will furnish annually a statement to the Trustee by certain of its
officers as to whether or not BNSF, 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 known defaults. (Section 1004)
Modification and Waiver
Modifications and amendments of the Indenture may be made by BNSF 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. No such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Debt Security,
(2) reduce the principal amount of, or any premium or interest on, any
Debt Security,
(3) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of Maturity,
(4) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security,
(5) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security,
(6) 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,
(7) 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
(8) 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)
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, (1) the principal
amount of an Original Issue Discount Security that will be deemed to be
Outstanding will be the amount of its principal that would be due and payable
as of such date upon acceleration of Maturity to such date, (2) 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 (3)
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
11
<PAGE>
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 (1)
or (2) above, of the amount described in such clause). Certain Debt Securities,
including those for which 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)
BNSF will generally 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 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 BNSF (or the
Trustee, if it sets 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, will 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 BNSF
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, BNSF has
delivered to the Trustee an Opinion of Counsel to the effect that BNSF 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, BNSF 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 (4) (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. BNSF, 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
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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. BNSF 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 BNSF exercises this option with respect to any Debt
Securities and such Debt Securities are declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust will 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, BNSF will 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 appear in the Security Register. (Sections 101 and 106)
Title
BNSF, the Trustee and any of their agents may treat the Person in whose name
a Debt Security is registered as the absolute owner of such Debt Security 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 BNSF.
PLAN OF DISTRIBUTION
BNSF may sell the Debt Securities (1) through an underwriter or
underwriters, (2) through dealers, (3) through agents, (4) directly to
purchasers, including affiliates of BNSF, or (5) through a combination of any
of these methods of sale. The applicable prospectus supplement will set forth
the terms of the offerings of any Debt Securities. The initial public offering
price and any discount or concessions allowed or reallowed to dealers may be
changed from time to time. The applicable prospectus supplement will set forth
the expected time of delivery of the Debt Securities for which this prospectus
is delivered.
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 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 BNSF 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.
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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 them on resale of the Debt
Securities may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.
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. BNSF 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.
BNSF may indemnify the Underwriters, agents or dealers who participate in
the distribution of Debt Securities against certain liabilities, including
liabilities under the Securities Act of 1933. BNSF may also contribute to
payments that such underwriters, dealers or agents or any of their controlling
persons may be required to make in respect of such liabilities. Underwriters,
agents or dealers may be customers of, engage in transactions with or perform
services for BNSF or subsidiaries of BNSF in the ordinary course of business.
If so indicated in the prospectus supplement, BNSF will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase Debt Securities from BNSF pursuant to delayed delivery contracts
providing for payment and delivery on the date stated in the prospectus
supplement. These 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 any of these contracts.
Offers to purchase Debt Securities may be solicited directly by BNSF and
sales of Debt Securities may be made by BNSF directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act of 1933 with respect to any resale of such Debt Securities.
The terms of any such sales will be described in the prospectus supplement
relating to such Debt Securities. Except as set forth in the applicable
prospectus supplement, no director, officer or employee of BNSF will solicit or
receive a commission in connection with direct sales by BNSF 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 offered by this prospectus will be
passed upon for BNSF by the law firm of Mayer, Brown & Platt, Chicago,
Illinois, and for the underwriters, dealers, or agents, if any, by the law firm
of Sullivan & Cromwell, New York, New York.
EXPERTS
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 incorporated
in this prospectus by reference to BNSF's Annual Report on Form 10-K for the
year ended December 31, 1997 have been incorporated in reliance on the reports
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of PricewaterhouseCoopers LLP as experts in auditing and accounting.
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