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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 20, 1999
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BURLINGTON NORTHERN SANTA FE CORPORATION
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(Exact name of Registrant as specified in charter)
Delaware
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(State or other jurisdiction of incorporation)
1-11535 41-1804964
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(Commission File Number) (IRS Employer Identification No.)
2650 Lou Menk Drive, Fort Worth, Texas 76131-2830
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(Address of principal executive offices) (Zip Code)
(817) 333-2000
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
The documents filed as exhibits to this Current Report on Form 8-K relate
to the Combination Agreement, dated as of December 18, 1999, by and among
Burlington Northern Santa Fe Corporation, a Delaware corporation ("BNSF"),
Canadian National Railway Company, a Canadian corporation ("CN"), North American
Railways, Inc., a Delaware corporation jointly owned by BNSF and CN ("NAR"), and
Western Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of
NAR.
ITEM 7. EXHIBITS
99.1 The Burlington Northern Santa Fe Railway Company Fact Sheet
99.2 Canadian National Railway Company Fact Sheet
99.3 Biography of Robert D. Krebs
99.4 Biography of Paul M. Tellier
99.5 Structure Chart
99.6 Analyst presentation
1
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BURLINGTON NORTHERN
SANTA FE CORPORATION
Date: December 22, 1999 By: /s/ Jeffrey R. Moreland
______________________________
Name: Jeffrey R. Moreland
Title: Senior Vice President-Law
and Chief of Staff
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Exhibit 99.1
The Burlington Northern Santa Fe Railway Company
Fact Sheet
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Franchise Facts
. BNSF operates one of the largest rail systems in North America with over
34,000 route miles of track in 28 states and two Canadian provinces.
. BNSF operates an average of 1,300 freight trains per day.
. BNSF serves all major ports on the West Coast and the Gulf of Mexico.
. BNSF has the rail industry's premier route between Southern California and
Chicago (2,214 miles to L.A.), the shortest route between the Pacific
Northwest and Chicago (2,218 miles to Seattle), and the only single-line
service route between Southern California and the Southeast.
. More than 85 percent of BNSF's Chicago to Southern California
transcontinental route is double tracked.
. BNSF has about 5,000 locomotives (3,800 of which are road units), and 98,000
rail cars.
. BNSF has one of the newest locomotive fleets in the industry, having
acquired 1,400 new locomotives since 1996 (more than 35 percent of the road
fleet). The new locomotives provide increased horsepower, greater fuel
efficiency and decreased emissions.
. BNSF's service performance has averaged more than 90 percent on time,
systemwide, year to date.
. BNSF has one of the largest computer systems in the world to control and
manage the 5,000 locomotives, 200,000 rail cars and 1,300 trains that travel
over its system 24-hours a day.
. BNSF employs approximately 43,000 people.
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Exhibit 99.2
Canadian National Railway Company
Fact Sheet
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Franchise Facts
. CN operates the largest rail network in Canada and the only transcontinental
network in North America. The company operates 16,000 route miles in nine
Canadian provinces and 15 US states.
. CN spans Canada and mid-America from the Atlantic and Pacific oceans to the
Gulf of Mexico, serving the ports of Vancouver, Montreal, Halifax, New
Orleans, and Mobile AL, and the key cities of Toronto, Buffalo, Chicago,
Detroit, Memphis, St. Louis and Jackson, MS.
. CN has the shortest route from the Atlantic coast to the US Midwest
through the St. Clair Tunnel between Sarnia, ON, and Port Huron, MI. The
tunnel handles double stack containers and the largest automotive carriers in
service.
. CN operates an average of 265 active scheduled freight trains per day on
the network.
. More than 75 per cent of CN's revenue comes from U.S. operations, Canada-U.S.
transborder and offshore traffic.
. CN operates 1,650 active locomotives and 66,000 active freight cars.
. With a strong focus on asset utilization, CN has effectively removed more
than 670 locomotives and 13,400 freight cars from its active fleet, giving
the company one of the newest fleets in the industry.
. CN has the lowest operating ratio among Class 1 railroads.
. CN uses its Service Reliability Strategy system to operate scheduled railroad
service across its entire network with a target for average on-time
performance of 90 per cent, system wide.
. CN employs approximately 23,500 people in Canada and the U.S.
<PAGE>
Exhibit 99.3
ROBERT D. KREBS
Chairman and Chief Executive Officer
Burlington Northern Santa Fe Corporation
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A native of Sacramento, California, Mr. Krebs began his career in the railroad
industry when he joined the Southern Pacific Company in June of 1966 on special
duty in the operating departments of Southern Pacific Transportation Company and
the St. Louis Southwestern Railway Company. He became: Vice President-Operations
of Southern Pacific Transportation Company in 1980; a Director of Southern
Pacific Transportation in 1981; President of Southern Pacific Transportation
Company and St. Louis Southwestern Railway Company in 1982; President and Chief
Operating Officer of Santa Fe Southern Pacific Corporation in 1983; President
and Chief Executive Officer of Santa Fe Southern Pacific in 1987; Chairman,
President and Chief Executive Officer on May 24, 1988; Chairman and Chief
Executive Officer of The Atchison, Topeka and Santa Fe Railway Company on June
1, 1989; and Chairman, President and Chief Executive Officer of the Railway on
June 4, 1991. On September 22, 1995, he was named President and Chief Executive
Officer of Burlington Northern Santa Fe Corporation. On April 17, 1997, he was
named Chairman, President and Chief Executive Officer of Burlington Northern
Santa Fe Corporation. On June 1, 1999, he was named Chairman and Chief Executive
Officer of Burlington Northern Santa Fe Corporation and Chairman and Chief
Executive Officer of The Burlington Northern and Santa Fe Railway Company.
He is a Director of Burlington Northern Santa Fe Corporation, The Burlington
Northern and Santa Fe Railway Company and Phelps Dodge Corporation.
Mr. Krebs is a member of the Board of the Fort Worth Symphony Orchestra
Association, the Board of Trustees of Texas Christian University and a Life
Trustee of The Northwestern Memorial Corporation.
He is Chairman of the Board of the Association of American Railroads.
Mr. Krebs earned a Bachelor of Arts degree at Stanford University in 1964.
He graduated with distinction and was elected to Phi Beta Kappa. He earned a
Masters in Business Administration at the Harvard School of Business in 1996.
He and his wife, Anne, have three children, Robert, Elisabeth and Duncan.
<PAGE>
Exhibit 99.4
PAUL M. TELLIER
President and Chief Executive Officer
Canadian National Railway Company
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Paul M. Tellier was appointed President and Chief Executive Officer and a
Director of the Canadian National Railway Company on October 1, 1992.
Mr. Tellier had been Clerk of the Privy Council and Secretary to the Cabinet of
the Government of Canada, the top public servant in the country, since August
1985.
He is a graduate of the universities of Ottawa and Oxford, England, and was
admitted to the Quebec Bar in 1963.
Mr. Tellier served in many positions in the public sector, including Deputy
Minister of Indian Affairs and Northern Development in 1979 and, in 1982, as
Deputy Minister of Energy, Mines and Resources.
Mr. Tellier is a Director of the following companies: Alcan Aluminium Limited,
BCE/Bell Canada, Bombardier Inc. and McCain Foods Limited. He is a former
Chairman of the Conference Board of Canada. As of May 1999, he is the Co-
Chairman of the Canada-Japan Business Council (CJBC).
Mr. Tellier was appointed Companion of the Order of Canada in 1993.
In 1997, Mr. Tellier was chosen by Railway Age as the Railroader of the Year.
In 1998, he was selected by his peers in Canada as the CEO of the Year.
<PAGE>
Exhibit 99.5
CN & BNSF COMBINATION
STRUCTURE
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Shareholders/1/
---------------------------
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Companion Companies
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North American Common Ownership Canadian National/2/
Railways, Inc./2/ Common Directors publicly traded
publicly traded Common Leadership
--------------------- --------------------------
|
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|
- -----------------------
Burlington Northern
Santa Fe/3/
- -----------------------
1. All shareholders will own a Canadian National voting share joined to
either CN stock exchangeable for North American Railways, Inc. common stock
or joined directly to North American Railways common stock. The CN voting
share joined to the CN exchangeable share will trade together as one
security. The North American Railways common stock joined to the CN voting
share will trade together as one security. Shareholders are subject to an
ownership limit whereby no single shareholder can own more than 15% of the
voting shares of North American Railways or CN.
2. Like CN, North American Railways will be headquartered in Montreal and
will operate in both of Canada's official languages. Size and membership of
North American Railways' Board will be identical to CN's Board and will
have a majority of Canadian residents.
3. Burlington Northern Santa Fe will be a wholly owned subsidiary of North
American Railways, Inc., a Delaware corporation, and will remain
headquartered in Fort Worth, TX.
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Exhibit 99.6
North American
Railways, Inc.
CN
[CN logo appears here]
BNSF
[BNSF logo appears here]
1
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Forward-looking Statement
This presentation may contain forward-looking statements within the meaning of
the United States Private Securities Reform Act of 1995 and other applicable
legislation, regarding future events and the future performance of CN that
involve risks and uncertainties that could cause actual results to differ
materially. This presentation may also contain forward-looking statements
regarding future events and the future performance of BNSF that involve risks
and uncertainties that could cause actual results to differ materially. Such
forward-looking statements may include, without limitation, statements that the
Company does not expect that claims, lawsuits, environmental costs, commitments,
contingent liabilities, labor negotiations or other matters will have a material
adverse effect on its consolidated financial condition, results of operations or
liquidity and other similar statements concerning matters that are not
historical facts, and projections or predictions as to the Company's financial
or operational results. Such forward-looking statements are or will be based on
information available at that time, are not guarantees of future performance and
involve known and unknown risks and uncertainties, and other factors which may
cause the outlook, the actual results or performance of the Company or the rail
industry to be materially different from any future results or performance
implied by such statements. Important factors that could cause such differences
include, but are not limited to, industry competition and legislative and/or
regulatory developments, changes in or compliance with environmental laws and
regulations, natural events such as severe weather, floods and earthquakes, the
effects of adverse general economic and business conditions, changes in fuel
prices, labor strikes, the impact of year 2000 systems problems, environmental
investigations or proceedings and other types of claims and litigation and other
risks detailed from time to time in reports filed by the Company with securities
regulators in Canada and the United States. Reference is made more specifically
to "Management Discussion and Analysis" in the Company's annual and quarterly
reports filed with Canadian securities regulators and in the Company's Form 40-F
filed with U.S. securities regulators. Reference is also made to the documents
BNSF files from time to time with the Securities and Exchange Commission
including BNSF's Form 10-K, Form 10-Q and Form 8-K reports, which contain
additional important factors that could cause the results of BNSF to differ from
its current expectations and the forward-looking statements contained in this
presentation.
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Overview
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Feature Description
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The Business . North American Railways, Inc. is formed by
Combination the combination of BNSF and CN
. Both BNSF and CN will maintain their current
regional operating and marketing focus
. IT, Purchasing, and selected marketing
functions will be shared
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Structure . 100% equity
. 1.05 BNSF share = 1.00 CN share
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Regulatory . Subject to STB approval
. Complies with both the CN Commercialization
Act and CBCA
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Tax Implications . Tax efficient transaction for U.S. and Canadian
shareholders
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3
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Corporate Backgrounds
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- ------------------------ ------------------------- -------------------------
CN BNSF Combined BNSF-CN
- ------------------------ ------------------------- -------------------------
. Market cap*: U.S.$6.0B . Market cap*: U.S.$12.9B . Market cap*: U.S.$18.9B
. Route Miles: 16,000 . Route Miles: 34,000 . Route Miles: 50,000
. Employees: 23,500 . Employees: 43,500 . Employees: 67,000
- ------------------------ ------------------------- -------------------------
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Combination creates largest North American railroad
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Note: *As of the closing market on December 17, 1999
4
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
North American Railways, Inc.
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[MAP OF UNITED STATES SHOWING ROUTES OF NORTH AMERICAN RAILWAYS, INC.]
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Complementary networks with
superior reach and strong franchise
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5
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Traffic Mix
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CN
--
1998 Revenue -- U.S.$3.5B (Cdn $5.2B)
Merchandise 50%
Grain 16%
Intermodal 16%
Coal 10%
Automotive 8%
BNSF
----
1998 Revenue -- U.S.$8.9B (Cdn $13.2B)
Intermodal 27%
Merchandise 29%
Coal 25%
Grain 14%
Automotive 5%
BNSF-CN
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1998 Pro Forma Revenue
U.S.$12.5B (Cdn $18.5B)
Bulk 36%
Coal 21%
Grain 15%
Merchandise 35%
Intermodal/Auto 29%
Intermodal 24%
Automotive 5%
Well-balanced portfolio
6
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Strategic Rationale
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North American Economies
Integrating
Shippers Demanding Integrated
North American Service
Seamless Service Best Way To Address
Interchange Issues
Trucking Industry Already Fully
Integrated
BNSF-CN Low Risk
End-To-End Combination
Complementary Strengths -- CN
Originations Align Well With BNSF
Terminations
7
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Customer Benefits
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. New network efficiencies
. More direct routes
. Faster transit times
. By-pass bottlenecks
. Easier to do business with
. Greater port access
. Increased equipment availability
. Commercial benefits
. Links production and consumption regions
. Access to new markets
8
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Revenue Synergies
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Automotive
. Single-line service between plants in
Michigan and Southern Ontario to U.S.
Southwest, West Coast and Mexico
Chemicals
. Connects Alberta, Gulf Coast and
Sarnia production regions
. Single-line service to U.S. Midwest and
West Coast
Intermodal
. Single-line service between Eastern
Canada, U.S. Midwest and U.S.
Southwest, West Coast
9
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Cost Synergies
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- ---------------- ---------------------------------------
Locomotive and ------ . Asset efficiencies
Car Fleet . Best Practices
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- ---------------- ----------------------------------------
Purchasing ------ . Joint procurement
. Pricing leverage
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- ---------------- ----------------------------------------
G&A ------ . Information technology and back shop
consolidation
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- ---------------- ----------------------------------------
Transportation ------ . Complementary network
. Best Practices
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10
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Shareholder Value
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EBIT Impact
(U.S.$M)
<TABLE>
<CAPTION>
<S> <C>
Year 1.....$150-200
Year 2.....$350-400
Year 3.....$500-600
</TABLE>
Approximately Half from Revenue and Half from Efficiencies
Accretion
. Accretive from year one, even with purchase accounting
. Comfortably double-digit by third year of operations
. Scope for further accretion possible through share buyback
. Significant free cash-flow generation
11
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Management Team
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. Rob Krebs - Chairman
. Paul Tellier - President and CEO
. Hunter Harrison - COO
. Tom Hund - CFO
. Matt Rose - BNSF President and CEO
---------------------
Implementation Team
---------------------
12
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Key Implementation Initiatives
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- ------------- -----------------------------------------------
Information ------ . Integrate operating systems and IT function
Systems . Develop joint e-commerce initiative
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- ------------- -----------------------------------------------
Purchasing ------ . Establish joint procurement system
- ------------- -----------------------------------------------
- ------------- -----------------------------------------------
Operations ------ . Adopt precision scheduling
. Utilize total car and locomotive fleets
- ------------- -----------------------------------------------
----------------------------------
Growth, scale and best practices
----------------------------------
13
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Low Risks
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. Key Factors
. End-to-end combination
. Same operating systems
. Best merger records
. Strong management team
. Comprehensive integration planning
. Structure preserves each company's culture
---------------------------------
A different kind of combination
---------------------------------
14
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
Roadmap To Completion
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- -----------------------------------------------------------
Key Activities Timeframe
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Execution And Announcement . December 20
- -----------------------------------------------------------
STB Pre-Notification . December 20
- -----------------------------------------------------------
STB Filing Application . Spring 2000
- -----------------------------------------------------------
Shareholder Votes . Spring 2000
- -----------------------------------------------------------
STB Approval Process . Prior mergers suggest up to
sixteen months from date of
announcement
- -----------------------------------------------------------
Closing . Mid 2001
- -----------------------------------------------------------
15
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CN BNSF
[CN logo appears here] [BNSF logo appears here]
BNSF-CN Combination
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. Meets shippers' North American service needs
. Has limited integration risk
. End-to-end combination
. Common operating systems
. Maintains local customer and national account focus
. Generates significant revenue and efficiency synergies
-------------------------------
Strong earnings and cash flow
will drive shareholder value
-------------------------------
16
