-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WBL23at8GOyWAQkKp04KrWdokZ1/Xky/mo/hEY3oedc+dcqt2L7HFptprUTXx1Jo jHDCBVWCpu0TdMwgiJcorQ== 0000930661-00-000257.txt : 20000214 0000930661-00-000257.hdr.sgml : 20000214 ACCESSION NUMBER: 0000930661-00-000257 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000211 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CANADIAN NATIONAL RAILWAY CO CENTRAL INDEX KEY: 0000016868 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 980018609 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: SEC FILE NUMBER: 001-02413 FILM NUMBER: 536828 BUSINESS ADDRESS: STREET 1: 935 DE LA GAUCHETIERE ST W CITY: MONTREAL QUEBEC CANA STATE: A8 ZIP: 00000 BUSINESS PHONE: 5143996569 MAIL ADDRESS: STREET 1: 935 DE LA GAUCHETIERE ST WEST STREET 2: QUEBEC CANADA CITY: MONTREAL STATE: A8 ZIP: 00000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BURLINGTON NORTHERN SANTA FE CORP CENTRAL INDEX KEY: 0000934612 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 411804964 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 2650 LOU MENK DR STREET 2: 777 MAIN ST CITY: FT WORTH STATE: TX ZIP: 76131 BUSINESS PHONE: 8173332000 MAIL ADDRESS: STREET 1: 3800 CONTINENTAL PLAZA STREET 2: 777 MAIN STREET CITY: FORT WORTH STATE: TX ZIP: 76102-5384 FORMER COMPANY: FORMER CONFORMED NAME: BURLINGTON NORTHERN SANTE FE CORP DATE OF NAME CHANGE: 19950913 FORMER COMPANY: FORMER CONFORMED NAME: BNSF CORP DATE OF NAME CHANGE: 19941223 425 1 SHAREHOLDER LETTER Filing under Rule 425 of the Securities Act of 1933 - --------------------------------------------------- Filer: Burlington Northern Santa Fe Corporation Companies that are the subject of the filing: Canadian National Railway Company North American Railways, Inc. Registration Statement No. 333-94397 February 11, 2000 Dear Fellow Shareholder: About two weeks ago, we announced our fourth-quarter results. I want to share with you our solid 1999 performance and review the significant strides we have made since 1994 to position Burlington Northern Santa Fe for even stronger growth and profitability in the future. A copy of the news release is attached for your information, but let me cite significant accomplishments for 1999. BNSF's operating ratio, the key measure of efficiency, improved to 75.4 percent. We continue to focus on improving service levels - and in 1999 BNSF achieved a record 91 percent system-wide on-time performance, the best in the industry, and a dramatic improvement from 82 percent in 1998. We generated free cash flow after dividends paid for the first time as a combined company. Throughout the year, BNSF repurchased 22.1 million shares for a total of 27 million shares repurchased since the initial 30 million-share program, was authorized in 1997. The Board of Directors subsequently approved an additional 30 million shares for repurchase. The successes of 1999 reflect a five-year journey of successful customer focus, effective integration, revenue growth and earnings performance for BNSF. Since the merger of Burlington Northern Inc. and Santa Fe Pacific Corp. was announced in 1994, we have accomplished a great deal, including: . Improving our operating ratio from 84.4 to 75.4 percent, adding about $800 million to operating income on $9.1 billion in 1999 revenues . Increasing revenues by over $1 billion -- triple the growth rate of other United States railroad competitors . Lowering operating expense per gross ton mile by about 20 percent . Reducing the ratio of freight loss and damage to freight revenue by 30 percent . Growing earnings per share at a 20 percent compounded rate, reaching a record $2.43 in 1999. We are proud of our achievements over the past five years. Our next great challenge is to continue to grow revenues and to meet the increasing demands from shippers for single-line service and connections to major markets in North America. In December 1999, we announced plans to combine BNSF and Canadian National (CN), North America's two most efficient and financially strong railroads. The end- to-end combination we envision will create an efficient, integrated network with new single-line traffic routes offering shippers expanded capabilities and even better service. We are convinced this is the right strategic move for BNSF and CN - as well as for our customers and employees - because we anticipate that it would: . Create the clear leader in the railroad industry in North America . Join two compatible companies, each with a proven record of successfully implementing previous consolidations . Cut transit times by establishing a single-line network between Eastern Canada and the entire Pacific Coast through Detroit and to the ports along the Gulf of Mexico . Create new rail and intermodal alternatives to trucking for many customers . Increase operating efficiencies through improved asset utilization and service scheduling . Generate annual revenue and cost synergies of $500 million to $600 million in operating income to be realized about evenly over the first three years after closing. If approved, the combination would create a truly North American railroad for the new millennium. If you have any questions, I encourage you to call our shareholder hotline at Georgeson Shareholder Communications at 1-800-223-2064 from 8:30 a.m. to 8:00 p.m. Eastern Time, Monday through Friday. I am enthusiastic about the future of your company and the steps we are taking to create new opportunities for shippers, customers, employees and greater value for our shareholders. Sincerely, Robert D. Krebs Chairman and Chief Executive Officer Any statements in this letter concerning future economic performance or business outlook, predictions or expectations of financial or operational results or synergies, and other expressions as to matters which are not historical facts, are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected in those statements. Important factors that could cause such differences include, but are not limited to, general economic downturns, which may limit demand and pricing; changes in fuel prices; labor matters and stoppages, which may affect the costs and feasibility of operations; competition and commodity concentrations, which may affect traffic and pricing levels; severe weather conditions and natural occurrences such as floods and earthquakes; regulatory and political developments, including the process of, or conditions imposed in connection with, obtaining regulatory and Canadian court approvals for the proposed combination with Canadian National Railway Company (CN); and the ability of the combined companies to realize the synergies expected as a result of the proposed combination. The Company assumes no obligation to update forward-looking information to reflect actual results or changed assumptions or other factors. We refer you to the documents that BNSF files from time to time with the U.S. Securities and Exchange Commission (SEC), such as reports on Form 10-K, Form 10-Q, and Form 8-K, and the registration statement for the securities to be issued in the proposed combination that has been filed by North American Railways, Inc. and CN referred to in the following paragraph (and in particular to "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in the registration statement), which contain additional important factors that could cause results to differ from current expectations and the forward-looking statements contained in this letter. North American Railways, Inc. and CN have filed a registration statement on Form F-4/S-4 with the SEC in connection with the securities to be issued in the combination. The registration statement has not been declared effective. This filing also includes the preliminary proxy statement for the shareholders meetings to be held for approval of the combination. Investors should read this document, and other documents filed with the SEC by BNSF, CN and North American Railways, Inc. about the combination, because they contain important information. These documents may be obtained for free at the SEC's Web site, www.sec.gov. Other filings made by BNSF on Forms 10-K, 10-Q and 8-K may be obtained for free from the BNSF Corporate Secretary's office at (817) 352-6856. Other filings made by CN on Forms 40-F and 6-K may be obtained for free from the CN Corporate Secretary's office at (514) 399-6569. For information concerning participants in BNSF's solicitation of proxies for approval of the combination, see "Certain Information Concerning Participants" filed by BNSF on Schedule 14A under SEC Rule 14a-12. [BNSF LOGO APPEARS HERE] NEWS Contact: Richard Russack FOR IMMEDIATE RELEASE (817) 352-6425 Burlington Northern Santa Fe Reports Record Fourth Quarter Results * Earnings of $0.69 per diluted share -- up 10 percent from fourth quarter 1998 earnings of $0.63 per diluted share. * Revenues of $2.37 billion, an increase of $76 million or 3 percent over fourth quarter 1998 revenues of $2.29 billion. * Fourth quarter operating income of $603 million -- $35 million or 6 percent higher than fourth quarter 1998 operating income of $568 million. * Operating ratio for the fourth quarter 1999 improved to 74.6 percent compared with 75.2 percent in 1998. * Full-year adjusted earnings of $2.43 per diluted share -- an increase of 3 percent over full year 1998 adjusted earnings of $2.36 per diluted share. * Revenues of $9.1 billion, an increase of $159 million or 2 percent from full-year 1998 revenues of $8.94 billion. * Full-year adjusted operating income of $2.24 billion improved 4 percent over 1998 operating income of $2.16 billion. * Full-year adjusted operating ratio lowered to 75.4 percent compared with 75.9 percent in 1998. FORT WORTH, Texas, January 25, 2000 - - Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) today reported record fourth quarter 1999 earnings of $0.69 per share on a diluted basis, a 10 percent increase from fourth quarter 1998 earnings of $0.63 per share. Net income increased $19 million to $315 million from fourth quarter 1998 net income of $296 million. BNSF 4Q Earnings / Page Two "Increases in our intermodal, carload, automotive and agricultural business units contributed to our record fourth quarter revenues, and the continued impact of efficiency initiatives implemented earlier in the year kept our expenses in line and strengthened our performance compared with the fourth quarter of 1998," said Robert D. Krebs, BNSF Chairman and Chief Executive Officer. Revenues of $2.37 billion for the 1999 fourth quarter were $76 million higher than the 1998 fourth quarter. Intermodal revenues increased $42 million, or 7 percent, to $679 million. Carload revenues reached $645 million, an increase of $17 million, or 3 percent, from last year. Automotive revenues improved $13 million, or 12 percent, to $124 million, primarily due to growth in vehicle shipments. Agricultural commodity revenues increased $7 million, or 2 percent, to $361 million, primarily due to stronger Mexico and Pacific Northwest soybean exports. Coal revenues declined $6 million, or 1 percent, to $554 million. Operating expenses of $1.77 billion were $41 million, or 2 percent, higher than 1998 despite an increase in volume of 4 percent. Higher purchased services, depreciation, fuel, and other expenses were partially offset by lower compensation and benefits and equipment rents expenses. Operating income was $603 million for the fourth quarter 1999 compared with $568 million for the same period in 1998. The operating ratio improved to 74.6 percent for the fourth quarter 1999 compared with an operating ratio of 75.2 percent for 1998. Common Stock Repurchases During the fourth quarter, BNSF repurchased 4.4 million shares at an average price of $28.66 per share, bringing total repurchases under BNSF's 30 million share-repurchase program to 27.1 million shares through 1999 at an average price of $31.02 per share since the program was approved in July 1997. In 1999, BNSF repurchased a total of 22.1 million shares. In December 1999, the Board of Directors authorized the Company to repurchase an additional 30 million shares. BNSF 4Q Earnings / Page Three Full Year 1999 Record Results "Continued growth in revenue and cost containment led to ongoing improvements in our 1999 earnings on an adjusted basis. During 1999, we reduced cash capital expenditures $359 million from 1998 spending levels to $1.79 billion, and for the first time as a combined company, we generated free cash flow (cash from operations less capital expenditures, other investments and dividends paid) of approximately $260 million for full year 1999," said Krebs. "We expect free cash flow to rise considerably in 2000," Krebs pointed out. BNSF's adjusted earnings for the year ended December 31, 1999, were $2.43 per diluted share, a 3 percent increase from 1998 adjusted earnings of $2.36 per diluted share. Adjusted net income increased $10 million to $1.13 billion from 1998 adjusted net income of $1.12 billion. Including second and third quarter special items, BNSF reported earnings of $2.44 per diluted share for the year ended December 31, 1999. Revenues for the year were $9.1 billion, up $159 million or 2 percent over 1998 revenues. Adjusted operating expenses of $6.86 billion for 1999 increased by $81 million or 1 percent. Adjusted operating income was $2.24 billion for 1999 compared with operating income of $2.16 billion for 1998. The adjusted operating ratio improved to 75.4 percent for 1999 compared with an operating ratio of 75.9 percent a year earlier. Proposed Combination with Canadian National Railway Company (CN) On December 20, 1999, BNSF and CN announced that their boards of directors had approved a definitive agreement to combine the businesses. On January 11, 2000, a registration statement was filed with the United States Securities and Exchange Commission related to securities that will be issued in connection with the proposed business combination. The BNSF/CN combination will create an end-to-end North American railroad that will offer shippers substantially expanded single-line service over a 50,000 route-mile network across Canada and the central and western United States. Combined, BNSF and CN would employ approximately 67,000 people and have combined annual revenues of approximately $12.5 billion. Benefits of the combination include new single-line traffic routes, high-quality, efficient and reliable service, and low integration risk. BNSF 4Q Earnings / Page Four "Canadian National and Burlington Northern Santa Fe are two of the most efficient and financially-strong railroads in North America today, each with industry-leading service plans and a proven track record of implementing previous consolidations. The combination is expected to push the frontier of efficiency in the industry even further. We anticipate service and transit-time improvements, asset utilization efficiencies, and cost savings in information technology, purchasing and other shared services. The prospect of `best practices' transfer between the two railroads is significant," said Krebs. The combination is subject to, among other things, approval by the shareholders of both companies, as well as approvals by the Quebec Superior Court and the United States Surface Transportation Board. The companies expect that all required regulatory approvals can be obtained and the transaction completed by mid-2001. Through The Burlington Northern and Santa Fe Railway Company, BNSF owns one of the largest railroad networks in the North America, with approximately 33,500 route miles covering 28 states and two Canadian provinces. Consolidated financial statements follow. Any statements in this press release concerning the Company's future economic performance or business outlook, predictions or expectations of financial or operational results, and other expressions as to matters which are not historical facts, are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected in those statements. Important factors that could cause such differences include, but are not limited to, general economic downturns, which may limit demand and pricing; labor matters and stoppages, which may affect the costs and feasibility of operations; competition and commodity concentrations, which may affect traffic and pricing levels; severe weather conditions and natural occurrences such as floods and earthquakes; regulatory and political developments, including the process of, or conditions imposed in connection with, obtaining regulatory approvals for the proposed combination; and the Company's ability to realize the synergies expected as a result of the proposed combination. The Company assumes no obligation to update forward-looking information to reflect actual results or changed assumptions or other factors. Burlington Northern Santa Fe Corporation Consolidated Statement of Income (Unaudited. In millions, except per share data)
Three Months Ended Year Ended December 31, December 31, ------------------------- --------------------------- Adjusted (a) 1999 1998 1999 1998 - ------------ --------- --------- ---------- ---------- Revenues $ 2,370 $ 2,294 $ 9,100 $ 8,941 --------- --------- ---------- ---------- Operating Expenses Compensation and benefits 702 725 2,772 2,812 Purchased services 242 228 946 894 Depreciation and amortization 229 214 897 832 Equipment rents 188 207 752 804 Fuel 196 182 700 721 Materials and other 210 170 797 720 --------- --------- ---------- ---------- Total Operating Expenses 1,767 1,726 6,864 6,783 --------- --------- ---------- ---------- Operating Income 603 568 2,236 2,158 Interest Expense 96 90 387 354 Other Income (Expense) - Net (3) (9) (36) (22) --------- --------- ---------- ---------- Income Before Income Taxes 504 469 1,813 1,782 Income Tax Expense 189 173 680 659 --------- --------- ---------- ---------- Net Income $ 315 $ 296 $ 1,133 $ 1,123 ========= ========= ========== ========== Basic Earnings Per Share $ 0.69 $ 0.63 $ 2.45 $ 2.39 ========= ========= ========== ========== Diluted Earnings Per Share $ 0.69 $ 0.63 $ 2.43 $ 2.36 ========= ========= ========== ========== Unadjusted Reported Earnings - ---------------------------- Net Income $ 315 $ 296 $ 1,137 $ 1,155 ========= ========= ========== ========== Basic Earnings Per Share $ 0.69 $ 0.63 $ 2.46 $ 2.45 ========= ========= ========== ========== Diluted Earnings Per Share $ 0.69 $ 0.63 $ 2.44 $ 2.43 ========= ========= ========== ========== Average Shares Outstanding Basic 455.2 469.3 463.2 470.5 ========= ========= ========== ========== Diluted 456.8 474.2 466.8 476.2 ========= ========= ========== ==========
(a) Year ended December 31, 1999 adjusted to exclude second quarter special items consisting of adjustments for reorganization costs and environmental expenses, partially offset by a credit for the reversal of liabilities associated with the consolidation of certain clerical work-forces and adjusted to exclude a third quarter gain in connection with prior period line sales that was partially offset by costs related to those line sales. Year ended December 31, 1998 adjusted to exclude other income attributable to the gain on pipeline partnership sale. Burlington Northern Santa Fe Corporation (Unaudited. In millions) Condensed Consolidated Balance Sheet
December 31, December 31, 1999 1998 -------------- -------------- Assets Cash and cash equivalents $ 22 $ 25 Other current assets 1,044 1,137 -------------- -------------- Total current assets 1,066 1,162 Properties and other assets 22,634 21,484 -------------- -------------- Total Assets $ 23,700 $ 22,646 ============== ============== Liabilities and Stockholders' Equity Long-term debt and commercial paper due within one year $ 158 $ 268 Other current liabilities 1,917 1,885 Long-term debt and commercial paper 5,655 5,188 Deferred income taxes 6,097 5,662 Other liabilities 1,701 1,859 Stockholders' equity 8,172 7,784 -------------- -------------- Total Liabilities and Stockholders' Equity $ 23,700 $ 22,646 ============== ==============
Condensed Consolidated Cash Flow Information
Year Ended Year Ended December 31, December 31, 1999 1998 ------------ ------------ Cash provided by operating activities $ 2,424 $ 2,218 Cash used for capital expenditures (1,788) (2,147) Other investing activities (152) (271) Dividends paid (224) (197) ----------- ----------- Free Cash Flow after Dividends Paid 260 (397) Purchase of BNSF common stock (688) (153) Other financing activities 62 104 ------------ ----------- Net Debt Incurred $ (366) $ (446) ============ ===========
Burlington Northern Santa Fe Corporation Supplemental Data (Unaudited)
Three Months Ended Year Ended December 31, December 31, ------------------------------ ------------------------------ 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Revenues (In millions) Carload $ 645 $ 628 $ 2,553 $ 2,588 Intermodal 679 637 2,518 2,437 Coal 554 560 2,227 2,239 Agricultural Commodities 361 354 1,329 1,271 Automotive 124 111 443 390 ------------ ------------ ------------ ------------ Total Freight Revenues 2,363 2,290 9,070 8,925 Other Revenues 7 4 30 16 ------------ ------------ ------------ ------------ Total Revenues $ 2,370 $ 2,294 $ 9,100 $ 8,941 ============ ============ ============ ============ Adjusted operating ratio 74.6% 75.2% 75.4% 75.9% Revenue ton miles (billions) 128.9 121.7 487.8 469.0 Freight revenue per thousand revenue ton miles $ 18.33 $ 18.82 $ 18.59 $ 19.03 Cars/Units (thousands) 2,116 2,033 8,064 7,884 Average freight revenue per car/unit $ 1,117 $ 1,126 $ 1,125 $ 1,132 Employees (average) 41,935 43,555 42,654 44,349
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