-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ar0uJJ+/JLqHgm1rN0oDju7GFegJz/W0CPvnaVn2G5sR/FmTreLy2/ml6doL4J4w ns5g62pi6+osMbiGqlpYyQ== 0000950130-95-000066.txt : 19950509 0000950130-95-000066.hdr.sgml : 19950508 ACCESSION NUMBER: 0000950130-95-000066 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19950117 SROS: MSE SROS: NYSE SROS: PSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SANTA FE PACIFIC CORP CENTRAL INDEX KEY: 0000732639 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 363258709 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-38751 FILM NUMBER: 95501440 BUSINESS ADDRESS: STREET 1: 1700 EAST GOLF RD CITY: SCHAUMBURG STATE: IL ZIP: 60173-5860 BUSINESS PHONE: 7089956000 FORMER COMPANY: FORMER CONFORMED NAME: SANTA FE SOUTHERN PACIFIC CORP DATE OF NAME CHANGE: 19890516 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SANTA FE PACIFIC CORP CENTRAL INDEX KEY: 0000732639 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 363258709 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 1700 EAST GOLF RD CITY: SCHAUMBURG STATE: IL ZIP: 60173-5860 BUSINESS PHONE: 7089956000 FORMER COMPANY: FORMER CONFORMED NAME: SANTA FE SOUTHERN PACIFIC CORP DATE OF NAME CHANGE: 19890516 SC 14D9/A 1 AMENDMENT NO. 8 TO SCHEDULE 14D-9 ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- SCHEDULE 14D-9/A Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 AMENDMENT NO. 8 ----------------- SANTA FE PACIFIC CORPORATION (Name of Subject Company) SANTA FE PACIFIC CORPORATION (Name of Person(s) Filing Statement) Common Stock, par value $1.00 per share (Title of Class of Securities) Common Stock - 802183 10 3 (CUSIP Number of Class of Securities) ------------------ Jeffrey R. Moreland Vice President - Law and General Counsel Santa Fe Pacific Corporation 1700 East Golf Road Schaumburg, Illinois 60173-5860 (708) 995-6000 (Name, address and telephone number of person authorized to receive notices and communications on behalf of the person(s) filing statement) ------------------ Copy to: Scott J. Davis Mayer, Brown & Platt 190 South LaSalle Street Chicago,Illinois 60603-3441 (312) 782-0600 ============================================================================== Statement in Response to Union Pacific Offer -------------------------------------------- Santa Fe Pacific Corporation (the "Company") hereby amends and supplements its statement on Schedule 14D-9 (the "Original Schedule 14D-9") filed with the Securities and Exchange Commission (the "Commission") on November 22, 1994, as amended by Amendments No. 1 through 7 thereto. Unless otherwise indicated herein, each capitalized term used but not defined herein shall have the meaning assigned to such term in the Original Schedule 14D-9. Item 4. THE SOLICITATION OR RECOMMENDATION The information set forth in the "Recommendation of SFP Board of Directors" section of the Supplement dated January 13, 1995 to the Offer to Purchase dated December 23, 1994, which is attached hereto as Exhibit 13, is incorporated herein by reference. Item 9. Material to be Filed as Exhibits. EXHIBIT INDEX Exhibit No. Description ----------- ----------- Exhibit 13 - Supplement dated January 13, 1995 to the Offer to Purchase dated December 23, 1994. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct. January 13, 1995 /s/ Jeffrey R. Moreland - ---------------- ----------------------- (Date) Jeffrey R. Moreland Vice President - Law and General Counsel EX-99.13 2 SUPPLEMENTAL OFFER TO PURCHASE EXHIBIT 99.13 SUPPLEMENT TO THE OFFER TO PURCHASE DATED DECEMBER 23, 1994 IMPORTANT NOTICE TO STOCKHOLDERS OF SANTA FE PACIFIC CORPORATION BURLINGTON NORTHERN INC. AND SANTA FE PACIFIC CORPORATION HEREBY SUPPLEMENT THE OFFER TO PURCHASE FOR CASH UP TO 63,000,000 SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS) OF SANTA FE PACIFIC CORPORATION AT $20.00 NET PER SHARE THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 8, 1995, UNLESS FURTHER EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT LEAST 63,000,000 SHARES OF SANTA FE PACIFIC CORPORATION COMMON STOCK BEING VALIDLY TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION"), (2) SANTA FE PACIFIC CORPORATION ("SANTA FE") AND BURLINGTON NORTHERN INC. ("BURLINGTON NORTHERN") HAVING OBTAINED SUFFICIENT FINANCING ON TERMS SATISFACTORY TO THEM TO PURCHASE 63,000,000 SHARES PURSUANT TO THE OFFER AND (3) APPROVAL OF THE MERGER REFERRED TO BELOW BY THE STOCKHOLDERS OF SANTA FE AND BURLINGTON NORTHERN. SANTA FE AND BURLINGTON NORTHERN DO NOT INTEND TO WAIVE THE MINIMUM CONDITION. THE OFFER IS NOT CONDITIONED ON RECEIPT OF INTERSTATE COMMERCE COMMISSION APPROVAL OF THE MERGER. SEE "THE TENDER OFFER-- 14. CONDITIONS OF THE OFFER" OF THE OFFER TO PURCHASE DATED DECEMBER 23, 1994. THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER BETWEEN BURLINGTON NORTHERN AND SANTA FE, AS AMENDED, PURSUANT TO WHICH SANTA FE WILL MERGE WITH BURLINGTON NORTHERN (THE "MERGER"). THE BOARD OF DIRECTORS OF SANTA FE HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THOSE SANTA FE STOCKHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES. THE OFFER IS BEING EFFECTED TO FACILITATE THE MERGER. SEE "RECOMMENDATION OF SFP BOARD OF DIRECTORS." ---------------- Questions and requests for assistance or additional copies of the Offer to Purchase, this Supplement, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to any of the Information Agents or either of the Dealer Managers at their respective addresses and telephone numbers set forth on the back cover of this Supplement. Additional copies of the Offer to Purchase, this Supplement, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from brokers, dealers, commercial banks or trust companies. ---------------- The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. LAZARD FRERES & CO. ---------------- The date of this Supplement is January 13, 1995. To the Holders of Common Stock of Santa Fe Pacific Corporation: INTRODUCTION The following information supplements and amends the Offer to Purchase dated December 23, 1994 (the "Offer to Purchase") of Burlington Northern Inc., a Delaware corporation ("BNI"), and Santa Fe Pacific Corporation, a Delaware corporation ("SFP" and, together with BNI, the "Purchasers"), pursuant to which the Purchasers are severally offering to purchase up to 63,000,000 shares in the aggregate of the outstanding shares of common stock, par value $1.00 per share, of SFP (the "SFP Common Stock," including the associated preferred share purchase rights), upon the terms and subject to the conditions set forth in the Offer to Purchase, as amended by this Supplement, and in the related Letter of Transmittal (which collectively constitute the "Offer"). The Purchasers have supplemented the Offer with the information contained herein. The Offer, proration period and related withdrawal rights were originally scheduled to expire at 12:00 Midnight, New York City time, on January 30, 1995. However, the Purchasers have extended the Offer, and the Offer, proration period and withdrawal rights will now expire at 12:00 Midnight, New York City time, on Wednesday, February 8, 1995, unless further extended. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT LEAST 63,000,000 SHARES OF SFP COMMON STOCK BEING VALIDLY TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION"), (2) SFP AND BNI HAVING OBTAINED SUFFICIENT FINANCING ON TERMS SATISFACTORY TO THEM TO PURCHASE 63,000,000 SHARES PURSUANT TO THE OFFER AND (3) APPROVAL OF THE MERGER REFERRED TO BELOW BY THE STOCKHOLDERS OF SFP AND BNI. THE PURCHASERS DO NOT INTEND TO WAIVE THE MINIMUM CONDITION. THE OFFER IS NOT CONDITIONED ON INTERSTATE COMMERCE COMMISSION ("ICC") APPROVAL OF THE MERGER. SEE "THE TENDER OFFER--14. CONDITIONS OF THE OFFER" OF THE OFFER TO PURCHASE. THE BOARD OF DIRECTORS OF SFP HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THOSE SFP STOCKHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES OF SFP COMMON STOCK ACCEPT THE OFFER. SEE "RECOMMENDATION OF SFP BOARD OF DIRECTORS." The Offer is being made pursuant to an Agreement and Plan of Merger dated as of June 29, 1994, as amended by the Amendment thereto dated as of October 26, 1994 and Amendment No. 2 thereto dated as of December 18, 1994 (as so amended, the "Merger Agreement") between SFP and BNI. Pursuant to the Merger Agreement, and on the terms and subject to the conditions set forth therein, SFP will merge with BNI, with BNI to be the surviving corporation in such Merger, and each outstanding share of SFP Common Stock will be converted into the right to receive 0.40 shares of BNI common stock, no par value per share (the "BNI Common Stock"). See "The Tender Offer--10. Purpose of the Offer; The Merger Agreement" of the Offer to Purchase. A copy of the Merger Agreement is attached as Appendix A to the Offer to Purchase. As of January 12, 1995, 0.40 of a share of BNI Common Stock had a value of $20.55, based on the closing market price of BNI Common Stock as reported in The Wall Street Journal. As of December 31, 1994, there were outstanding 188,301,537 shares of SFP Common Stock and employee stock options ("Options") to purchase 14,470,071 shares of SFP Common Stock. The purpose of the Offer is to acquire shares of SFP Common Stock and to facilitate the Merger, which the Board of Directors of SFP believes is in the best interest of SFP stockholders. The Offer also provides an opportunity to existing stockholders of SFP to sell shares of SFP Common Stock at a premium over recent trading prices. See "The Tender Offer--6. Price Range of SFP Common Stock; Dividends" of the Offer to Purchase. Up to 63,000,000 shares of SFP Common Stock are to be purchased in the Offer; any shares tendered in response to the Offer over and above such amount would be subject to proration in accordance with the terms of the Offer. Proration may result in SFP stockholders receiving cash for only a portion of any shares of SFP Common Stock tendered, with the remaining consideration to be received in the form of BNI Common Stock pursuant to the Merger after the receipt of ICC approval and satisfaction or waiver of the other conditions to the Merger. All information herein concerning BNI has been furnished by BNI, and all information herein concerning SFP has been furnished by SFP. BNI has represented and warranted to SFP, and SFP has represented and warranted to BNI, that the particular information so furnished is true and complete. The Offer does not constitute a solicitation of proxies for any meeting of SFP's stockholders. Such solicitation by SFP will be made only pursuant to separate proxy materials complying with the requirements of Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, this Offer is neither an offer to sell nor a solicitation of offers to buy any securities which may be issued in the Merger. The issuance of such securities would have to be registered under the Securities Act of 1933, as amended (the "Securities Act"), and such securities would be offered only by means of a prospectus complying with the requirements of the Securities Act. SFP is distributing a joint proxy statement/prospectus with respect to the Merger. IN ORDER TO VOTE FOR THE MERGER, AN SFP STOCKHOLDER IS REQUIRED TO SUBMIT A PROXY OR VOTE IN PERSON AT THE SFP STOCKHOLDER MEETING SCHEDULED FOR FEBRUARY 7, 1995, OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF. Stockholders are urged to read the Offer to Purchase, this Supplement and the related Letter of Transmittal carefully before deciding whether to tender their shares of SFP Common Stock. RECOMMENDATION OF SFP BOARD OF DIRECTORS The Board of Directors of SFP has unanimously approved the Offer and the Merger and recommends that those SFP stockholders who wish to receive cash for a portion of their shares of SFP Common Stock accept the Offer. The Offer is being effected to facilitate the Merger. The SFP Board believes that a business combination of SFP and BNI is in the best long-term interests of SFP and its stockholders. The Offer allows stockholders who wish to do so to receive cash, at a premium over recent trading prices for SFP Common Stock, without waiting for ICC approval of the Merger. At the same time, the revised transaction structure allows SFP stockholders to participate in the ownership of the combined company. The SFP Board believes that a BNI-SFP combination is an excellent strategic fit, presents substantial long-term benefits and is likely to receive ICC approval. The SFP Board has also concluded that the revised Merger Agreement is superior to Union Pacific Corporation's ("UPC") offer (which includes a tender offer), especially on a long-term basis. The Board's reasons for reaching this conclusion included: (1) the Board believed that a BNI-SFP merger is likely to receive ICC approval and, because of anticipated increases in operating income from the Merger (which are expected to result from both operating efficiencies and increased revenues), the Merger will have significant long-term benefits for SFP stockholders; (2) the Board believed that the long-term value of the UPC stock that SFP stockholders would receive in a UPC-SFP merger is uncertain because a combination of the UPC and SFP railroads is unlikely to receive ICC approval and, even if ICC approval could be obtained, it would probably require UPC to make substantial concessions to competing railroads; (3) the $20 per share that SFP stockholders will receive pursuant to the Offer is greater than the $17.50 per share available in UPC's tender offer; and (4) as of December 18, 1994, the market value of 0.40 of a BNI common share (the exchange ratio in the Merger) exceeded the market value of 0.354 of a UPC common share (the exchange ratio proposed by UPC). See "The Tender Offer--6. Price Range of SFP Common Stock; Dividends" and "--9. Background of the Merger and the Offer" of the Offer to Purchase. 2 In making its recommendation, the Board considered the impact of the increase in SFP debt that the Offer would require and concluded that incurring such debt is prudent in light of SFP's ability to repay it and the benefits of the Offer and the Merger for SFP's stockholders. SFP anticipates borrowing up to $1.31 billion (of which approximately $400 million will be to replace existing debt) in connection with the Offer and related matters from a syndicate of banks under a new credit agreement. In addition, the new credit agreement will provide for a $250 million revolving credit facility for general corporate purposes. The anticipated terms of such financings are summarized in the Offer to Purchase. See "The Tender Offer--12. Source and Amount of Funds" of the Offer to Purchase. SFP anticipates that its ability to borrow additional funds will be restricted by the terms of the new credit agreement. SFP's credit rating status was placed under review with direction uncertain by Moody's Investors Service and on Credit Watch with developing implications by Standard & Poor's prior to announcement of the Offer and continues in that status. It is possible that SFP's credit ratings would be downgraded upon completion of the Offer. SFP does not expect that any ratings downgrade, should one occur, would impair its ability to maintain adequate liquidity to meet its ongoing obligations. The interest expense on SFP's anticipated borrowings would reduce SFP's net income. Principal and interest on the debt being used by SFP to finance the Offer, as well as other operating expenses and liquidity needs of SFP, are expected to be funded by SFP during the period prior to the ICC's decision on the Merger from cash generated before borrowings, currently available cash balances and borrowings in excess of requirements in connection with the Offer. Should the ICC not approve the Merger, SFP believes that, on a stand-alone basis, it will be able to fund the debt service attributable to the debt incurred in connection with the Offer through a combination of cash generated before borrowings and refinancings in the capital markets. In either case, SFP will have access to the $250 million revolving credit facility for general corporate purposes, if required. Although the SFP Board believes that SFP's proposed borrowing is prudent, it is possible that the need to repay the debt incurred in its borrowing will have a detrimental effect on SFP, either before the Merger or if the Merger cannot be consummated. 3 UNAUDITED PRO FORMA FINANCIAL STATEMENTS OF SFP The unaudited pro forma financial statements have been prepared to give effect to the SFP tender offer for 38 million shares of SFP Common Stock at $20 per share and the related borrowings and debt repayments (the "SFP Recapitalization"). The SFP Recapitalization is reflected in the pro forma balance sheet as if it occurred on December 31, 1993 and September 30, 1994 and in the statements of operations as if it occurred on January 1, 1993. The unaudited pro forma financial statements are prepared for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that might have occurred had the applicable transaction actually taken place on the dates indicated, or of future results of operations or financial position. Consummation of the tender offer for SFP Common Stock is conditioned upon, among other things, approval of the Merger by both SFP and BNI stockholders. 4 PRO FORMA SFP RECAPITALIZED BALANCE SHEET AS OF SEPTEMBER 30, 1994 UNAUDITED (DOLLARS IN MILLIONS)
SANTA FE SANTA FE PACIFIC SFP PACIFIC CORPORATION RECAPITALIZATION CORPORATION HISTORICAL ADJUSTMENTS RECAPITALIZED ----------- ---------------- ------------- ASSETS Current assets Cash and cash equivalents......... $ 17 $-- $ 17 Accounts receivable, net.......... 98 -- 98 Other current assets.............. 246 -- 246 ------ ---- ------ Total current assets............ 361 -- 361 Property and equipment, net......... 4,684 -- 4,684 Other assets........................ 271 27 (R.1) 298 ------ ---- ------ Total assets.................... $5,316 $ 27 $5,343 ====== ==== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable.................. $ 253 $-- $ 253 Other current liabilities......... 449 -- 449 Current portion of long-term debt and commercial paper............. 192 -- 192 ------ ---- ------ Total current liabilities....... 894 -- 894 Long-term debt...................... 890 843 (R.2) 1,733 Deferred income taxes............... 1,167 (19)(R.3) 1,148 Other liabilities................... 1,157 (3)(R.4) 1,154 ------ ---- ------ Total liabilities............... 4,108 821 4,929 ------ ---- ------ Stockholders' equity Common stock...................... 190 -- 190 Paid-in capital................... 842 15 (R.4) 857 Retained earnings................. 263 (49)(R.4) 214 Treasury stock.................... (87) (760)(R.4) (847) ------ ---- ------ Total stockholders' equity...... 1,208 (794) 414 ------ ---- ------ Total liabilities and stock- holders' equity.............. $5,316 $ 27 $5,343 ====== ==== ======
(See accompanying Notes to Pro Forma SFP Recapitalized Financial Statements) 5 PRO FORMA SFP RECAPITALIZED BALANCE SHEET AS OF DECEMBER 31, 1993 UNAUDITED (DOLLARS IN MILLIONS)
SANTA FE SANTA FE PACIFIC SFP PACIFIC CORPORATION RECAPITALIZATION CORPORATION HISTORICAL ADJUSTMENTS RECAPITALIZED ----------- ---------------- ------------- ASSETS Current assets Cash and cash equivalents......... $ 71 $ -- $ 71 Accounts receivable, net.......... 96 -- 96 Other current assets.............. 291 -- 291 ------ ----- ------ Total current assets............ 458 -- 458 Properties and equipment, net....... 4,360 -- 4,360 Other assets........................ 556 27 (R.1) 583 ------ ----- ------ Total assets.................... $5,374 $ 27 $5,401 ====== ===== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable.................. $ 241 $ -- $ 241 Other current liabilities......... 429 -- 429 Current portion of long-term debt and commercial paper............. 185 -- 185 ------ ----- ------ Total current liabilities....... 855 -- 855 Long-term debt...................... 991 843 (R.2) 1,834 Deferred income taxes............... 1,116 (19)(R.3) 1,097 Other liabilities................... 1,144 (3)(R.4) 1,141 ------ ----- ------ Total liabilities............... 4,106 821 4,927 ------ ----- ------ Stockholders' equity Common stock...................... 190 -- 190 Paid-in capital................... 870 15 (R.4) 885 Retained earnings................. 340 (49)(R.4) 291 Treasury stock.................... (132) (760)(R.4) (892) ------ ----- ------ Total stockholders' equity...... 1,268 (794) 474 ------ ----- ------ Total liabilities and stock- holders' equity.............. $5,374 $ 27 $5,401 ====== ===== ======
(See accompanying Notes to Pro Forma SFP Recapitalized Financial Statements) 6 PRO FORMA SFP RECAPITALIZED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1994 UNAUDITED (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
SANTA FE SANTA FE PACIFIC SFP PACIFIC CORPORATION RECAPITALIZATION CORPORATION HISTORICAL ADJUSTMENTS RECAPITALIZED ----------- ---------------- ------------- Revenues......................... $ 1,970 $-- $ 1,970 Operating expenses Compensation and benefits...... 625 -- 625 Fuel........................... 183 -- 183 Materials...................... 92 -- 92 Equipment rents................ 185 -- 185 Purchased services............. 282 -- 282 Depreciation................... 150 -- 150 Other.......................... 147 -- 147 ------- ---- ------- Total operating expenses..... 1,664 -- 1,664 ------- ---- ------- Operating income................. 306 -- 306 Interest expense................. 90 57 (R.5) 147 Other income (expense), net...... 49 -- 49 ------- ---- ------- Income before income taxes....... 265 (57) 208 Income tax expense............... 112 (22)(R.6) 90 ------- ---- ------- Income from continuing opera- tions........................... $ 153 $(35) $ 118 ======= ==== ======= Earnings per common share Income from continuing opera- tions......................... $ .81 $ .77(R.7) ======= ======= Number of shares used in computa- tion of earnings per common share (in thousands)............ 189,700 152,400(R.7)
(See accompanying Notes to Pro Forma SFP Recapitalized Financial Statements) 7 PRO FORMA SFP RECAPITALIZED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1993 UNAUDITED (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
SANTA FE SANTA FE PACIFIC SFP PACIFIC CORPORATION RECAPITALIZATION CORPORATION HISTORICAL ADJUSTMENTS RECAPITALIZED ----------- ---------------- ------------- Revenues........................ $ 2,409 $ -- $ 2,409 Operating expenses Compensation and benefits..... 800 800 Fuel.......................... 239 -- 239 Materials..................... 128 -- 128 Equipment rents............... 229 -- 229 Purchased services............ 322 -- 322 Depreciation.................. 188 -- 188 Other......................... 185 -- 185 ------- ----- ------- Total operating expenses.... 2,091 -- 2,091 ------- ----- ------- Operating income................ 318 -- 318 Interest expense................ 133 73 (R.5) 206 Gain on sale of California lines.......................... 145 -- 145 Other income (expense), net..... 24 -- 24 ------- ----- ------- Income before income taxes...... 354 (73) 281 Income tax expense.............. 177 (28)(R.6) 149 ------- ----- ------- Income from continuing operations..................... $ 177 $ (45) $ 132 ======= ===== ======= Earnings per common share Income from continuing operations................... $ .95 $ .88(R.7) ======= ======= Number of shares used in computation of earnings per common share (in thousands).... 187,200 149,900(R.7)
(See accompanying Notes to Pro Forma SFP Recapitalized Financial Statements) 8 NOTES TO PRO FORMA SFP RECAPITALIZED FINANCIAL STATEMENTS The SFP Recapitalization plan reflected in the pro forma financial statements includes borrowing $1,075 million of $1,560 million in available bank commitments at an assumed average interest rate of 9 percent (see "The Tender Offer--12. "Source and Amount of Funds" of the Offer to Purchase for further discussion) with the proceeds principally used for (i) financing the repurchase of 38 million shares of its outstanding common stock at a price of $20 per share or $760 million in total, (ii) the early retirement of $200 million of outstanding senior indebtedness, and (iii) repayment of short-term borrowings and payment of refinancing transaction costs. Additionally, SFP will incur Merger transaction costs, including the accelerated vesting of restricted stock and certain other transaction costs, upon stockholder approval of the Merger. R.1 OTHER ASSETS Represents estimated debt issuance costs to be paid in connection with the SFP Recapitalization, net of debt issue costs expensed in conjunction with the retirement of debt. R.2 LONG-TERM DEBT Reflects the $1,075 million SFP Recapitalization borrowing less (i) the early retirement of outstanding senior debt of $200 million and (ii) the repayment of $32 million short-term borrowings which were outstanding at September 30, 1994. After the SFP Recapitalization, projected principal repayments during the five years 1995 through 1999 would be $203 million, $97 million, $218 million, $144 million and $187 million, respectively. R.3 DEFERRED INCOME TAXES Deferred income taxes have been reduced for the tax benefit of the costs of retiring debt and the accelerated vesting of SFP's restricted stock described in R.4. below at a rate of 39 percent. R.4 STOCKHOLDERS' EQUITY Paid-in capital has been increased by $15 million representing the fair value of approximately 760,000 shares of restricted stock at an assumed $20 per share, which vests upon shareholder approval. Retained earnings has been reduced by $49 million to reflect costs, net of taxes and costs accrued, associated with the SFP Recapitalization and the Merger including expenses for early retirement of debt, accelerated vesting of restricted stock, and estimated legal, investment banking and other transaction costs. Costs of $22 million after taxes for the early retirement of debt will be expensed as an extraordinary charge in the period the debt is retired. Costs for the accelerated vesting of restricted stock of $7 million after taxes (which is net of amounts already accrued) will be expensed in the period that restrictions lapse. Merger transaction costs of $20 million will be expensed in the period incurred. Treasury stock has been increased by $760 million to reflect the purchase of 38 million shares of SFP Common Stock acquired through SFP's tender offer. R.5 INTEREST EXPENSE Reflects the estimated net increase in interest expense associated with debt borrowings/repayments discussed in R.2. above. R.6 INCOME TAX EXPENSE Income tax expense reflects the effect of pro forma adjustments at an estimated rate of 39 percent. 9 R.7 EARNINGS PER COMMON SHARE SFP weighted average shares outstanding have been reduced for SFP's cash tender offer, net of restricted stock which will vest upon stockholder approval of the Merger. SFP historical earnings per common share have been reduced to reflect a decrease in income from continuing operations due to additional interest expense discussed in R.5. above. CERTAIN ADDITIONAL INFORMATION HART-SCOTT-RODINO ACT The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to BNI's purchase of shares of SFP Common Stock pursuant to the Offer expired at 12:00 Midnight, January 11, 1995. Accordingly, the condition to the Purchasers' obligation to accept for payment and pay for shares of SFP Common Stock pursuant to the Offer set forth in clause (iii) of the first paragraph of "The Tender Offer--14. Conditions of the Offer" in the Offer to Purchase has been satisfied. EXTENSION OF THE OFFER If the Purchasers increase or decrease the number of shares of SFP Common Stock being sought in the Offer and the Offer is scheduled to expire at any time before the expiration of a period of 10 business days from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified in the Offer to Purchase, the Offer will be extended until the expiration of such period of 10 business days. The Purchasers do not intend to waive the Minimum Condition nor do they intend to increase the number of shares of SFP Common Stock being sought pursuant to the Offer. TRANSACTION IN SFP COMMON STOCK On December 27, 1994, Mr. Robert D. Krebs made a charitable contribution of 15,818 shares of SFP Common Stock. ---------------- Except as otherwise set forth in this Supplement, the terms and conditions set forth in the Offer to Purchase remain applicable in all respects to the Offer. The information set forth herein should be read in conjunction with the Offer to Purchase. Santa Fe Pacific Corporation Burlington Northern Inc. January 13, 1995 10 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for SFP Common Stock and any other required documents should be sent to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: First Chicago Trust Company of New York By Mail: By Facsimile Transmission: By Hand: (For Eligible Institutions Only) Tenders & Exchanges (201) 222-4720 Tenders & Exchanges P.O. Box 2564 Suite (201) 222-4721 14 Wall Street 4660 SFP Suite 4680 SFP Jersey City, NJ 07303-2564 8th Floor New York, NY 10005 Confirm Facsimile by Telephone: (For Confirmation Only) (201) 222-4707 Questions or request for assistance or additional copies of the Offer to Purchase, this Supplement, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to any of the Information Agents or either of the Dealer Managers at their respective addresses and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agents are: D.F. KING & CO., INC. MACKENZIE KISSEL BLAKE INC. PARTNERS INC. 77 Water Street 156 Fifth Avenue 25 Broadway, 6th Floor New York, New York New York, New York 10010 New York, New York 10004 10005 CALL TOLL FREE (800) 322-2885 CALL TOLL FREE (800) CALL TOLL FREE (800) 554-7733 697-6974 The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. LAZARD FRERES & CO. 85 Broad Street One Rockefeller Plaza New York, New York 10004 New York, New York 10020 -----END PRIVACY-ENHANCED MESSAGE-----