<PAGE>

================================================================================

                          UNITED STATES SECURITIES AND
                               EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                          -----------------------------

                                    FORM 10-K

                   [X] Annual report pursuant to Section 13 or
                15(d) of the Securities Exchange Act of 1934 for
                                 the fiscal year
                             ended DECEMBER 31, 2000

                                       or

              [ ] Transition report pursuant to Section 13 or 15(d)
                 of the Securities Exchange Act of 1934 for the
                                transition period

                  from _________________ to ___________________

                         Commission File Number 0-19150
                                                -------

                        WISCONSIN CENTRAL TRANSPORTATION
                                   CORPORATION

             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                DELAWARE                                36-3541743
     -------------------------------                 ----------------
     (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)               IDENTIFICATION NUMBER)


    6250 North River Road, Suite 9000                     60018
           Rosemont, Illinois                          -----------
    --------------------------------                   (ZIP CODE)
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


     Registrant's telephone number,
           including area code:                        (847) 318-4600
                                                       --------------

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, $0.01 PAR VALUE

Indicate by check [X] whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

               [X]        YES                  [ ]        NO

Indicate by check [X] if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

<PAGE>


The aggregate market value (based on the closing sales price on February 28,
2001 as reported by Nasdaq Stock Market(R)) of the voting stock of the
registrant beneficially held by non-affiliates of the registrant was
approximately $677.2 million. For the sole purpose of making this calculation,
the term "non-affiliate" has been interpreted to exclude directors and executive
officers of the registrant. Such interpretation is not intended to be, and
should not be construed to be, an admission by the registrant or such directors
or executive officers that such directors and executive officers are
"affiliates" of the registrant, as that term is defined under the Securities
Exchange Act of 1934.

Indicate the number of shares outstanding of the
Registrant's Common Stock as of February 28, 2001:             46,394,450 shares


                       DOCUMENTS INCORPORATED BY REFERENCE


Certain information in the registrant's Proxy Statement for its special meeting
to be held on April 4, 2001, filed in definitive form on March 1, 2001, is
incorporated by reference in Part I hereof.

Certain information in the registrant's Proxy Statement for its Annual Meeting
to be held June 14, 2001, to be filed pursuant to Regulation 14A, is
incorporated by reference in Part III hereof.



================================================================================
<PAGE>



<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                                        Page
<S>                                                                                             <C>

             Disclaimer Regarding Forward-Looking Statements..........................................     1


                                                       PART I

      Item
      ----

         1. Business..................................................................................     1
         2. Properties................................................................................    10
         3. Legal Proceedings.........................................................................    11
         4. Submission of Matters to a Vote of Security Holders.......................................    12


                                                       PART II


         5. Market for the Registrant's Common Equity and Related Stockholder Matters.................    14
         6. Selected Financial Data...................................................................    15
         7. Management's Discussion and Analysis of Financial Condition and
            Results of Operations.....................................................................    17
         7A.Quantitative and Qualitative Disclosures About Market Risk................................    26
         8. Financial Statements and Supplementary Data...............................................    27
         9. Changes in and Disagreements with Accountants on Accounting and Financial
            Disclosure................................................................................    49


                                                      PART III


        10. Directors and Executive Officers of the Registrant........................................    49
        11. Executive Compensation....................................................................    49
        12. Security Ownership of Certain Beneficial Owners and Management............................    49
        13. Certain Relationships and Related Transactions............................................    49

                                                       PART IV


        14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................    49
</TABLE>


<PAGE>



                 DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS

     This report contains certain statements that are "forward-looking", within
the meaning of Section 21E of the Securities Exchange Act of 1934, including
statements regarding, among other matters, the beliefs, expectations, plans and
estimates of the Company with respect to certain future events, including
without limitation the impact of governmental regulation, the impact of
litigation and regulatory proceedings and the actions to be taken by others
(including collective bargaining organizations) and similar expressions
concerning matters that are not historical facts. Such forward-looking
statements are not guarantees of future performance and involve known and
unknown risks, uncertainties and other factors that could cause actual events to
differ materially from those expressed in those statements.

                                     PART I

ITEM 1. BUSINESS

GENERAL

     Wisconsin Central Transportation Corporation ("WCTC") was incorporated
under the laws of the State of Delaware in 1987. The principal offices of WCTC
are located at One O'Hare Center, Suite 9000, 6250 N. River Road, Rosemont,
Illinois 60018, telephone (847) 318-4600. All dollar amounts in this report are
stated in U.S. dollars unless otherwise indicated.

     WCTC is a holding company which conducts its business through subsidiaries
and minority-owned corporations. Its North American rail business is conducted
through its wholly-owned consolidated subsidiaries, Wisconsin Central Ltd.
("WCL"), Fox Valley & Western Ltd. ("FV&W"), WCL Railcars, Inc., Wisconsin
Chicago Link Ltd. ("WCLL"), Sault Ste. Marie Bridge Company ("SSM"), WC Canada
Holdings, Inc. ("WCCHI") and Algoma Central Railway Inc. ("ACRI"). Its
transportation business in the United Kingdom, New Zealand and Australia
(referred to herein as "international business") is conducted by Wisconsin
Central International, Inc. ("WCI"), another wholly-owned consolidated
subsidiary, through its minority-owned affiliates in each of those countries.

     Our North American business began in 1987 when we acquired a rail system of
approximately 2,000 route miles in Wisconsin, the Upper Peninsula of Michigan,
northeastern Illinois and eastern Minnesota from another railroad. We began
freight operations with approximately 600 employees, 85 locomotives and 2,900
railcars. Since 1987, we have acquired additional rail lines in Wisconsin,
Michigan and Ontario and increased our business from new and continuing
customers. At December 31, 2000, our North American rail system comprised
approximately 2,760 route miles, and had 2,180 employees, 244 locomotives and
13,164 railcars. The railroad's principal gateways are Chicago, Duluth/Superior,
Green Bay, Milwaukee, Minneapolis/St. Paul and Sault Ste. Marie, Ontario. These
gateways permit us to connect with other railroads serving these locations. See
"North American Business".

     Our international business began in 1993 when we led a consortium which
acquired the government-owned rail and ferry businesses in New Zealand. In the
period from 1995 to 1997 a consortium that we led acquired most of the rail
freight business in the United Kingdom. In late 1997 we led a consortium that
acquired the government-owned rail lines in Tasmania and in 1998 our consortium
was named preferred bidder to operate railroad assets in Jordan. See
"International Business".

DEVELOPMENTS SINCE JANUARY 1, 2000

     Merger Agreement


     On January 29, 2001 WCTC entered into an Agreement and Plan of Merger with
Canadian National Railway Company ("CN") and a wholly owned indirect subsidiary
of CN, providing for the acquisition of WCTC by CN for an equity purchase price
of approximately $800 million or $17.15 per share payable in cash, and also
providing for various related matters, including restrictions on our activities
while the merger is pending. The proposed merger is subject to approval by
holders of a majority of our common stock, approval by the Surface
Transportation Board ("STB") and various other conditions.

     On March 1, 2001 we filed with the Securities and Exchange Commission
("SEC") a definitive proxy statement and a notice of stockholders' meeting with
respect to a special stockholders' meeting to be held on

                                       1
<PAGE>

April 4, 2001 to consider the proposed merger. On or about March 1, 2001, the
proxy statement and notice of stockholders meeting were sent to stockholders of
record as of February 23, 2001. The definitive proxy statement is incorporated
by reference in this report.


     Increased Ownership in EWS

     In March 2000, we increased our ownership in English Welsh & Scottish
Railway Holdings Limited ("EWS") from approximately 39.5% to approximately 42.5%
(undiluted) through the exercise of options with a total exercise price of $6.2
million.

     Stock Repurchase Program

     In 2000, our Board of Directors authorized funds to be used to repurchase
shares of our Common Stock. As of December 31, 2000, the Company had repurchased
4,963,300 shares at an average price of approximately $11.78 per share.

     Proxy Contest


     On October 20, 2000, it was announced that a dissident stockholders'
committee filed a consent solicitation with the SEC proposing certain corporate
governance changes and stockholder actions, including the replacement of our
current Board of Directors with a new Board of Directors. We filed a Consent
Revocation Statement with the SEC opposing the proposals of the committee. On
January 18, 2001, the results of the proxy contest were announced. The proposals
to remove our current Board of Directors and elect the dissidents' slate of
directors were rejected while four corporate governance proposals, including the
elimination of the classified board, were accepted. See Item 4.


     Proposed Divestiture of International Affiliates

     On November 3, 2000, we announced that we had retained the investment
banking firm of Goldman, Sachs & Co. to act as financial advisor in evaluating
various strategic alternatives, including the potential sale of our company and
divestiture of our international holdings. On November 9, 2000, we announced
that we had retained the investment banking firm of Deutsche Bank AG to act as a
financial advisor in connection with the potential disposition of our 23.7%
interest in Tranz Rail Holdings Limited ("Tranz Rail").

NORTH AMERICAN BUSINESS

     Operations

     The following table shows the development of our North American business
over the past five years, as reflected in certain statistics:
<TABLE>
<CAPTION>

                                        2000           1999            1998           1997            1996
                                     -----------    -----------    -----------     -----------    -----------
<S>                                  <C>            <C>            <C>             <C>            <C>
Operating revenues (in thousands)    $   372,114    $   362,744    $   344,062     $   333,510    $  278,397 (1)
  Year over year increase                    2.6%           5.4%           3.2%           19.8%          5.4%
Total carloads (number)                  536,593        563,200        547,662         565,625       464,149
  Year over year increase (decrease)        (4.7)%          2.8%          (3.2)%          21.9%          6.4%
Average number of employees                2,262          2,285          2,309           2,254         2,086
  Year over year increase (decrease)        (1.0)%         (1.0)%          2.4%            8.1%          5.9%
Operating ratio (2)                         75.0%          75.2%          73.3%           76.7%         81.3%
</TABLE>

-------------
(1)  Excludes the disputed switching charges of $13.3 million discussed in Note
     15 to the consolidated financial statements included in Item 8.
(2)  Operating ratio represents operating expenses as a percentage of operating
     revenues. The 1996 percentage excludes the disputed switching charges of
     $13.3 million discussed in Note 15 to the consolidated financial statements
     included in Item 8.

     Our operating philosophy emphasizes safety, customer service and high
productivity from our employees. We use primarily two person train crews.
Employees are paid on a salaried basis. We follow a program of cross-training
our employees to perform a number of related functions.

                                       2
<PAGE>



     The following table summarizes our North American work force by function:


                           AVERAGE NUMBER OF EMPLOYEES
<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                          -----------------------------------------------------
                                                           2000        1999        1998        1997        1996
                                                           ----        ----        ----       -----        ----
<S>                                                     <C>         <C>         <C>         <C>         <C>
General and administrative............................      174         176         173         175         175
Engineering (maintenance of way)......................      748         771         781         761         640
Mechanical (maintenance of equipment).................      410         423         448         438         411
Transportation........................................      930         915         907         880         860
                                                         ------      ------      ------      ------      ------
     Total............................................    2,262       2,285       2,309       2,254       2,086
                                                          =====      =====        =====       =====       =====
</TABLE>

     We serve a competitive market area in North America that demands
consistent, high quality train service. Our North American rail network is
divided into 14 main lines and 17 secondary lines. Main lines are those with the
heaviest use, while secondary lines provide service to on-line customers. Train
service is provided seven days per week on main lines and five or six days per
week on secondary lines. Our train service is designed to provide a flow of cars
from key origination points at least once every 24 hours. This flow moves on
scheduled trains between specified locations, exchanging or adding cars at each
stop.

     Under the current regulatory framework in North America, shipments by rail
may move either under a tariff or under a transportation contract. Shipments
performed under contract, generally one year in duration, make up approximately
two-thirds of our North American business. These contracts generally have cost
escalation clauses based on various indices that are representative of the
related costs. Our transportation contracts also typically provide that a
specified percentage of a customer's particular commodity must be shipped
pursuant to the contract. Payments are due from customers upon receipt of
billing. In general, where a shipment involves more than one railroad, the
carrier delivering to the final destination receives and then distributes
payment for all of the participating carriers. Payments due to and from other
railroads are netted on a monthly basis.

     Customers and Traffic

     The volume of our North American business in 2000, as measured by carloads
handled (including as a carload each loaded trailer or container), was 536,593
carloads (excluding haulage traffic) generating $329.0 million in gross freight
revenues. Of these carloads, 89.9% were originating or terminating business
(i.e. business to or from a point on our lines) or local business (i.e.,
business which both originates and terminates on our lines). We believe that
this high percentage of originating, terminating and local business adds
stability to our business volume due to our marketing-oriented approach and our
ability to customize service for customers within our territory. The remainder
of our North American business was overhead business. Overhead business is
received from other railroads at interchange points in our territory and moved
to another point in our territory for interchange to another railroad. Our
ability to handle certain overhead business is restricted by contract. See Item
2.

     The following table shows the composition of our North American 2000
traffic by class:
<TABLE>
<CAPTION>

                              2000 VOLUME BY CLASS

                                                               CARLOADS                  GROSS FREIGHT REVENUES
                                                          -------------------            ----------------------
                                                                         % OF           DOLLARS IN          % OF
                                                           NUMBER        TOTAL            MILLIONS        TOTAL
                                                           ------        -----           ----------       -------
<S>                                                      <C>         <C>               <C>             <C>
Local  .............................................       190,495       35.5%            $   76.4          23.2%
Originating.........................................       106,517       19.9                 81.2          24.7
Terminating.........................................       185,272       34.5                142.6          43.3
Overhead............................................        54,309       10.1                 28.8           8.8
                                                          --------     ------           ----------       -------
     Total..........................................       536,593      100.0%            $  329.0         100.0%
                                                           =======      =====             ========         =====
</TABLE>


     The 25 largest customers of our North American business accounted for
approximately 70.6% of our volume and 70.1% of our gross freight revenues in
2000. Ten shippers (Stora Enso, formerly Consolidated Papers, Inc.,
Cleveland-Cliffs, Inc., International Paper, The Mead Corporation,
Quad/Graphics, Weyerhaeuser Corp., Wisconsin Public Service Corp., Georgia
Pacific Corp., Minnesota Mining and Manufacturing Co. and Packaging Corporation
of America) accounted for approximately 48.2% of our gross

                                       3
<PAGE>

freight revenues in North America in 2000. Stora Enso accounted for
approximately 12.3% of our gross freight revenues in North America in 2000. Our
volume is subject to general economic conditions and specific situations within
customers' respective industries as well as generally to the effects of
competition.

     We also provide wholesale freight haulage services for CN's intermodal,
carload and bulk commodity trains between Superior, Wisconsin and Chicago.
Wholesale freight haulage services are not included in our carload statistics or
our calculation of largest customers. Revenue related to these wholesale freight
haulage services is included in other operating revenues. If CN were included in
our customer calculation, it would be among the ten largest customers.

     Commodities Base

     We transport a wide variety of commodities for our North American
customers. The following table summarizes our North American volume for 2000 by
commodity group. A discussion of the individual commodity groups follows the
table.

<TABLE>
<CAPTION>
                            2000 COMMODITY GROUP MIX

                                                             CARLOADS                 GROSS FREIGHT REVENUES
                                                        -------------------           ----------------------
                                                                       % OF            DOLLARS IN      % OF
                                                          NUMBER       TOTAL            MILLIONS       TOTAL
                                                          ------       -----            ---------      -----
<S>                                                    <C>          <C>             <C>              <C>
Paper and other forest products.....................      150,329      28.0%          $    139.7       42.5%
Minerals............................................      222,100      41.4                 94.4       28.7
Industrial products.................................       54,187      10.1                 47.0       14.3
Food and grain......................................       26,077       4.9                 19.8        6.0
Intermodal..........................................       63,911      11.9                 13.3        4.0
Other  .............................................       19,989       3.7                 14.8        4.5
                                                        ---------     -----           ----------     ------
     Total..........................................      536,593     100.0%          $    329.0      100.0%
                                                        =========     =====           ==========      =====
</TABLE>


     PAPER AND OTHER FOREST PRODUCTS. Paper and other forest products accounted
for 42.5% of our gross North American freight revenues and 28.0% of our volume
in 2000. Paper and other forest products that we carry include a wide variety of
paper products, woodpulp, pulpboard (a packaging material), lumber and wood
fibers. We provide direct rail service to major woodpulp and paper manufacturers
in central and northeastern Wisconsin, the Upper Peninsula of Michigan and
Ontario. The distribution and marketing patterns for different types of forest
products vary, as do the seasonality and cyclicality of the markets. Much of our
forest products business generally follows the cycles of the paper industry.
Generally, this commodity grouping is influenced by the paper production levels
in the territories that we serve.

     MINERALS. Minerals accounted for 28.7% of our gross North American freight
revenues and 41.4% of our volume in 2000. The principal minerals that we haul in
our North American operations are metallic ore, coal, clay products and roofing
granules. Metallic ore consists primarily of shipments to steel producers in
Ohio as well as shipments to Escanaba, Michigan for transloading to lake
vessels. Low sulfur coal is carried inbound to electric utility plants in
Wisconsin and high sulfur coal is carried inbound to paper companies and other
industries in Wisconsin. Inbound clay products are used in paper production and
in the iron ore pelletizing process. Outbound roofing granules originate at
manufacturing facilities in Wisconsin. Other mineral products that we carry are
sand and stone.

     INDUSTRIAL PRODUCTS. Industrial products accounted for 14.3% of our gross
North American freight revenues and 10.1% of our volume in 2000. Industrial
products that we haul include chemicals and petroleum products, which are hauled
inbound to paper companies and fertilizer distributors that we serve, and steel,
which is hauled primarily from Canadian producers to various points throughout
North America.

     FOOD AND GRAIN. Food and grain products totaled 6.0% of our gross North
American freight revenues and 4.9% of our volume in 2000. Corn, barley, malt and
canned and frozen vegetables make up most of this group.


     INTERMODAL. Intermodal volume consists of over-the-road trailers and
shipping containers hauled on railroad flat cars. The trailer and container
business is especially truck-competitive, and handles time-sensitive
commodities. This business represented 4.0% of our gross North American freight
revenues

                                       4
<PAGE>

and 11.9% of our volume in 2000. We have intermodal facilities in
Chicago and in Arcadia, Green Bay, Neenah and Stevens Point, Wisconsin.


     OTHER. Other commodities accounted for 4.5% of our gross North American
freight revenues and 3.7% of our volume in 2000. Other commodities include waste
and scrap and miscellaneous freight.

     Seasonality

     Our gross freight revenues from quarter to quarter during the course of a
year have not historically been subject to significant seasonal changes. Our
operating expenses for the first quarter historically have been somewhat higher
than for any other quarter, primarily due to adverse weather conditions.

     Competition

     Our railroad operations in North America are subject to competition from
trucks, other rail carriers and lake vessels. Competition with rail carriers and
lake vessels is usually based on price, while competition with trucks can be
based on price, service or both. Trucks are our dominant competition, competing
actively for shipments of nearly all commodities that we handle, especially
intermodal traffic and forest products. Rail competition exists principally in
the Duluth/Superior to Chicago corridor. Lake vessels generally compete for bulk
commodities such as coal and ore. Our pricing and service decisions are also
impacted by competition among our customers and their competitors, as we must
provide pricing and service that help keep our customers competitive in their
markets.

     Marketing

     We emphasize superior service to our customers and have created a marketing
organization designed to identify and quickly respond to customers' needs. We
structure our services to provide consistent transit times and ready
availability of quality equipment. Our marketing strategy includes decentralized
pricing authority to enable marketing personnel with specific market knowledge
and direct customer contact to make pricing decisions within established
guidelines. This quick and independent reaction to market opportunities,
together with clear delegation of authority and responsibility, provides for
effective customer relations and enables us to retain and increase our base of
business. In recognition of our excellent service during the years 1988 through
1999, LOGISTICS MANAGEMENT & DISTRIBUTION REPORT, a respected trade publication,
presented us with its "Readers Choice" quality award for each of those years.
The award for 2000 has not yet been presented. The award is based on customer
surveys encompassing service, equipment, convenience, price and sales criteria.
We have also received many awards from our customers recognizing our excellent
service.

     Employee Relations

     At December 31, 2000, we employed approximately 2,180 full-time employees.
Our employees, after meeting certain requirements and subject to current union
contracts, are eligible to participate in our employee stock purchase plans,
savings plans and bonus plans.

     The 326 conductors employed by WCL, FV&W and SSM have been represented by
the United Transportation Union ("UTU") since 1997. The labor contract with the
UTU became amendable on December 31, 2000 and we are in the process of
negotiating an amendment to the contract with the union.


     The 340 engineers employed by WCL, FV&W and SSM have been represented by
the Brotherhood of Locomotive Engineers ("BLE") since 1997. In February 2001, we
successfully negotiated a labor agreement with the BLE that was ratified by its
members. The agreement settles wage and work rule issues through 2002.


     ACRI's approximately 140 non-management employees are represented by
various collective bargaining organizations.

     The remainder of our employees are not represented by collective bargaining
organizations.

     Environmental Matters

     Our North American operations are subject to various federal, state and
local laws and regulations relating to the protection of the environment. These
environmental laws and regulations, which are implemented principally by the
U.S. Environmental Protection Agency ("USEPA") and comparable state agencies,
govern

                                       5
<PAGE>

the management of hazardous wastes, the discharge of pollutants into the
air and into surface and underground waters, and the manufacture, handling,
transportation, storage and disposal of certain substances. One such law, the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), which is also known as the "Superfund" law, generally imposes joint
and several liability for clean-up and enforcement costs, without regard to
fault or the legality of the original conduct, on current and predecessor owners
and operators of a site. Much of our real property has been used for industrial
purposes or leased to commercial and industrial companies whose activities may
have resulted in discharges onto the property. Consequently, our railroads may
be responsible under CERCLA and other applicable federal and state statutes for
all or a part of the costs to clean up sites at which contaminants have been
released by them, their lessees, predecessor owners or lessees of properties, or
other third parties. Prior owners of a majority of our rail operating properties
have agreed to indemnify us with respect to contamination or non-compliance with
environmental laws arising prior to our acquisition of the subject sites. We and
one of these prior owners are currently in discussions over the application of
the indemnity to certain specific sites. In addition, several of the states in
which our railroads operate make available reimbursement programs for clean-up
of contamination.

     We believe that the operations of our railroads are in material compliance
with current laws and regulations. We estimate that any expense incurred in
maintaining compliance with current laws and regulations will not have a
material effect on our financial position, financial results of operations or
capital expenditures. However, there can be no assurance that the current
regulatory requirements will not change, or that currently unforeseen
environmental incidents will not occur, or that past non-compliance with
environmental laws will not be discovered on our rail operating properties that
may not be subject to indemnification or reimbursement of remediation costs.
See Item 3.

     Regulation

     In addition to environmental, safety and other regulation applicable to all
businesses, railroads are subject to regulation by federal agencies, primarily
the STB and the Federal Railroad Administration ("FRA"), and by state
departments of transportation and some other state and local regulatory
agencies. ACRI's operations are subject to Canadian rail regulations which are
generally similar to, but differ in certain respects from, their U.S.
counterparts. Only U.S. regulation is described below. The STB has jurisdiction
over, among other things, prices charged for services and service levels. It
also has jurisdiction over acquisition, extension or abandonment of rail lines,
consolidation, merger, or acquisition of control of rail common carriers, and
the imposition of labor protection conditions in connection with some of the
foregoing. The FRA has jurisdiction over railroad track, equipment and operating
safety standards. State agencies regulate certain local safety issues, such as
adequacy of warning devices at grade crossings.

     Generally, a railroad is free to adjust the level of prices on its business
without regulatory restrictions. In those instances in which a railroad is found
not to face effective competition and to have prices which yield revenue in
excess of a prescribed revenue-to-variable-cost ratio, the STB has authority to
investigate the reasonableness of the prices. In addition to maximum price
regulation, an individual railroad's ability to adjust its prices is constrained
by the regulation of prices that apply to business interchanged between
railroads.


     For purposes of rail regulation, the STB classifies railroads by revenues,
with the largest, most regulated railroads being referred to as "Class I"
railroads and smaller railroads being referred to as "Class II" or "Class III"
railroads. WCL, FV&W and SSM are classified as Class II railroads, while WCLL is
classified as a Class III railroad. On September 25, 2000, the STB issued a
notice (Ex Parte No. 634) requesting comments from interested parties on an
administrative proposal to adopt Statement of Financial Accounting Standards No.
94 ("SFAS 94"). The proposal would require that, for regulatory reporting
purposes, carriers report data to the STB on a consolidated basis for all
commonly controlled U.S. railroads and U.S. railroad-related interests. On
November 15, 2000, the Company filed a Petition for Rulemaking ("Petition") with
the STB (Ex Parte No. 584) requesting the STB to amend its rail carrier
classification regulations and increase the annual revenue threshold for Class I
railroads from its current $250 million (in 1992 unadjusted dollars) to $500
million (in 2000 dollars). On November 24, 2000, the Company submitted comments
to the STB objecting to the adoption of SFAS 94 and requesting that the STB
consolidate its proceeding on SFAS 94 with the Company's Petition. To date, the
STB has not indicated its intention to adopt SFAS 94 or to commence rulemaking
on the issues of carrier reclassification.


                                       6
<PAGE>

     Insurance and Casualties

     Insurance. We maintain $150.0 million in third party liability insurance
coverage for personal injuries, including death, property damage and other
specified risks of our operations in excess of a self-insured retention of $2.0
million per occurrence (except for ACRI which has a self-insured retention of
$0.5 million per occurrence). We also maintain $30.0 million in all risks
property damage coverage, including property of shippers, in excess of
retentions of $1.0 million per occurrence with respect to rail accidents and
$50,000 per occurrence with respect to non-rail incidents. In addition, we
maintain $30.0 million in directors' and officers' liability insurance with a
Company retention of $350,000 per incident. We believe our insurance is
appropriate in light of our experience and the experience of the rail industry.
However, we can give no assurance as to the adequacy, availability or cost of
insurance in the future.

     Metra. The commuter rail division of the Regional Transportation Authority
("Metra"), the commuter rail system for northeastern Illinois, operates commuter
trains over our trackage between Chicago and Antioch, Illinois. The commuter
service is operated by Metra using its own equipment and personnel. Metra has
agreed to indemnify us with respect to personal injury and property damages
incurred in connection with Metra's operations, except in certain limited
circumstances.

INTERNATIONAL BUSINESS

     Our international business is conducted through affiliates located in the
United Kingdom, New Zealand and Australia.

     United Kingdom

     We currently own approximately 42.5% of EWS which provides most of the rail
freight services in Great Britain, operates freight trains through the English
Channel tunnel and carries mail for the Royal Mail. The EWS businesses were
acquired from British Rail in privatization transactions in the period from late
1995 to late 1997, with the acquisition of the principal rail freight business
occurring in February 1996. During 2000, we increased our ownership interest in
EWS to approximately 42.5%, through the exercise of options with a total
exercise price of approximately $6.2 million. EWS has approximately 6,100
employees and utilizes 843 locomotives and 17,956 railcars in its operations.
EWS's total operating revenues for 2000 were approximately $805 million. We
participate in the management of EWS by furnishing executive talent and
consulting services. In addition, four of our directors are on the nine-member
board of EWS. We have invested approximately $91.2 million in EWS through
December 31, 2000. We account for our investment in EWS under U.S. generally
accepted accounting principles ("GAAP") utilizing the equity method of
accounting. Our 2000 consolidated statement of income included equity in the net
income of EWS of $0.7 million.

     New Zealand

     We currently own approximately 23.7% of the New Zealand company, Tranz
Rail, which operates a 2,400 route mile freight and passenger rail business, an
interisland ferry business and a trucking business with a total of approximately
4,200 employees, 510 locomotives and self-propelled passenger cars, 5,960
railcars, 3,500 shipping containers and three ferry vessels. We participate in
the management of Tranz Rail by furnishing consulting services. In addition,
five of our directors are on the ten-member board of Tranz Rail, and our
chairman is also the chairman of Tranz Rail. Tranz Rail's total operating
revenues for 2000 were approximately $273.9 million. We have invested
approximately $22.3 million in Tranz Rail, and have received approximately $30.7
million in proceeds from return of capital and dividends.

     Tranz Rail completed an initial public offering of its common stock on June
18, 1996 and is listed on The Nasdaq Stock Market(R) in the United States and
listed on the New Zealand stock exchange in New Zealand. Total equity market
capitalization of Tranz Rail as of December 31, 2000 was approximately $186.4
million. We account for our investment in Tranz Rail under U.S. GAAP utilizing
the equity method of accounting. Our 2000 consolidated statement of income
included equity in the net income of Tranz Rail of $1.8 million.

     Tranz Rail is subject to the reporting requirements of the Securities
Exchange Act of 1934 applicable to a foreign private issuer and, accordingly,
files certain reports and other information with the SEC.

                                       7
<PAGE>

     Australia


     We currently own approximately 33% of the Australian company, Australian
Transport Network Limited ("ATN"), which provides substantially all commercial
rail freight service in Tasmania operating a 555 route mile rail system and also
provides rail transportation services, as an independent rail operator, to a
major grain shipper in the states of Victoria and New South Wales. Tranz Rail
owns another 27% of ATN. ATN utilizes approximately 200 employees, 55
locomotives and 719 railcars. We have been granted options to acquire additional
shares in ATN from other ATN shareholders to compensate us for our leadership of
the consortium. We participate in the management of ATN by furnishing consulting
services. In addition, two of our directors and two of our executive officers
are on the eight-member board of ATN. ATN's total operating revenues for 2000
were approximately $18.9 million. Through December 31, 2000, we had invested
approximately $6.3 million in ATN. In January 2001, we invested another $1.5
million in ATN in connection with its debt refinancing. We account for our
investment in ATN under U.S. GAAP utilizing the equity method of accounting. Our
2000 consolidated statement of income included equity in the net income of ATN
of $0.2 million.

     Jordan

     In 1998, we announced that a consortium including WCI was named as the
preferred bidder for a 25-year contract to operate the assets of the Aqaba
Railway Company ("ARC") which is currently owned by the Government of Jordan
("GOJ"). The ARC system includes approximately 300 kilometers of railroad
trackage that serves primarily the Jordan Phosphates Mines Company ("JPMC")
hauling phosphate. As preferred bidder, the consortium is negotiating a final
lease agreement with the GOJ and a final transportation agreement with JPMC
which we anticipate closing in 2001. The funds for our investment have been and
will be derived from internally generated funds and borrowings under existing
credit facilities.


EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth information regarding each person who serves
as one of our executive officers:

<TABLE>
<CAPTION>

                           AGE AS OF
       NAME            FEBRUARY 28, 2001                   POSITION WITH COMPANY
   ----                -----------------                   ---------------------

<S>                               <C>        <C>
Thomas F. Power, Jr.              60         President and Chief Executive Officer
J. Reilly McCarren                44         President and Chief Executive Officer, WCL,
                                                 FV&W, ACRI, SSM and WCLL
Ronald G. Russ                    46         Executive Vice President and Chief Financial Officer
James E. Fisk                     48         Executive Vice President - Corporate Development
John L. Bradshaw                  49         Vice President - Corporate Development
Deborah M. Coady                  46         Vice President - Human Resources and Claims
Janet H. Gilbert                  53         Vice President - General Counsel, WCL, FV&W, ACRI, SSM and WCLL
Randy H. Henke                    47         Vice President - Engineering, WCL, FV&W, ACRI and SSM
Walter C. Kelly                   57         Vice President and Chief  Accounting  Officer;  Chief Financial  Officer WCL,
                                                 FV&W,  ACRI, SSM and WCLL
Glenn J. Kerbs                    60         Vice President - WCTC
Robert F. Nadrowski               54         Vice President - Mechanical, WCL, FV&W, ACRI and SSM
William R. Schauer                56         Vice President - Marketing, WCL, FV&W, ACRI and SSM
J. Edward Terbell                 48         Vice President and General Manager, WCL,  FV&W, ACRI
                                                 and SSM
Richard P. White                  55         Vice President - Corporate Development
Marty J. Mickey                   38         Treasurer
</TABLE>



     Mr. Power has served as our President and Chief Executive Officer since
September 1999. Prior to September 1999, Mr. Power served as Executive Vice
President and Chief Financial Officer of our Company since our formation in
1987. Mr. Power is a director of the Company and each of our subsidiaries other
than ACRI and WCCHI, and has served as such since 1987. Mr. Power also serves as
a director of EWS and Tranz Rail. Mr. Power has 33 years of railroad management
experience.


                                       8
<PAGE>

     Mr. McCarren has served as President and Chief Executive Officer of our
North American operating subsidiaries since September 1999. From July 1996 to
August 1999, Mr. McCarren served as Executive Vice President and Chief Operating
Officer of our North American operating subsidiaries. Mr. McCarren has served as
a director of the Company since December 1998. From 1990 to 1996, Mr. McCarren
served as President of Gateway Western Railway Company. From 1988 to 1990, Mr.
McCarren served as the General Superintendent - Transportation for the Chicago,
Missouri and Western Railway. Mr. McCarren has 22 years of railroad management
experience.

     Mr. Russ has served as Executive Vice President and Chief Financial Officer
of our Company since September 1999. From May 1999 to September 1999, Mr. Russ
served as Vice President of the Company. From January 1994 to April 1999, Mr.
Russ served as Executive Manager and Chief Financial Officer of Tranz Rail.
Prior to serving at Tranz Rail, Mr. Russ served as our Treasurer from 1987 to
1993. Mr. Russ has 20 years of railroad management experience.

     Mr. Fisk has served as Executive Vice President - Corporate Development of
our Company since September 1999. From 1996 to 1999, Mr. Fisk served as
Engineering Director of EWS. Prior to serving at EWS, Mr. Fisk served as
Mechanical Superintendent - Locomotive for our North American operating
subsidiaries from 1987 to 1996. Mr. Fisk also serves as a director of ATN. Mr.
Fisk has 27 years of railroad management experience.


     Mr. Bradshaw has served as a Vice President - Corporate Development of our
Company since June 1998. From June 1994 to June 1998, Mr. Bradshaw served as
Group General Manager, Operations for Tranz Rail. From November 1993 to June
1994, Mr. Bradshaw served as General Manager, Rail Operations for Tranz Rail.
Prior to serving at Tranz Rail, Mr. Bradshaw served as Vice President and
General Manager of our North American operating subsidiaries from 1987 to
November 1993. Mr. Bradshaw has 27 years of railroad management experience.


     Ms Coady has served as Vice President - Human Resources and Claims of our
Company since November 1999. From 1996 to 1999, Ms Coady served as Assistant
Vice President, Human Resources of our North American operating subsidiaries.
From 1993 to 1996, Ms Coady served as Superintendent of Transportation of FV&W's
Fox Valley Division. Prior to joining our Company in 1993, Ms Coady was employed
by the Fox River Valley Railroad, most recently as Director of Human Resources.
Ms Coady has 25 years of human resource experience.


     Ms Gilbert has served as Vice President - General Counsel of our North
American operating subsidiaries since October 1999. From 1996 to 1999, Ms
Gilbert served as General Counsel of our North American operating subsidiaries.
Prior to that time, Ms Gilbert served as Assistant General Counsel of our North
American operating subsidiaries since our formation in 1987. Ms Gilbert began
her legal career as trial counsel for the Federal Trade Commission and joined
the railroad industry in 1983. Ms Gilbert has 18 years of railroad management
experience.


     Mr. Henke has served as Vice President - Engineering of our North American
operating subsidiaries since February 2001. From 1999 to 2001, Mr. Henke served
as Chief Engineer - Structures of our North American operating subsidiaries.
From 1996 to 1999, Mr. Henke served the EWS most recently as head of its
operating division. In 1995, Mr. Henke served as our Vice President, Planning.
Prior to that time, Mr. Henke served as the Western Division Transportation
Manager for our North American operating subsidiaries since our formation in
1987. Mr. Henke has 24 years of railroad management experience.

     Mr. Kelly has served as Vice President and Chief Accounting Officer of our
Company since September 1988. He serves as Vice President and Chief Financial
Officer of our North American operating subsidiaries. Prior to joining the
Company, Mr. Kelly served as Corporate Controller for Spiegel, Inc. (a catalog
retailer) from 1987 to 1988, as an independent consultant during 1986, and as
Vice President, Finance for Wilton Enterprises, Inc. (a distributor of
housewares) during 1985.

     Mr. Kerbs has served as Vice President of our Company since January 2001.
From 1987 to 2001, Mr. Kerbs served as Vice President - Engineering of our North
American operating subsidiaries. From 1974 until 1987, Mr. Kerbs was employed by
the Chicago and Northwestern Transportation Corporation ("CNW") most recently as
Director of Maintenance Operations. Mr. Kerbs has 37 years of railroad
management experience.

     Mr. Nadrowski has been employed as Vice President - Mechanical of our North
American operating subsidiaries since 1987. From 1985 until 1987, Mr. Nadrowski
was involved in the ownership and operation

                                       9
<PAGE>

of a marina and a motel in Wisconsin. From 1966 to 1985, Mr. Nadrowski was
employed by the Milwaukee Road, most recently as Assistant Vice President and
Chief Mechanical Officer. Mr. Nadrowski has 30 years of railroad management
experience.

     Mr. Schauer has served as Vice President - Marketing of our North American
operating subsidiaries since October 1988, and served as Assistant Vice
President, Marketing, of WCL from 1987 until October 1988. From 1986 until 1987,
Mr. Schauer was employed by CNW as General Marketing Manager. Mr. Schauer has 26
years of railroad management experience.

     Mr. Terbell has been employed as Vice President and General Manager our
North American operating subsidiaries since November 1993. Prior to that time,
Mr. Terbell served as WCL's Eastern Division Transportation Manager since 1987.
From 1973 until 1987, Mr. Terbell was employed by CNW, most recently as
Assistant Division Manager - Engineering. Mr. Terbell has 26 years of railroad
management experience.

     Mr. White has served as Vice President - Corporate Development of our
Company since November 1999. From 1996 to 1999, Mr. White served as Vice
President - Human Resources, of our Company. Prior to joining our Company, Mr.
White held a variety of positions with Tranz Rail and its predecessors from 1962
to 1996, most recently as Executive Manager, Personnel. Mr. White also serves as
a director of ATN. Mr. White has 39 years of railroad management experience.

     Mr. Mickey has served as Treasurer of our Company and its subsidiaries
since May 1996. Prior to that time, Mr. Mickey served as Assistant Controller of
WCL from 1990 to 1996. From 1984 to 1990, Mr. Mickey was employed by Arthur
Andersen & Co., most recently as audit manager.

     The executive officers of the Company are elected annually by and serve at
the discretion of the Company's Board of Directors.

ITEM 2. PROPERTIES


     Our principal North American properties are 2,538 route miles of operating
rail lines (1,845 route miles of main lines and 693 route miles of secondary
lines), 222 route miles of trackage rights (contractual rights to operate over
lines of railroad owned by others), associated yards, terminals, repair
facilities and contiguous real estate. The following table sets forth our North
American operating rail lines:


<TABLE>
<CAPTION>
                                                                           OWNED
                                                               ------------------------
                                                                MAIN   SECONDARY  TOTAL    TRACKAGE    TOTAL
                                                               LINES     LINES    OWNED     RIGHTS    OPERATED
                                                               -----    -------  ------    -------    --------

<S>                                                           <C>           <C>    <C>       <C>      <C>
WCL  .......................................................   1,151        540    1,691       204      1,895
FV&W .......................................................     224        120      344        15        359
ACRI .......................................................     295          -      295         1        296
SSM  .......................................................     171         33      204         2        206
WCLL .......................................................       4          -        4         -          4
                                                               -----      -----   ------     -----      -----
     Total..................................................   1,845        693    2,538       222      2,760
                                                               =====      =====   ======     =====      =====
</TABLE>

     We also own 147 route miles of abandoned rail lines and rail lines not
currently operated.


     The majority of our main line from Chicago to Stevens Point, Wisconsin (238
route miles) is in FRA Class IV condition, permitting speeds up to 50 m.p.h. for
freight trains. Our other main lines are primarily FRA Class III lines,
permitting speeds up to 40 m.p.h., and we consider them appropriate to handle
current and expected traffic on those lines. Secondary lines are primarily FRA
Class II lines, permitting speeds up to 25 m.p.h., which we also consider
appropriate for current and expected traffic volume. Class designations of rail
lines are made or revised based on track inspections. Additionally, all of the
main lines are inspected with an electronic rail defect detector car at least
once annually. Our maintenance and track improvement plans are designed to, at
the minimum, preserve class designations at present levels.

     We have trackage rights that provide us access into Chicago,
Duluth/Superior, Milwaukee and Minneapolis/St. Paul. The trackage rights are
subject to restrictions on the use of rail lines into Milwaukee and
Minneapolis/St. Paul for overhead business. We also have rights under various
leases, joint facility agreements and transportation contracts. We are lessees
of locomotives, railcars and maintenance

                                       10
<PAGE>

equipment. Our joint facility agreements include various operating and
maintenance agreements with other railroads under which certain railroad
properties (such as track, switches, crossings, interchanges and bridges) are
jointly used and maintained.

     We own and operate car and locomotive repair facilities located in Fond du
Lac, Stevens Point and Green Bay, Wisconsin, Gladstone, Michigan and Sault Ste.
Marie, Ontario. These facilities service our locomotives and railcars and offer
equipment repair services to other carriers and our customers. We also own a
metallic ore transload dock and storage facility in Escanaba, Michigan. The ore
dock site includes a pier used to transload iron ore into cargo ships that are
docked at the pier. The pier is capable of docking four ships at a time.

     At December 31, 2000, our North American equipment fleet consisted of 244
locomotives (178 owned and 66 leased) and 13,164 freight cars (4,040 owned and
9,124 leased). The average age of the locomotives and freight cars in our fleet
is 34 years and 23 years, respectively. Despite their age, our locomotives and
freight cars have achieved good availability, primarily as a result of our
preventive maintenance program. Of our current fleet of locomotives and freight
cars, approximately 65% and 60%, respectively, were acquired new or have been
rebuilt or received a major overhaul since 1987. Our availability rates with
respect to our locomotive and railcar fleet were 91% and 98%, respectively, in
2000.

     We own various parcels of non-operating real estate that are contiguous to
our rail lines. Some of this real estate is leased to third parties, on varying
terms, generating lease income of $1.5 million in each of the past three years.
In addition, we have, since inception, sold certain of our excess assets. The
proceeds and pre-tax gains recognized with respect to these sales from 1996
through 2000 are as follows:
<TABLE>
<CAPTION>

                                                                         YEAR ENDED DECEMBER 31,
                                                     -------------------------------------------------------------
                                                        2000         1999         1998         1997         1996
                                                     --------     --------      -------      -------      --------
                                                                              (IN THOUSANDS)

<S>                                                  <C>          <C>           <C>          <C>          <C>
Proceeds from sales of excess assets..............   $  1,135     $    275      $   943      $   847      $  1,210
Pre-tax gain from sales of excess assets..........        972          221          592          682         1,015
</TABLE>

     Our strategy is to sell excess assets, but there can be no assurances as to
our ability to sell our remaining excess assets or as to the prices we will
receive if and when we sell excess assets.

     The quality of our title to our rights-of-way varies. Our properties were
acquired by our predecessors over extended periods of time and by different
companies. Accordingly, the original conveyancing documents were not
standardized and are subject to judicial interpretation as to the interest
conveyed to the original acquiring railroad. In cases involving other railroads,
deeds have sometimes been construed to create either an easement for railroad
purposes or an ownership interest that terminated upon the cessation of use for
railroad purposes. At the time of each acquisition of rail properties, we
obtained either a representation from the seller or title insurance (or both) to
the effect that we would have sufficient interest in the acquired properties to
operate a railroad. However, if we cease to operate our railroad over a parcel
of land, our interest in the parcel could revert to adjacent landowners or to
others holding a reversionary interest. In Wisconsin, our right to dispose of
property is limited by a Wisconsin statute that gives the state the right of
first refusal with respect to any property to be sold by a railroad. Because of
their age, buildings and structures on our rail properties are also often
subject to historical preservation review prior to disposition.

     In the acquisition of our various North American rail lines, the sellers
typically retained mineral rights and rights to a portion of the revenues from
fiber optic cable easements. Our share of revenue from fiber optic cable
easements has been insignificant.

ITEM 3. LEGAL PROCEEDINGS

     Employees of our U.S. railroads are covered by the Federal Employers'
Liability Act ("FELA"), rather than state workers' compensation systems. Under
FELA, damage awards for injuries and deaths of railroad employees are settled by
negotiation or litigation based on the comparative negligence of the employee
and the employer and are not subject to limitations on the amount of recovery
(as recoveries are under workers' compensation systems).

                                       11
<PAGE>

     Our railroads are currently subject to a number of claims and legal actions
that arose in the ordinary course of business, including FELA claims by our
employees and personal injury claims (including wrongful death claims) by third
parties. We believe these claims, taking into account reserves and applicable
insurance, will not have a material adverse effect on our financial position or
annual financial results of operations. Adverse judgments with respect to these
claims, individually or in the aggregate, in excess of related reserves and
applicable insurance, could have a material adverse effect on our financial
position or annual financial results of operations.


     In October 1995, the Circuit Court of Dane County ruled in favor of a
Wisconsin Department of Revenue ("WDR") retroactive assessment of personal
property taxes for the tax years 1990 through 1993 against all Wisconsin
railroads, including WCL and FV&W. As a result of the ruling, we recognized the
$3.0 million retroactive assessment, as well as accrued interest of $0.7
million, in our 1995 consolidated statement of income. After various litigation
proceedings on this matter, WCL and FV&W reached a settlement with the WDR with
respect to this case in 2000 which resulted in a $2.4 million reversal of
previously recorded expenses by WCL and FV&W. See Note 17 to the consolidated
financial statements included in Item 8.


     WCL and FV&W have been named as "potentially responsible parties" under
state spill statutes or CERCLA with respect to contamination at a number of
sites on their properties. As potentially responsible parties, WCL and FV&W as
the owners or lessees of these sites have been identified by state or federal
environmental authorities as parties that may have an obligation (jointly and
severally with predecessor and concurrent owners and lessees and other third
parties) to pay for the cost of remediation of those sites. However, we believe
that any expense we may incur in connection with the clean-up of such sites will
not have a material adverse effect on our financial condition or annual
financial results of operations. As part of our normal operations, our railroads
transport hazardous materials from time to time, which may expose them to claims
and potential liability for injuries to employees, other persons, property and
the environment. See Item 1.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


     On October 20, 2000, a dissident stockholders' committee initiated a
solicitation of stockholder written consents for adoption of the following six
proposals:


          PROPOSAL 1: Proposal 1 provided for the amendment of Section 3.2 of
          the By-laws to remove the provision establishing a classified Board of
          Directors and to require the annual election of all directors. In
          particular, the proposed amendment would delete the third and fourth
          sentences of Section 3.2 of the Bylaws and insert in lieu thereof the
          sentence "Directors shall be elected annually to serve for one year
          terms."

          PROPOSAL 2: Proposal 2 provided for the amendment of Section 3.3 of
          the By-laws to recognize the elimination of the classified Board of
          Directors by deleting the second and third sentences and inserting in
          lieu thereof the sentence "Any director elected in accordance with
          this paragraph shall hold office until the next annual meeting of the
          stockholders or until his or her earlier death, resignation or removal
          in a manner permitted by statute or these by-laws."

          PROPOSAL 3: Proposal 3 provided for the elimination of Section 3.13 of
          the By-laws in its entirety. The proposed elimination of Section 3.13
          of the By-laws would permit the stockholders of the Company to remove
          directors with or without cause.


          PROPOSAL 4: Proposal 4 provided for the removal of the nine members of
          our Board of Directors who were serving at the time the solicitation
          was initiated: Thomas E. Evans, Carl Ferenbach, J. Reilly McCarren,
          Roland V. McPherson, Thomas F. Power, Jr., Thomas W. Rissman, John W.
          Rowe, A. Francis Small and Robert H. Wheeler, and any other person or
          persons who were members of our Board at the time the proposals became
          effective (other than the persons elected as a result of the adoption
          of Proposal 5, described below).

                                       12
<PAGE>

          PROPOSAL 5: Proposal 5 provided for the election of John W. Barriger,
          Edward A. Burkhardt, Robert E. Dowdy, Aaron J. Gellman, Michael W.
          Howell, Henry Posner III and Andy Sze as directors to serve until the
          Company's next annual meeting of stockholders and until their
          successors have been duly elected and qualified.

          PROPOSAL 6: Proposal 6 provided for the repeal of any amendments of
          the By-laws (whether effected by supplement to, deletion from or
          revision of the By-laws) adopted subsequent to May 20, 1999, and at or
          prior to the time the proposals become effective (other than
          amendments adopted as a result of the adoption of Proposals 1, 2 or
          3).

     In order to pass and become effective, each of the proposals required
consent by stockholders owning a majority of outstanding shares. We announced
the results of the proxy solicitation on January 18, 2001. Proposals 1, 2, 3 and
6 received the required majority and passed. Proposals 4 and 5 did not receive
the required majority and did not pass. The specific results, as reported by the
Inspector of Election we retained, are as follows:

<TABLE>
<CAPTION>

                                                                                           AFFIRMATIVELY
                                                                                              WITHHELD
                                                  CONSENTS AS A                            CONSENTS AS A
                                                  PERCENTAGE OF           NUMBER OF        PERCENTAGE OF
                                                 TOTAL NUMBER OF       AFFIRMATIVELY      TOTAL NUMBER OF
                                 NUMBER OF         OUTSTANDING            WITHHELD          OUTSTANDING
                                 CONSENTS            SHARES               CONSENTS             SHARES
                                ----------           ------               --------             ------

          <S>                  <C>                    <C>                <C>                  <C>
          PROPOSAL 1            24,521,374            52.69                509,001              1.09

          PROPOSAL 2            24,499,924            52.64                530,451              1.14

          PROPOSAL 3            24,501,024            52.64                529,351              1.14

          PROPOSAL 4            15,219,441            32.70              9,810,934             21.08

          PROPOSAL 5            15,217,107            32.70              9,813,268             21.09

          PROPOSAL 6            23,442,604            50.37              1,587,771              3.41
</TABLE>

     After completion of the consent solicitation, the following persons
continue to serve as directors: Thomas E. Evans, Carl Ferenbach, J. Reilly
McCarren, Roland V. McPherson, Thomas F. Power, Jr., Thomas W. Rissman, John W.
Rowe, A. Francis Small and Robert H. Wheeler.

                                       13
<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS


     Our Common Stock is available for quotation through The Nasdaq Stock
Market(R) under the symbol "WCLX". On February 28, 2001 there were 1,950 record
holders of our Common Stock. The following table sets forth, for the periods
indicated, the high and low sales prices per share of our Common Stock as quoted
through the Nasdaq National Market System:

<TABLE>
<CAPTION>

                                                                           PRICE PER SHARE
                                                                        --------------------
              CALENDAR PERIOD                                             HIGH         LOW
              ---------------                                           -------      -------
<S>                                                                     <C>          <C>
              1999:
                First Quarter........................................   $ 17.88      $ 12.56
                Second Quarter.......................................     22.38        12.38
                Third Quarter........................................     20.00        13.50
                Fourth Quarter.......................................     15.25        12.44

              2000:
                First Quarter........................................   $ 14.88      $ 10.72
                Second Quarter.......................................     16.13        11.13
                Third Quarter........................................     14.56         9.88
                Fourth Quarter.......................................     16.00         9.81
</TABLE>


     We have not paid and have no current plans to pay dividends on our Common
Stock. We currently intend to retain all earnings for use in our business. The
payment of any future dividends will be determined by the Board of Directors in
light of the future prevailing conditions, including our earnings, financial
condition and requirements, restrictions in financing agreements, business
conditions and other factors. We are also restricted from making dividend
payments by the agreement we entered into with CN with respect to the proposed
merger.

                                       14
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                                 YEAR ENDED DECEMBER 31,
                                       -------------------------------------------------------------------------
                                           2000            1999           1998          1997 (1)         1996
                                        -----------    -----------     -----------    -----------    -----------
                                                         (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                     <C>           <C>             <C>            <C>            <C>
INCOME STATEMENT DATA:

Operating revenues (2)                  $   372,114    $   362,744     $   344,062    $   333,510    $   265,119
Operating expenses (3)                      279,100        272,666         252,323        255,831        226,388
                                        -----------    -----------     -----------    -----------    -----------
Income from operations                       93,014         90,078          91,739         77,679         38,731

Other income, net (4)                         2,479          1,246           6,762          1,234          1,812
Interest expense (5)                        (24,547)       (17,830)        (17,169)       (14,663)       (11,808)
Provision for income taxes                  (28,095)       (29,103)        (32,205)       (25,442)       (11,378)
                                        -----------    -----------     -----------    -----------    -----------
Income before equity in net income
   of affiliates and extraordinary items     42,851         44,391          49,127         38,808         17,357

Equity in net income of affiliates (6)        2,708         22,466          27,167         38,618         32,677
Extraordinary items (7)                           -              -               -              -         (1,602)
                                        -----------    -----------     -----------    -----------    -----------
Net income                              $    45,559    $    66,857     $    76,294    $    77,426    $    48,432
                                        ===========    ===========     ===========    ===========    ===========
Diluted earnings per share:
   Income before extraordinary
      items                             $      0.93    $      1.30     $      1.49    $      1.51    $      0.98
   Net income                           $      0.93    $      1.30     $      1.49    $      1.51    $      0.95

Cash dividends per common share         $         -              -               -              -              -

BALANCE SHEET DATA:
Total assets                             $1,199,165     $1,159,503      $1,016,040    $   911,596    $   691,275
Investment in affiliates                    208,316        223,046         173,750        152,489        114,652
Total debt                                  391,291        343,133         273,799        280,770        165,034
Stockholders' equity                        475,061        509,920         443,994        369,685        299,146
Debt to total capitalization                   45.2%          40.2%           38.1%          43.2%          35.6%
</TABLE>


(1)  Includes partial year (11 months) results of the operation of the Duck
     Creek North lines acquired January 1997.

(2)  The 1996 amount is shown net of disputed switching charges of $13.3 million
     discussed in Note 15 to the consolidated financial statements included in
     Item 8.

(3)  The 2000 amount includes the effect of $2.0 million of expenses due to
     special items which include the write-off of acquisition costs, a
     reorganization charge, proxy contest and strategic review costs and a
     property tax settlement, all discussed in Item 7. The 1999 amount includes
     reorganization expenses of $3.9 million discussed in Item 7.

(4)  The 1998 amount includes $5.4 million related to the March 1998 sale of the
     Company's rights under a five-year transportation agreement discussed in
     Note 14 to the consolidated financial statements included in Item 8.

(5)  Interest expense includes $0.3 million, $1.2 million, $0.9 million and $2.9
     million in 1999, 1998, 1997 and 1996, respectively, resulting from disputed
     switching charges discussed in Note 15 to the consolidated financial
     statements included in Item 8.

(6)  The 2000 and 1999 amounts include $(10.2) million and $4.2 million
     respectively, of special one-time items at EWS and Tranz Rail discussed in
     Item 7. The 1996 amount Includes partial year (10 months) results of EWS's
     principal freight business, acquired February 1996.


(7)  Extraordinary items result from early extinguishment of debt obligations
     and are stated net of related income tax benefits.


                                       15
<PAGE>


The operating data below presents additional information about our North
American operations.
<TABLE>
<CAPTION>

                                                                        YEAR ENDED DECEMBER 31,
                                                   ----------------------------------------------------------------
                                                      2000          1999         1998         1997(1)      1996
                                                   -----------  -----------  -----------  -----------   -----------
<S>                                                <C>          <C>           <C>         <C>           <C>
OPERATING DATA:
Revenue ton miles of freight traffic
(millions) (2).................................       10,082       10,779        9,677       10,338        9,786
Revenue per ton mile (cents) (3)...............          3.1          2.9          3.2          3.0          2.6
Operating ratio (4)............................         75.0%        75.2%        73.3%        76.7%        81.3%
Revenue ton miles per freight
    train hour (thousands) (2).................           37           39           38           38           44
Revenue ton miles per locomotive
    in service (millions) (2)..................           41           45           42           46           47
Fuel consumption (thousand gallons)............       29,764       31,248       29,743       29,634       28,537
Fuel cost per gallon (average, in cents).......           86           65           67           74           75
Revenue ton miles per gallon of fuel (2).......          339          345          325          349          343
Total carloads.................................      536,593      563,200      547,662      565,625      464,149
Carloads from originating, terminating
    and local traffic..........................         89.9%        88.1%        90.1%        84.9%        78.3%
Gross freight revenues from originating,
    terminating and local traffic..............         91.2%        89.2%        91.1%        87.9%        84.2%
</TABLE>


(1)  Includes partial year (11 months) results of the operation of the Duck
     Creek North lines acquired January 1997.

(2)  A revenue ton mile equals weight in tons of freight carried for hire
     multiplied by the distance in miles between origin and destination.

(3)  Revenue per ton mile equals net freight revenue divided by revenue ton
     miles of freight volume.

(4)  Operating ratio represents operating expenses as a percentage of operating
     revenues. The 1996 percentage excludes the effect of the disputed switching
     charges of $13.3 million discussed in Note 15 to the consolidated financial
     statements included in Item 8.





                                       16
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion should be read in conjunction with our
consolidated financial statements, related notes and other financial information
included in Item 8.

RESULTS OF OPERATIONS: 2000 COMPARED TO 1999

     Our net income for 2000 was $45.6 million compared with $66.9 million for
1999, a decrease of $21.3 million, or 31.9%.

     OPERATING REVENUES. Operating revenues for North American operations in
2000 were $372.1 million compared with $362.7 million for 1999, an increase of
$9.4 million or 2.6%. Volume, as measured by carloads handled (including as a
carload each trailer or container), for 2000 was 536,593 carloads (excluding
haulage business) compared with 563,200 carloads in 1999, a decrease of 26,607
carloads or 4.7%.

     The following table compares our 2000 and 1999 revenues:

                                            OPERATING REVENUE COMPARISON
                                                    2000 VS. 1999
<TABLE>
<CAPTION>
                                                                  % OF GROSS                  % OF GROSS
                                                         2000        FREIGHT          1999      FREIGHT       %
                                                      REVENUES      REVENUES        REVENUES    REVENUES    CHANGE
                                                      --------      --------        --------    --------    ------
                                                                  (IN THOUSANDS, EXCEPT PERCENTAGES)

<S>                                                  <C>              <C>           <C>          <C>        <C>
Gross freight revenues............................   $  329,016       100.0%        $326,340     100.0%      0.8%
Allowances, absorptions and adjustments...........      (14,347)       (4.4)         (15,148)     (4.6)      5.3
                                                      ---------        ----          -------      ----
Net freight revenues..............................      314,669        95.6          311,192      95.4       1.1
Switching, haulage, demurrage, passenger
     and other revenues...........................       57,445        17.5           51,552      15.8      11.4
                                                     ----------       -----       ----------     -----
Operating revenues................................     $372,114       113.1%        $362,744     111.2%      2.6%
                                                       ========       =====         ========     =====
</TABLE>

     Gross freight revenues for 2000 increased in three of six commodity groups
compared with 1999, with an overall increase of 0.8%. Carload volume decreased
in four of six commodity groups compared to 1999, with an overall decrease of
4.7%. Although overall volume decreased, we experienced an increase in gross
freight revenues, primarily due to a change in the business mix in that a
decrease in volume for minerals (lower average price per carload) was offset by
an increase in paper volume (higher average price per carload).

     The following table compares volume (in carloads), gross freight revenues
and average revenue per carload by commodity group for the years 2000 and 1999:

         CARLOAD AND GROSS FREIGHT REVENUE COMPARISON BY COMMODITY GROUP
                                  2000 VS. 1999
<TABLE>
<CAPTION>
                                                                                                     AVERAGE
                                                                                                     REVENUE
                                                    CARLOADS           GROSS FREIGHT REVENUES      PER CARLOAD
                                             --------------------     -----------------------    --------------
              COMMODITY GROUP                   2000       1999         2000         1999           2000   1999
------------------------------------------   ---------    -------     ----------   ----------    -------  -----
                                                                           (IN THOUSANDS)

<S>                                            <C>        <C>         <C>          <C>           <C>     <C>
Paper and other forest products                150,329    148,880     $  139,699   $  133,609    $   929 $  897
Minerals                                       222,100    245,617         94,383       98,223        425    400
Industrial products                             54,187     53,776         47,059       47,295        868    879
Food and grain                                  26,077     30,610         19,787       20,178        759    659
Intermodal                                      63,911     63,975         13,305       12,732        208    199
Other                                           19,989     20,342         14,783       14,303        740    703
                                             ---------    -------     ----------    ---------
Total                                          536,593    563,200     $  329,016   $  326,340    $   613 $  579
                                             =========    =======     ==========   ==========

</TABLE>


                                       17
<PAGE>


     Gross freight revenue from paper and other forest products increased $6.1
million or 4.6% on a volume increase of 1.0%. Demand from the paper industries
was stronger throughout most of 2000 compared to 1999. Increased revenues of
$4.0 million, $2.2 million, $0.6 million and $0.6 million from paper, wood
fibers, pulpboard and lumber, respectively, were partially offset by a decrease
of $1.3 million in revenues from woodpulp.

     Gross freight revenues for minerals decreased 3.9% while volume decreased
9.6% from the 1999 level. The volume decrease was primarily driven by a 16%
reduction in metallic ore shipments due to a build-up of inventory at the
Escanaba ore dock at the end of 1999 and the expiration of a temporary
transportation agreement in November 1999. Shipments of granules used in the
production of roofing shingles decreased due to a lower demand. This was
somewhat offset by an increase in shipments of aggregates used in oil and
construction industries and an increase in coal revenues and volume of 5.4% and
5.0%, respectively, over 1999.

     Gross freight revenues in the industrial products segment decreased
slightly as a lower demand for steel was mostly offset by an increase in the
demand for chemicals and petroleum products. Demand for steel decreased compared
to 1999 as a result of the general economic downturn in the domestic steel
industry which faced increasing pricing pressures from foreign competitors.
Meanwhile, demand for paper making chemicals was positively impacted by the
strong demand in the paper market. Overhead shipments of agricultural
fertilizers decreased in 2000 as business was diverted to a competitive route.

     Food and grain revenues decreased 1.9% while volume decreased 14.8%. The
decrease was primarily a result of a reduction in overhead shipments of grain
and a weaker demand in canned goods.

     Intermodal revenues increased 4.5% as we experienced an increase in the
participation of truck-line carriers and an increase in the shipments of
imported raw materials to online receivers. Other commodity revenues experienced
a 3.4% increase as demand in the scrap paper market was somewhat offset by the
diversion of some consumer goods to truck carriers due to service disruptions
experienced by other rail carriers.


     Other revenues increased $5.9 million in 2000 to $57.4 million. Haulage
revenues (which are not included in gross freight revenues) increased by $2.5
million due to an increase in business between Superior, Wisconsin and Chicago
by the CN under a wholesale freight haulage agreement. The fuel surcharge
program, implemented in 2000 to help offset the high cost of fuel, generated
$1.4 million of incremental revenue in 2000. Additionally, demurrage and
switching revenues both increased by $1.0 million over the 1999 levels due to
certain changes in business patterns.


     OPERATING EXPENSES. Operating expenses were $279.1 million for 2000, an
increase of $6.4 million, or 2.4%, compared with 1999. The largest increases in
operating expenses occurred in labor, fuel and depreciation costs. The 2000 and
1999 operating expenses include a number of unusual items. In 2000, operating
expenses include a net $2.0 million of special items: a $1.9 million write-off
of deferred acquisition costs, $1.8 million of expenses relating to strategic
review and proxy contest costs and $0.7 million of reorganization charges,
offset in part by a $2.4 million favorable property tax settlement. The 1999
operating expenses include a $3.9 million reorganization charge. Our operating
ratio (operating expenses as a percentage of operating revenues) was 75.0% for
2000, compared to 75.2% in 1999.

                                       18
<PAGE>


     The following table sets forth a comparison of our operating expenses
during 2000 and 1999:

<TABLE>
<CAPTION>

                                             OPERATING EXPENSE COMPARISON
                                                    2000 VS. 1999

                                                                      2000                1999          % CHANGE
                                                                  -----------          -----------      --------
                                                                                       (IN THOUSANDS)
<S>                                                                <C>                <C>                <C>
Labor expense (including payroll taxes
   and fringe benefits)........................................     $ 119,952          $   115,680          3.7%
Diesel fuel....................................................        25,461               20,270         25.6
Materials......................................................        25,424               26,253         (3.2)
Equipment rents, net...........................................        25,621               27,739         (7.6)
Joint facilities, net..........................................         1,483                1,074         38.1
Depreciation...................................................        25,842               22,872         13.0
Casualty and insurance.........................................         8,774                9,726         (9.8)
Property taxes.................................................         4,011                3,909          2.6
Property tax settlement........................................        (2,365)                   -          *
Acquisition cost write-off.....................................         1,939                    -          *
Strategic review and proxy contest costs.......................         1,750                    -          *
Reorganization costs...........................................           725                3,874          *
Other operating................................................        40,483               41,269         (1.9)
                                                                  -----------          -----------
Operating expenses.............................................   $   279,100          $   272,666          2.4%
                                                                  ===========          ===========
</TABLE>

* Not meaningful.

     Labor expense for 2000 increased 3.7% compared with 1999 primarily due to
an average 3% increase in wage rates at the beginning of 2000, combined with the
rising costs of medical benefits for our employees and a slight shift of the
labor force mix to higher skilled and better compensated positions. This was
partially offset by a 1% decrease in the average work force and a 16% decrease
in incentive expense. Labor expense as a percentage of operating revenues
increased to 32.2% in 2000 compared with 31.9% in 1999.

     Diesel fuel expense for 2000 increased $5.2 million or 25.6% versus 1999
due primarily to the sharp increase in fuel prices experienced throughout 2000.
Higher fuel prices in 2000 resulted in a $10.8 million unfavorable price
variance, before the effect of hedges, compared to 1999. The hedges we had in
place during 2000 saved us $4.5 million during the year. We have hedge
arrangements covering approximately 23% of our expected fuel consumption for the
first half of 2001 and approximately 10% of our expected fuel consumption for
the balance of 2001. We enter into hedge arrangements to reduce our exposure to
price volatility and can give no assurance that the hedge arrangements will
yield lower costs than spot market purchases. See Item 7A.

     Materials expense for 2000 decreased $0.8 million or 3.2% versus 1999
primarily due to a reduction in repair costs for locomotives and freight cars.
Net equipment rents for 2000 decreased by $2.1 million or 7.6% primarily due to
smoother operations in the Chicago rail corridor in 2000 as compared to 1999,
more efficient use of equipment and the benefits of certain favorable
renegotiated lease terms in 2000. Net joint facilities expense increased $0.4
million compared to 1999, reflecting changes in operating patterns.

     Depreciation expense for 2000 increased $3.0 million or 13.0% primarily due
to capital spending programs on track and structures to support increasing
volume levels. Casualty and insurance expense for 2000 decreased by $1.0 million
or 9.8% primarily due to lower personal injury claim costs. Excluding the effect
of a $2.4 million tax settlement with the State of Wisconsin, property tax
expense for 2000 increased by $0.1 million or 2.6%.

     Deferred acquisition costs of $1.9 million were written off in 2000
primarily related to unsuccessful attempts to acquire a freight car leasing
company in Poland and a railroad operating company in Western Australia and
termination of our participation in the privatization of Poland's national
railway.


     We incurred $1.8 million of charges for strategic review and proxy contest
costs in 2000. The majority of this amount, approximately $1.1 million, was
spent for advisory and legal expenses incurred in the defense against proxy
proceedings initiated by a dissident stockholders' committee. The committee
proposed certain

                                       19
<PAGE>

stockholder actions, including the replacement of our current Board of Directors
with a new Board. See Item 4. The remaining approximately $0.7 million was spent
primarily on advisory fees to actively explore the disposition of all or part of
our company to realize greater stockholder value.

     Reorganization costs of $0.7 million were incurred in 2000 to consolidate
certain operating functions and simplify the organizational structure. The
reorganization resulted in the elimination of over 40 salaried positions, and is
expected to improve annual cash flow by approximately $3 million. Reorganization
costs in 1999 represent costs associated with reorganization of personnel and
agreements entered into with former employees .


     OTHER INCOME (EXPENSE) AND INCOME TAXES. Other income for 2000 was $2.5
million, $1.2 million more than 1999. This change is primarily attributable to
an increase in the gain on land sales of $0.8 million combined with a reduction
in the amortization of organization costs.

     Interest expense for 2000 was $24.5 million, an increase of $6.7 million
over 1999. This increase resulted from higher average debt outstanding combined
with increased average interest rates on our revolving credit line. The average
debt balance increased mainly due to the repurchase of almost 5.0 million shares
of our common stock and the purchase of additional shares of EWS stock.

     The income tax provision as a percentage of pre-tax income remained
constant at 39.6% for both 2000 and 1999.

     EQUITY IN NET INCOME OF AFFILIATES. Our results for 2000 included equity in
net income of affiliates of $2.7 million compared to $22.5 million for 1999.


     EWS. The contribution from EWS to our equity in net income of affiliates in
2000 was $0.7 million versus $13.6 million in 1999. Our equity in the net income
of EWS in 2000 was impacted by an $8.8 million charge to write-off obsolete
equipment, expense previously capitalized project development costs and increase
a provision for redundancy. Excluding the 2000 charges, our equity in the income
of EWS was $9.5 million compared to $13.6 million in 1999. In 2000, EWS
generated $804.8 million of operating revenues compared to $826.7 million for
the year earlier period, a decrease of 2.6%. The decrease in EWS's operating
revenues is the result of a 6.3% decrease in the average value of the British
pound in U.S. dollars. In its home currency, EWS's revenues were up 3.4% in 2000
as compared to 1999. Operating expenses in 2000 were $802.8 million, an increase
of 3.5% over the 1999 level. Operating expenses increased primarily due to
increases in fuel prices and lease expenses. Lease expenses increased as EWS
added new locomotives and railcars to its fleet in order to raise the level of
customer service. Additionally, in the fourth quarter of 2000, EWS's operating
results were negatively impacted by severe rail network disruptions in the
United Kingdom which affected all rail operators. The disruptions resulted from
a detailed review of the rail line by Railtrack, the owner of the rail
infrastructure, following severe flooding and a rail accident involving another
rail carrier.

     We filed a Form 10-K/A (an amendment to Form 10-K) with the SEC containing
EWS's financial statements for each of its fiscal years ended March 31, 1998,
1999, 2000. The Form 10-K/A is filed within six months after EWS's fiscal year
end which is March 31 of each year.

     Tranz Rail. The contribution from Tranz Rail to our equity in net income of
affiliates in 2000 was $1.8 million versus $8.9 million in 1999. In 2000, Tranz
Rail generated $273.9 million in operating revenues compared to $311.4 million
in the previous year, a decrease of 12.0%. This decrease was due to a 13.6%
decrease in the average value of the New Zealand dollar in U.S. dollars. In its
home currency, Tranz Rail's revenues were up 1.8% while its operating expenses
increased 5.7% versus 1999. The decrease in Tranz Rail's contribution is largely
the result of several significant one-time items in 1999 and 2000. Our equity in
the 1999 net income of Tranz Rail includes the following: a $6.2 million tax
credit resulting from a review of its deferred tax provisioning, a $1.3 million
charge related to an increase in its redundancy provision, and a $1.0 million
write-off for certain previously capitalized costs (largely for feasibility
studies). The 2000 results were negatively impacted by charges for
organizational changes of $1.4 million. Excluding the special items in both
years, our equity in the net income of Tranz Rail would have been $3.2 million
in 2000 compared to $4.7 million in 1999.


     Tranz Rail is subject to the reporting requirements of the Securities
Exchange Act of 1934 applicable to a foreign private issuer, and, accordingly,
files certain reports and other information with the SEC.

                                       20
<PAGE>


     ATN. The contribution from ATN to our equity in net income of affiliates
was $0.2 million in 2000 versus $(0.1) million in 1999. The 1999 results
included the effect of a $1.0 million write-off of deferred acquisition costs
incurred in an unsuccessful attempt to acquire a rail freight franchise in
Australia. In 2000, ATN generated operating revenues of $18.9 million and
incurred operating expenses of $17.6 million.

     Currency Fluctuation. The value in U.S. dollars of our investments in
companies outside the United States and of our equity in the earnings of those
companies fluctuates from time to time as the value in U.S. dollars of the
currencies of those countries fluctuates. Accordingly, our net earnings and
stockholders' equity may fluctuate as the value of those currencies fluctuates.


RESULTS OF OPERATIONS:  1999 COMPARED TO 1998

     Our net income for 1999 was $66.9 million compared with $76.3 million for
1998, a decrease of $9.4 million, or 12.4%.

     OPERATING REVENUES. Operating revenues for North American operations in
1999 were $362.7 million compared with $344.1 million for 1998, an increase of
$18.7 million or 5.4%. Volume, as measured by carloads handled, for 1999 was
563,200 carloads (excluding haulage business) compared with 547,662 carloads in
1998, an increase of 15,538 carloads or 2.8%.

     The following table compares our 1999 and 1998 revenues:


                                            OPERATING REVENUE COMPARISON
                                                    1999 VS. 1998
<TABLE>
<CAPTION>
                                                                  % OF GROSS              % OF GROSS
                                                          1999      FREIGHT       1998       FREIGHT        %
                                                        REVENUES   REVENUES     REVENUES    REVENUES     CHANGE
                                                        --------  --------      --------    --------     ------
                                                                  (IN THOUSANDS, EXCEPT PERCENTAGES)

<S>                                                   <C>          <C>       <C>            <C>        <C>
Gross freight revenues............................    $  326,340     100.0%     $323,127      100.0%      1.0%
Allowances, absorptions and adjustments...........       (15,148)     (4.6)      (15,868)      (4.9)      4.5
                                                      ----------   -------    ----------     ------
Net freight revenues..............................       311,192      95.4       307,259       95.1       1.3
Switching, haulage, demurrage, passenger
     and other revenues...........................        51,552      15.8        36,803       11.4      40.1
                                                      ----------   -------    ----------    -------
Operating revenues................................    $  362,744      111.2%    $344,062      106.5%      5.4%
                                                      ==========   ========     ========    =======
</TABLE>

     Gross freight revenues in all commodity groups for 1999 were unfavorably
affected by merger-related industry service problems in the eastern U.S. Gross
freight revenues for 1999 increased in three of six commodity groups compared
with 1998, with an overall increase of 1.0%. Carload volume also increased in
three of six commodity groups compared to 1998, with an overall increase of
2.8%. The following table compares volume (in carloads), gross freight revenues
and average revenue per carload by commodity group for the years 1999 and 1998:

<TABLE>
<CAPTION>
                           CARLOAD AND GROSS FREIGHT REVENUE COMPARISON BY COMMODITY GROUP
                                                    1999 VS. 1998

                                                                                                    AVERAGE
                                                                                                    REVENUE
                                                    CARLOADS          GROSS FREIGHT REVENUES      PER CARLOAD
                                                    --------          ----------------------      -----------
              COMMODITY GROUP                   1999       1998         1999         1998         1999    1998
------------------------------------------   ---------    -------     ----------   ----------    ------- ------
                                                                            (IN THOUSANDS)

<S>                                            <C>        <C>         <C>          <C>           <C>     <C>
Paper and other forest products                148,880    152,770     $  133,609   $  136,061    $   897 $  891
Minerals                                       245,617    235,469         98,223       91,771        400    390
Industrial products                             53,776     58,492         47,295       50,725        879    867
Food and grain                                  30,610     27,533         20,178       19,036        659    691
Intermodal                                      63,975     52,671         12,732       10,364        199    197
Other                                           20,342     20,727         14,303       15,170        703    732
                                             ---------    -------     ----------   ----------
Total                                          563,200    547,662     $  326,340   $  323,127    $   579  $ 590
                                             =========    =======     ==========   ==========
</TABLE>

     Paper and other forest products volume and gross freight revenues decreased
by 2.6% and 1.8%, respectively, primarily due to competitive pressure from
imports of printing paper as well as the conversion of certain overhead lumber
shipments to a wholesale freight haulage arrangement.

                                       21
<PAGE>

     Volume and gross freight revenues for minerals increased 4.3% and 7.0%,
respectively, primarily due to increased demand for roofing material and
increases in rail shipments of iron ore sourced from the upper Midwest,
partially offset by reductions in sand and stone. Volume and gross freight
revenues for coal remained substantially unchanged compared to the prior year.
Sand and stone volume and gross freight revenues decreased primarily due to a
reduction in shipments of aggregates from our operating territory.

     Volume and gross freight revenues for industrial products decreased by 8.1%
and 6.8%, respectively, primarily due to a reduction in steel shipments from a
major customer of ACRI caused by continued pressure on the steel industry from
low priced imports from offshore countries.

     Food and grain volume and gross freight revenues increased 11.2% and 6.0%,
respectively, primarily due to increases in shipments of corn and other grains
in our operating territory. Intermodal volume and gross freight revenues
increased by 21.5% and 22.9%, respectively, primarily due to increased market
share resulting from service improvements during 1999. Other volume and gross
freight revenues decreased by 1.9% and 5.7%, respectively, primarily due to
decreases in shipments of scrap metal to casting producers in our operating
territory.

     Wholesale freight haulage revenue, which is not included in our gross
freight revenues, increased $17.0 million in 1999 to $29.8 million. The increase
is primarily related to a full year in 1999 of a wholesale freight haulage
agreement with CN that began in August 1998.

     OPERATING EXPENSES. Operating expenses were $272.7 million for 1999, an
increase of $20.3 million, or 8.1%, compared with 1998. The largest increases in
operating expenses occurred in equipment rents, property taxes, depreciation and
casualty and insurance costs. Our operating ratio (operating expenses as a
percentage of operating revenues) was 75.2% for 1999, compared to 73.3% in 1998.

     The following table sets forth a comparison of our operating expenses
during 1999 and 1998:
<TABLE>
<CAPTION>

                                             OPERATING EXPENSE COMPARISON
                                                    1999 VS. 1998

                                                                      1999                1998          % CHANGE
                                                                  -----------         ------------      --------
                                                                                      (IN THOUSANDS)
<S>                                                                  <C>              <C>                   <C>
Labor expense (including payroll taxes
   and fringe benefits)........................................      $115,680         $    111,729          3.5%
Diesel fuel....................................................        20,270               19,982          1.4
Materials......................................................        26,253               26,609         (1.3)
Equipment rents, net...........................................        27,739               23,449         18.3
Joint facilities, net..........................................         1,074                2,252            *
Depreciation...................................................        22,872               19,910         14.9
Casualty and insurance.........................................         9,726                8,514         14.2
Property taxes.................................................         3,909                3,178         23.0
Reorganization costs...........................................         3,874                   --            *
Other operating................................................        41,269               36,700         12.4
                                                                  -----------         ------------
Operating expenses.............................................   $   272,666         $    252,323          8.1%
                                                                  ===========         ============
</TABLE>


*- Not meaningful.


     Labor expense for 1999 increased 3.5% compared with 1998 primarily due to
an average 3% increase in wage rates at the beginning of 1999 and a 10% increase
in the costs of our medical and dental programs, partially offset by a 1%
decrease in the average work force and a $4.7 million decrease in incentive
expense. Labor expense as a percentage of operating revenues decreased to 31.9%
in 1999 compared with 32.5% in 1998.


     Diesel fuel expense for 1999 increased $0.3 million or 1.4% versus 1998 due
primarily to a 5.1% increase in fuel consumption, partially offset by a 3.4%
reduction in the 1999 average fuel price compared to 1998. Materials expense for
1999 decreased $0.4 million or 1.3% versus 1998 primarily due to a reduction in
repair costs for locomotives and freight cars. Net equipment rents for 1999
increased by $4.3 million or 18.3% primarily due to increased equipment lease
costs associated with freight cars which we sold and leased back in December
1998, new leases entered into in the second half of 1998 and increased rents
paid to other railroads related to the increase in intermodal carloads. Net
joint facilities expense decreased $1.2 million

                                       22
<PAGE>

compared to 1998, primarily due to improved routing of trains to accelerate
movements through the Chicago corridor.

     Depreciation expense for 1999 increased $3.0 million or 14.9% primarily due
to capital spending programs on track and structures to support increasing
volume levels. Casualty and insurance expense for 1999 increased by $1.2 million
or 14.2% primarily due to higher personal injury claim costs. Property taxes for
1999 increased by $0.7 million or 23.0% primarily due to credits recorded in
1998 related to the successful appeal of property tax assessments for the tax
years 1994 through 1997. Other operating expenses increased in part due to
increased costs associated with cross training employees during union contract
negotiations and increases in repair costs associated with derailments.


     Reorganization costs, incurred in 1999, represent costs associated with
reorganization of personnel and agreements that we entered into with former
employees.


     OTHER INCOME (EXPENSE) AND INCOME TAXES. Other income for 1999 was $1.2
million, $0.1 million less than 1998. This change is primarily attributable to a
reduction in gains on sales of non-operating real estate.

     Interest expense for 1999 was $17.8 million, an increase of $0.7 million
over 1998, primarily due to increased borrowings related to additional
investments in EWS amounting to $31.6 million. The income tax provision for 1999
was $29.1 million, a decrease of $3.1 million compared to 1998 due to the
decrease in pre-tax income.

     EQUITY IN NET INCOME OF AFFILIATES. Our results for 1999 included equity in
net income of affiliates of $22.5 million compared to $27.2 million for 1998.

     EWS. The contribution from EWS to our equity in net income of affiliates in
1999 was $13.6 million versus $21.7 million for 1998. In 1999 EWS generated
$826.7 million in operating revenues compared to $897.3 million for the year
earlier period, a decrease of 7.9%. Operating expenses in 1999 were $775.7
million, a decrease of 4.0% over the 1998 level.

     The decrease in EWS's operating revenues is primarily the result of a
reduction in infrastructure services as a result of reduced maintenance work
train requirements from Railtrack, the owner of the track structure in Great
Britain. In addition, domestic steel production in Great Britain was under
pressure due to a worldwide oversupply of steel. The decrease in EWS's operating
expenses is primarily attributable to EWS's continued restructuring of its
operations as part of its conversion from a government-owned railway to a
privately-owned, market-based transport provider. EWS's restructuring is
dependent upon the acquisition of new locomotives and railcars, both to replace
existing equipment and to provide capacity for future growth. At December 31,
1999, EWS had received 187 new locomotives from 1996 and 1997 orders to General
Motors Corporation for 280 units. EWS had also received 884 new railcars from a
1997 order to Thrall Car Manufacturing Company for 2,500 units. During 1999 EWS
refined its U.S. GAAP capitalization policy with regard to locomotive overhauls
to include certain overheads not previously capitalized, resulting in an
increase in the EWS contribution to our equity in net income of affiliates of
$1.5 million.

     Tranz Rail. The contribution from Tranz Rail to our equity in net income of
affiliates in 1999 was $8.9 million versus $4.9 million in 1998. The increase in
Tranz Rail's contribution is largely the result of several significant one-time
items. The impact of the major items on our equity in net income of Tranz Rail
includes the following: a $6.2 million tax credit resulting from a review of its
deferred tax provisioning, a $1.3 million charge related to an increase in its
redundancy provision, and a $1.0 million write-off for certain previously
capitalized pre-commencement costs (largely for feasibility studies). In 1999,
Tranz Rail generated $311.4 million in operating revenues compared to $309.8
million for 1998, an increase of 0.5%. Operating expenses in 1999 were $290.1
million, an increase of 7.3% versus the 1998 level. The increase in Tranz Rail's
operating expenses relate primarily to the one-time items previously discussed.

     ATN. The contribution from ATN to our equity in net income of affiliates
was $(0.1) million in 1999 versus $0.7 million in 1998. ATN recognized a charge
for costs incurred in an unsuccessful attempt to acquire V-Line Freight, a
railroad operating company in Australia. The impact of this charge on our equity
in net income from ATN was $1.0 million. In 1999 ATN generated operating
revenues of $21.8 million and operating expenses of $20.9 million, which
includes the charge previously discussed.

                                       23
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Cash generated from operations is our primary source of liquidity and is
used principally for capital expenditures, debt service and working capital
requirements. We also generate cash from asset sales and from financing
activities. From 1996 through 2000, we generated cash in the amounts of $416.6
million from operations, $46.0 million from the sale and salvage of assets,
$248.5 million from increased debt, $12.9 million from equity issuances and $9.6
million in dividends from Tranz Rail. These cash amounts were primarily used to
fund $503.5 million of capital expenditures, $92.5 million of asset
acquisitions, $58.5 million of share repurchases and $83.7 million of
investments in affiliates. At December 31, 2000, we had $391.3 million of total
debt outstanding, which constituted 45.2% of our total capitalization.


     On August 1, 2000, we obtained an unsecured revolving credit facility (the
"Revolver") with a syndicate of banks with a total capacity of $275.0 million,
which allows us to choose various floating rate options. The Revolver includes a
$175.0 million tranche with an expiration of July 31, 2005 and a $100.0 million
tranche with an expiration of July 31, 2001. We pay a facility fee based on the
Revolver's total capacity and a utilization fee dependent on the average amounts
outstanding under the Revolver. Such fees vary based on our credit rating and
leverage ratio. Principal reductions are not required under the Revolver prior
to its expiration date. This Revolver replaced various revolving credit
agreements with a total capacity of $183.3 million that were scheduled to expire
on October 31, 2000. In addition, we have a separate $50.0 million unsecured
credit facility which serves as a back-up facility for our commercial paper
issues. This facility expires on July 31, 2001. We expect to be able to
refinance the credit facilities that expire in 2001 prior to their expiration.
The unused borrowing availability under our committed loan facilities was $98.8
million at December 31, 2000.


     Our liquidity to date has been significantly enhanced because we have not
been required to pay current income taxes (other than the Alternative Minimum
Tax) as a result of net operating loss carryforwards ("NOLs") for income tax
purposes. These NOLs are largely the result of temporary differences in the
recognition of certain revenues and expenses for financial and income tax
purposes. We have recorded a deferred liability for the temporary differences on
our consolidated balance sheets. At December 31, 2000, we had $1.1 million of
NOLs remaining, which will begin to expire in 2012. We expect to be able to
fully utilize these NOLs to offset future tax liabilities.

     Our financing arrangements limit our ability to pay dividends on our
capital stock, incur additional indebtedness, create liens on our assets,
repurchase shares of capital stock and make certain loans, investments or
guarantees. EWS's and ATN's borrowing arrangements contain provisions that
substantially restrict their ability to transfer funds to us in the form of cash
dividends, loans or advances. Tranz Rail's net assets are not similarly
restricted.

     Capital expenditures totaled $90.8 million in 2000, a decrease of $17.2
million versus 1999. The decrease in capital expenditures in 2000 over 1999
consists of an $18.3 million decrease in roadway and structure improvements
offset by a $1.0 million increase in expenditures for equipment. The decrease in
roadway and structures relates primarily to a reduction in the number of ties
installed and miles of rail installed and surfaced. The increase in equipment
expenditures reflects a slight increase in the amount of equipment upgrades
performed in 2000 compared to 1999.

The following table sets forth our capital expenditures for the periods
indicated:

                              CAPITAL EXPENDITURES
<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                  --------------------------------------------------------------
                                                     2000          1999         1998         1997         1996
                                                  ----------   ----------   ----------   ----------    ---------
                                                                           (IN THOUSANDS)

<S>                                             <C>          <C>          <C>          <C>           <C>
Roadway and structures (1)...................     $   78,128   $   96,382   $  103,086   $   88,159    $  56,304
Locomotive, railcar and other
    transportation equipment.................         12,651       11,623       21,014       23,696       12,454
                                                  ----------   ----------   ----------   ----------    ---------
Total (2)....................................     $   90,779     $108,005     $124,100     $111,855    $  68,758
                                                  ==========     ========     ========     ========    =========
</TABLE>
--------------
(1)  Includes communications and signals, bridges and other improvements.
(2)  Excludes $92.5 million expended in 1997 to acquire additional rail lines
     and pay related transaction costs.


                                       24
<PAGE>



     The following table presents a summary of our roadway and structures
improvements for the periods indicated:


                       ROADWAY AND STRUCTURE IMPROVEMENTS
<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                    -----------------------------------------------------------
                                                     2000          1999         1998         1997        1996(1)
                                                    -------      -------      -------       ------       -------

<S>                                                <C>          <C>          <C>          <C>            <C>
Track miles surfaced (2)......................       1,138        1,219        1,070        1,090          949
Track miles of rail installed.................         116          131          102          104           51
Tons of ballast applied (in thousands)........         463          445          564          519          417
Ties installed (in thousands).................         226          282          434          505          280
--------------
</TABLE>

1)   A portion of the roadway and structure improvements in 1996 was funded by
     Metra, the commuter rail division of the Regional Transportation Authority
     which operates the commuter rail system for northeast Illinois, including
     on a portion of WCL's trackage in Illinois.

(2)  Surfacing is the process by which track is aligned and cross-leveled in
     conjunction with the application of ballast and the installation of ties.

     We believe that our cash flow from operations, together with available
amounts under our revolving credit facilities, will allow us to meet our future
liquidity and capital expenditure requirements.

RECENT ACCOUNTING PRONOUNCEMENTS

     SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", establishes accounting and reporting standards for derivatives and
for hedging activities. As issued, SFAS No.133 was effective for all fiscal
years beginning after June 15, 1999. In June 1999, SFAS No. 137 was issued
effectively deferring the date or required adoption of SFAS No. 133 to fiscal
years beginning after June 15, 2000. In June 2000, SFAS No. 138 was issued which
amends the accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and hedging activities.

     The Company expects to adopt SFAS No. 133, as amended, effective January 1,
2001. SFAS No. 133 requires the Company to recognize all derivatives on the
balance sheet at fair value. Based on this pronouncement, the Company's fuel
hedge program would be classified as a cash flow hedge. Changes in the fair
value of the fuel hedge program will be recognized in other comprehensive income
and the corresponding asset or liability will be recognized on the balance
sheet. Based on the Company's fuel hedge positions at December 31, 2000, the
Company estimates that an asset and accumulated other comprehensive income of
approximately $0.3 million for the fair value of its fuel hedge portfolio, net
of taxes, would have been reported for 2000 if SFAS No. 133, as amended, had
been adopted at that time.

                                       25
<PAGE>


     ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     In the ordinary course of business, we utilize various financial
instruments which inherently have some degree of market risk. The quantitative
and qualitative information presented below describe significant aspects of our
financial instrument programs which have material market risk.

     Interest Rate Sensitivity. We are exposed to changes in interest rates
primarily as a result of our borrowing activities, which include fixed and
floating rate borrowings used to maintain liquidity and fund our business
operations. The nature and amount of long-term debt can be expected to vary as a
result of future business requirements, market conditions and other factors. We
are not currently a party to any interest rate risk management transactions. The
table below presents principal cash flows and related weighted average interest
rates (inclusive of facility and other fees) by contractual maturity dates of
debt instruments as of December 31, 2000.


<TABLE>
<CAPTION>
                                              COMMERCIAL PAPER AND
                      FIXED RATE DEBT           VARIABLE RATE DEBT                            TOTAL DEBT
                      ---------------           ------------------        INTEREST-           ---------
                                AVERAGE                     AVERAGE           FREE                     AVERAGE
                               INTEREST                    INTEREST           DEBT                     INTEREST
   MATURITY          AMOUNT      RATE            AMOUNT       RATE           AMOUNT        AMOUNT        RATE
   --------          ------      ----            ------       ----           ------        ------        ----
                                           (in thousands, except percentages)

<S>            <C>           <C>            <C>          <C>            <C>               <C>         <C>
   2001            $    -                   $  66,721       7.2%        $  2,686           $  69,407     6.9%
   2002                 -                          -                       2,655               2,655     0.0
   2003                 -                          -                       2,039               2,039     0.0
   2004                 -                          -                       1,552               1,552     0.0
   2005                 -                     159,500       7.6            1,144             160,644     7.5
   Thereafter       150,000      6.8%              -                       4,994             154,994     6.6
                  ---------                 ---------                   --------             -------
   Total          $ 150,000      6.8%       $ 226,221       7.5%        $ 15,070           $  391,291     6.9%
                  =========                 =========                   ========           ==========
   Fair Value     $ 125,132                 $ 226,221                   $ 11,268           $  362,621
                  =========                 =========                   ========           ==========
</TABLE>


     Commodity Price Sensitivity. We have a program to hedge against
fluctuations in the price of our diesel fuel purchases. This program includes
forward purchases for delivery at fueling facilities, and various commodity swap
and collar transactions which are accounted for as hedges. Based on historical
information, we believe there is a significant correlation between the market
prices of diesel fuel and #2 heating oil, and our swap and collar transactions
are typically based on the delivery price of #2 heating oil. Our contracts
require us to purchase a defined quantity at a defined price. Such transactions
are generally settled in cash with the counter party. As of December 31, 2000,
we had hedge arrangements covering approximately 23% of our expected fuel
consumption for the first half of 2001 and approximately 10% of our expected
fuel consumption for the second half of 2001. As of December 31, 2000, 4.9
million notional gallons were included in diesel fuel swaps and collar
arrangements at weighted average contract prices ranging from $.7065 to $.8160
per gallon. This price does not include taxes, transportation costs and certain
other fuel handling costs. As of December 31, 2000, the unrealized gain on these
hedges, net of taxes, was $0.3 million. Gains and losses from hedge transactions
are deferred and matched to specific fuel purchases. At December 31, 2000, we
also maintained fuel inventories used in normal operations which were not
material to our overall financial position and therefore represent no
significant market exposure.

     Investments in Affiliates. The value in U.S. dollars of our investments in
companies outside the United States and of our equity in the earnings of those
companies fluctuates from time to time as the value in U.S. dollars of the
currencies of those countries fluctuates. We do not hedge this exposure. We have
entered into a zero cost collar arrangement to hedge a portion of our foreign
currency exposure on future management fees from EWS which are payable in pounds
sterling. The collar has a put strike of $1.550 and a call strike of $1.6520
with a notional amount of (pound)0.75 million as of December 31, 2000. As of
December 31, 2000, the unrealized gain on this collar arrangement was
insignificant.

     We do not purchase or hold derivative financial instruments for trading
purposes.



                                       26
<PAGE>




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                                          PAGE
                                                                                                          ----

<S>                                                                                                        <C>
         INDEPENDENT AUDITORS' REPORT............................................................          28

         FINANCIAL STATEMENTS

             Consolidated Balance Sheets.........................................................          29-30
             Consolidated Statements of Income...................................................          31
             Consolidated Statements of Changes in Stockholders' Equity..........................          32
             Consolidated Statements of Cash Flows...............................................          33
             Notes to Consolidated Financial Statements..........................................          34-48

</TABLE>


                                       27

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Wisconsin Central Transportation Corporation:

We have audited the consolidated balance sheets of Wisconsin Central
Transportation Corporation and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wisconsin Central
Transportation Corporation and subsidiaries as of December 31, 2000 and 1999,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.

                                                              KPMG LLP


Chicago, Illinois
January 31, 2001





                                       28
<PAGE>




          WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (IN THOUSANDS)

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,
                                                                                ----------------------------------
                                                                                   2000                  1999
                                                                                ------------         -------------
<S>                                                                            <C>                  <C>
CURRENT ASSETS:
   Cash and cash equivalents...............................................     $        729         $       1,543
   Receivables, net of allowance for doubtful accounts of
      $2,218 and $2,196 at December 31, 2000 and 1999......................           88,369                88,035
   Materials and supplies..................................................           24,078                23,320
   Deferred income taxes...................................................            1,775                 1,425
   Other current assets....................................................            4,572                 3,284
                                                                                ------------         -------------
      Total current assets.................................................          119,523               117,607

INVESTMENTS IN INTERNATIONAL AFFILIATES....................................          208,316               223,046
PROPERTIES:
   Roadway and structures..................................................          870,662               799,947
   Equipment...............................................................          132,320               130,231
                                                                                ------------         -------------
      Total properties.....................................................        1,002,982               930,178
   Less accumulated depreciation...........................................         (134,742)             (114,182)
                                                                                ------------         -------------
      Net properties.......................................................          868,240               815,996

OTHER ASSETS, PRINCIPALLY DEFERRED FINANCING COSTS.........................            3,086                 2,854
                                                                                ------------         -------------

      Total assets...........................................................     $1,199,165            $1,159,503
                                                                                ============         =============
</TABLE>


                The accompanying notes to consolidated financial
                    statements are an integral part of these
                              financial statements.


                                       29

<PAGE>


          WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                            DECEMBER 31,
                                                                                --------------------------------
                                                                                   2000                 1999
                                                                                ------------        ------------
<S>                                                                             <C>                 <C>
CURRENT LIABILITIES:
    Short-term debt..........................................................   $     69,407        $    180,280
    Accounts payable.........................................................         45,728              47,239
    Accrued expenses.........................................................         87,743              88,397
    Income taxes payable.....................................................          3,652                 877
    Interest payable.........................................................          2,870               2,943
                                                                                ------------        ------------
      Total current liabilities..............................................        209,400             319,736

LONG-TERM DEBT...............................................................        321,884             162,853

OTHER LIABILITIES............................................................          9,842              10,271

DEFERRED INCOME TAXES........................................................        172,256             147,663

DEFERRED INCOME..............................................................         10,722               9,060
                                                                                ------------        ------------

      Total liabilities......................................................        724,104             649,583

STOCKHOLDERS' EQUITY:
   Preferred stock, par value $1.00; authorized
      1,000,000 shares; none issued or outstanding...........................             --                  --
   Common stock, par value $.01; authorized 150,000,000
      shares; issued and outstanding, 46,394,357 shares
      and 51,250,231 shares in 2000 and 1999, respectively...................            464                 513
   Paid-in capital...........................................................        106,405             116,505
   Retained earnings.........................................................        395,261             396,798
   Accumulated other comprehensive income....................................        (27,069)             (3,896)
                                                                                ------------        ------------
      Total stockholders' equity.............................................        475,061             509,920
                                                                                ------------        ------------
      Total liabilities and stockholders' equity................................. $1,199,165          $1,159,503
                                                                                  ==========          ==========

</TABLE>

                The accompanying notes to consolidated financial
                    statements are an integral part of these
                              financial statements.

                                       30

<PAGE>


          WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                   -----------------------------------------------
                                                                        2000              1999            1998
                                                                   -------------     ------------      -----------
<S>                                                                <C>               <C>               <C>
REVENUES:
    Freight.....................................................   $     314,669     $    311,192      $   307,259
    Other.......................................................          57,445           51,552           36,803
                                                                       ---------       ----------       ----------
      Operating revenues........................................         372,114          362,744          344,062

EXPENSES:
    Roadway and structures......................................          57,240           53,286           50,116
    Equipment...................................................          65,279           65,042           60,821
    Transportation..............................................         117,016          112,045          105,736
    General and administrative..................................          38,840           38,419           35,650
    Reorganization costs..........................................           725            3,874                -
                                                                     -----------     ------------        ---------
      Operating expenses........................................         279,100          272,666          252,323
                                                                     -----------     ------------        ---------
INCOME FROM OPERATIONS..........................................          93,014           90,078           91,739

OTHER INCOME (EXPENSE):
   Sale of rights under transportation agreement................              --               --            5,445
    Interest expense............................................         (24,547)         (17,830)         (17,169)
    Other income................................................           2,479            1,246            1,317
                                                                   -------------     ------------      -----------
      Total other income (expense), net.........................         (22,068)         (16,584)         (10,407)
                                                                   -------------     ------------      -----------

INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME
   OF INTERNATIONAL AFFILIATES..................................          70,946           73,494           81,332
Provision for income taxes......................................          28,095           29,103           32,205
                                                                   -------------     ------------      -----------

INCOME BEFORE EQUITY IN NET INCOME OF INTERNATIONAL
   AFFILIATES...................................................          42,851           44,391           49,127
Equity in net income of international affiliates................           2,708           22,466           27,167
                                                                   -------------     ------------      -----------
NET INCOME......................................................   $      45,559     $     66,857      $    76,294
                                                                   =============     ============      ===========

COMMON SHARES OUTSTANDING:
   Weighted average common shares...............................          48,999           51,196           51,079
    Dilutive effect of common stock options.....................               5              106              242
                                                                   -------------     ------------      -----------
    Weighted average diluted shares.............................          49,004           51,302           51,321
                                                                   =============     ============      ===========

BASIC EARNINGS PER SHARE........................................   $        0.93     $       1.31      $      1.49
                                                                   =============     ============      ===========

DILUTED EARNINGS PER SHARE......................................   $        0.93     $       1.30      $      1.49
                                                                   =============     ============      ===========
</TABLE>


                The accompanying notes to consolidated financial
                    statements are an integral part of these
                              financial statements.


                                       31

<PAGE>


          WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                                        ACCUMULATED
                                                                                                           OTHER
                                            COMMON STOCK                       COMPRE-                     COMPRE-
                                         ------------------     PAID-IN        HENSIVE       RETAINED      HENSIVE
                                         SHARES      AMOUNT     CAPITAL         INCOME       EARNINGS       INCOME          TOTAL
                                         ------     -------    ----------       ------      ----------     ---------       --------

<S>                                     <C>          <C>        <C>          <C>            <C>             <C>         <C>
BALANCE AT DECEMBER 31, 1997...........  51,011       $ 510      $112,492                   $  253,647       $ 3,036    $   369,685

Comprehensive income:
 Net income............................      --          --                   $ 76,294          76,294            --         76,294
 Other comprehensive income:
  Currency translation adjustments ....                                         (4,327)             --        (4,327)        (4,327)
                                                                               --------
Comprehensive income...................                                       $ 71,967
                                                                               ========
Common stock issued:
 Employee stock purchase plans ........      98           1         1,892                           --            --          1,893
 Stock option plans. ..................      34          --           449                           --            --            449
                                         ------     -------      --------                   ----------    ----------      ---------
BALANCE AT DECEMBER 31, 1998..........   51,143         511       114,833                      329,941        (1,291)       443,994

Comprehensive income:
 Net income ...........................      --          --           --        66,857          66,857            --         66,857
 Other comprehensive income:
  Currency translation adjustments ....                                         (2,605)             --        (2,605)        (2,605)
                                                                              --------
Comprehensive income ..................                                       $ 64,252
                                                                              ========
Common stock issued:
 Employee stock purchase plans ........      91           2         1,464                           --            --          1,466
 Stock option plans ...................      16          --           208                           --            --            208
                                         ------     -------      --------                   ----------    ----------      ---------

BALANCE AT DECEMBER 31, 1999...........  51,250         513       116,505                      396,798        (3,896)       509,920

Comprehensive income:
 Net income ...........................      --          --           --      $ 45,559          45,559                       45,559
 Other comprehensive income:
  Currency translation adjustments ....                                        (23,173)             --       (23,173)       (23,173)
                                                                              --------
Comprehensive income...................                                       $ 22,386
                                                                              =========

Common stock issued:
 Employee stock purchase plans ........     104           1         1,181                           --            --          1,182
 Stock option plans....................       3          --            40                           --            --             40

Common stock repurchased...............  (4,963)        (50)      (11,321)                     (47,096)           --        (58,467)
                                         ------     -------      --------                   ----------    ----------      ---------

BALANCE AT DECEMBER 31, 2000...........  46,394     $   464      $106,405                   $  395,261    $  (27,069)     $ 475,061
                                         ======     =======      ========                   ==========    ==========      =========

</TABLE>


                The accompanying notes to consolidated financial
                    statements are an integral part of these
                              financial statements.


                                       32
<PAGE>


          WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                       ----------------------------------------------
                                                                          2000              1999             1998
                                                                       -----------      -----------       -----------
<S>                                                                    <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income....................................................    $    45,559      $   66,857       $    76,294
     Reconciliation of net income to net cash
         provided by operating activities:
         Depreciation and amortization.............................         26,211          23,353            20,609
         Deferred income taxes.....................................         24,243          26,417            23,872
         Equity in net income of international affiliates..........         (2,708)        (22,466)          (27,167)
         Gains on property sales...................................           (972)           (221)             (592)
         Amortization of deferred gains on sale-leaseback
              of equipment.........................................         (1,270)         (1,253)           (1,122)
         Changes in working capital:
              Accounts receivable..................................           (334)         (9,510)            1,197
              Materials and supplies...............................           (758)            290            (3,050)
              Other current assets, excluding
                  deferred income taxes............................         (1,288)         (1,866)            1,965
              Accrued disputed switching charges and
                  associated interest..............................             --         (21,797)            1,186
              Other current liabilities, excluding debt............          1,406            (843)           11,462
         Other liabilities.........................................           (429)          5,549                58
                                                                           --------      -----------      ----------
Net cash provided by operating activities..........................         89,660          64,510           104,712
                                                                           --------      -----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Property additions............................................        (90,779)       (108,005)         (124,100)
     Property sales and other transactions.........................          1,236           1,150             4,432
     Investments in international affiliates.......................         (6,717)        (32,248)               --
     Dividend from affiliate.......................................          1,860           2,156             2,224
     Proceeds from sale-leaseback of equipment.....................         13,614               --           19,000
                                                                       -----------      ------------      -----------
Net cash used for investing activities.............................        (80,786)       (136,947)          (98,444)
                                                                       -----------      -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of debt securities.........................             --               --           150,000
     Repayments of debt............................................             --               --          (156,971)
     Other debt issued.............................................         48,158           69,334                --
     Debt issuance costs...........................................           (601)              --            (3,297)
     Issuance of common stock, net.................................          1,222            1,674             2,342
     Common stock repurchased......................................        (58,467)              --                --
                                                                       ------------      -----------       -----------
Net cash provided by (used for) financing activities...............         (9,688)          71,008            (7,926)
                                                                       ------------      -----------       -----------
Net decrease in cash and cash equivalents..........................           (814)          (1,429)           (1,658)
Cash and cash equivalents, beginning of year.......................          1,543            2,972             4,630
                                                                       -----------      -----------       -----------
Cash and cash equivalents, end of year.............................    $       729      $     1,543       $     2,972
                                                                       ===========      ===========       ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid during the year for:
         Interest .................................................    $    25,850      $    18,376       $    15,955
         Income taxes..............................................          1,162            6,028             1,900
</TABLE>

                The accompanying notes to consolidated financial
                    statements are an integral part of these
                              financial statements.

                                       33

<PAGE>


          WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     NATURE OF BUSINESS

     Wisconsin Central Transportation Corporation ("WCTC") operates
     approximately 2,760 route miles of railway serving Wisconsin, Illinois,
     Minnesota, Michigan's Upper Peninsula and Ontario through its principal
     operating subsidiaries, Wisconsin Central Ltd. ("WCL"), Fox Valley &
     Western Ltd. ("FV&W"), WCL Railcars, Inc., Wisconsin Chicago Link Ltd.,
     Sault Ste. Marie Bridge Company ("SSM"), WC Canada Holdings, Inc. and
     Algoma Central Railway Inc. ("ACRI"). WCTC, through its Wisconsin Central
     International, Inc. ("WCI") subsidiary, also holds a 23.7% equity interest
     in Tranz Rail Holdings Limited ("Tranz Rail"), which provides
     transportation services in New Zealand, a 42.5% equity interest in English
     Welsh & Scottish Railway Holdings Limited ("EWS"), which provides
     transportation services in Great Britain, and a 33% equity interest in
     Australian Transport Network Limited ("ATN") which provides transportation
     services in Australia.


     PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements presented herein include the results
     of operations of WCTC and its wholly-owned subsidiaries. WCTC and its
     subsidiaries are referred to herein as the Company. All intercompany
     balances and transactions have been eliminated in consolidation.

     USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities, the disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported amount
     of revenues and expenses during the reporting period. Actual results could
     differ from those estimates.

     CASH AND CASH EQUIVALENTS

     Cash equivalents consist of investments in money market instruments with
     original maturities of less than 30 days and are stated at cost which
     equals redemption value. Checks that have been issued but have not cleared
     the bank are included in accounts payable.

     MATERIALS AND SUPPLIES

     Materials and supplies consist mainly of fuel oil and items for improvement
     and maintenance of roadway, structures and equipment, and are stated at the
     lower of cost or market utilizing average costs. As of December 31, 2000,
     the Company had entered into hedging positions for approximately 23%
     (unaudited) of its expected fuel consumption for the first half of 2001 and
     approximately 10% (unaudited) of its expected fuel consumption for the
     balance of 2001. Gains and losses on such transactions are deferred and
     matched to specific fuel purchases.

     INVESTMENTS IN INTERNATIONAL AFFILIATES/CURRENCY TRANSLATION

     The Company's investments in its international affiliates are accounted for
     under the equity method of accounting. Under this method, the Company's
     share of the net income of these investments is recorded in the Company's
     financial statements when earned and dividends are credited against the
     investment in affiliates when received.

     The translation of foreign currency amounts into U.S. dollars is performed
     for balance sheet accounts using period-end exchange rates and for revenue
     and expense accounts using the average exchange rate during the period.
     Gains or losses resulting from currency translation are included in
     stockholders' equity. All dollar amounts included herein are stated in U.S.
     dollars.


                                       34

<PAGE>


     PROPERTIES

     Properties are recorded at cost. Depreciation is principally computed using
     composite group straight-line rates. Average depreciable lives utilized by
     the Company are summarized as follows:

<TABLE>
<CAPTION>
                    Asset Class                                                            Years
                    -----------                                                            -----

<S>                                                                                         <C>
                  Roadway properties....................................................    45
                  Bridges...............................................................    54
                  Signals and communication systems.....................................    30
                  Locomotives and freight cars..........................................    38
</TABLE>

     Additions and improvements to track structures are capitalized. Repair and
     maintenance costs are charged to expense. When roadway property other than
     land is sold, the costs of the assets less the sales proceeds are charged
     to accumulated depreciation. Gains or losses resulting from sales of land
     not required for railroad operations are included in "other income" in the
     consolidated statements of income. Overhead costs related to track
     additions and improvements are also capitalized. During 2000, 1999 and
     1998, approximately $1.2 million, $1.3 million, and $1.2 million,
     respectively, of interest was capitalized on construction-in-progress.

     ENVIRONMENTAL REMEDIATION LIABILITIES

     The Company accrues for losses associated with environmental remediation
     obligations when such losses are probable and reasonably estimable.
     Accruals for estimated losses from environmental remediation obligations
     generally are recognized no later than completion of initial remediation
     feasibility studies. Such accruals are adjusted as further information
     develops or circumstances change. Costs of future expenditures for
     environmental remediation obligations are not discounted to their present
     value. Recoveries of environmental remediation costs from other parties are
     recorded as assets when their receipt is deemed probable.

     REVENUES

     Freight revenues are recognized as shipments progress. Other revenues
     consist primarily of demurrage, switching, haulage and passenger revenues.

     RECLASSIFICATIONS

     Certain amounts in the prior year financial statements have been
     reclassified to conform with the 2000 presentation

     RECENT ACCOUNTING PRONOUNCEMENTS

     Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
     for Derivative Instruments and Hedging Activities", establishes accounting
     and reporting standards for derivatives and for hedging activities. As
     issued, SFAS No.133 was effective for all fiscal years beginning after June
     15, 1999. In June 1999, SFAS No. 137 was issued effectively deferring the
     date or required adoption of SFAS No. 133 to fiscal years beginning after
     June 15, 2000. In June 2000, SFAS No. 138 was issued which amends the
     accounting and reporting standards of SFAS No. 133 for certain derivative
     instruments and hedging activities.

     The Company expects to adopt SFAS No. 133, as amended, effective January 1,
     2001. SFAS No. 133 requires the Company to recognize all derivatives on the
     balance sheet at fair value. Based on this pronouncement, the Company's
     fuel hedge program would be classified as a cash flow hedge. Changes in the
     fair value of the fuel hedge program will be recognized in other
     comprehensive income and the corresponding asset or liability will be
     recognized on the balance sheet. Based on the Company's fuel hedge
     positions at December 31, 2000, the Company estimates that an asset and
     accumulated other comprehensive income of approximately $0.3 million for
     the fair value of its fuel hedge portfolio, net of taxes, would have been
     reported for 2000 if SFAS No. 133, as amended, had been adopted at that
     time.


                                       35

<PAGE>


(2)  INTERNATIONAL AFFILIATES

     The Company's international business is conducted through affiliates
     located in the United Kingdom, New Zealand and Australia.

     INVESTMENTS IN INTERNATIONAL AFFILIATES

       The Company's investments in its international affiliates are summarized
as follows:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                     --------------------------
                                                                                       2000         1999
                                                                                       ----         ----
                                                                                         (in thousands)

<S>                                                                                <C>             <C>
       EWS......................................................................   $    168,300    $    174,936
       Tranz Rail...............................................................         34,267          42,106
       ATN......................................................................          5,749           6,004
                                                                                   ------------    ------------
       Total....................................................................   $    208,316    $    223,046
                                                                                   ============    ============
</TABLE>

       EQUITY IN NET INCOME OF INTERNATIONAL AFFILIATES

       The Company's equity in net income of its international affiliates is
summarized below:

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                                                --------------------------------

                                                                                  2000        1999       1998
                                                                                --------    --------    --------
                                                                                          (in thousands)

<S>                                                                             <C>         <C>         <C>
       EWS..................................................................    $    698    $ 13,624    $ 21,664
       Tranz Rail...........................................................       1,847       8,928       4,851
       ATN..................................................................         163         (86)        652
                                                                                 -------    --------    --------
       Total................................................................    $  2,708    $ 22,466    $ 27,167
                                                                                ========    ========    ========
</TABLE>

       ENGLISH WELSH & SCOTTISH RAILWAY HOLDINGS LIMITED

       The Company currently owns approximately 42.5% of EWS, which provides
       most of the rail freight services in Great Britain, operates freight
       trains through the English Channel tunnel and carries mail for the Royal
       Mail. The EWS businesses were acquired from British Rail in privatization
       transactions during the period from late 1995 to late 1997, with the
       acquisition of the principal rail freight business occurring in February
       1996. During 2000, the Company increased its ownership interest in EWS
       from approximately 39.5% to approximately 42.5% by exercising an option
       to purchase approximately 4.0 million additional shares for $6.2 million.
       The Company has invested approximately $91.2 million in EWS.

       The Company is party to a management services agreement with EWS under
       which the Company provides management services to EWS, including
       principally making available the services of certain Company executives
       for full-time employment by EWS, training of EWS personnel by the Company
       and making available the expertise and consulting services of other
       Company executives. Amounts earned by the Company from EWS for services
       under the management services agreement (not including the services of
       Company executives who are paid directly by EWS) were $1.7 million, $2.0
       million and $2.3 million in 2000, 1999 and 1998, respectively. The
       management services agreement is subject to renewal on an annual basis.

       Four of the directors of the Company are directors and hold shares and
       options of EWS.


                                       36
<PAGE>



       TRANZ RAIL HOLDINGS LIMITED

       The Company currently owns approximately 23.7% of Tranz Rail, which
       operates a 2,400 route mile freight and passenger rail business, an
       interisland ferry business and a trucking business in New Zealand. The
       Company has invested approximately $22.3 million in Tranz Rail, and has
       received approximately $30.7 million in proceeds from return of capital
       and dividends through December 31, 2000.

       Tranz Rail completed an initial public offering of its common stock on
       June 18, 1996 and is listed on The Nasdaq Stock Market(R) in the United
       States and on the New Zealand Stock Exchange in New Zealand. Total equity
       market capitalization of Tranz Rail as of December 31, 2000 was
       approximately $186 million.

       The Company has provided management services to Tranz Rail, including
       principally making available the services of certain Company executives
       for full-time employment by Tranz Rail, training of Tranz Rail personnel
       by the Company and making available the expertise and consulting services
       of other Company executives. Amounts earned by the Company from Tranz
       Rail for services under the management services agreement (not including
       the services of Company executives who were paid directly by Tranz Rail)
       were $0.3 million, $0.5 million, and $0.7 million in 2000, 1999, and
       1998, respectively.

       Five of the directors of the Company are directors and hold shares and
       options of Tranz Rail.

       AUSTRALIAN TRANSPORT NETWORK LIMITED

       The Company currently owns 33% of ATN, which provides all the commercial
       rail freight service in Tasmania over its 555 route mile rail system and
       rail transportation services as an independent operator on the Australian
       mainland. The Company has invested approximately $6.3 million in ATN.

       Two of the directors and two of the executive officers of the Company are
       directors of ATN.

       In connection with the establishment of ATN and subsequent capital
       contributions by its stockholders, two other ATN stockholders each
       granted the Company options to purchase an additional 1.21% of the shares
       of ATN at any time during a five-year period ending November 14, 2002.
       The options initially had an exercise price equal to 104% of the price
       all stockholders initially paid for their shares of ATN; that price
       increases by approximately 3.5% at each anniversary of the initial
       funding of ATN in November 1997.

       PARTICIPATION OF BERKSHIRE PARTNERS

       Berkshire Partners LLC ("Berkshire") has participated in each of the
       investment consortiums related to the Company's international affiliates
       and continues to hold shares in Tranz Rail, EWS and ATN. One of the
       directors of the Company, EWS, Tranz Rail and ATN is an executive
       officer, director and beneficial owner of shares of Berkshire.


                                       37
<PAGE>


       SUMMARY FINANCIAL INFORMATION

       The combined results of operations and financial position of the
       Company's international affiliates, including the Company's share, are
       summarized below:

       Combined Condensed Balance Sheet Information:

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                     ------------------------------
                                                                                         2000             1999
                                                                                     ------------       -----------
                                                                                              (in thousands)

<S>                                                                                 <C>              <C>
       Current assets...........................................................    $     342,962    $     302,976
       Total assets.............................................................        1,489,530        1,724,370
       Current liabilities......................................................          294,068          295,344
       Total liabilities........................................................          858,616        1,036,605
       Total equity.............................................................          630,914          687,765
</TABLE>

       Combined Condensed Income Statement Information:

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                                 ----------------------------------------------
                                                                     2000             1999              1998
                                                                 -----------     -------------    -------------
                                                                                 (in thousands)

<S>                                                             <C>               <C>              <C>
       Operating revenues.....................................  $   1,097,678     $   1,159,968    $   1,225,642
       Operating income.......................................         21,246            73,250          132,659
       Net income.............................................          9,142            73,076           88,439
</TABLE>

       The borrowing arrangements of EWS and ATN each contain provisions which
       substantially restrict their ability to transfer funds to the Company in
       the form of cash dividends, loans and advances. Tranz Rail's net assets
       are not similarly restricted.

       The Company's retained earnings included undistributed earnings of
       international affiliates of $135.7 million and $134.9 million at December
       31, 2000 and 1999, respectively.

(3)    ACCRUED EXPENSES

       Major components of accrued expenses include:

<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                      -----------------------------
                                                                                          2000             1999
                                                                                      -----------       -----------
                                                                                             (in thousands)

<S>                                                                                   <C>               <C>
       Interline liabilities on forwarded and received traffic......................  $    22,652       $    22,726
       Equipment costs..............................................................       17,722            16,584
       Casualty and environmental liabilities.......................................       14,122            13,702
       Other accrued expenses.......................................................       33,247            35,385
                                                                                      -----------       -----------
       Total accrued expenses.......................................................  $    87,743       $    88,397
                                                                                      ===========       ===========
</TABLE>

                                       38

<PAGE>



(4)    OTHER REVENUES

       Other revenues consist of the following:
<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31
                                                                              -------------------------------------
                                                                                  2000         1999         1998
                                                                              ----------    ---------    ----------
                                                                                          (in thousands)

<S>                                                                         <C>           <C>          <C>
       Haulage  ..........................................................   $    32,298   $   29,821   $    12,823
       Passenger..........................................................         5,684        5,508         5,194
       Demurrage..........................................................         4,456        3,329         4,059
       Switching..........................................................         4,797        3,732         3,534
       Management fees....................................................         2,020        2,532         2,982
       Other .............................................................         8,190        6,630         8,211
                                                                               ---------     ----------   ---------
       Total other revenues...............................................    $   57,445    $  51,552    $   36,803
                                                                              ==========    =========    ==========
</TABLE>

(5)    LONG-TERM DEBT

       Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                          2000           1999
                                                                                      -------------    -----------
                                                                                             (in thousands)

<S>                                                                                   <C>            <C>
       Public debt securities.......................................................  $   150,000    $   150,000
       WCTC revolving credit agreement..............................................      177,500        169,500
       ACRI revolving credit agreement..............................................           --          8,309
       Commercial paper.............................................................       48,721             --
       Other........................................................................       15,070         15,324
                                                                                      -----------    -----------
       Total debt...................................................................      391,291        343,133
       Less current maturities......................................................      (69,407)      (180,280)
                                                                                      -----------    -----------
       Total debt, less current maturities..........................................  $   321,884    $   162,853
                                                                                      ===========    ===========
</TABLE>

       In January 1998, the Company filed a shelf registration statement with
       the Securities and Exchange Commission registering $250 million of debt
       securities for potential issuance to the public. In April 1998, the
       Company sold $150 million of these debt securities in a public offering.
       The net proceeds from the sale were used to repay outstanding borrowings
       under the Company's bank revolving credit facility. The debt securities
       mature on April 15, 2008 and bear interest at 6.625% and yield 6.676%. In
       conjunction with the sale of these securities, the Company incurred $3.3
       million in debt issuance costs that are being amortized to interest
       expense over the life of the debt, raising the all-in annual average
       interest rate related to this debt to about 6.8%.

       On August 1, 2000, the Company obtained an unsecured revolving credit
       facility (the "Revolver") with a syndicate of banks with a total capacity
       of $275.0 million, which allows the Company to choose various floating
       rate options. The Revolver includes a $175.0 million tranche with an
       expiration of July 31, 2005 and a $100.0 million tranche with an
       expiration of July 31, 2001. The Company pays a facility fee based on the
       Revolver's total capacity and a utilization fee dependent on the average
       amounts outstanding under the Revolver. Such fees vary based on the
       Company's credit rating and leverage ratio. Principal reductions are not
       required under the Revolver prior to its expiration date. The effective
       interest rate on outstanding borrowings under the Revolver at December
       31, 2000, excluding and including the facility and utilization fees, were
       7.3% and 7.6%, respectively. The Revolver replaced various revolving
       credit agreements with a total capacity of $183.3 million that were set
       to expire on October 31, 2000.

       On August 1, 2000, the Company obtained an additional $50.0 million
       unsecured revolving credit facility that serves as a back-up facility to
       the commercial paper that is issued by the Company. This credit facility
       has rate options that parallel those available under the Revolver and has
       an expiration of July 31, 2001. The Company pays a facility fee for this
       revolving credit agreement. At December 31, 2000, no amounts were
       outstanding under this credit facility, while $48.7 million of commercial
       paper was


                                       39

<PAGE>

       outstanding at rates, excluding and including the facility fee,
       that averaged 6.9% and 7.0%, respectively. Such commercial paper has
       maturities ranging from 2 to 136 days at December 31, 2000.

       Other long-term debt consists of government-financed interest-free loans
       supporting railroad infrastructure improvements that promote economic
       development in the jurisdictions served by such government entities.

       In 1999 the Company entered into a guaranty of 33% of ATN's total credit
       facility of AU$8.5 million. Such guaranty was eliminated in January 2001
       in connection with a refinancing by ATN.

       The Company's aggregate unused borrowing availability under its committed
       loan facilities was $98.8 million at December 31, 2000.

       Maturities of debt at December 31, 2000 for each of the years 2001
       through 2005 and thereafter were as follows:

<TABLE>
<CAPTION>
                          YEAR                                                     AMOUNT
                          ----                                                   -----------
                                                                               (in thousands)

                        <S>                                                     <C>
                         2001...............................................    $     69,407
                         2002...............................................           2,655
                         2003...............................................           2,039
                         2004...............................................           1,552
                         2005...............................................         160,644
                         Thereafter.........................................         154,994
                                                                                ------------
                         Total..............................................    $    391,291
                                                                                ============
</TABLE>

       The financing arrangements of the Company limit its ability to pay
       dividends on its capital stock, incur additional indebtedness, create
       liens on its assets, repurchase shares of its capital stock, and make
       certain loans, investments or guarantees.

(6)    FAIR VALUE OF FINANCIAL INSTRUMENTS

       The carrying amounts of cash and cash equivalents, other current assets,
       short-term variable-rate debt and other current liabilities approximate
       fair value. The Company estimates the fair value of its long-term,
       fixed-rate debt based on quoted market prices for the same or similar
       issues or on the current rates offered for debt of the same remaining
       maturities. The fair value of the Company's long-term, fixed-rate debt at
       December 31, 2000 was $136.4 million as compared to a carrying amount of
       $165.1 million. The unrealized gain on the Company's fuel hedging
       positions, net of taxes, at December 31, 2000 was $0.3 million.

(7)    SALE-LEASEBACK TRANSACTIONS

       The Company has entered into equipment sale-leaseback transactions
       (predominantly relating to equipment) with third-party financing
       institutions which have resulted in gains that are reflected as deferred
       income in the Company's consolidated balance sheets. The gains on
       sale-leaseback transactions are amortized over the terms of the related
       operating leases.



                                       40
<PAGE>



       The following table indicates the future amortization of deferred gains
on sale-leaseback transactions:
<TABLE>
<CAPTION>

                         YEAR                                                     AMOUNT
                         ----                                                 --------------
                                                                              (in thousands)

                        <S>                                                     <C>
                         2001...............................................     $   1,289
                         2002...............................................         1,228
                         2003...............................................         1,208
                         2004...............................................         1,208
                         2005...............................................         1,192
                         Thereafter.........................................         4,597
                                                                                 ---------
                         Total..............................................     $  10,722
                                                                                 =========
</TABLE>

(8)    LEASES

       Total operating lease expense (predominantly relating to equipment)
       amounted to $32.7 million, $34.5 million, and $30.5 million in 2000, 1999
       and 1998, respectively.

       Minimum future lease payments under operating leases that have remaining
       non-cancelable lease terms in excess of one year are as follows:

<TABLE>
<CAPTION>
                         YEAR                                                     AMOUNT
                         ----                                                 --------------
                                                                              (in thousands)

                        <S>                                                     <C>
                         2001...............................................     $  28,507
                         2002...............................................        27,480
                         2003...............................................        25,507
                         2004...............................................        23,055
                         2005...............................................        22,903
                         Thereafter.........................................       146,962
                                                                                 ---------
                         Total..............................................     $ 274,414
                                                                                 =========
</TABLE>

(9)    BENEFIT PLANS

       PROFIT-BASED INCENTIVE PLANS

       The Company has profit-based incentive plans for all full-time employees.
       Amounts accrued under these plans were based primarily upon meeting or
       exceeding targeted operating results set at the beginning of the plan
       year. During 2000, 1999 and 1998, $3.6 million, $4.5 million and $10.4
       million, respectively, were accrued under provisions of these incentive
       plans.


                                       41
<PAGE>



       STOCK OPTION PLANS

       The Company has four stock option plans under which certain key
       management employees and members of the Company's Board of Directors may
       be granted options to purchase shares of the Company's common stock.
       Options may have a duration of up to 10 years and have an exercise price
       not less than the fair market value of the common stock at the time of
       the grant. A summary of activity in the Company's stock option plans as
       of December 31, 2000 is presented below:

<TABLE>
<CAPTION>
                                                                                           AVERAGE     NUMBER
                                                                                           OPTION        OF
                                                                                            PRICE      SHARES
                                                                                            -----      ------

<S>                                                                                    <C>           <C>
       Options outstanding at December 31, 1997..................................       $   18.06     1,000,505
           Granted in 1998.......................................................           21.22        97,000
           Exercised in 1998.....................................................           13.42       (33,936)
                                                                                                     -----------
       Options outstanding at December 31, 1998..................................           18.50     1,063,569
           Granted in 1999.......................................................           16.87     1,006,400
           Exercised in 1999.....................................................           14.46       (23,100)
           Canceled/forfeited in 1999..............................................         20.22      (181,400)
                                                                                                     -----------
       Options outstanding at December 31, 1999..................................           17.50     1,865,469
           Granted in 2000.........................................................         13.00       614,500
           Exercised in 2000.......................................................         13.42        (3,000)
           Canceled/forfeited in 2000..............................................         17.47      (138,155)
                                                                                                     -----------
       Options outstanding at December 31, 2000..................................       $   16.33     2,338,814
                                                                                                     ===========

       Options available for grant at December 31, 2000..........................                       894,215
                                                                                                     -----------
</TABLE>

       Of the options outstanding at December 31, 2000, 1,756,114 were vested
       and fully exercisable. The remaining 582,700 options will vest in the
       years 2001 through 2004.

       Summarized information about the Company's stock options outstanding at
       December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                                                                             WEIGHTED
                                                                                              AVERAGE
                                                                                             REMAINING
                 RANGE OF                                OPTIONS                            CONTRACTUAL
              EXERCISE PRICE                           OUTSTANDING                         LIFE IN YEARS
              --------------                           -----------                         -------------

<S>                                                    <C>                                     <C>
              $ 12.00 - $ 17.63                         1,998,614                               7.0
              $ 20.53 - $ 24.50                           152,200                               7.4
              $ 30.84 - $ 36.50                           188,000                               5.8

</TABLE>



                                       42
<PAGE>



       EMPLOYEE STOCK PURCHASE PLANS

       In 1991, the Company adopted an Employee Stock Purchase Plan ("Purchase
       Plan"). Under the Purchase Plan, all eligible employees who elect to
       participate are granted an option to purchase, through payroll deductions
       over the course of the year following the date of grant, a number of
       common stock shares not to exceed 7.5% of their annual base salary
       divided by the purchase price per share. The purchase price per share
       under the Purchase Plan is the lesser of 85% of the market value of the
       common stock as of the grant date or 85% of the market value on the
       exercise date. In December 1995, the Company established a plan similar
       to the Purchase Plan for ACRI (collectively, the two plans are referred
       to as the "Purchase Plans"). Information regarding the Purchase Plans is
       summarized below:

<TABLE>
<CAPTION>
                                                                                      AVERAGE           NUMBER
                                                                                     PURCHASE             OF
                                                                                       PRICE            SHARES
                                                                                       -----            ------
<S>                                                                                  <C>               <C>
       Shares authorized for purchase............................................                      2,625,000
           Purchased through December 31, 1997...................................    $   8.17           (730,538)
           Purchased in 1998.....................................................       19.34            (97,861)
           Purchased in 1999.....................................................       16.10            (90,991)
           Purchased in 2000.....................................................       11.31           (104,426)
                                                                                                     -----------
       Total shares available to be purchased....................................                      1,601,184
                                                                                                     ===========
</TABLE>

       At December 31, 2000, participating employees have accumulated $0.5
       million under the Purchase Plans through payroll deductions that can be
       used to purchase shares of common stock in 2001.

       STOCK-BASED COMPENSATION PRO FORMA INFORMATION

       SFAS No. 123, "Accounting for Stock-Based Compensation" establishes
       financial accounting and reporting standards for stock-based compensation
       plans. SFAS 123 defines a fair-value based method of accounting for an
       employee stock option or similar equity instrument, and gives entities a
       choice of recognizing related compensation expense by adopting the
       fair-value method or continuing to account for stock-based compensation
       using the intrinsic-value method prescribed in Accounting Principles
       Board Opinion No. 25, "Accounting for Stock Issued to Employees," ("APBO
       25"). The Company has elected to continue to account for stock-based
       compensation using the method prescribed in APBO 25. Accordingly, no
       compensation cost has been recognized for the Company's stock-based
       employee compensation plans. Had compensation cost for the Company's
       stock-based employee compensation plans been recorded based on the
       fair-value method prescribed by SFAS 123, the Company's net income and
       earnings per common share would have been reduced to the pro forma
       amounts indicated below:

<TABLE>
<CAPTION>
                                                                                 2000         1999          1998
                                                                             ----------   ----------     ----------

<S>                                                                          <C>          <C>            <C>
           Net income - as reported (in thousands).....................      $   45,559   $   66,857     $   76,294
           Net income - pro forma (in thousands).......................          43,002       63,013         75,528
           Diluted earnings per share - as reported....................            0.93         1.30           1.49
           Diluted earnings per share - pro forma......................            0.88         1.23           1.47
</TABLE>


       The weighted average fair value of options at the date of grant in 2000,
       1999 and 1998 was $6.47, $7.86 and $9.63 per option, respectively. The
       fair value of each option grant was estimated on the date of grant using
       the Black-Scholes option pricing model using the following assumptions:
       expected

                                       43
<PAGE>

       volatility ranging from 35% to 41%; risk-free interest rate
       ranging from 4.3% to 6.7% based upon the date of the option grant; and
       expected lives of six years.

       OTHER

       All U.S. employees of the Company are covered under the Railroad
       Retirement Act. All Canadian employees are covered under the
       government-sponsored Canadian Pension Plan and the ACRI Employee
       Retirement Savings Plan ("Savings Plan"). Under the Savings Plan,
       employees may elect to contribute up to 5% of their income on a pre-tax
       basis to the Savings Plan. The Company matches twice the amount
       contributed by each employee up to a maximum of 10%. In 2000, 1999 and
       1998, such matching contributions by the Company amounted to $0.5
       million, $0.5 million and $0.6 million, respectively.

(10)   INCOME TAXES

       The Company files consolidated federal income tax returns which include
       all of its U.S. subsidiaries and a provincial Canadian income tax return
       for ACRI.

       Deferred income taxes are accounted for in accordance with the asset and
       liability method by applying current statutory tax rates to (a) temporary
       differences between the financial statement carrying amount and the tax
       bases of assets and liabilities and (b) net operating loss and
       alternative minimum tax credit carryforwards. The effect on deferred tax
       assets and liabilities of a change in tax rates is recognized in income
       in the period of the enactment date.

       No provision is made for U.S. income taxes applicable to undistributed
       earnings of ACRI and the foreign affiliates that are indefinitely
       reinvested in those entities. Undistributed earnings of ACRI and the
       foreign affiliates amounted to $137.6 million at December 31, 2000. Upon
       distribution of those earnings in the form of dividends or otherwise, the
       Company would be subject to U.S. income taxes (subject to a reduction for
       foreign tax credits) and withholding taxes payable to the various foreign
       countries. It is not practicable to determine the amount of U.S. income
       taxes or foreign withholding taxes that would be payable upon the
       remittance of those earnings.

       The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                                                                   YEAR ENDED DECEMBER 31,
                                                                                   -----------------------
                                                                            2000            1999           1998
                                                                            ----            ----           ----
                                                                                       (in thousands)
<S>                                                                      <C>            <C>             <C>
       Current:
           Federal.....................................................  $    3,233     $    2,311      $    7,868
           State and other.............................................         619            375             465
                                                                         ----------     ----------      ----------
           Total current...............................................       3,852          2,686           8,333
                                                                         ----------     ----------      ----------

       Deferred:
           Federal.....................................................      22,091         23,781          21,479
           State and other.............................................       2,152          2,636           2,393
                                                                         ----------     ----------      ----------
           Total deferred..............................................      24,243         26,417          23,872
                                                                         ----------     ----------      ----------
       Total...........................................................  $   28,095     $   29,103      $   32,205
                                                                         ==========     ==========      ==========
</TABLE>



                                       44
<PAGE>



       Deferred income tax expense (benefits) are attributable to the following
       temporary differences and carryforwards:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                                 -----------------------
                                                                          2000            1999             1998
                                                                       ----------      ----------       ----------
                                                                                      (in thousands)

<S>                                                                    <C>               <C>       <C>
       Depreciation and amortization............................       $   21,824        $27,800   $       23,841
       Sale-leaseback transactions..............................              176            482              253
       Alternative minimum tax credit carryforwards.............           (3,988)        (2,389)          (7,761)
       Net operating loss carryforwards.........................            6,769          1,881            7,966
       Provisions for bad debts, casualties, claims
           and other expenses...................................             (538)        (1,357)            (427)
                                                                       ----------        -------      -----------
       Total...................................................       $    24,243     $   26,417      $    23,872
                                                                   ==============   =============   =============
</TABLE>

       The tax effects of temporary differences that give rise to significant
       portions of the deferred tax (liabilities) assets are presented below:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                            ------------
                                                                                       2000               1999
                                                                                   ------------      -------------
                                                                                         (in thousands)
<S>                                                                               <C>                 <C>
       Deferred tax liabilities principally due to
           differences in depreciation on properties........................       $   (204,705)       $  (182,881)
       Deferred tax assets attributable to:
           Net operating loss carryforwards.................................              3,315             10,084
           Alternative minimum tax credit carryforwards.....................             23,945             19,957
           Sale-leaseback transactions......................................              4,036              4,212
           Provisions for bad debts, casualties,
                claims and other expenses...................................              2,928              2,390
                                                                                   ------------      -------------
       Total deferred tax assets............................................             34,224             36,643
                                                                                   ------------      -------------
       Net deferred tax liability...........................................       $   (170,481)     $    (146,238)
                                                                                   ============      =============
</TABLE>

       The net deferred tax liability is classified in the consolidated balance
sheets as follows:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                            ------------
                                                                                       2000               1999
                                                                                       ----               ----
                                                                                           (in thousands)

<S>                                                                                <C>               <C>
       Noncurrent deferred tax liability...................................        $   (172,256)     $    (147,663)
       Current deferred tax asset..........................................               1,775              1,425
                                                                                   ------------      -------------
       Net deferred tax liability..........................................        $   (170,481)     $    (146,238)
                                                                                   ============      =============
</TABLE>

       The reconciliation of the statutory tax rate to the effective income tax
rate is as follows:

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31
                                                                                    ----------------------
                                                                              2000            1999          1998
                                                                              ----            ----          ----

<S>                                                                           <C>             <C>           <C>
       Statutory rate..................................................       35.0%           35.0%         35.0%
       State income taxes, net of federal tax benefit..................        4.0             4.0           4.0
       Other...........................................................        0.6             0.6           0.6
                                                                             -----            ----          ----
       Effective rate..................................................       39.6%           39.6%         39.6%
                                                                              ====            ====          ====
</TABLE>

       Income tax expense related to dividends received from Tranz Rail has been
       recorded as a reduction to the Company's equity in the net income of
       Tranz Rail. Through December 31, 2000, $2.9 million of such income taxes
       payable have been provided for such dividends, which are included as a
       reduction to "Investments in international affiliates" on the
       consolidated balance sheets.



                                       45

<PAGE>



       The Company had net operating loss carryforwards ("NOLs") at December 31,
       2000 for income tax purposes, after taking into account the taxes on the
       Tranz Rail dividends, totaling $1.1 million, which will begin to expire
       in 2012. The Company expects to be able to utilize these NOLs to offset
       future tax liabilities.

(11)   RELATED PARTY TRANSACTIONS

       LEGAL SERVICES

       Oppenheimer Wolff & Donnelly ("OW&D") provides the Company with legal and
       other services in connection with various labor matters, litigation,
       regulatory issues, acquisition and corporate matters. The amounts paid
       OW&D by the Company for services during 2000, 1999 and 1998 were $0.2
       million, $1.0 million and $1.1 million, respectively. A director and
       stockholder of WCTC was of counsel to OW&D during 1998 and a portion of
       1999.

       McLachlan, Rissman & Doll ("MR&D") provides the Company with legal and
       other services in connection with various corporate and acquisition and
       financing matters. The amounts paid MR&D by the Company for services
       during 2000, 1999 and 1998 were $1.4 million, $0.8 million and $0.3
       million, respectively. A member of MR&D is a director and stockholder of
       WCTC.

       FINANCIAL SERVICES

       Railroad Financial Corporation ("RFC") provides the Company with
       financial advisory services in connection with equipment leasing
       transactions. The amount paid to RFC for services provided in 2000 was
       $0.3 million. No amounts were paid to RFC by the Company in 1999 or 1998.
       Two of the directors of RFC are also directors and stockholders of WCTC.

       OTHER

       Information regarding other related party transactions appears in Note 2,
       "International Affiliates".

(12)   SIGNIFICANT CUSTOMERS

       In 2000, 1999 and 1998, one customer accounted for 12.3%, 12.0% and
       12.4%, respectively, of the Company's gross freight revenues. During
       those years, no other customer accounted for more than 10% of the
       Company's gross freight revenues.

(13)   OTHER INCOME

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                                                     -----------------------
                                                                               2000          1999          1998
                                                                               ----          ----          ----
                                                                                         (in thousands)

<S>                                                                         <C>           <C>            <C>
       Rental income......................................................  $   1,514     $   1,517      $   1,503
       Gains on property sales............................................        972           221            592
       Financing and organization cost amortization.......................        (59)         (385)          (469)
       Other, net.........................................................         52          (107)          (309)
                                                                            ---------     ---------      ---------
           Total..........................................................  $   2,479     $   1,246      $   1,317
                                                                            =========     =========      =========
</TABLE>


(14)   SALE OF RIGHTS UNDER TRANSPORTATION AGREEMENT

       In March 1998, the Company sold for $5.4 million its rights under a
       five-year transportation agreement that was scheduled to terminate in
       1999. The amount, paid in two equal installments in March 1998 and March
       1999, was recorded as non-operating income in the Company's consolidated
       statement of income for the year ended December 31, 1998.



                                       46

<PAGE>

(15)   DISPUTED SWITCHING CHARGES

       On June 4, 1993, WCL was served with a complaint filed by the Baltimore &
       Ohio Chicago Terminal Railway Company ("BOCT") in the United States
       District Court for the Northern District of Illinois, Eastern Division.
       In its complaint, the BOCT claimed that WCL owed BOCT for intermediate
       switching and car hire reclaim charges allegedly incurred from July 1988
       through February 1993. Arbitration hearings were held in 1995, and in
       June 1996 the arbitration panel ruled in favor of BOCT. The arbitration
       panel's ruling awarded BOCT $16.8 million of disputed switching and car
       hire reclaim charges, and $2.5 million of interest relating to such
       charges. Based upon the arbitration panel's ruling, the Company recorded
       in its 1996 consolidated statement of income pretax provisions of $15.8
       million, representing amounts awarded in excess of previously recorded
       accruals. Additional interest of $0.3 million, $1.2 million, $0.9 million
       and $0.4 million was accrued on the unpaid award amount in 1999, 1998,
       1997 and 1996, respectively. In April 1997, WCL filed a petition with the
       Surface Transportation Board ("STB") contesting substantially all BOCT
       switching charges. That matter is pending before the STB. The U.S.
       District Court issued a final ruling on the case affirming the
       arbitration award on August 28, 1997. WCL appealed this ruling to the
       U.S. Court of Appeals, which affirmed the District Court's ruling and
       denied WCL's petition for rehearing. WCL's petition for a writ of
       certiorari was denied by the U.S. Supreme Court on March 19, 1999. All
       amounts owed have been paid to BOCT.

(16)   COMMON STOCK REPURCHASE PROGRAM

       In March 2000, the Company's Board of Directors authorized up to $35
       million to be used to repurchase shares of WCTC's common stock. In
       October 2000, the amount of authorized funds was increased to $70
       million. As of December 31, 2000, the Company had repurchased 4,963,300
       shares at an average price of approximately $11.78 per share. It is
       Company policy to retire shares after they have been repurchased. Common
       stock, paid in capital and retained earnings were reduced as a result of
       the repurchase.

(17)   CONTINGENCIES

       PROPERTY TAX DISPUTE

       In October 1995, the Circuit Court of Dane County ruled in favor of a
       Wisconsin Department of Revenue ("WDR") retroactive assessment of
       personal property taxes for the tax years 1990 through 1993 against all
       Wisconsin railroads, including WCL and FV&W. As a result of the ruling,
       the Company recognized the $3.0 million retroactive assessment, as well
       as accrued interest of $0.7 million, in its 1995 consolidated statement
       of income. After various litigation on this matter, WCL and FV&W reached
       a settlement with the WDR with respect to this case in 2000 which
       resulted in a $2.4 million reversal of previously recorded expenses by
       WCL and FV&W, which is reflected in the 2000 consolidated statement of
       income.

       OTHER

       The Company's railroads are involved in various other legal actions,
       including personal injury, property damage and environmental clean-up
       matters. WCL and FV&W have also been identified as potentially
       responsible parties by various federal and state authorities for
       remediation of various waste disposal sites. While the final outcome with
       respect to these matters cannot be predicted with certainty, it is the
       opinion of management that their resolution will not have a material
       adverse effect on the Company's financial position or its annual
       financial results of operations.


                                       47

<PAGE>



(18)   UNAUDITED QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
                                        FIRST          SECOND           THIRD         FOURTH
                                       QUARTER        QUARTER          QUARTER        QUARTER            YEAR
                                       -------        -------          -------        -------        --------
                                                     (in thousands, except per share amounts)
<S>                                     <C>            <C>             <C>             <C>            <C>
       2000:
         Operating revenues.........    $91,891        $93,027         $96,334         $90,862        $372,114
         Operating income...........     18,079         24,243          29,231          21,461          93,014
         Net income.................     12,604          7,775          14,544          10,636          45,559
         Basic earnings per
           share (1)................       0.25           0.16            0.30           0.23             0.93
         Diluted earnings per
           share (1)................       0.25           0.16            0.30           0.23             0.93

       1999:
         Operating revenues.........    $88,520        $90,772         $92,065         $91,387        $362,744
         Operating income...........     17,959         25,149          21,474          25,496          90,078
         Net income.................     13,673         18,854          15,982          18,348          66,857
         Basic earnings per
           share....................       0.27           0.37            0.31           0.36             1.31
         Diluted earnings per
           share (1)................       0.27           0.37            0.31           0.36             1.30
</TABLE>

       (1) Sum of the quarterly earnings per share amounts does not equal the
           annual total due to rounding.

(19)   SUBSEQUENT EVENTS

       On January 29, 2001, the Company entered into an Agreement and Plan of
       Merger with Canadian National Railway Company ("CN") and a wholly-owned
       indirect subsidiary of CN, providing for the acquisition by CN of all of
       the Company's outstanding shares of common stock for approximately $800
       million or $17.15 per share, payable in cash.

       The proposed merger is subject to, among other things, approval by
       holders of a majority of the Company's common stock. The Company's
       stockholders are expected to vote on the proposed merger during the first
       half of 2001. CN's obligation to consummate the merger is subject to CN
       having obtained from the STB a final, unappealable decision that approves
       or exempts the proposed merger and does not impose on the parties
       conditions that would significantly and adversely affect the reasonably
       anticipated economic benefits of the proposed merger to CN and its
       stockholders. Timing of completion of the proposed merger is uncertain
       because of the approvals required.

       On January 18, 2001 a proxy contest initiated by a dissident stockholder
       committee came to a close. The Company incurred approximately $1.1
       million for advisory and legal expenses in 2000 to defend against this
       proxy contest.


                                       48
<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     See "Executive Officers of the Registrant" in Part I above for information
regarding executive officers of the Company. The remainder of the information
required by Item 10 is incorporated by reference to the Company's proxy
statement for its annual meeting to be filed pursuant to Regulation 14A.

ITEM 11. EXECUTIVE COMPENSATION

     Incorporated by reference to the Company's proxy statement for its annual
meeting to be filed pursuant to Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference to the Company's proxy statement for its annual
meeting to be filed pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference to the Company's proxy statement for its annual
meeting to be filed pursuant to Regulation 14A.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     The following documents are filed as a part of this Report:

<TABLE>
<CAPTION>
         (a)  (1) Financial Statements

<S>                                                                                                       <C>
                      Consolidated Balance Sheets................................................         29-30
                      Consolidated Statements of Income..........................................         31
                      Consolidated Statements of Changes in Stockholders' Equity.................         32
                      Consolidated Statements of Cash Flows......................................         33
                      Notes to Consolidated Financial Statements.................................         34-48
</TABLE>

              (2) Schedules

                      All schedules have been omitted as not applicable or not
                      required or because the information required to be shown
                      therein is included in the financial statements or notes
                      thereto.

              (3) Exhibits

                      The exhibits set forth in the accompanying Index to
                      Exhibits are filed as a part of this report.

         (b) Reports on Form 8-K filed during the quarter ended December 31,
2000.

                      The Company filed no reports on Form 8-K during the
quarter ended December 31, 2000.


                                       49
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                  WISCONSIN CENTRAL TRANSPORTATION
                                  CORPORATION
                                  (Registrant)
                                  By:     /S/ THOMAS F. POWER, JR.
                                         -------------------------
                                          Thomas F. Power, Jr., PRESIDENT
                                          AND CHIEF EXECUTIVE OFFICER

                                  Date:   MARCH 23, 2001
                                         ---------------

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

              SIGNATURE                                                     TITLE

<S>                                                    <C>
By:     /s/ THOMAS F. POWER, JR.                        President, Chief Executive Officer
       -------------------------                        and Director (Principal Executive Officer)
       (Thomas F. Power, Jr.)

Date:   MARCH 23, 2001

By:     /s/ RONALD G. RUSS                              Executive Vice President and Chief Financial Officer
       -------------------                              (Principal Financial Officer)
        (Ronald G. Russ)

Date:   MARCH 23, 2001

By:     /s/ WALTER C. KELLY                             Vice President and Chief Accounting Officer,
       --------------------                             Chief Financial Officer, North American subsidiaries
        (Walter C. Kelly)

Date:   MARCH 23, 2001

By:    /s/ ROBERT H. WHEELER                            Chairman and Director
       ---------------------
       (Robert H. Wheeler)

Date:  MARCH 23, 2001

By:    /s/ J. REILLY MCCARREN                           Director, President and Chief Executive Officer,
       ----------------------                           North American Subsidiaries
       (J. Reilly McCarren)

Date:  MARCH 23, 2001

By:     /s/ THOMAS W. RISSMAN                           Director
       ----------------------
        (Thomas W. Rissman)

Date:   MARCH 23, 2001

By:     /s/ CARL FERENBACH                              Director
       -------------------
        (Carl Ferenbach)

Date:   MARCH 23, 2001

                                       50
<PAGE>


By:     /s/ ROLAND V. MCPHERSON                         Director
       ------------------------
        (Roland V. McPherson)

Date:   MARCH 23, 2001

 By:                                                    Director
       -----------------
        (John W. Rowe)

Date:

By:                                                     Director
       ---------------------
        (A. Francis Small)

Date:

By:     /s/ THOMAS E. EVANS                             Director
       --------------------
        (Thomas E. Evans)

Date:   MARCH 23, 2001

</TABLE>

                                       51
<PAGE>


                                 EXHIBITS INDEX

    NUMBER                 EXHIBIT
    ------                 -------

     2.1  Agreement and Plan of Merger dated January 29, 2001 among registrant,
          Canadian National Railway Company and WC Merger Sub, Inc.
          (Incorporated by reference to Annex A to registrant's preliminary
          Proxy Statement filed pursuant to Section 14(a) of the Exchange Act on
          February 15, 2001 with respect to a special stockholders' meeting)

     3.1  Restated Certificate of Incorporation of the registrant, as amended
          (Incorporated by reference to Exhibit 3 to registrant's Quarterly
          Report on Form 10-Q for the quarter ended June 30, 1996)

     3.2  Amendment dated January 12, 2001, to the By-laws of the registrant

     3.3  By-laws of the Registrant, as amended to date


     4.1  Revolving Credit Agreement dated as of August 1, 2000 among
          registrant, Fleet National Bank and the Banks signatory thereto
          (Incorporated by reference to Exhibit 4.1 to registrant's Quarterly
          Report on Form 10-Q for the fiscal quarter ended June 30, 2000)

     4.2  Indenture dated April 21, 1998 between the registrant and The Bank of
          New York, as Trustee (Incorporated by reference to Exhibit 4.1 to Form
          S-3 (Registration No. 333-44049) filed under the Securities Act on
          January 12, 1998)

     4.3  Form of Security issued by registrant pursuant to Indenture filed as
          Exhibit 4.4 (Incorporated by reference to Exhibit 4.2 to registrant's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1998)

          Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, registrant is
          not filing any instrument with respect to long-term debt in cases in
          which the amount of debt securities authorized under the instrument
          does not exceed 10 percent of the total assets of registrant.
          Registrant agrees to furnish a copy of each such instrument to the
          Commission upon request.


     10.1 Director Stock Option Plan of the registrant (compensatory plan or
          arrangement identified as such pursuant to Item 14(a)(3) of Form 10-K)
          (Incorporated by reference to Exhibit 4.1 to registrant's Registration
          Statement on Form S-8 (Registration No. 33-84088) filed under the
          Securities Act on September 19, 1994)

     10.2 Supplement to Director Stock Option Plan (compensatory plan or
          arrangement identified as such pursuant to Item 14(a)(3) of Form 10-K)
          (Incorporated by reference to Exhibit 4.2 to registrant's Registration
          Statement on Form S-8 (Registration No. 33-84088) filed under the
          Securities Act on September 19, 1994)

     10.3 Long Term Deferred Compensation Plan of the registrant dated December
          9, 1993 (compensatory plan or arrangement identified as such pursuant
          to Item 14(a)(3) of Form 10-K) (Incorporated by reference to Exhibit
          10(jj) to registrant's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1993)

     10.4 Key Management Stock Option Plan of the registrant (compensatory plan
          or arrangement identified as such pursuant to Item 14(a)(3) of Form
          10-K) (Incorporated by reference to Exhibit 10(s) to registrant's
          Registration Statement on Form S-1 (Registration No. 33-39939) filed
          under the Securities Act and declared effective by the Securities and
          Exchange Commission on May 21, 1991) (see Exhibit 10.5 for subsequent
          amendment)

<PAGE>

     10.5 Amendment No. 1, dated May 20, 1993, to Key Management Stock Option
          Plan (amending Key Management Stock Option Plan filed as Exhibit 10.4)
          (compensatory plan or arrangement identified as such pursuant to Item
          14(a)(3) of Form 10-K) (Incorporated by reference to Exhibit 10(ii) to
          registrant's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1993)

     10.6 Management Incentive Compensation Plan of the registrant (compensatory
          plan or arrangement identified as such pursuant to Item 14(a)(3) of
          Form 10-K) (Incorporated by reference to Exhibit 10(f) to registrant's
          Annual Report on Form 10-K for fiscal year ended December 31, 1997)

     10.7 Stockholders Agreement of the registrant dated October 11, 1987 as
          amended April 1, 1991 (Incorporated by reference to Exhibit 10(q) to
          registrant's Registration Statement on Form S-1 (Registration No.
          33-39939) filed under the Securities Act and declared effective by the
          Securities and Exchange Commission on May 21, 1991) (see Exhibit 10.8
          for subsequent amendment)

     10.8 Amendment No. 2 to Stockholders Agreement dated as of April 1, 1992
          (amending Stockholders Agreement filed as Exhibit 10.7) (Incorporated
          by reference to Exhibit 10(aa) to registrant's Registration Statement
          on Form S-1 (Registration No. 33-52022) filed under the Securities Act
          and declared effective by the Commission on December 14, 1992)

     10.9 1997 Long-Term Incentive Plan (compensatory plan or arrangement
          identified as such pursuant to Item 14(a)(3) of Form 10-K)
          (Incorporated by reference to Exhibit 4.3 to registrant's Registration
          Statement on Form S-8 (Registration No. 333-35493) filed under the
          Securities Act on September 12, 1997)

     10.10 1998 Stock Option Plan for New Directors (compensatory plan or
          arrangement identified as such pursuant to Item 14(a)(3) of Form 10-K)
          (Incorporated by reference to Exhibit 4.3 to registrant's Registration
          Statement on Form S-8 (Registration No. 333-69529) filed under the
          Securities Act on December 23, 1998)

     10.11 Change of Control Agreement dated as of January 25, 2001 between
          registrant and Thomas F. Power, Jr. (compensatory plan or arrangement
          identified as such pursuant to Item 14(a)(3) of Form 10-K)

     10.12 Change of Control Agreement dated as of January 25, 2001 between
          registrant and Robert H. Wheeler (compensatory plan or arrangement
          identified as such pursuant to Item 14(a)(3) of Form 10-K)

     10.13 Employment Security Agreement dated November 9, 2000 between
          registrant and Marty J. Mickey with information from substantially
          identical agreements with each of the other executive officers (other
          than Thomas F. Power, Jr.) provided on attached Schedule A
          (compensatory plan or arrangement identified as such pursuant to Item
          14(a)(3) of Form 10-K)

     21.1 Subsidiaries of registrant (Incorporated by reference to Exhibit 21 to
          registrant's Annual Report on Form 10-K for fiscal year ended December
          31, 1997)

     23.1 Consent of KPMG LLP

     99.1 Definitive Proxy Statement filed pursuant to Section 14(a) of the
          Exchange Act on March 1, 2001 with respect to special stockholders
          meeting (Incorporated by reference to registrant's Form DEF14A filed
          pursuant to Section 14(a) of the Exchange Act on March 1, 2001 with
          respect to a special stockholders' meeting)