SOURCE: Burlington Northern Santa Fe

Burlington Northern Santa Fe

April 23, 2009 16:01 ET

Burlington Northern Santa Fe Reports First Quarter 2009 Results

FORT WORTH, TX--(Marketwire - April 23, 2009) - Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI)

--  Quarterly earnings were $0.86 per diluted share, which included a
    $0.19 per share charge related to an unfavorable coal rate case decision
    and an $0.08 per share loss on unwinding interest rate hedges on debt no
    longer expected to be issued. This compares to first-quarter 2008 earnings
    of $1.30 per diluted share.
    
--  Freight revenues decreased $831 million, or 20 percent, to $3.31
    billion compared with the first quarter of 2008 as loads handled decreased
    14 percent. The 20-percent decrease in freight revenues included a
    reduction in fuel surcharges of approximately $325 million and a $96
    million charge related to the unfavorable coal rate case decision.
    
--  Operating expenses decreased $631 million, or 19 percent, to $2.76
    billion compared with the first quarter of 2008. The reduction in operating
    expenses was driven by strong cost controls, decreased unit volumes and
    lower fuel expenses resulting from decreased fuel prices.
    

Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) today reported quarterly earnings of $0.86 per diluted share, which included a $0.19 per share charge related to an unfavorable coal rate case decision and an $0.08 per share loss on unwinding interest rate hedges on debt no longer expected to be issued. This compares to first-quarter 2008 earnings of $1.30 per diluted share.

"During the first quarter of 2009, BNSF's focus on cost control and a variable cost structure enabled us to weather a difficult economic environment," said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer. "BNSF continues to manage through the recession and is well positioned to take advantage of the eventual economic recovery."

First-quarter 2009 freight revenues decreased $831 million, or 20 percent, to $3.31 billion compared with $4.14 billion in the prior year. The 20-percent decrease in revenues included a decrease in fuel surcharges of approximately $325 million and a $96 million charge in excess of amounts previously accrued related to the unfavorable coal rate decision. The remaining variance was due to lower unit volumes as a result of the economic downturn, partially offset by improved yields.

Coal revenues were $863 million. Excluding the $96 million charge related to the unfavorable coal rate decision, coal revenues increased $5 million, or 1 percent, reflecting improved yields on slightly lower unit volumes. Agricultural Products revenues were $187 million, or 22 percent lower than the first quarter of 2008. Lower unit volumes caused mainly by reduced domestic loadings and international grain shipments were partially offset by improved yields. Industrial Products revenues declined $220 million, or 23 percent, to $719 million, which included a decline in unit volumes that was driven by lower demand for construction products and building products and was partially offset by improved yields. Consumer Products revenues fell $333 million, or 24 percent, to $1.05 billion, on lower international intermodal, domestic intermodal and automotive volumes due to economic conditions. Decreased fuel surcharges driven by lower fuel prices also negatively impacted revenues of each of the business units.

Operating expenses for the first quarter of 2009 were $2.76 billion compared with first-quarter 2008 operating expenses of $3.39 billion. The $631 million decrease in operating expenses was driven by strong cost controls, decreased unit volumes and lower fuel prices, which decreased fuel expenses by about $300 million.

First-quarter 2009 interest expense increased $64 million, or 48 percent, to $198 million compared with $134 million in the first quarter of 2008. This increase was primarily attributable to a $43 million loss on unwinding interest rate hedges on debt no longer expected to be issued, and the unfavorable coal rate case decision further increased interest expense by $9 million.

Burlington Northern Santa Fe Corporation's subsidiary BNSF Railway Company operates one of the largest North American rail networks, with about 32,000 route miles in 28 states and two Canadian provinces. BNSF Railway Company is among the world's top transporters of intermodal traffic, moves more grain than any other American railroad, carries the components of many of the products we depend on daily, and hauls enough low-sulfur coal to generate about ten percent of the electricity produced in the United States. BNSF Railway Company is an industry leader in Web-enabling a variety of customer transactions at www.bnsf.com.

Financial information follows:

Burlington Northern Santa Fe Corporation
Consolidated Income Information
(Dollars in millions, except per share data)

                                                            Three Months
                                                           Ended March 31,
                                                          ----------------
                                                            2009     2008
                                                          -------  -------
Operating revenues
  Freight revenues (a)                                    $ 3,312  $ 4,143
  Other revenues                                              112      118
                                                          -------  -------
    Total operating revenues                                3,424    4,261
                                                          -------  -------

Operating expenses
  Compensation and benefits                                   868      983
  Fuel                                                        614    1,045
  Purchased services                                          478      525
  Depreciation and amortization                               370      341
  Equipment rents                                             201      230
  Materials and other                                         224      262
                                                          -------  -------
    Total operating expenses                                2,755    3,386
                                                          -------  -------

Operating income                                              669      875
Interest expense (b)                                          198      134
Other expense, net                                              3        -
                                                          -------  -------

Income before income taxes                                    468      741
Income tax expense                                            175      286
                                                          -------  -------

Net income                                                $   293  $   455
                                                          =======  =======

Diluted earnings per share                                $  0.86  $  1.30
                                                          =======  =======

Diluted average shares outstanding (in millions)            341.9    351.3
                                                          =======  =======

Operating ratio (c)                                          79.8%    78.9%
                                                          =======  =======


(a)  2009 includes a $96 million charge related to an unfavorable coal rate
     case decision.

(b)  2009 includes a $43 million loss on interest rate hedges and $9
     million related to an unfavorable coal rate case decision.

(c)  Calculated as total operating expenses less other revenues divided by
     freight revenues.





Burlington Northern Santa Fe Corporation
Consolidated Balance Sheet Information
(Dollars in millions, except per share amounts)


                                                  March 31,   December 31,
                                                    2009          2008
                                                ------------  ------------

Assets
  Current assets:
  Cash and cash equivalents                     $        610  $        633
  Accounts receivable, net                               825           847
  Materials and supplies                                 538           525
  Current portion of deferred income taxes               472           442
  Other current assets                                   277           218
                                                ------------  ------------
    Total current assets                               2,722         2,665

Property and equipment, net                           31,391        30,847

Other assets                                           2,850         2,891
                                                ------------  ------------

Total assets                                    $     36,963  $     36,403
                                                ============  ============

Liabilities and stockholders' equity
  Current liabilities:
  Accounts payable and other current
   liabilities                                  $      3,133  $      3,190
  Long-term debt due within one year                     275           456
                                                ------------  ------------
    Total current liabilities                          3,408         3,646

Long-term debt and commercial paper                    9,416         9,099
Deferred income taxes                                  8,787         8,590
Pension and retiree health and welfare
 liability                                             1,049         1,047
Casualty and environmental liabilities                   968           959
Employee separation costs                                 56            57
Other liabilities                                      1,865         1,874
                                                ------------  ------------
   Total liabilities                                  25,549        25,272
                                                ------------  ------------

Stockholders' equity:
  Common stock and additional paid-in capital          7,662         7,636
  Retained earnings                                   12,921        12,764
  Treasury stock and other                            (9,169)       (9,269)
                                                ------------  ------------
    Total stockholders' equity                        11,414        11,131
                                                ------------  ------------

Total liabilities and stockholders' equity      $     36,963  $     36,403
                                                ============  ============

Book value per share                            $      33.62  $      32.82
                                                ============  ============
Common shares outstanding (in millions)                339.5         339.2
                                                ============  ============
Net debt to total capitalization (a)                    44.3%         44.5%
                                                ============  ============

(a) Net debt is calculated as total debt less cash and cash equivalents,
    and capitalization is calculated as the sum of net debt and total
    stockholders' equity.





Burlington Northern Santa Fe Corporation
Consolidated Cash Flow Information
(in millions)

                                                        Three Months
                                                       Ended March 31,
                                                  ------------------------
                                                      2009         2008
                                                  -----------  -----------

Operating activities

  Net income                                      $       293  $       455
  Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                        370          341
     Deferred income taxes                                 90           83
     Long-term casualty and environmental
      liabilities, net                                     (1)           7
     Other, net                                            49            1
  Change in accounts receivable sales program             (50)           -
  Other changes in working capital                        (17)          28
                                                  -----------  -----------

Net cash provided by operating activities                 734          915
                                                  -----------  -----------

Investing activities

  Capital expenditures                                   (462)        (468)
  Construction costs for facility financing
   obligation                                             (13)          (4)
  Acquisition of equipment pending financing             (286)        (173)
  Proceeds from sale of assets financed                   368            -
  Other, net                                                2          (98)
                                                  -----------  -----------

Net cash used for investing activities                   (391)        (743)
                                                  -----------  -----------

Financing activities

  Net (payments) borrowings                              (251)         430
  Dividends paid                                         (136)        (112)
  Purchase of BNSF common stock                            (4)        (373)
  Proceeds from stock options exercised                     8           35
  Proceeds from facility financing obligation              15           18
  Other, net                                                2           25
                                                  -----------  -----------

Net cash (used for) provided by financing
 activities                                              (366)          23
                                                  -----------  -----------
(Decrease) increase in cash and cash equivalents          (23)         195

Cash and cash equivalents:
  Beginning of period                                     633          330
                                                  -----------  -----------
  End of period                                   $       610  $       525
                                                  ===========  ===========





Burlington Northern Santa Fe Corporation
Operating Statistics *

                                                   Three Months Ended
                                                       March 31,
                                                   -----------------
                                                     2009     2008
                                                   -------- --------



Revenue Statistics

  Cars / units (in thousands)                         2,128    2,486

  Average revenue per car / unit (a)               $  1,602 $  1,667

  Average length of haul (miles)                      1,099    1,087

  Revenue ton miles (in millions)                   149,148  167,936

  Freight revenue / thousand GTM (a)               $  13.80 $  14.65

  Freight revenue / thousand RTM (a)               $  22.85 $  24.67

Operating / Productivity Statistics

  Operating Expense
  Gross ton miles (in millions)                     247,008  282,818

  Operating expense / thousand GTM                 $  11.15 $  11.97

  Thousand GTM / average employee                     6,421    6,991

  Compensation
  Average employees                                  38,468   40,453

  Compensation and benefits / average employee     $ 22,561 $ 24,297

  Compensation and benefits / thousand GTM         $   3.51 $   3.48

  Fuel (b)
  GTM / gallon of fuel                                  777      777

  Gallons of fuel used (in millions)                    318      364

  Average price per gallon of fuel (c)             $   1.85 $   2.77

  Velocity
  Locomotive miles per day                            298.6    303.7

  Car miles per day                                   224.0    202.0


* Certain prior period amounts have been reclassified to conform with the
  current period presentation.

(a) 2009 coal revenues on a GAAP basis were $863 million.  However, for
    comparative purposes the table above excludes (from coal revenues and
    from the computation of amounts derived therefrom) a $96 million charge
    related to an unfavorable coal rate case decision.

(b) Fuel statistics are based on locomotive diesel fuel.

(c) Includes handling, taxes and hedge effect.





Burlington Northern Santa Fe Corporation
Revenue Statistics by Commodity


                                            Three Months
                                           Ended March 31,
                                      ------------------------   Percent
                                          2009         2008      Change
Revenues  (in millions)               -----------  -----------  ---------
Domestic Intermodal                   $       515  $       636      (19.0)%
International Intermodal                      462          619      (25.4)
Automotive                                     74          129      (42.6)
                                      -----------  -----------  ---------
Total Consumer Products                     1,051        1,384      (24.1)

Coal (a)                                      959          954        0.5
Industrial Products                           719          939      (23.4)
Agricultural Products                         679          866      (21.6)
                                      -----------  -----------  ---------
Total freight revenue                       3,408        4,143      (17.7)
Other revenue                                 112          118       (5.1)
                                      -----------  -----------  ---------
Total revenues                        $     3,520  $     4,261      (17.4)%
                                      ===========  ===========  =========

Cars / units (in thousands)
Domestic Intermodal                           458          504       (9.1)%
International Intermodal                      497          622      (20.1)
Automotive                                     21           39      (46.2)
                                      -----------  -----------  ---------
Total Consumer Products                       976        1,165      (16.2)

Coal                                          627          634       (1.1)
Industrial Products                           298          403      (26.1)
Agricultural Products                         227          284      (20.1)
                                      -----------  -----------  ---------
Total cars / units                          2,128        2,486      (14.4)%
                                      ===========  ===========  =========

Average revenue per car / unit
Domestic Intermodal                   $     1,124  $     1,262      (10.9)%
International Intermodal                      930          995       (6.5)
Automotive                                  3,524        3,308        6.5
                                      -----------  -----------  ---------
Total Consumer Products                     1,077        1,188       (9.3)

Coal (a)                                    1,530        1,505        1.7
Industrial Products                         2,413        2,330        3.6
Agricultural Products                       2,991        3,049       (1.9)
                                      -----------  -----------  ---------
Average revenue per car / unit        $     1,602  $     1,667       (3.9)%
                                      ===========  ===========  =========

Revenue ton miles  (in millions)
Domestic Intermodal                        11,867       12,795       (7.3)%
International Intermodal                   14,700       18,996      (22.6)
Automotive                                    793        1,457      (45.6)
                                      -----------  -----------  ---------
Total Consumer Products                    27,360       33,248      (17.7)

Coal                                       73,245       72,310        1.3
Industrial Products                        21,301       28,355      (24.9)
Agricultural Products                      27,242       34,023      (19.9)
                                      -----------  -----------  ---------
Total revenue ton miles                   149,148      167,936      (11.2)%
                                      ===========  ===========  =========

Freight revenue per thousand ton miles
Domestic Intermodal                   $     43.40  $     49.71      (12.7)%
International Intermodal                    31.43        32.59       (3.6)
Automotive                                  93.32        88.54        5.4
                                      -----------  -----------  ---------
Total Consumer Products                     38.41        41.63       (7.7)

Coal (a)                                    13.09        13.19       (0.8)
Industrial Products                         33.75        33.12        1.9
Agricultural Products                       24.92        25.45       (2.1)
                                      -----------  -----------  ---------
Freight revenue per thousand ton
 miles                                $     22.85  $     24.67       (7.4)%
                                      ===========  ===========  =========

(a) 2009 coal revenues on a GAAP basis were $863 million. However, for
    comparative purposes the table above excludes (from coal revenues and
    from the computation of amounts derived therefrom) a $96 million charge
    related to an unfavorable coal rate case decision.





Burlington Northern Santa Fe Corporation
Capital Expenditures

                                                     Three Months Ended
                                                          March 31,
                                                  -------------------------
                                                      2009         2008
                                                  ------------ ------------

Capital expenditures  (in millions)
  Engineering
    Rail                                          $        110 $         87
    Ties                                                    87           71
    Surfacing                                               42           40
    Other                                                  108          100
                                                  ------------ ------------
      Total engineering                                    347          298
  Mechanical                                                37           36
  Other                                                     28           29
                                                  ------------ ------------
      Total replacement capital                            412          363
                                                  ------------ ------------

  Information services                                      19           23
  Terminal and line expansion                               31           82
                                                  ------------ ------------
      Total capital expenditures                  $        462 $        468
                                                  ============ ============


Track miles of rail laid
  Replacement capital                                      205          153
  Expansion projects                                        12           13
                                                  ------------ ------------
      Total                                                217          166
                                                  ============ ============

Cross ties inserted (thousands)
  Replacement capital                                      769          540
  Expansion projects                                        10           33
                                                  ------------ ------------
      Total                                                779          573
                                                  ============ ============

Track resurfaced (miles)                                 2,351        2,015
                                                  ============ ============

Contact Information

  • Investor Contact:
    Linda Hurt
    (817) 352-6452

    Media Contact:
    John Ambler
    (817) 867-6407