SOURCE: Burlington Northern Santa Fe

Burlington Northern Santa Fe

October 22, 2009 16:01 ET

Burlington Northern Santa Fe Reports Third Quarter 2009 Results

FORT WORTH, TX--(Marketwire - October 22, 2009) - Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) --

--  Quarterly earnings were $1.42 per diluted share, which included a $0.06
    per share impact related to a favorable coal rate case adjustment.
    --  Compared to third-quarter 2008 earnings of $1.99 per diluted share.

--  Quarterly freight revenues were $3.49 billion, which included a
    decrease in fuel surcharges of $725 million.
    --  Compared to third-quarter 2008 freight revenues of $4.77 billion.
    --  Loads handled decreased 17 percent.

--  Quarterly operating expenses were $2.69 billion, which included a
    decrease of about $550 million related to lower fuel prices.
    --  Compared to third-quarter 2008 operating expenses of $3.70 billion.
    --  Strong cost controls.
    --  Decreased unit volumes.

Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) today reported quarterly earnings of $1.42 per diluted share, which included a $0.06 per share impact related to a favorable coal rate case adjustment. This compared to third-quarter 2008 earnings of $1.99 per diluted share.

"During the recession, BNSF has demonstrated significant operating leverage through ongoing dedication to controlling costs and productivity improvements," said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer. "The combination of our significant operating leverage and long-term market opportunities places BNSF in a strong position when the economy recovers."

Third-quarter 2009 freight revenues decreased $1.28 billion, or 27 percent, to $3.49 billion compared with $4.77 billion in the prior year. The 27-percent decrease in revenues included a decrease in fuel surcharges of $725 million. The remaining variance was due to 17 percent lower unit volumes as a result of the economic downturn, partially offset by improved yields.

Coal revenues were down $107 million, or 10 percent, to $940 million on lower unit volumes driven by soft demand due to economic conditions and mild summer weather, partially offset by a favorable coal rate case adjustment and improved yields. Agricultural Products revenues declined $194 million, or 21 percent, to $715 million on lower unit volumes predominately driven by reduced domestic loadings and international grain shipments. Industrial Products revenues of $747 million were $377 million, or 34 percent lower than the third quarter of 2008, due primarily to lower unit volumes, driven by lower demand for construction and building products, partially offset by improved yields. Consumer Products revenues decreased $599 million, or 36 percent, to $1.09 billion, on lower international intermodal, domestic intermodal and automotive volumes due to economic conditions. Revenue was also impacted in each of the business units because of lower fuel surcharges.

Operating expenses for the third quarter of 2009 declined $1.01 billion, or 27 percent, to $2.69 billion, compared with third-quarter 2008 operating expenses of $3.70 billion. About half of the $1.01 billion reduction was due to lower fuel prices, with the remainder due to strong cost controls and decreased unit volumes.

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.

Burlington Northern Santa Fe Corporation will present additional information on its third quarter earnings in a webcast at 4:30 p.m. Eastern Time October 22, 2009.

Financial information follows:

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


                                    Three Months Ended  Nine Months Ended
                                       September 30,       September 30,
                                    ------------------  ------------------
                                      2009      2008      2009      2008
                                    --------  --------  --------  --------
Operating revenues
 Freight revenues (a)               $  3,489  $  4,766  $ 10,018  $ 13,258
 Other revenues                          106       140       317       387
                                    --------  --------  --------  --------
   Total operating revenues            3,595     4,906    10,335    13,645
                                    --------  --------  --------  --------

Operating expenses
 Compensation and benefits               872     1,013     2,564     2,947
 Fuel                                    606     1,349     1,729     3,685
 Purchased services                      453       537     1,396     1,600
 Depreciation and amortization           386       349     1,135     1,039
 Equipment rents                         194       229       591       682
 Materials and other (b)                 183       222       553       896
                                    --------  --------  --------  --------
   Total operating expenses            2,694     3,699     7,968    10,849
                                    --------  --------  --------  --------

Operating income                         901     1,207     2,367     2,796
Interest expense (c)                     127       122       462       396
Other expense, net                         1         6         5        11
                                    --------  --------  --------  --------

Income before income taxes               773     1,079     1,900     2,389
Income tax expense                       285       384       715       889
                                    --------  --------  --------  --------

Net income                          $    488  $    695  $  1,185  $  1,500
                                    ========  ========  ========  ========

Diluted earnings per share          $   1.42  $   1.99  $   3.45  $   4.28
                                    ========  ========  ========  ========

Operating ratio (d)                     74.2%     74.7%     76.4%     78.9%
                                    ========  ========  ========  ========

* Certain comparative prior period amounts have been adjusted to conform
  to the current period presentation.

(a)  Third quarter 2009 includes a $30 million favorable adjustment to the
     charge taken in the first quarter 2009 related to an unfavorable coal
     rate case decision. The first nine months of 2009 includes a $66
     million charge related to the unfavorable coal rate case decision.

(b)  Second quarter 2008 includes a $175 million increase in expense
     related to environmental matters in Montana.

(c)  The first nine months of 2009 includes a net $32 million loss on
     interest rate hedges and $8 million related to an unfavorable coal
     rate case decision.

(d)  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)


                                                September 30, December 31,
                                                    2009          2008
                                                ------------  ------------
Assets
 Current assets:
 Cash and cash equivalents                      $      1,161  $        633
 Accounts receivable, net                                853           847
 Materials and supplies                                  523           525
 Current portion of deferred income taxes                454           442
 Other current assets                                    286           218
                                                ------------  ------------
   Total current assets                                3,277         2,665

Property and equipment, net                           32,135        30,847

Other assets                                           3,141         2,891
                                                ------------  ------------

Total assets                                    $     38,553  $     36,403
                                                ============  ============

Liabilities and stockholders' equity
 Current liabilities:
 Accounts payable and other current liabilities $      2,848  $      3,190
 Long-term debt due within one year                      323           456
                                                ------------  ------------
   Total current liabilities                           3,171         3,646

Long-term debt                                        10,062         9,099
Deferred income taxes                                  9,235         8,590
Pension and retiree health and welfare
 liability                                             1,020         1,047
Casualty and environmental liabilities                   963           959
Employee separation costs                                 55            57
Other liabilities                                      1,792         1,874
                                                ------------  ------------
   Total liabilities                                  26,298        25,272
                                                ------------  ------------

Stockholders' equity:
 Common stock and additional paid-in capital           7,726         7,636
 Retained earnings                                    13,541        12,764
 Treasury stock and other                             (9,012)       (9,269)
                                                ------------  ------------
   Total stockholders' equity                         12,255        11,131
                                                ------------  ------------

Total liabilities and stockholders' equity      $     38,553  $     36,403
                                                ============  ============

Book value per share                            $      36.00  $      32.82
                                                ============  ============
Common shares outstanding (in millions)                340.4         339.2
                                                ============  ============



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


                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2009      2008      2009      2008
                                    --------  --------  --------  --------
Operating activities

  Net income                        $    488  $    695  $  1,185  $  1,500
  Adjustments to reconcile net
   income to net cash provided by
   operating activities:
    Depreciation and amortization        386       349     1,135     1,039
    Deferred income taxes                200       116       458       248
    Long-term casualty and
     environmental liabilities, net       (1)      (10)      (31)      181
    Other, net                             1         6        16        39
  Changes in accounts receivable
   sales program                           -       278       (50)      278
  Other changes in working capital        42       213       (75)       18
                                    --------  --------  --------  --------

Net cash provided by operating
 activities                            1,116     1,647     2,638     3,303
                                    --------  --------  --------  --------

Investing activities

  Capital expenditures excluding
   equipment                            (587)     (670)   (1,669)   (1,704)
  Acquisition of equipment              (159)     (238)     (615)     (676)
  Proceeds from sale of equipment
   financed                                -         -       368       190
  Construction costs for facility
   financing obligation                   (5)      (21)      (36)      (38)
  Other, net                             (71)      (43)     (167)     (153)
                                    --------  --------  --------  --------

Net cash used for investing
 activities                             (822)     (972)   (2,119)   (2,381)
                                    --------  --------  --------  --------

Financing activities

  Net borrowings (payments)              507      (370)      352       215
  Dividends paid                        (136)     (111)     (409)     (334)
  Purchase of BNSF common stock           (3)     (236)      (15)     (878)
  Proceeds from stock options
   exercised                              14         8        26        87
  Proceeds from facility financing
   obligation                              -        21        51        50
  Other, net                               1         8         4        84
                                    --------  --------  --------  --------

Net cash provided by (used for)
 financing activities                    383      (680)        9      (776)
                                    --------  --------  --------  --------
Increase (decrease) in cash and
 cash equivalents                        677        (5)      528       146

Cash and cash equivalents:
  Beginning of period                    484       481       633       330
                                    --------  --------  --------  --------
  End of period                     $  1,161  $    476  $  1,161  $    476
                                    ========  ========  ========  ========

* Certain comparative prior period amounts have been adjusted to conform to
  the current period presentation.



Burlington Northern Santa Fe Corporation
Operating Statistics*


                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------- -------------------
                                      2009      2008      2009      2008
                                    --------- --------- --------- ---------
Revenue Statistics

  Cars / units (in thousands)           2,137     2,590     6,306     7,585

  Average revenue per car /
   unit (a)                         $   1,619 $   1,840 $   1,599 $   1,748

  Average length of haul (miles)        1,096     1,081     1,102     1,088

  Revenue ton miles (in millions)     150,675   170,134   443,526   502,443

  Freight revenue / thousand
   GTM (a)                          $   13.88 $   16.64 $   13.73 $   15.63

  Freight revenue / thousand
   RTM (a)                          $   22.96 $   28.01 $   22.74 $   26.39

Operating / Productivity Statistics

  Operating Expense
  Gross ton miles (in millions)       249,260   286,486   734,644   848,364

  Operating expense / thousand
   GTM (b)                          $   10.81 $   12.91 $   10.85 $   12.79

  Thousand GTM / average employee       6,672     6,970    19,411    20,698

  Compensation
  Average employees                    37,359    41,103    37,847    40,987

  Compensation and benefits /
   average employee                 $  23,326 $  24,646 $  67,728 $  71,893

  Compensation and benefits /
   thousand GTM                     $    3.49 $    3.54 $    3.49 $    3.47

  Fuel (c)
  GTM / gallon of fuel                    860       821       816       794

  Gallons of fuel used (in millions)      290       349       900     1,068

  Average price per gallon of fuel
   (d)                              $    1.99 $    3.72 $    1.83 $    3.33

  Velocity
  Locomotive miles per day              312.1     294.7     306.9     298.0

  Car miles per day                     229.2     205.5     229.6     203.3

* Certain comparative prior period amounts have been adjusted to conform to
  the current period presentation

(a) Coal revenues on a GAAP basis were $940 million and $2,678 million for
    the three and nine month periods ended September 30, 2009,
    respectively. However, for comparative purposes the table above
    excludes (from coal revenues and from the computation of amounts
    derived therefrom) a $30 million favorable and $66 million unfavorable
    impact related to a coal rate case decision for the three and nine
    month periods ended September 30, 2009, respectively.

(b) Second quarter 2008 includes a $175 million increase in expense related
    to environmental matters in Montana.

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

(d) Includes handling, taxes and hedge effect.



Burlington Northern Santa Fe Corporation
Revenue Statistics by Commodity


                   Three Months Ended           Nine Months Ended
Revenues  (in         September 30,               September 30,
 millions)         ----------------- Percent    ----------------- Percent
                     2009     2008   Change       2009     2008   Change
                   -------- -------- -------    -------- -------- -------

Domestic
 Intermodal        $    526 $    783   (32.8)%  $  1,553 $  2,149   (27.7)%
International
 Intermodal             477      776   (38.5)      1,383    2,095   (34.0)
Automotive               84      127   (33.9)        240      399   (39.8)
                   -------- -------- -------    -------- -------- -------
Total Consumer
 Products             1,087    1,686   (35.5)      3,176    4,643   (31.6)

Coal (a)                910    1,047   (13.1)      2,744    2,903    (5.5)
Industrial Products     747    1,124   (33.5)      2,152    3,109   (30.8)
Agricultural
 Products               715      909   (21.3)      2,012    2,603   (22.7)
                   -------- -------- -------    -------- -------- -------
Total freight
 revenue              3,459    4,766   (27.4)     10,084   13,258   (23.9)
Other revenue           106      140   (24.3)        317      387   (18.1)
                   -------- -------- -------    -------- -------- -------
Total revenues     $  3,565 $  4,906   (27.3)%  $ 10,401 $ 13,645   (23.8)%
                   ======== ======== =======    ======== ======== =======

Cars/units (in
 thousands)
Domestic
 Intermodal             463      555   (16.6)%     1,381    1,598   (13.6)%
International
 Intermodal             490      667   (26.5)      1,461    1,943   (24.8)
Automotive               25       32   (21.9)         70      114   (38.6)
                   -------- -------- -------    -------- -------- -------
Total Consumer
 Products               978    1,254   (22.0)      2,912    3,655   (20.3)

Coal                    604      645    (6.4)      1,820    1,868    (2.6)
Industrial Products     308      420   (26.7)        888    1,245   (28.7)
Agricultural
 Products               247      271    (8.9)        686      817   (16.0)
                   -------- -------- -------    -------- -------- -------
Total cars/units      2,137    2,590   (17.5)%     6,306    7,585   (16.9)%
                   ======== ======== =======    ======== ======== =======

Average revenue per
 car/unit
Domestic
 Intermodal        $  1,136 $  1,411   (19.5)%  $  1,125 $  1,345   (16.4)%
International
 Intermodal             973    1,163   (16.3)        947    1,078   (12.2)
Automotive            3,360    3,969   (15.3)      3,429    3,500    (2.0)
                   -------- -------- -------    -------- -------- -------
Total Consumer
 Products             1,111    1,344   (17.3)      1,091    1,270   (14.1)

Coal (a)              1,507    1,623    (7.1)      1,508    1,554    (3.0)
Industrial Products   2,425    2,676    (9.4)      2,423    2,497    (3.0)
Agricultural
 Products             2,895    3,354   (13.7)      2,933    3,186    (7.9)
                   -------- -------- -------    -------- -------- -------
Average revenue per
 car/unit          $  1,619 $  1,840   (12.0)%  $  1,599 $  1,748    (8.5)%
                   ======== ======== =======    ======== ======== =======

Revenue ton miles
 (in millions)
Domestic
 Intermodal          12,154   14,249   (14.7)%    36,146   40,951   (11.7)%
International
 Intermodal          15,165   19,556   (22.5)     44,824   58,194   (23.0)
Automotive              960    1,231   (22.0)      2,693    4,236   (36.4)
                   -------- -------- -------    -------- -------- -------
Total Consumer
 Products            28,279   35,036   (19.3)     83,663  103,381   (19.1)

Coal                 71,253   75,001    (5.0)    213,973  215,570    (0.7)
Industrial Products  22,952   29,557   (22.3)     65,313   88,056   (25.8)
Agricultural
 Products            28,191   30,540    (7.7)     80,577   95,436   (15.6)
                   -------- -------- -------    -------- -------- -------
Total revenue ton
 miles              150,675  170,134   (11.4)%   443,526  502,443   (11.7)%
                   ======== ======== =======    ======== ======== =======

Freight revenue per
 thousand ton miles
Domestic
 Intermodal        $  43.28 $  54.95   (21.2)%  $  42.96 $  52.48   (18.1)%
International
 Intermodal           31.45    39.68   (20.7)      30.85    36.00   (14.3)
Automotive            87.50   103.17   (15.2)      89.12    94.19    (5.4)
                   -------- -------- -------    -------- -------- -------
Total Consumer
 Products             38.44    48.12   (20.1)      37.96    44.91   (15.5)

Coal (a)              12.77    13.96    (8.5)      12.82    13.47    (4.8)
Industrial Products   32.55    38.03   (14.4)      32.95    35.31    (6.7)
Agricultural
 Products             25.36    29.76   (14.8)      24.97    27.27    (8.4)
                   -------- -------- -------    -------- -------- -------
Freight revenue per
 thousand ton
 miles             $  22.96 $  28.01   (18.0)%  $  22.74 $  26.39   (13.8)%
                   ======== ======== =======    ======== ======== =======


(a) Coal revenues on a GAAP basis were $940 million and $2,678 million for
    the three and nine month periods ended September 30, 2009,
    respectively. For comparative purposes, the table above excludes the
    impact related to the coal rate decision (see note (a) on prior table
    "Operating Statistics").



Burlington Northern Santa Fe Corporation
Capital Expenditures*


                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2009      2008      2009      2008
                                    --------- --------- --------- ---------
Capital expenditures excluding
 equipment (in millions)
 Engineering
  Rail                              $     134 $     131 $     382 $     340
  Ties                                    124       111       355       289
  Surfacing                                82        76       202       185
  Other                                   154       177       419       406
                                    --------- --------- --------- ---------
   Total engineering                      494       495     1,358     1,220
 Mechanical                                24        47        86       116
 Other                                     30        35        88        87
                                    --------- --------- --------- ---------
   Total replacement capital              548       577     1,532     1,423
                                    --------- --------- --------- ---------

 Information services                      16        28        59        71
 Terminal and line expansion               23        65        78       210
                                    --------- --------- --------- ---------
   Total capital expenditures
    excluding equipment             $     587 $     670 $   1,669 $   1,704
                                    ========= ========= ========= =========

Acquisition of equipment            $     159 $     238 $     615 $     676
                                    ========= ========= ========= =========

Track miles of rail laid
 Replacement capital                      327       295       850       699
 Expansion projects                         5        20        17        43
                                    --------- --------- --------- ---------
   Total                                  332       315       867       742
                                    ========= ========= ========= =========

Cross ties inserted (thousands)
 Replacement capital                    1,110     1,008     3,102     2,387
 Expansion projects                         9        53        22       120
                                    --------- --------- --------- ---------
   Total                                1,119     1,061     3,124     2,507
                                    ========= ========= ========= =========

Track resurfaced (miles)                5,257     4,465    12,623    10,068
                                    ========= ========= ========= =========

* Certain comparative prior period amounts have been adjusted to conform to
  the current period presentation.

Contact Information

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

    Media Contact:
    John Ambler
    (817) 867-6407