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Burlington Northern Santa Fe Reports Second Quarter Results FORT WORTH, TX--(MARKET WIRE)--Jul 24, 2008 -- Burlington Northern Santa Fe Corporation
(BNSF) (NYSE:BNI - News)
-- Quarterly earnings were $1.00 per diluted share, which included a
$0.31 per share charge related to environmental matters in Montana and a
$0.03 per share effect from additional personal injury accruals. This
compares to second-quarter 2007 earnings of $1.20 per diluted share.
-- Freight revenues were $613 million, or 16 percent higher than second
quarter of 2007 and included an increase in fuel surcharges of
approximately $400 million over prior year.
-- Operating income was $714 million, compared to second-quarter 2007
operating income of $841 million. The decrease in operating income reflects
a $474 million increase in fuel expense and includes a $175 million charge
related to environmental matters in Montana and $15 million for additional
personal injury accruals.
-- The Company also announced that planned capital commitments for 2008
will be increased, as described below.
Burlington Northern Santa Fe Corporation (BNSF) (NYSE:BNI - News) today reported quarterly earnings of $1.00 per diluted share, which included a $0.31 per share charge related to environmental matters in Montana and a $0.03 per share effect from additional personal injury accruals. This compares to second-quarter 2007 earnings of $1.20 per diluted share. "We experienced a number of challenges during the second quarter, including a soft economy, rapidly increasing fuel prices and significant damage to our network from flooding across the Midwest. I am proud of the efforts of our team to rebuild our network despite significant devastation. As of mid-July, network fluidity and service to our customers had been fully restored. Despite current softness in the economy, we continue to be optimistic about the long-term given the strength of our diverse franchise, the value of our product offering and our continued focus on yield and productivity improvement," said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer. Second-quarter 2008 freight revenues increased $613 million, or 16 percent, to $4.35 billion compared with $3.74 billion in the prior year. The 16-percent increase in revenue was primarily attributable to improved yields and an increase in fuel surcharges of approximately $400 million driven by higher fuel prices. Agricultural Products revenues increased $218 million, or 36 percent, to $828 million, due primarily to strong unit volumes in ethanol, corn, soybeans and wheat combined with improved yields. Coal revenues of $902 million rose $126 million, or 16 percent, driven by improved yields and contractual inflation escalators, partially offset by lower unit volumes due to weather-related challenges. Industrial Products revenues increased by $96 million, or 10 percent, to $1.05 billion. Strong demand for construction and petroleum products was offset by a decline in building products due to weakness in the housing market. Consumer Products revenues of $1.57 billion rose $173 million, or 12 percent as strong domestic intermodal unit volumes and improved yields were offset by lower international intermodal unit volumes. Each of the business units also benefited from increased fuel surcharges driven by higher fuel prices. Operating expenses for the second quarter of 2008 were $3.76 billion compared with second-quarter 2007 operating expenses of $3.00 billion. The $762 million increase in operating expenses was largely driven by a $474 million increase in fuel expense due to higher fuel prices and includes a $175 million charge related to environmental matters in Montana and $15 million for additional personal injury accruals. The Company also announced that planned capital commitments for 2008 will be about $2.85 billion, or $275 million higher than previously disclosed due to: (i) the acceleration of capital projects to take advantage of the Economic Stimulus Act of 2008, (ii) the acquisition of additional new locomotives which will enable the Company to take advantage of the significant fuel efficiency and other environmental benefits and the Economic Stimulus Act of 2008, and (iii) capital expenditures associated with significant flooding costs in the Midwest. 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 Six Months
Ended June 30, Ended June 30,
------------------- -------------------
2008 2007 2008 2007
------- ------- ------- -------
Operating revenues
Freight revenues $ 4,349 $ 3,736 $ 8,492 $ 7,280
Other revenues 129 107 247 208
------- ------- ------- -------
Total operating revenues 4,478 3,843 8,739 7,488
------- ------- ------- -------
Operating expenses
Fuel 1,245 771 2,254 1,423
Compensation and benefits 951 925 1,934 1,857
Purchased services 540 507 1,065 1,009
Depreciation and amortization 349 322 690 629
Equipment rents 223 237 453 469
Materials and other 456 (a) 240 754 (a) 566 (b)
------- ------- ------- -------
Total operating expenses 3,764 3,002 7,150 5,953
------- ------- ------- -------
Operating income 714 841 1,589 1,535
Interest expense 140 132 274 253
Other expense, net 5 6 5 11
------- ------- ------- -------
Income before income taxes 569 703 1,310 1,271
Income tax expense 219 270 505 489
------- ------- ------- -------
Net income $ 350 $ 433 $ 805 $ 782
======= ======= ======= =======
Diluted earnings per share $ 1.00 $ 1.20 $ 2.30 $ 2.16
======= ======= ======= =======
Diluted average shares
outstanding (in millions) 349.2 360.8 350.2 362.2
======= ======= ======= =======
Operating ratio (c) 83.6% 77.5% 81.3% 78.9%
======= ======= ======= =======
(a) Second quarter 2008 includes a $0.31 per share charge related to
environmental matters in Montana and a $0.03 per share effect from
additional personal injury accruals.
(b) 2007 includes a first-quarter charge of $81 million for additional
environmental expenses and a technology system write-off.
(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)
June 30, December 31,
2008 2007
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 481 $ 330
Accounts receivable, net 829 790
Materials and supplies 689 579
Current portion of deferred income taxes 337 290
Other current assets 455 192
----------- -----------
Total current assets 2,791 2,181
Property and equipment, net 30,131 29,567
Other assets 2,220 1,835
----------- -----------
Total assets $ 35,142 $ 33,583
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and other current liabilities $ 3,051 $ 2,824
Long-term debt due within one year 434 411
----------- -----------
Total current liabilities 3,485 3,235
Long-term debt and commercial paper 8,385 7,735
Deferred income taxes 8,698 8,484
Casualty and environmental liabilities 1,014 843
Pension and retiree health and welfare liability 454 444
Employee separation costs 73 77
Other liabilities 1,700 1,621
----------- -----------
Total liabilities 23,809 22,439
----------- -----------
Stockholders' equity:
Common stock and additional paid-in capital 7,579 7,353
Retained earnings 11,728 11,152
Treasury stock and other (7,974) (7,361)
----------- -----------
Total stockholders' equity 11,333 11,144
----------- -----------
Total liabilities and stockholders' equity $ 35,142 $ 33,583
=========== ===========
Book value per share $ 32.91 $ 32.05
=========== ===========
Common shares outstanding (in millions) 344.4 347.7
=========== ===========
Net debt to total capitalization (a) 42.4% 41.2%
=========== ===========
(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 *
(Dollars in millions)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2008 2007 2008 2007
------ ------ ------ ------
Operating activities
Net income $ 350 $ 433 $ 805 $ 782
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 349 322 690 629
Deferred income taxes 49 62 132 114
Long-term casualty and environmental
liabilities, net 184 (9) 191 33
Other, net 32 52 33 93
Change in accounts receivable sales
program - (300) - -
Other changes in working capital (190) (132) (146) (75)
------ ------ ------ ------
Net cash provided by operating activities 774 428 1,705 1,576
------ ------ ------ ------
Investing activities
Capital expenditures (574) (615) (1,042) (1,152)
Construction costs for facility
financing obligation (13) (8) (17) (9)
Other, net (112) 120 (399) (173)
------ ------ ------ ------
Net cash used for investing activities (699) (503) (1,458) (1,334)
------ ------ ------ ------
Financing activities
Net borrowings 155 420 585 467
Dividends paid (111) (89) (223) (179)
Purchase of BNSF common stock (269) (360) (642) (709)
Proceeds from stock options exercised 44 60 79 115
Proceeds from facility financing
obligation 11 - 29 -
Other, net 51 45 76 82
------ ------ ------ ------
Net cash (used for) provided by financing
activities (119) 76 (96) (224)
------ ------ ------ ------
(Decrease) increase in cash and cash
equivalents (44) 1 151 18
Cash and cash equivalents:
Beginning of period 525 392 330 375
------ ------ ------ ------
End of period $ 481 $ 393 $ 481 $ 393
====== ====== ====== ======
* Certain comparative prior period amounts have been adjusted to conform to
the current period presentation.
Burlington Northern Santa Fe Corporation
Operating Statistics *
Three Months Six Months
Ended June 30, Ended June 30,
------------------- -------------------
2008 2007 2008 2007
------- ------- ------- -------
Cars / units (in thousands) 2,509 2,581 4,995 5,088
Average revenues per car / unit $ 1,733 $ 1,448 $ 1,700 $ 1,431
Revenue ton miles (in millions) 164,373 163,428 332,309 320,691
Gross ton miles (in millions) 279,060 279,535 561,878 549,618
RTM / GTM 0.59 0.58 0.59 0.58
Freight revenue / thousand RTM $ 26.46 $ 22.86 $ 25.55 $ 22.70
Operating expense / thousand
RTM $ 22.90 (a) $ 18.37 $ 21.52 (a) $ 18.56 (b)
Freight revenue / thousand GTM $ 15.58 $ 13.37 $ 15.11 $ 13.25
Operating expense / thousand
GTM $ 13.49 (a) $ 10.74 $ 12.73 (a) $ 10.83 (b)
Compensation and benefits /
thousand GTM $ 3.41 $ 3.31 $ 3.44 $ 3.38
Average employees 41,404 41,763 40,929 41,488
Thousand RTM / average employee 3,970 3,913 8,119 7,730
Thousand GTM / average employee 6,740 6,693 13,728 13,248
Gallons of fuel used
(in millions) 355 356 719 716
Average price per gallon of
fuel (c) $ 3.51 $ 2.17 $ 3.14 $ 1.99
GTM / gallon of fuel 786 785 781 768
Freight train miles
(in millions) 41 42 83 83
GTM / freight train hours
(in thousands) 135 126 137 125
Route miles operated 32,162 32,332 32,162 32,332
* Certain comparative prior period amounts have been adjusted to conform
to the current period presentation.
(a) Second quarter 2008 includes a $175 million increase in expense related
to environmental matters in Montana and $15 million for additional
personal injury accruals.
(b) 2007 includes a first-quarter charge of $81 million for additional
environmental expenses and a technology system write-off.
(c) Includes handling, taxes and hedge effect.
Burlington Northern Santa Fe Corporation
Revenue Statistics by Commodity
Three Months Six Months
Ended June 30, Ended June 30,
--------------- Percent ---------------- Percent
Revenues (in millions) 2008 2007 Change 2008 2007 Change
------- ------- ------ -------- ------- ------
Domestic Intermodal $ 730 $ 610 19.7 % $ 1,366 $ 1,196 14.2 %
International Intermodal 700 663 5.6 1,319 1,273 3.6
Automotive 143 127 12.6 272 243 11.9
------- ------- ------ -------- ------- ------
Total Consumer Products 1,573 1,400 12.4 2,957 2,712 9.0
Industrial Products 1,046 950 10.1 1,985 1,796 10.5
Coal 902 776 16.2 1,856 1,536 20.8
Agricultural Products 828 610 35.7 1,694 1,236 37.1
------- ------- ------ -------- ------- ------
Total freight revenue 4,349 3,736 16.4 8,492 7,280 16.6
Other revenue 129 107 20.6 247 208 18.8
------- ------- ------ -------- ------- ------
Total revenues $ 4,478 $ 3,843 16.5 % $ 8,739 $ 7,488 16.7 %
======= ======= ====== ======== ======= ======
Cars / units (in thousands)
Domestic Intermodal 539 510 5.7 % 1,043 1,017 2.6 %
International Intermodal 654 746 (12.3) 1,276 1,473 (13.4)
Automotive 43 44 (2.3) 82 85 (3.5)
------- ------- ------ -------- ------- ------
Total Consumer Products 1,236 1,300 (4.9) 2,401 2,575 (6.8)
.
Industrial Products 422 431 (2.1) 825 821 0.5
Coal 589 611 (3.6) 1,223 1,205 1.5
Agricultural Products 262 239 9.6 546 487 12.1
------- ------- ------ -------- ------- ------
Total cars / units 2,509 2,581 (2.8)% 4,995 5,088 (1.8)%
======= ======= ====== ======== ======= ======
Average revenue per car /
unit
Domestic Intermodal $ 1,354 $ 1,196 13.2 % $ 1,310 $ 1,176 11.4 %
International Intermodal 1,070 889 20.4 1,034 864 19.7
Automotive 3,326 2,886 15.2 3,317 2,859 16.0
------- ------- ------ -------- ------- ------
Total Consumer Products 1,273 1,077 18.2 1,232 1,053 17.0
Industrial Products 2,479 2,204 12.5 2,406 2,188 10.0
Coal 1,531 1,270 20.6 1,518 1,275 19.1
Agricultural Products 3,160 2,552 23.8 3,103 2,538 22.3
------- ------- ------ -------- ------- ------
Average revenue per car /
unit $ 1,733 $ 1,448 19.7 % $ 1,700 $ 1,431 18.8 %
======= ======= ====== ======== ======= ======
Revenue ton miles (in millions)
Domestic Intermodal 13,907 12,836 8.3 % 26,702 25,424 5.0 %
International Intermodal 19,642 21,312 (7.8) 38,638 41,633 (7.2)
Automotive 1,548 1,629 (5.0) 3,005 3,093 (2.8)
------- ------- ------ -------- ------- ------
Total Consumer Products 35,097 35,777 (1.9) 68,345 70,150 (2.6)
Industrial Products 30,144 30,629 (1.6) 58,499 58,364 0.2
Coal 68,259 69,307 (1.5) 140,569 135,741 3.6
Agricultural Products 30,873 27,715 11.4 64,896 56,436 15.0
------- ------- ------ -------- ------- ------
Total revenue ton miles 164,373 163,428 0.6 % 332,309 320,691 3.6 %
======= ======= ====== ======== ======= ======
Freight revenue per
thousand ton miles
Domestic Intermodal $ 52.49 $ 47.52 10.5 % $ 51.16 $ 47.04 8.8 %
International Intermodal 35.64 31.11 14.6 34.14 30.58 11.6
Automotive 92.38 77.96 18.5 90.52 78.56 15.2
------- ------- ------ -------- ------- ------
Total Consumer Products 44.82 39.13 14.5 43.27 38.66 11.9
Industrial Products 34.70 31.02 11.9 33.93 30.77 10.3
Coal 13.21 11.20 17.9 13.20 11.32 16.6
Agricultural Products 26.82 22.01 21.9 26.10 21.90 19.2
------- ------- ------ -------- ------- ------
Freight revenue per
thousand ton miles $ 26.46 $ 22.86 15.7 % $ 25.55 $ 22.70 12.6 %
======= ======= ====== ======== ======= ======
Burlington Northern Santa Fe Corporation
Capital Expenditures
Three Months Six Months
Ended June 30, Ended June 30,
--------------- ---------------
2008 2007 2008 2007
------- ------- ------- -------
Capital expenditures (in millions)
Engineering
Rail $ 122 $ 117 $ 209 $ 199
Ties 107 100 178 178
Surfacing 69 78 109 126
Other 130 102 230 205
------- ------- ------- -------
Total engineering 428 397 726 708
Mechanical 33 36 69 62
Other 22 24 51 51
------- ------- ------- -------
Total replacement capital 483 457 846 821
------- ------- ------- -------
Information services 20 20 43 36
New locomotive and freight car
acquisitions 9 - 9 -
Terminal and line expansion 62 138 144 295
------- ------- ------- -------
Total capital expenditures $ 574 $ 615 $ 1,042 $ 1,152
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Track miles of rail laid
Replacement capital 251 246 404 371
Expansion projects 10 51 23 72
------- ------- ------- -------
Total 261 297 427 443
======= ======= ======= =======
Cross ties inserted (thousands)
Replacement capital 839 818 1,379 1,482
Expansion projects 34 133 67 187
------- ------- ------- -------
Total 873 951 1,446 1,669
======= ======= ======= =======
Track resurfaced (miles) 4,128 4,234 6,143 6,370
======= ======= ======= =======Contact: Investor Contact:
Linda Hurt
(817) 352-6452
Media Contact:
Patrick Hiatte
(817) 867-6418
Source: Burlington Northern Santa Fe
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