(BNSF issued the following news release on January 27.)
FORT WORTH, Texas — Burlington Northern Santa Fe Corporation (BNSF) today reported record fourth-quarter 2003 earnings of $0.61 per share, or 13-percent, higher than fourth-quarter 2002 earnings of $0.54 per share.
“We’re pleased with both the double-digit earnings per share increase and the freight revenue growth of 8 percent realized by BNSF in the fourth quarter. Our revenue growth was again driven by strong volumes in our Consumer Products, Industrial Products and Agricultural businesses,” said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer. “For 2004, we anticipate continued revenue growth as both the global and U.S. economies continue to expand,” Rose added.
Freight revenues for the fourth quarter increased $185 million, or 8 percent, to a record $2.46 billion compared with 2002 fourth-quarter revenues of $2.27 billion. Fourth-quarter freight revenues included fuel surcharges of $31 million compared with $14 million in the prior year. Consumer Products revenues increased $123 million, or 15 percent, to a record $969 million reflecting increased volumes in the international, truckload and perishables sectors. Industrial Products revenues rose $51 million, or 10 percent, to $542 million reflecting increased business in steel, taconite, clay and minerals in the construction products sector along with military, lumber and paper traffic in the building products sector. Agricultural Products revenues were up $26 million, or 7 percent, to $419 million, due to increased export demand for grain and greater ethanol shipments from Midwest plants to California. Coal revenues for the fourth quarter decreased $15 million, or 3 percent, to $525 million compared with strong 2002 fourth- quarter revenues of $540 million due to a plant shutdown, the conversion of a utility from coal to natural gas and the closure of a BNSF-served mine.
Operating expenses of $2.02 billion were $150 million, or 8 percent, higher than the same period in 2002, principally driven by a 9-percent increase in units handled and increased fuel prices.
For the fourth quarter of 2003, operating income rose $41 million, or 9 percent, to $477 million compared with the fourth quarter of 2002. BNSF’s operating ratio was 80.6 percent compared with 80.8 percent for the same period in the prior year.
Year-End 2003 Results
BNSF’s earnings per share before the cumulative effect of a change in accounting principle was $2.09 for the year ended December 31, 2003, compared with prior-period earnings of $2.00 per share.
In the first quarter of 2003, BNSF adopted Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. The statement disallowed the accrual of asset retirement costs that are not legal obligations. The net cumulative effect of this accounting change on years prior to 2003 was an increase to net income of $39 million, net of tax, or $0.10 per share.
Record freight revenues of $9.29 billion were 5 percent higher than 2002 freight revenues of $8.87 billion. Freight revenues in 2003 included fuel surcharges of $110 million, compared with $26 million in the prior year. Operating expenses of $7.75 billion increased by $425 million, or 6 percent, driven primarily by a $240 million, or 29 percent, year-over-year increase in fuel expense and a 6 percent year-over-year increase in units handled. In spite of increased fuel prices, 2003 operating income grew to $1.67 billion. BNSF’s operating ratio was 82.1 percent compared with 81.3 percent in the prior year.
Common Stock Repurchases
During the fourth quarter of 2003, BNSF repurchased approximately 1.3 million shares of its common stock at an average price of $29.68 per share. Approximately 8.0 million shares were repurchased during 2003 at an average price of $27.25 per share. This brings total repurchases under BNSF’s 150-million share-repurchase program to approximately 124 million shares as of December 31, 2003, at an average price of $26.05 per share since the program was announced in July 1997.
BNSF’s subsidiary, The Burlington Northern and Santa Fe Railway Company, operates one of the largest railroad networks in North America, with about 32,500 route miles covering 28 states and two Canadian provinces. BNSF is an industry leader in Web-enabling a variety of customer transactions at www.bnsf.com . The railway is among the world’s top transporters of intermodal traffic, moves more grain than any other American railroad, transports the components of many of the products we depend on daily, and hauls enough coal to generate about ten percent of the electricity produced in the United States.