(BNSF issued the following news release on October 26.)
FORT WORTH, Texas — Burlington Northern Santa Fe Corporation today reported third-quarter 2004 earnings of $0.01 per share which includes a net of tax charge of $288 million, or $0.76 per share to reflect changes in the way BNSF estimates asbestos and environmental liabilities. Third-quarter 2003 earnings per share were $0.55.
“We achieved an all-time record for quarterly revenues which enabled BNSF to record its third consecutive quarterly double-digit revenue increase,” said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer. “Substantial unit volume increases in three of our four business groups contributed to this strong performance.”
Third-quarter 2004 freight revenues increased $373 million, or 16 percent, to an all-time quarterly record of $2.74 billion compared with 2003 third- quarter revenues of $2.37 billion. Of the 16 percent increase, about 3 percent was driven by fuel surcharges and about 3 percent came from price increases. Consumer Products revenues increased $168 million, or 18 percent, to an all-time quarterly record of $1.10 billion as a result of double-digit increases in the international intermodal, truckload and perishables sectors. Industrial Products revenues increased $80 million, or 14 percent, to an all- time quarterly record of $634 million reflecting strong demand in the construction products, building products, and petroleum products sectors. Coal revenues rose $78 million, or 15 percent, to $589 million resulting from record demand by utility customers. Agricultural Products revenues were up $47 million, or 13 percent, to $418 million driven by increased corn and wheat exports.
Third-quarter 2004 operating expenses, which include the pre-tax charge of $465 million, were $2.69 billion while prior-year third-quarter operating expenses were $1.97 billion. This increase was primarily due to the charge as well as historically high fuel prices and 12-percent higher freight volumes. Operating income, including the impact of the above charge, was $100 million. Third-quarter 2003 operating income was $430 million.
As a result of a comment letter received following its Form 8-K filing on October 7, 2004, BNSF is currently in discussions with the staff of the Securities and Exchange Commission concerning the charge recorded in the third quarter to reflect changes in the way BNSF estimates asbestos and environmental liabilities. The Company believes its accounting for the charge is appropriate. Regardless of the outcome of these discussions, the Company believes there will not be a material impact on the ongoing results of its operations or liquidity.
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. 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. BNSF is an industry leader in Web-enabling a variety of customer transactions at http://www.bnsf.com.