(Burlington Northern Santa Fe issued the following on July 24.)
FORT WORTH, Texas — Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) 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.
— 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.
“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.