(The Associated Press distributed the following story on October 27.)
FORT WORTH, Texas — Burlington Northern Santa Fe Corp. posted a sharp drop in third-quarter profit, as a charge to reflect changes in the way the company estimates asbestos and environmental liabilities hurt its bottom line.
The Forth Worth-based railroad company said Tuesday that third-quarter net income came to $2 million, or 1 cent a share, for the latest quarter, including a charge of $288 million, or 76 cents a share, compared with $203 million, or 55 cents a share, a year earlier.
Excluding the charge, earnings came to 77 cents a share, beating Wall Street’s average estimate of 75 cents a share.
Revenue for the latest quarter rose almost 17 percent to $2.79 billion from $2.4 billion a year ago.
Freight revenue rose 16 percent to $2.74 billion, helped partially by fuel surcharges and price increases.
Consumer-products revenue increased 18 percent to $1.1 billion, industrial-products revenue rose 14 percent to $634 million, and coal revenue rose 15 percent to $589 million.
Burlington Northern said it is discussing the $288 million charge with the Securities and Exchange Commission as a result of a comment letter received from the SEC following a regulatory filing on Oct. 7.
Burlington Northern said it believes its accounting for the charge recorded in the third quarter is “appropriate.” Regardless of the outcome of its discussions with the SEC, the company doesn’t expect a material impact on its operations or liquidity.
About two-thirds of the charge represents Burlington’s estimated cost of incurred, but not reported, liabilities from asbestos-related exposures.
Previously, the company accrued for these items on an as-reported basis. The remainder of the charge stems from Burlington’s refinement of estimated environmental liabilities at known sites. Most of the contamination at these sites occurred decades ago, the company has said.
Shares of Burlington Northern closed Tuesday at $41.01, up 13 cents, on the New York Stock Exchange.