Burlington Northern Santa Fe Reports Third Quarter 2008 Results

FORT WORTH, TX, Oct 23 (MARKET WIRE) --
Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI)

-- Quarterly earnings were $2.00 per diluted share, which included a
$0.09 per share impact related to a favorable tax settlement. This compares
to third-quarter 2007 earnings of $1.48 per diluted share.

-- Freight revenues increased $818 million, or 21 percent, to $4.77
billion compared with the third quarter of 2007, and included higher fuel
surcharges of approximately $570 million.

-- Operating income of $1.21 billion increased $206 million, or 21
percent, compared with the same 2007 period.

Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) today
reported quarterly earnings of $2.00 per diluted share, compared with
third-quarter 2007 earnings of $1.48 per diluted share.

"The U.S. and global economies are facing very significant challenges.
Despite the economic uncertainty, BNSF continues to perform well. In the
third quarter, BNSF achieved our best quarterly earnings per share in the
history of the Company," said Matthew K. Rose, BNSF Chairman, President
and Chief Executive Officer. "While we are all concerned about the current
financial and economic situation, we continue to be optimistic about the
future of our diverse franchise and we remain confident about our
long-term prospects."

Third-quarter 2008 freight revenues increased $818 million, or 21 percent,
to $4.77 billion compared with $3.95 billion in the prior year. The
21-percent increase in revenue was primarily attributable to improved
yields and an increase in fuel surcharges of approximately $570 million
driven by higher fuel prices.

Agricultural Products revenues were up $227 million, or 33 percent, to
$909 million, predominately due to strong unit volumes in ethanol, corn
and feeds and improved yields. Coal revenues rose $198 million, or 23
percent, to $1.05 billion, as a result of higher unit volumes,
contractual inflation escalators and improved yields. Industrial Products
revenues of $1.12 billion were $162 million, or 17 percent higher than
the third quarter of 2007. Improved yields and increased demand for
construction products more than offset the lower unit volumes for both
building products and chemicals and plastic products. Consumer Products
revenues rose $231 million, or 16 percent, to $1.69 billion due mainly to
growth in domestic intermodal unit volumes and improved yields, offset by
lower international intermodal unit volumes. Increased fuel surcharges
driven by higher fuel prices further benefited each of the business units.

Operating expenses for the third quarter of 2008 were $3.70 billion
compared with third-quarter 2007 operating expenses of $3.07 billion. The
$631 million increase in operating expenses was primarily driven by a $501
million increase in fuel expense due to higher fuel prices on relatively
flat fuel consumption.

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 Nine Months
Ended September 30, Ended September 30,
------------------ ---------------------
2008 2007 2008 2007
-------- -------- -------- --------

Operating revenues
Freight revenues $ 4,766 $ 3,948 $ 13,258 $ 11,228
Other revenues 140 121 387 329
-------- -------- -------- --------
Total operating
revenues 4,906 4,069 13,645 11,557
-------- -------- -------- --------

Operating expenses
Fuel 1,349 848 3,685 2,332
Compensation and benefits 1,013 937 2,947 2,794
Purchased services 537 501 1,602 1,510
Depreciation and
amortization 349 324 1,039 953
Equipment rents 230 235 683 704
Materials and other 221 223 893 (a) 728 (b)
-------- -------- -------- --------
Total operating
expenses 3,699 3,068 10,849 9,021
-------- -------- -------- --------

Operating income 1,207 1,001 2,796 2,536
Interest expense 122 132 396 385
Other expense, net 6 6 11 17
-------- -------- -------- --------

Income before income taxes 1,079 863 2,389 2,134
Income tax expense 384 333 889 822
-------- -------- -------- --------

Net income $ 695 $ 530 $ 1,500 $ 1,312
======== ======== ======== ========

Diluted earnings per share $ 2.00 $ 1.48 $ 4.30 $ 3.64
======== ======== ======== ========

Diluted average shares
outstanding (in millions) 347.2 357.1 349.2 360.5
======== ======== ======== ========

Operating ratio (c) 74.7% 74.6% 78.9% 77.4%
======== ======== ======== ========

* 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) 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)

September 30, December 31,
2008 2007
------------ ------------

Assets
Current assets:
Cash and cash equivalents $ 476 $ 330
Accounts receivable, net 623 790
Materials and supplies 626 579
Current portion of deferred income taxes 422 290
Other current assets 318 192
------------ ------------
Total current assets 2,465 2,181

Property and equipment, net 30,510 29,567

Other assets 2,658 1,835
------------ ------------

Total assets $ 35,633 $ 33,583
============ ============

Liabilities and stockholders' equity
Current liabilities:
Accounts payable and other current
liabilities $ 3,252 $ 2,824
Long-term debt due within one year 403 411
------------ ------------
Total current liabilities 3,655 3,235

Long-term debt and commercial paper 8,297 7,735
Deferred income taxes 8,847 8,484
Casualty and environmental liabilities 1,004 843
Pension and retiree health and welfare
liability 454 444
Employee separation costs 71 77
Other liabilities 1,701 1,621
------------ ------------
Total liabilities 24,029 22,439
------------ ------------

Stockholders' equity:
Common stock and additional paid-in capital 7,615 7,353
Retained earnings 12,285 11,152
Treasury stock and other (8,296) (7,361)
------------ ------------
Total stockholders' equity 11,604 11,144
------------ ------------

Total liabilities and stockholders' equity $ 35,633 $ 33,583
============ ============

Book value per share $ 33.90 $ 32.05
============ ============
Common shares outstanding (in millions) 342.3 347.7
============ ============
Net debt to total capitalization (a) 41.5% 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 Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------

Operating activities

Net income $ 695 $ 530 $ 1,500 $ 1,312
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 349 324 1,039 953
Deferred income taxes 116 106 248 220
Long-term casualty and
environmental liabilities, net (10) (7) 181 26
Other, net 6 44 39 137
Change in accounts receivable
sales program 278 (100) 278 (100)
Other changes in working capital 213 (8) 18 (83)
-------- -------- -------- --------

Net cash provided by operating
activities 1,647 889 3,303 2,465
-------- -------- -------- --------

Investing activities

Capital expenditures (670) (623) (1,712) (1,775)
Construction costs for facility
financing obligation (21) (9) (38) (18)
Other, net (281) (145) (631) (318)
-------- -------- -------- --------

Net cash used for investing
activities (972) (777) (2,381) (2,111)
-------- -------- -------- --------

Financing activities

Net (payments) borrowings (370) 192 215 659
Dividends paid (111) (89) (334) (268)
Purchase of BNSF common stock (236) (255) (878) (964)
Proceeds from stock options
exercised 8 11 87 126
Proceeds from facility financing
obligation 21 - 50 -
Other, net 8 11 84 93
-------- -------- -------- --------

Net cash used for financing
activities (680) (130) (776) (354)
-------- -------- -------- --------
(Decrease) increase in cash and cash
equivalents (5) (18) 146 -

Cash and cash equivalents:
Beginning of period 481 393 330 375
-------- -------- -------- --------
End of period $ 476 $ 375 $ 476 $ 375
======== ======== ======== ========

* Certain comparative prior period amounts have been adjusted to conform to
the current period presentation.

Burlington Northern Santa Fe Corporation
Operating Statistics *

Three Months Nine Months
Ended September 30, Ended September 30,
----------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------

Revenue Statistics

Cars / units (in thousands) 2,590 2,630 7,585 7,718

Average revenues per car / unit $ 1,840 $ 1,501 $ 1,748 $ 1,455

Revenue ton miles (in millions) 170,134 166,635 502,443 487,326

Freight revenue / thousand GTM $ 16.64 $ 13.93 $ 15.63 $ 13.48

Freight revenue / thousand RTM $ 28.01 $ 23.69 $ 26.39 $ 23.04

Average length of haul (miles) 1,081 1,067 1,088 1,077

Operating / Productivity Statistics

Operating Expense
Gross ton miles (in millions) 286,486 283,465 848,364 833,083

Operating expense / thousand GTM $ 12.91 $ 10.82 $ 12.79(a) $ 10.83(b)

Thousand GTM / average employee 6,970 6,822 20,698 20,069

Compensation
Average employees 41,103 41,553 40,987 41,510

Compensation and benefits /
average employee $ 24,646 $ 22,551 $ 71,893 $ 67,318

Compensation and benefits /
thousand GTM $ 3.54 $ 3.31 $ 3.47 $ 3.35

Fuel
GTM / gallon of fuel 821 803 794 779

Gallons of fuel used (in
millions) 349 353 1,068 1,069

Average price per gallon of fuel
(c) $ 3.72 $ 2.31 $ 3.33 $ 2.09

Velocity
Locomotive miles per day 287.4 288.4 290.3 290.0

Car miles per day 205.5 195.2 203.3 196.6

* 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 Nine Months
Ended September 30, Ended September 30,
--------------- Percent ------------------ Percent
Revenues (in millions) 2008 2007 Change 2008 2007 Change
------- ------- ----- --------- -------- -----
Domestic Intermodal $ 783 $ 645 21.4 % $ 2,149 $ 1,841 16.7 %
International Intermodal 776 690 12.5 2,095 1,963 6.7
Automotive 127 120 5.8 399 363 9.9
------- ------- ----- --------- -------- -----
Total Consumer Products 1,686 1,455 15.9 4,643 4,167 11.4

Industrial Products 1,124 962 16.8 3,109 2,758 12.7
Coal 1,047 849 23.3 2,903 2,385 21.7
Agricultural Products 909 682 33.3 2,603 1,918 35.7
------- ------- ----- --------- -------- -----
Total freight revenue 4,766 3,948 20.7 13,258 11,228 18.1
Other revenue 140 121 15.7 387 329 17.6
------- ------- ----- --------- -------- -----
Total revenues $ 4,906 $ 4,069 20.6 % $ 13,645 $ 11,557 18.1 %
======= ======= ===== ========= ======== =====

Cars / units (in
thousands)
Domestic Intermodal 555 528 5.1 % 1,598 1,545 3.4 %
International Intermodal 667 740 (9.9) 1,943 2,213 (12.2)
Automotive 32 39 (17.9) 114 124 (8.1)
------- ------- ----- --------- -------- -----
Total Consumer Products 1,254 1,307 (4.1) 3,655 3,882 (5.8)
.
Industrial Products 420 431 (2.6) 1,245 1,252 (0.6)
Coal 645 627 2.9 1,868 1,832 2.0
Agricultural Products 271 265 2.3 817 752 8.6
------- ------- ----- --------- -------- -----
Total cars / units 2,590 2,630 (1.5)% 7,585 7,718 (1.7)%
======= ======= ===== ========= ======== =====

Average revenue per car /
unit
Domestic Intermodal $ 1,411 $ 1,222 15.5 % $ 1,345 $ 1,192 12.8 %
International Intermodal 1,163 932 24.8 1,078 887 21.5
Automotive 3,969 3,077 29.0 3,500 2,927 19.6
------- ------- ----- --------- -------- -----
Total Consumer Products 1,344 1,113 20.8 1,270 1,073 18.4

Industrial Products 2,676 2,232 19.9 2,497 2,203 13.3
Coal 1,623 1,354 19.9 1,554 1,302 19.4
Agricultural Products 3,354 2,574 30.3 3,186 2,551 24.9
------- ------- ----- --------- -------- -----
Average revenue per car /
unit $ 1,840 $ 1,501 22.6 % $ 1,748 $ 1,455 20.1 %
======= ======= ===== ========= ======== =====

Revenue ton miles (in
millions)
Domestic Intermodal 14,249 13,331 6.9 % 40,951 38,755 5.7 %
International Intermodal 19,556 20,854 (6.2) 58,194 62,487 (6.9)
Automotive 1,231 1,454 (15.3) 4,236 4,547 (6.8)
------- ------- ----- --------- -------- -----
Total Consumer Products 35,036 35,639 (1.7) 103,381 105,789 (2.3)

Industrial Products 29,557 30,337 (2.6) 88,056 88,701 (0.7)
Coal 75,001 71,468 4.9 215,570 207,209 4.0
Agricultural Products 30,540 29,191 4.6 95,436 85,627 11.5
------- ------- ----- --------- -------- -----
Total revenue ton miles 170,134 166,635 2.1 % 502,443 487,326 3.1 %
======= ======= ===== ========= ======== =====

Freight revenue per
thousand ton miles
Domestic Intermodal $ 54.95 $ 48.38 13.6 % $ 52.48 $ 47.50 10.5 %
International Intermodal 39.68 33.09 19.9 36.00 31.41 14.6
Automotive 103.17 82.53 25.0 94.19 79.83 18.0
------- ------- ----- --------- -------- -----
Total Consumer Products 48.12 40.83 17.9 44.91 39.39 14.0

Industrial Products 38.03 31.71 19.9 35.31 31.09 13.6
Coal 13.96 11.88 17.5 13.47 11.51 17.0
Agricultural Products 29.76 23.36 27.4 27.27 22.40 21.7
------- ------- ----- --------- -------- -----
Freight revenue per
thousand ton miles $ 28.01 $ 23.69 18.2 % $ 26.39 $ 23.04 14.5 %
======= ======= ===== ========= ======== =====

Burlington Northern Santa Fe Corporation
Capital Expenditures

Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------

Capital expenditures (in millions)
Engineering
Rail $ 128 $ 106 $ 337 $ 305
Ties 108 78 286 256
Surfacing 73 68 182 194
Other 172 128 402 333
--------- --------- --------- ---------
Total engineering 481 380 1,207 1,088
Mechanical 47 40 116 102
Other 49 23 100 74
--------- --------- --------- ---------
Total replacement capital 577 443 1,423 1,264
--------- --------- --------- ---------

Information services 28 13 71 49
New locomotive and freight car
acquisitions - - 8 -
Terminal and line expansion 65 167 210 462
--------- --------- --------- ---------
Total capital expenditures $ 670 $ 623 $ 1,712 $ 1,775
========= ========= ========= =========

Track miles of rail laid
Replacement capital 295 228 699 599
Expansion projects 20 75 43 147
--------- --------- --------- ---------
Total 315 303 742 746
========= ========= ========= =========

Cross ties inserted (thousands)
Replacement capital 1,008 747 2,387 2,229
Expansion projects 53 144 120 331
--------- --------- --------- ---------
Total 1,061 891 2,507 2,560
========= ========= ========= =========

Track resurfaced (miles) 4,465 3,448 10,608 9,818
========= ========= ========= =========

Investor Contact:
Linda Hurt
(817) 352-6452

Media Contact:
Patrick Hiatte
(817) 867-6418

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