bnsf 3Q 2002 Investors Report

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bnsf 3Q 2002 Investors Report

  1. 1. 3rd Quarter 2002 Investors’ Report
  2. 2. BURLINGTON NORTHERN SANTA FE CORPORATION INVESTORS' REPORT - UNAUDITED 3rd Quarter 2002 INDEX Page Earnings Press Release 1-3 Consolidated Income Information 4 Consolidated Balance Sheet Information 5 Consolidated Cash Flow Information 6 Operating Statistics 7 Revenue Statistics by Commodity 8 Capital Expenditures and Track Maintenance 9
  3. 3. NEWS Contact: Marsha Morgan FOR IMMEDIATE RELEASE (817) 352-6452 Burlington Northern Santa Fe Reports Third Quarter 2002 Results • Third-quarter 2002 earnings of $0.51 per share compared with $0.56 per share excluding adjustments for an automotive contract settlement and non-operating investment losses in 2001, or $0.58 per share including these items. • Freight revenues were $2.28 billion, even with the adjusted prior period. • Operating income was $421 million compared with adjusted operating income of $470 million a year ago. FORT WORTH, Texas, October 22, 2002 - - Burlington Northern Santa Fe Corporation (BNSF) (NYSE: BNI) today reported third-quarter 2002 earnings of $0.51 per share compared with $0.56 per share excluding adjustments for an automotive contract settlement and non- operating investment losses in 2001, or $0.58 per share including these items. “BNSF posted its fourth consecutive year-over-year quarterly record for on-time performance for our customers,” said Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer. “BNSF is maintaining its focus on customer service and cost control in this current difficult revenue environment.” Freight revenues for the 2002 third quarter were $2.28 billion compared with 2001 revenues of $2.31 billion or $2.28 billion excluding the $32 million automotive contract settlement. Consumer Products adjusted revenues increased $27 million, or 3 percent, to $881 million, due to increased intermodal volumes in the international and truckload businesses, despite the work stoppage late in the third quarter at West Coast ports. Industrial Products revenues fell $11 million, or 2 percent, to $524 million, as general softness in the building, construction and petroleum products sectors was partially offset by new chemical traffic. 1
  4. 4. BNSF 3Q Earnings Release / Page Two Coal revenues increased $16 million, or 3 percent, to $535 million, reflecting increased shipments compared with the same period in 2001. Agricultural Products revenues declined $32 million, or 9 percent, to $342 million, primarily as a result of reduced export demand. Operating expenses of $1.89 billion were $46 million, or 2 percent, higher than the same 2001 period. Compensation and benefits expense increased primarily due to the recently announced decrease in the long-term return on pension assets assumption. Additionally, most other operating expense categories were higher, except for fuel, which was lower than the previous year due to a reduction in fuel price per gallon. Operating income was $421 million for the 2002 third quarter compared with operating income in the same 2001 period of $502 million or $470 million excluding the automotive contract settlement. BNSF’s operating ratio increased to 81.6 percent for the 2002 third quarter compared with 78.3 percent or 79.4 percent excluding the automotive contract settlement in 2001. Common Stock Repurchases During the 2002 third quarter, BNSF repurchased 2.9 million shares of its common stock at an average price of $28.09 per share. This brings total repurchases under BNSF’s 120-million share-repurchase program to 113.0 million shares as of September 30, 2002, at an average price of $25.97 per share since the program was announced in July 1997. A subsidiary of Burlington Northern Santa Fe Corporation (NYSE: BNI), The Burlington Northern and Santa Fe Railway Company (BNSF) operates one of the largest railroad networks in North America, with 33,000 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. For the year ended 2001, the railway moved more intermodal traffic than any other rail system in the world, is America’s largest grain-hauling railroad, transports the mineral components of many of the products we depend on daily, and hauls enough coal to generate more than 10 percent of the electricity produced in the United States. Consolidated financial statements follow. 2
  5. 5. BNSF 3Q Earnings Release / Page Three Statements made in this release concerning predictions or expectations of financial or operational performance, or concerning other future events or results, are quot;forward-looking statementsquot; within the meaning of the federal securities laws. Forward-looking statements involve a number of risks and uncertainties and actual results may differ materially from that projected or implied in those statements. Important factors that could cause such differences include, but are not limited to, economic and industry conditions: material adverse changes in economic or industry conditions, both within the United States and globally, customer demand, effects of adverse economic conditions affecting shippers, adverse economic conditions in the industries and geographic areas that produce and consume freight, competition and consolidation within the transportation industry, changes in fuel prices, changes in the securities and capital markets, and changes in labor costs and labor difficulties, including stoppages affecting either BNSF’s operations or our customers’ abilities to deliver goods to BNSF for shipment; legal and regulatory factors: developments and changes in laws and regulations and the ultimate outcome of shipper claims, environmental investigations or proceedings and other types of claims and litigation; and operating factors: technical difficulties, changes in operating conditions and costs, and competition and commodity concentrations, the Company’s ability to achieve its operational and financial initiatives and to contain costs, as well as natural events such as severe weather, floods and earthquakes or other disruptions of the Company’s operating systems, structures, or equipment. The Company cautions against placing undue reliance on forward-looking statements, which reflect its current beliefs and are based on information currently available to it as of the date a forward-looking statement is made. The Company undertakes no obligation to revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs. In the event the Company does update any forward-looking statement, no inference should be made that the Company will make additional updates with respect to that statement, related matters, or any other forward-looking statement. 3
  6. 6. Burlington Northern Santa Fe Corporation Consolidated Income Information * (in millions, except per share data) Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 Operating revenues Freight revenues $ 2,282 $ 2,314 $ 6,603 $ 6,818 Other revenues 26 29 75 89 Total operating revenues 2,308 2,343 6,678 6,907 Operating expenses Compensation and benefits 730 714 2,140 2,137 Purchased services 297 275 850 811 Depreciation and amortization 235 222 696 680 Equipment rents 182 185 537 562 Fuel 215 240 606 743 Materials and other 228 205 655 625 Total operating expenses 1,887 1,841 5,484 5,558 Operating income 421 502 1,194 1,349 Interest expense 107 117 321 352 Other (income) expense, net 7 20 (19) 98 Income before income taxes 307 365 892 899 Income tax expense 115 140 334 339 Income before extraordinary charge 192 225 558 560 Extraordinary charge, net of tax - - - (6) Net income $ 192 $ 225 $ 558 $ 554 Diluted earnings per share after extraordinary charge $ 0.51 $ 0.58 $ 1.46 $ 1.41 Diluted average shares outstanding 379.5 390.2 382.4 392.0 Operating ratio 81.6% 78.3% 81.9% 80.2% * Third Quarter 2001 earnings include unusual items comprised of an automotive revenue contract settlement partially offset by a non-operating loss on investments. Excluding the unusual items, third quarter 2001 earnings is $0.56 per diluted share and the operating ratio is 79.4 percent. Year-to-date earnings include unusual items comprised of non-recurring losses related to non- operating investments, the third quarter items above and an extraordinary charge for a loss on early extinguishment of debt. Excluding the unusual items, year-to-date 2001 earnings is $1.51 per diluted share and the operating ratio is 80.6 percent. 4
  7. 7. Burlington Northern Santa Fe Corporation Consolidated Balance Sheet Information (in millions, except per share amounts) September 30, December 31, 2002 2001 Assets Current assets: Cash and cash equivalents $ 47 $ 26 Accounts receivable, net 208 172 Materials and supplies 200 191 Current portion of deferred income taxes 333 306 Other current assets 108 28 Total current assets 896 723 Property and equipment, net 23,826 23,110 Other assets 954 888 Total assets $ 25,676 $ 24,721 Liabilities and stockholders' equity Current liabilities: Accounts payable and other current liabilities $ 1,967 $ 1,873 Long-term debt due within one year 143 288 Total current liabilities 2,110 2,161 Long-term debt and commercial paper 6,802 6,363 Deferred income taxes 7,060 6,731 Casualty and environmental liabilities 426 423 Employee merger and separation costs 178 216 Other liabilities 1,028 978 Total liabilities 17,604 16,872 Stockholders' equity: Common stock and additional paid-in capital 5,669 5,589 Retained earnings 5,468 5,048 Treasury stock (3,041) (2,745) Unearned compensation (43) (34) Accumulated other comprehensive income (deficit) 19 (9) Total stockholders' equity 8,072 7,849 Total liabilities and stockholders' equity $ 25,676 $ 24,721 Book value per share $ 21.33 $ 20.34 Common shares outstanding 378.5 385.8 Net debt to total capitalization * 46.1% 45.8% * Net debt is calculated as total debt less cash. 5
  8. 8. Burlington Northern Santa Fe Corporation Consolidated Cash Flow Information (in millions) Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 Operating activities Net income $ 192 $ 225 $ 558 $ 554 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 235 222 696 680 Deferred income taxes 96 99 286 206 Employee merger and separation costs paid (17) (11) (48) (38) Other - net 1 25 (32) 84 Changes in working capital 90 75 19 80 Net cash provided by operating activities 597 635 1,479 1,566 Investing activities and dividends paid Capital expenditures (375) (424) (1,016) (1,061) Other - net (29) 12 (127) (4) Dividends paid (46) (47) (138) (143) Free cash flow after dividends paid 147 176 198 358 Financing activities Purchase of BNSF common stock (82) (106) (281) (263) Proceeds from stock options exercised 5 5 40 106 Other - net (1) - (3) (17) Net debt paid (incurred) $ 69 $ 75 $ (46) $ 184 6
  9. 9. Burlington Northern Santa Fe Corporation Operating Statistics Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 Cars/units (in thousands) 2,142 2,088 6,105 6,090 Average revenue per car/unit (a) $ 1,065 $ 1,093 $ 1,082 $ 1,114 Revenue ton miles (in millions) 124,547 125,620 364,792 373,857 Gross ton miles (in millions) 222,967 226,068 649,762 669,383 RTM/GTM 0.56 0.56 0.56 0.56 Freight revenue/thousand RTM (a) $ 18.32 $ 18.17 $ 18.10 $ 18.15 Operating expense/thousand RTM $ 15.15 $ 14.66 $ 15.03 $ 14.87 Freight revenue/thousand GTM (a) $ 10.23 $ 10.09 $ 10.16 $ 10.14 Operating expense/thousand GTM $ 8.46 $ 8.14 $ 8.44 $ 8.30 Compensation and benefits/thousand GTM $ 3.27 $ 3.16 $ 3.29 $ 3.19 Average employees 37,733 39,597 37,532 39,205 Period end employees 37,223 39,511 37,223 39,511 Thousand RTM/average employee 3,301 3,172 9,719 9,536 Thousand GTM/average employee 5,909 5,709 17,312 17,074 Gallons of fuel used (in millions) 291 291 857 881 Average price per gallon of fuel (cents) (b) 73.9 82.5 70.7 84.3 GTM/gallon of fuel 766 777 758 760 Freight train miles (in millions) 38 37 108 109 GTM/freight train hours (in thousands) 139 140 144 141 Route Miles Operated 32,944 33,211 32,944 33,211 (a) Excludes effects of a third quarter 2001 automotive revenue contract settlement of $32 million. (b) Includes handling, taxes and hedge effect. 7
  10. 10. Burlington Northern Santa Fe Corporation Revenue Statistics by Commodity* Three Months Nine Months Ended September 30, Percent Ended September 30, Percent Revenues (in millions) 2002 2001 Change 2002 2001 Change Intermodal $ 734 $ 683 7.5 % $ 2,060 $ 1,972 4.5 % Automotive 76 100 (24.0) 243 325 (25.2) Other Consumer Products 71 71 - 204 208 (1.9) Total Consumer Products 881 854 3.2 2,507 2,505 0.1 Industrial Products 524 535 (2.1) 1,550 1,588 (2.4) Coal 535 519 3.1 1,531 1,577 (2.9) Agricultural Products 342 374 (8.6) 1,015 1,116 (9.1) Total freight revenue 2,282 2,282 - 6,603 6,786 (2.7) Other revenue 26 29 (10.3) 75 89 (15.7) Total revenues $ 2,308 $ 2,311 (0.1) % $ 6,678 $ 6,875 (2.9) % Cars/units (in thousands) Intermodal 956 889 7.5 % 2,665 2,528 5.4 % Automotive 38 45 (15.6) 115 154 (25.3) Other Consumer Products 43 45 (4.4) 123 128 (3.9) Total Consumer Products 1,037 979 5.9 2,903 2,810 3.3 Industrial Products 370 374 (1.1) 1,075 1,100 (2.3) Coal 540 531 1.7 1,551 1,574 (1.5) Agricultural Products 195 204 (4.4) 576 606 (5.0) Total cars/units 2,142 2,088 2.6 % 6,105 6,090 0.2 % Average revenue per car/unit Intermodal $ 768 $ 768 -% $ 773 $ 780 (0.9) % Automotive 2,000 2,222 (10.0) 2,113 2,110 0.1 Other Consumer Products 1,651 1,578 4.6 1,659 1,625 2.1 Total Consumer Products 850 872 (2.5) 864 891 (3.0) Industrial Products 1,416 1,430 (1.0) 1,442 1,444 (0.1) Coal 991 977 1.4 987 1,002 (1.5) Agricultural Products 1,754 1,833 (4.3) 1,762 1,842 (4.3) Average revenue per car/unit $ 1,065 $ 1,093 (2.6) % $ 1,082 $ 1,114 (2.9) % Revenue ton-miles (in millions) Intermodal 23,114 22,680 1.9 % 67,207 66,328 1.3 % Automotive 1,143 1,437 (20.5) 3,642 4,650 (21.7) Other Consumer Products 3,116 3,048 2.2 9,124 9,037 1.0 Total Consumer Products 27,373 27,165 0.8 79,973 80,015 (0.1) Industrial Products 24,083 25,035 (3.8) 70,583 74,905 (5.8) Coal 54,275 52,637 3.1 155,142 156,882 (1.1) Agricultural Products 18,816 20,783 (9.5) 59,094 62,055 (4.8) Total revenue ton-miles 124,547 125,620 (0.9) % 364,792 373,857 (2.4) % Freight revenue per thousand ton-miles Intermodal $ 31.76 $ 30.11 5.5 % $ 30.65 $ 29.73 3.1 % Automotive 66.49 69.59 (4.5) 66.72 69.89 (4.5) Other Consumer Products 22.79 23.29 (2.1) 22.36 23.02 (2.9) Total Consumer Products 32.18 31.44 2.4 31.35 31.31 0.1 Industrial Products 21.76 21.37 1.8 21.96 21.20 3.6 Coal 9.86 9.86 - 9.87 10.05 (1.8) Agricultural Products 18.18 18.00 1.0 17.18 17.98 (4.4) Freight revenue per thousand ton-miles $ 18.32 $ 18.17 0.8 % $ 18.10 $ 18.15 (0.3) % * Excludes effects of a third quarter 2001 automotive contract settlement of $32 million. 8
  11. 11. Burlington Northern Santa Fe Corporation Capital Expenditures and Track Maintenance Three Months Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 Capital expenditures (in millions) Maintenance of way Rail $ 62 $ 72 $ 167 $ 183 Ties 61 77 196 204 Surfacing 53 47 121 105 Other 92 91 235 237 Total maintenance of way 268 287 719 729 Mechanical 36 51 98 121 Information services 21 20 62 50 Other 23 32 51 59 Total maintenance of business 348 390 930 959 Terminal and line expansion 23 28 73 90 Other 4 6 13 12 Total capital expenditures $ 375 $ 424 $ 1,016 $ 1,061 Operating lease commitments $ 41 $ 52 $ 147 $ 149 Total capital commitments $ 416 $ 476 $ 1,163 $ 1,210 Track maintenance Track miles of rail laid Maintenance of business 259 251 579 577 Expansion projects 3 3 4 15 Total 262 254 583 592 Cross ties inserted (thousands) Maintenance of business 665 816 1,972 1,992 Expansion projects 10 10 17 50 Total 675 826 1,989 2,042 Track resurfaced (miles) 4,273 3,404 10,000 8,175 9

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