2. BURLINGTON NORTHERN SANTA FE CORPORATION
INVESTORS' REPORT - UNAUDITED
3rd Quarter 2001
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. NEWS
Contact: Richard Russack FOR IMMEDIATE RELEASE
(817) 352-6425
Burlington Northern Santa Fe Reports
Third Quarter 2001 Results
โข Earnings were $0.58 per diluted share compared with third quarter 2000 earnings
of $0.64 per diluted share. Third quarter 2001 includes $.05 per diluted share
related to a revenue contract settlement, partially offset by a $.03 per diluted share
non-operating loss on investments.
โข Freight revenues for the third quarter were $2.31 billion, even with last year.
โข Free cash flow for the nine months ended September 30, 2001 was $358 million.
FORT WORTH, Texas, October 23, 2001 - - Burlington Northern Santa Fe Corporation
(BNSF) (NYSE: BNI) today reported third quarter 2001 earnings of $0.58 per diluted share,
compared with third quarter 2000 earnings of $0.64 per diluted share.
โBNSF continues to focus on revenue quality, operating expense efficiencies and free
cash flow,โ said Matthew K. Rose, President and Chief Executive Officer. โAs we pointed out
last July, we are continuing to take steps to align our costs with the current business
environment. Part of this initiative will include a reduction of our salaried workforce by
approximately 400 positions. In addition, we continue to review our network to further improve
our efficiencies.โ
Freight revenues for the 2001 third quarter were $2.31 billion, even with last year on
slightly higher ton-miles compared with the same 2000 period. Freight revenues include a
$32 million settlement related to a transportation contract. Agricultural Commodities revenues
increased $11 million, or 3 percent, to $331 million, primarily due to an increased demand for
corn, partially offset by a decline in wheat exports and domestic demand for milo and meal.
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4. Consumer products revenues increased $22 million, or 3 percent, to $888 million reflecting the
contract settlement and double-digit growth in truckload business, offset by decreases in
domestic intermodal shipments resulting from the current economic slowdown. Industrial
products revenues fell $7 million or 1 percent, to $576 million because of continued production
cutbacks affecting most sectors. Coal revenues decreased $30 million, or 5 percent, to $519
million, despite 3 percent higher volume as a result of increased demand for electricity, and tight
Eastern coal supplies. These volume increases were offset by lower revenue per unit on certain
contract renewals that occurred at the beginning of this year.
Operating expenses of $1.84 billion were $69 million higher than the 2000 third quarter.
Compensation and benefits expense was $40 million higher than 2000 due to higher wages,
incentive compensation accruals and health and welfare costs. Fuel expense was $9 million
higher than 2000, due to a 4 cent increase in the average cost of diesel fuel. All other expenses
were $20 million higher primarily due to casualty expense and purchased services.
Operating income was $502 million for the third quarter 2001 compared with
$571 million a year ago.
Common Stock Repurchases
During the third quarter, BNSF repurchased 4.1 million shares at an average price of
$26.19 per share. This brings total repurchases under BNSFโs 120 million share-repurchase
program to 101.1 million shares as of September 30, 2001 at an average price of $25.71 per share
since the program was announced in July 1997.
Through The Burlington Northern and Santa Fe Railway Company, BNSF operates one
of the largest railroad networks in the United States, with 33,500 route miles covering 28 states
and two Canadian provinces.
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5. Consolidated financial statements follow.
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 that could cause actual results to differ materially
from that projected 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, and changes in labor
costs and labor difficulties including stoppages; 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, competition and commodity
concentrations, the Companyโs ability to achieve its operational and financial initiatives and to
contain costs, as well as such as severe weather, floods and earthquakes or other disruptions of
the Companyโs operating systems, structures, or equipment.
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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,
2001 2000 2001 2000
Operating revenues
Freight revenues $ 2,314 $ 2,318 $ 6,818 $ 6,797
Other revenues 29 25 89 71
Total operating revenues 2,343 2,343 6,907 6,868
Operating expenses
Compensation and benefits 714 674 2,137 2,049
Purchased services 275 263 811 771
Depreciation and amortization 222 225 680 670
Equipment rents 185 192 562 547
Fuel 240 231 743 661
Materials and other 205 187 625 606
Total operating expenses 1,841 1,772 5,558 5,304
Operating income 502 571 1,349 1,564
Interest expense 117 117 352 336
Other income (expense) - net (20) (36) (98) (59)
Income before income taxes 365 418 899 1,169
Income tax expense 140 159 339 444
Income before extraordinary charge 225 259 560 725
Extraordinary charge, net of tax - - (6) -
Net income $ 225 $ 259 $ 554 $ 725
Diluted earnings per share after
extraordinary charge $ 0.58 $ 0.64 $ 1.41 $ 1.72
Diluted average shares outstanding 390.2 402.5 392.0 422.2
Operating ratio 78.3% 75.4% 80.2% 77.0%
* Third quarter 2001 earnings include unusual items of $0.02 per diluted share comprised of a transportation contract settlement
of $0.05 per diluted share, partially offset by investment losses of $0.03 per diluted share. Excluding the unusual items, third
quarter earnings per share is $0.56 and the operating ratio is 79.4%. Year-to-date earnings include unusual items of $0.10 per
diluted share comprised of losses related to non-rail 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 earnings per share is $1.51 and the operating
ratio is 80.6%.
Third quarter 2000 earnings include an unusual item of $0.04 per diluted share reflecting costs for the terminated BNSF/CN
merger proposal. Excluding the unusual item, third quarter earnings per share is $0.68. Year-to-date earnings include unusual
items of $0.09 per diluted share comprised of reduction and redeployment of employees and the third quarter item above.
Excluding the unusual items, year-to-date earnings per share is $1.81 and the operating ratio is 76.4%.
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7. Burlington Northern Santa Fe Corporation
Consolidated Balance Sheet Information
(in millions, except per share amounts)
September 30, December 31,
2001 2000
Assets
Current assets
Cash and cash equivalents $ 20 $ 11
Accounts receivable, net 298 314
Materials and supplies 207 220
Current portion of deferred income taxes 314 299
Other current assets 146 132
Total current assets 985 976
Property and equipment, net 22,888 22,369
Other assets 868 1,030
Total assets $ 24,741 $ 24,375
Liabilities and stockholders' equity
Current liabilities
Accounts payable and other current liabilities $ 1,979 $ 1,954
Long-term debt due within one year 387 232
Total current liabilities 2,366 2,186
Long-term debt and commercial paper 6,297 6,614
Deferred income taxes 6,660 6,422
Casualty and environmental liabilities 419 430
Employee merger and separation costs 212 262
Other liabilities 997 981
Total liabilities 16,951 16,895
Stockholders' equity
Common stock and additional paid-in capital 5,579 5,433
Retained earnings 4,917 4,505
Treasury stock (2,689) (2,413)
Unearned compensation (35) (35)
Other 18 (10)
Total stockholders' equity 7,790 7,480
Total liabilities and stockholders' equity $ 24,741 $ 24,375
Total debt to total capital 46.2% 47.8%
Book value per share $ 20.10 $ 19.10
Common shares outstanding 387.5 391.6
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8. Burlington Northern Santa Fe Corporation
Consolidated Cash Flow Information
(in millions)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
Operating activities
Net income $ 225 $ 259 $ 554 $ 725
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 222 225 680 670
Deferred income taxes 99 97 206 218
Employee merger and separation costs paid (11) (15) (38) (47)
Other - net 25 27 84 75
Changes in working capital 75 60 80 66
Net cash provided by operating activities 635 653 1,566 1,707
Investing activities and dividends paid
Capital expenditures (424) (354) (1,061) (990)
Other - net 12 (51) (4) (159)
Dividends paid (47) (50) (143) (158)
Free cash flow after dividends paid 176 198 358 400
Financing activities
Purchase of BNSF common stock (106) (241) (263) (1,344)
Proceeds from stock options exercised 5 2 106 5
Other - net - 5 (17) 23
Net debt paid (incurred) $ 75 $ (36) $ 184 $ (916)
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9. Burlington Northern Santa Fe Corporation
Operating Statistics
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
Cars/units (thousands) 2,088 2,113 6,090 6,113
Average revenue per car/unit (a) $ 1,093 $ 1,097 $ 1,114 $ 1,112
Revenue ton miles (millions) 125,620 127,484 373,857 368,168
Gross ton miles (millions) 226,068 225,335 669,383 655,733
RTM/GTM 0.56 0.57 0.56 0.56
Freight revenue/thousand RTM (a) $ 18.17 $ 18.18 $ 18.15 $ 18.46
Operating expense/thousand RTM (b) $ 14.66 $ 13.90 $ 14.87 $ 14.41
Freight revenue/thousand GTM (a) $ 10.09 $ 10.29 $ 10.14 $ 10.37
Operating expense/thousand GTM (b) $ 8.14 $ 7.86 $ 8.30 $ 8.09
Compensation and benefits/thousand GTM $ 3.16 $ 2.99 $ 3.19 $ 3.12
Employees (c) 39,597 40,198 39,205 39,815
Thousand RTM/average employee 3,172 3,171 9,536 9,247
Gallons of fuel used (millions) 291 293 881 871
Average price per gallon of fuel (cents) (d) 82.5 78.8 84.3 75.9
GTM/gallon of fuel 777 769 760 753
Freight train miles (millions) 37 37 109 107
GTM/freight train hours (thousands) 140 148 141 151
(a) Excludes effects of a third quarter 2001 transportation contract settlement of $32 million.
(b) Adjusted for unusual items, year-to-date 2000 (i) operating expense/thousand RTM is $14.29 and (ii) operating
expense/thousand GTM is $8.02.
(c) Represents average mid-month count for the period.
(d) Includes handling, taxes and hedge effect.
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11. Burlington Northern Santa Fe Corporation
Capital Expenditures and Track Maintenance
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
Capital expenditures (in millions)
Maintenance of way
Rail $ 71 $ 53 $ 180 $ 167
Ties 75 57 200 181
Surfacing 45 38 101 108
Other 90 72 232 199
Total maintenance of way 281 220 713 655
Mechanical 51 54 121 144
Information services 19 16 50 43
Other 31 29 58 83
Total maintenance of business 382 319 942 925
Terminal and line expansion 27 30 88 56
Other 15 5 31 9
Total capital expenditures $ 424 $ 354 $ 1,061 $ 990
Operating lease commitments $ 52 $ 62 $ 149 $ 301
Track maintenance
Track miles of rail laid
Maintenance of business 259 194 604 566
Expansion projects 3 9 15 20
Total 262 203 619 586
Cross ties inserted (thousands)
Maintenance of business 816 703 1,992 2,054
Expansion projects 10 38 50 71
Total 826 741 2,042 2,125
Track resurfaced (miles) 3,404 3,503 8,175 9,301
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