Burlington Northern Santa Fe (BNI) 10-Q 23 Oct 09 2009 Q3 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
In Millions, except Share data	9 Months Ended Sep. 30, 2009	Oct. 13, 2009	Jun. 30, 2008
Document and Company Information [Abstract]
Entity Registrant Name	BURLINGTON NORTHERN SANTA FE CORP
Entity Central Index Key	0000934612
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$34,135
Entity Common Stock, Shares Outstanding		340,435,006

Consolidated Statements of Inco

Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Revenues	$3,595	$4,906	$10,335	$13,645
Operating expenses:
Compensation and benefits	872	1,013	2,564	2,947
Fuel	606	1,349	1,729	3,685
Purchased services	453	537	1,396	1,600
Depreciation and amortization	386	349	1,135	1,039
Equipment rents	194	229	591	682
Materials and other	183	222	553	896
Total operating expenses	2,694	3,699	7,968	10,849
Operating income	901	1,207	2,367	2,796
Interest expense	127	122	462	396
Other expense, net	1	6	5	11
Income before income taxes	773	1,079	1,900	2,389
Income tax expense	285	384	715	889
Net income	$488	$695	$1,185	$1,500
Earnings per share:
Basic earnings per share	1.43	2.01	3.48	4.33
Diluted earnings per share	1.42	1.99	3.45	4.28
Dividends declared per share	0.4	0.4	1.2	1.04

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) (USD $)
In Millions	Sep. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$1,161	$633
Accounts receivable, net	853	847
Materials and supplies	523	525
Current portion of deferred income taxes	454	442
Other current assets	286	218
Total current assets	3,277	2,665
Property and equipment, net of accumulated depreciation of $10,453 and $9,912, respectively	32,135	30,847
Other assets	3,141	2,891
Total assets	38,553	36,403
Current liabilities:
Accounts payable and other current liabilities	2,848	3,190
Long-term debt due within one year	323	456
Total current liabilities	3,171	3,646
Long-term debt	10,062	9,099
Deferred income taxes	9,235	8,590
Pension and retiree health and welfare liability	1,020	1,047
Casualty and environmental liabilities	963	959
Employee separation costs	55	57
Other liabilities	1,792	1,874
Total liabilities	26,298	25,272
Stockholders' equity:
Common stock, $0.01 par value, 600,000 shares authorized; 543,062 shares and 541,346 shares issued, respectively (shares in thousands)	5	5
Additional paid-in capital	7,721	7,631
Retained earnings	13,541	12,764
Treasury stock, at cost, 202,640 shares and 202,165 shares, respectively (shares in thousands)	(8,424)	(8,395)
Accumulated other comprehensive loss	(588)	(874)
Total stockholders' equity	12,255	11,131
Total liabilities and stockholders' equity	$38,553	$36,403

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
In Millions, except Share data in Thousands	Sep. 30, 2009	Dec. 31, 2008
Accumulated depreciation	$10,453	$9,912
Common stock, par value	0.01	0.01
Common stock, shares authorized	600,000	600,000
Common stock, shares issued	543,062	541,346
Treasury stock, shares	202,640	202,165

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
OPERATING ACTIVITIES
Net income	$1,185	$1,500
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,135	1,039
Deferred income taxes	458	248
Employee separation costs paid	(10)	(11)
Long-term casualty and environmental liabilities, net	(31)	181
Other, net	26	50
Changes in current assets and liabilities:
Accounts receivable, net	50	(108)
Change in accounts receivables sales program	(50)	278
Materials and supplies	2	(47)
Other current assets	(91)	(142)
Accounts payable and other current liabilities	(36)	315
Net cash provided by operating activities	2,638	3,303
INVESTING ACTIVITIES
Capital expenditures excluding equipment	(1,669)	(1,704)
Acquisition of equipment	(615)	(676)
Proceeds from sale of equipment financed	368	190
Construction costs for facility financing obligation	(36)	(38)
Other, net	(167)	(153)
Net cash used for investing activities	(2,119)	(2,381)
FINANCING ACTIVITIES
Net decrease in commercial paper and bank borrowings	(100)	(261)
Proceeds from issuance of long-term debt	825	650
Payments on long-term debt	(373)	(174)
Dividends paid	(409)	(334)
Proceeds from stock options exercised	26	87
Purchase of BNSF common stock	(15)	(878)
Excess tax benefits from equity compensation plans	18	90
Proceeds from facility financing obligation	51	50
Other, net	(14)	(6)
Net cash provided by (used for) financing activities	9	(776)
Increase in cash and cash equivalents	528	146
Cash and cash equivalents:
Beginning of period	633	330
End of period	1,161	476
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amounts capitalized	463	406
Income taxes paid, net of refunds	170	565
Non-cash asset financing	$464	$79

Consolidated Statements of Equi

Consolidated Statements of Equity (Unaudited) (USD $)
In Millions, except Share data in Thousands	3 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2009		Dec. 31, 2008
Beginning Balance		$11,131
Common stock dividends, $1.20 per share		(408)
Restricted stock and stock options expense		32
Restricted stock activity and related tax expense of $1		1
Exercise of stock options and related tax benefit of $17		43
Purchase of BNSF common stock		(15)	[1]
Comprehensive income:
Net income	488	1,185
Change in unrecognized prior service credit and actuarial losses, net of tax expense of $6		9
Change in fuel/interest hedge mark-to-market and other items, net of tax expense of $155		249
Recognized loss on derivative instruments-discontinued hedges, net of tax benefit of $16		27
Change in unrealized loss on securities held by equity method investees, net of tax expense of $1		1
Total comprehensive income		1,471
Ending Balance	12,255	12,255		11,131
Common Stock and Paid-in Capital
Beginning Balance		7,636
Beginning Balance, Shares		541,346
Restricted stock and stock options expense		32
Restricted stock activity and related tax expense of $1		1
Restricted stock activity and related tax expense of $1, shares		506
Exercise of stock options and related tax benefit of $17		57
Exercise of stock options and related tax benefit of $17, shares		1,210
Comprehensive income:
Ending Balance	7,726	7,726		7,636
Ending Balance, Shares	543,062	543,062		541,346
Treasury Stock
Beginning Balance		(8,395)
Beginning Balance, Shares		(202,165)
Restricted stock activity and related tax expense of $1, shares		1
Exercise of stock options and related tax benefit of $17		(14)
Exercise of stock options and related tax benefit of $17, shares		(243)
Purchase of BNSF common stock		(15)	[1]
Purchase of BNSF common stock, shares		(233)	[1]
Comprehensive income:
Ending Balance	(8,424)	(8,424)		(8,395)
Ending Balance, Shares	(202,640)	(202,640)		(202,165)
Retained Earnings
Beginning Balance		12,764
Common stock dividends, $1.20 per share		(408)
Comprehensive income:
Net income		1,185
Ending Balance	13,541	13,541		12,764
Accumulated Other Comprehensive Loss
Beginning Balance		(874)
Comprehensive income:
Change in unrecognized prior service credit and actuarial losses, net of tax expense of $6		9
Change in fuel/interest hedge mark-to-market and other items, net of tax expense of $155		249
Recognized loss on derivative instruments-discontinued hedges, net of tax benefit of $16		27
Change in unrealized loss on securities held by equity method investees, net of tax expense of $1		1
Ending Balance	($588)	($588)		($874)
[1]Total-to-date share repurchases through September 30, 2009, under the Company's share repurchase program, were 192 million shares at an average price of $41.53 per share, leaving 18 million shares available for repurchase out of the 210 million shares authorized.

Consolidated Statement of Equit

Consolidated Statement of Equity (Parenthetical) (Unaudited) (USD $)
In Millions, except Per Share data	9 Months Ended Sep. 30, 2009
Dividends declared per share	1.2
Restricted stock activity, tax expense	($1)
Exercise of stock options, tax benefit	17
Change in unrecognized prior service credit and actuarial losses, tax expense	(6)
Change in fuel/interest hedge mark-to-market and other items, tax expense	(155)
Recognized loss on derivative instruments - discontinued hedges, tax benefit	16
Change in unrealized loss on securities held by equity method investees, tax expense	(1)
Common Stock and Paid-in Capital
Restricted stock activity, tax expense	(1)
Exercise of stock options, tax benefit	17
Treasury Stock
Restricted stock activity, tax expense	(1)
Exercise of stock options, tax benefit	17
Retained Earnings
Dividends declared per share	1.2
Accumulated Other Comprehensive Loss
Change in unrecognized prior service credit and actuarial losses, tax expense	(6)
Change in fuel/interest hedge mark-to-market and other items, tax expense	(155)
Recognized loss on derivative instruments - discontinued hedges, tax benefit	16
Change in unrealized loss on securities held by equity method investees, tax expense	($1)

Accounting Policies and Interim

Accounting Policies and Interim Results (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Accounting Policies and Interim Results [Abstract]
Accounting Policies and Interim Results	1.Accounting Policies and Interim Results The Consolidated Financial Statements should be read in conjunction with Burlington Northern Santa Fe Corporations Annual Report on Form 10-K for the year ended December31, 2008, including the financial statements and notes thereto. Burlington Northern Santa Fe Corporation (BNSF)is a holding company that conducts no operating activities and owns no significant assets other than through its interests in its subsidiaries. The Consolidated Financial Statements include the accounts of BNSF and its majority-owned subsidiaries, all of which are separate legal entities (collectively, the Company). BNSFs principal operating subsidiary is BNSF Railway Company (BNSF Railway). All significant intercompany accounts and transactions have been eliminated. BNSF was incorporated in Delaware on December16, 1994. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the entire year. In the opinion of management, the unaudited financial statements reflect all adjustments (consisting of only normal recurring adjustments, except as disclosed) necessary for a fair statement of BNSFs consolidated financial position as of September30, 2009, and the results of operations for the three and nine month periods ended September30, 2009 and 2008. BNSF has evaluated subsequent events through October23, 2009, which represents the date the Consolidated Financial Statements were issued. Certain comparative prior period amounts in the Consolidated Financial Statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported operating income or net income. Adoption of New Accounting Pronouncement In June2009, the Financial Accounting Standards Board (FASB) issued authoritative accounting guidance which established the FASB Accounting Standards Codification (Codification or ASC) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities and stated that all guidance contained in the Codification carries an equal level of authority. The authoritative accounting guidance recognized that rules and interpretive releases of the Securities and Exchange Commission (SEC)under federal securities laws are also sources of authoritative Generally Accepted Accounting Principles (GAAP) for SEC registrants. The Company adopted the provisions of the authoritative accounting guidance for the interim reporting period ended September30, 2009, the adoption of which did not have a material effect on the Companys consolidated financial statements.

Hedging Activities

Hedging Activities (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Hedging Activities [Abstract]
Hedging Activities	2.Hedging Activities The Company uses derivative financial instruments to hedge against increases in diesel fuel prices and interest rates as well as to convert a portion of its fixed-rate long-term debt to floating-rate debt. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for the use of the hedging instrument. This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the balance sheet, commitments or forecasted transactions. The Company assesses at the time a derivative contract is entered into, and at least quarterly thereafter, whether the derivative item is effective in offsetting the changes in fair value or cash flows. Any change in fair value resulting from ineffectiveness, as defined by authoritative accounting guidance related to derivatives and hedging, is recognized in current period earnings. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is recorded in accumulated other comprehensive loss (AOCL)as a separate component of stockholders equity and reclassified into earnings in the period during which the hedge transaction affects earnings. Cash flows related to fuel and interest rate derivatives are classified as operating activities in the Consolidated Statements of Cash Flows. BNSF monitors its hedging positions and credit ratings of its counterparties and does not anticipate any losses due to counterparty nonperformance. All counterparties were financial institutions with credit ratings of A2/A or higher as of September30, 2009. The maximum amount of loss the Company could incur from credit risk based on the gross fair value of derivative instruments in asset positions as of September30, 2009 and December31, 2008, was $63million and $77million, respectively. Other than as disclosed under the heading Fuel; Total Fuel-Hedging Activities, the Companys hedge agreements do not include provisions requiring collateral. Certain of the Companys hedge instruments are covered by master netting arrangements whereby, in the event of a default, the non-defaulting party has the right to setoff any amounts payable against any obligation of the defaulting party under the same counterparty agreement. As such, the Companys net asset exposure to counterparty credit risk was $51million and $53million as of September30, 2009 and December31, 2008, respectively. Additional disclosure related to derivative instruments is included in Note 9 to the Consolidated Financial Statements. The amounts recorded in the Consolidated Balance Sheets for derivative transactions were as follows (in millions). These amounts exclude $8million and $106million of collateral posted for certain fuel hedge contracts as of September30, 2009 and December31, 2008, respectively. September 30, December 31, 2009 2008 Short-term hedge

Accounts Receivable, Net

Accounts Receivable, Net (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Accounts Receivable, Net [Abstract]
Accounts Receivable, Net	3.Accounts Receivable, Net BNSF Railway sells a portion of its accounts receivable to Santa Fe Receivables Corporation (SFRC), a special purpose subsidiary. The sole purpose and activity of SFRC is to purchase receivables from BNSF Railway. SFRC transfers an undivided interest in such receivables, with limited exceptions, to a master trust and causes the trust to issue an undivided interest in the receivables to investors (the A/R sales program). The undivided interests in the master trust may be in the form of certificates or purchased interests and are isolated from BNSF Railway which eliminates all of BNSF Railways control over the undivided interest. SFRC periodically incurs minor legal fees that are paid by BNSF Railway and are financed through short-term intercompany payables. BNSF Railways total capacity to sell undivided interests to investors under the A/R sales program was $700million at September30, 2009, which was comprised of two $175million, 364-day accounts receivable facilities and two $175million, 3-year accounts receivable facilities. Both 364-day facilities will mature in November2009 and are expected to be renewed. The two 3-year facilities will mature in November2010. Each of the financial institutions providing credit for the facilities is rated Aa3/A or higher. There was no outstanding interest held by investors under the A/R sales program at September30, 2009. Outstanding undivided interests held by investors under the A/R sales program were $50million at December31, 2008, with $12.5million outstanding under each of the four facilities. These undivided interests in receivables are excluded from accounts receivable by BNSF Railway in connection with the sale of undivided interests under the A/R sales program. As of September30, 2009 and December31, 2008, an interest in $864million and $878million, respectively, of receivables had been transferred by SFRC to the master trust. When SFRC transfers the interest in these receivables to the master trust, it retains an undivided interest in the receivables, which is included in accounts receivable in the Companys Consolidated Financial Statements. The interest that continues to be held by SFRC of $864million and $828 million at September30, 2009 and December31, 2008, respectively, less an allowance for uncollectible accounts, reflected the total accounts receivable transferred by SFRC to the master trust less $50million of outstanding undivided interests held by investors at December31, 2008. Due to a relatively short collection cycle, the fair value of the undivided interest transferred to investors in the A/R sales program approximated book value, and there was no gain or loss from the transaction. BNSF Railway retains the collection responsibility with respect to the accounts receivable. Proceeds from collections reinvested in the A/R sales program were approximately $11.2billion and $14.5billion for the nine months ended September30, 2009 and 2008, respectively. No servicing asset or liability has been recorded because the fees BNSF Railway receives for servicing the receivables approximate the related costs. SFRCs costs of the sale of receivables are inc

Debt

Debt (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Debt [Abstract]
Debt	4.Debt Revolving Credit Facility and Commercial Paper As of September30, 2009, the Company had borrowing capacity of up to $1.2billion under its long-term revolving bank credit facility, which expires in September2012. Annual facility fees are currently 0.08percent for the facility. The rate is subject to change based upon changes in BNSFs senior unsecured debt ratings. Borrowing rates are based upon (i)LIBOR plus a spread determined by BNSFs senior unsecured debt ratings; (ii)money market rates offered at the option of the lenders; or (iii)an alternate base rate. BNSF must maintain compliance with certain financial covenants under its revolving bank credit facility. At September30, 2009, the Company was in compliance with these covenants. At September30, 2009, there were no bank borrowings against the revolving credit agreement. BNSF issues commercial paper from time to time that is supported by the revolving bank credit facility. Outstanding commercial paper balances reduce the amount of borrowings available under this agreement. The classification of commercial paper is determined by the Companys ability and intent to use long-term or short-term funding sources to settle the obligations at maturity. At December31, 2008, the Company classified outstanding commercial paper as long-term debt. No commercial paper was outstanding as of September30, 2009. Notes and Debentures In September2009, BNSF issued $750million of 4.7percent notes due October1, 2019. The net proceeds from the sale of the notes are being used for general corporate purposes which may include, but are not limited to, working capital, capital expenditures, repurchase of common stock pursuant to the share repurchase program, and repayment of outstanding indebtedness. At September30, 2009, $750million remained authorized by the Board of Directors to be issued through a SEC debt shelf registration statement. Equipment Obligation In July2009, BNSF Railway entered into an 18-year equipment obligation totaling $75million to finance locomotives and railcars. Capital Leases During the first nine months of 2009, BNSF entered into a 12-year capital lease to finance $368million of locomotives and freight cars. Additionally, BNSF entered into capital leases totaling $96million to finance maintenance of way and other vehicles and equipment with lease terms of three to seven years. Financing Obligation In 2005, the Company commenced the construction of an intermodal facility that it intended to sell to a third party and subsequently lease back. As of September30, 2009, construction of the facility was completed for a cost of approximately $160million. All improvements have been sold to the third party and BNSF leased the facility from the third party for 20years. This sale leaseback transaction was accounted for as a financing obligation due to continuing involvement. The outflows from the construction of the facility were classified as investing activities, and the inflows from the associated financing proceeds were classified as financing activities in the Companys Consolidated Statements of Cash Flows. Fair Value of Debt Instruments

Commitments and Contingencies

Commitments and Contingencies (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Commitments and Contingencies [Abstract]
Commitments and Contingencies	5.Commitments and Contingencies Personal Injury Personal injury claims, including asbestos claims and employee work-related injuries and third-party injuries (collectively, other personal injury), are a significant expense for the railroad industry. Personal injury claims by BNSF Railway employees are subject to the provisions of the Federal Employers Liability Act (FELA)rather than state workers compensation laws. FELAs system of requiring the finding of fault, coupled with unscheduled awards and reliance on the jury system, contributed to increased expenses in past years. Other proceedings include claims by non-employees for punitive as well as compensatory damages. A few proceedings purport to be class actions. The variability present in settling these claims, including non-employee personal injury and matters in which punitive damages are alleged, could result in increased expenses in future years. BNSF has implemented a number of safety programs designed to reduce the number of personal injuries as well as the associated claims and personal injury expense. BNSF records a liability for personal injury claims when the expected loss is both probable and reasonably estimable. The liability and ultimate expense projections are estimated using standard actuarial methodologies. Liabilities recorded for unasserted personal injury claims are based on information currently available. Due to the inherent uncertainty involved in projecting future events such as the number of claims filed each year, developments in judicial and legislative standards and the average costs to settle projected claims, actual costs may differ from amounts recorded. Expense accruals and any required adjustments are classified as materials and other in the Consolidated Statements of Income. Asbestos The Company is party to a number of personal injury claims by employees and non-employees who may have been exposed to asbestos. The heaviest exposure for BNSF employees was due to work conducted in and around the use of steam locomotive engines that were phased out between the years of 1950 and 1967. However, other types of exposures, including exposure from locomotive component parts and building materials, continued after 1967 until they were substantially eliminated at BNSF by 1985. BNSF assesses its unasserted liability exposure on an annual basis during the third quarter. BNSF determines its asbestos liability by estimating its exposed population, the number of claims likely to be filed, the number of claims that will likely require payment, and the estimated cost per claim. Estimated filing and dismissal rates and average cost per claim are determined utilizing recent claim data and trends. During the third quarter of 2009 and 2008, the Company analyzed recent filing and payment trends to ensure the assumptions used by BNSF to estimate its future asbestos liability were reasonable. In the third quarters of 2009 and 2008, management determined that the liability remained appropriate and no change was recorded. The Company plans to update its study again in the third quarter of 2010. Throughout the year, BNSF monitors actual experience against

Employee Separation Costs

Employee Separation Costs (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Employee Separation Costs [Abstract]
Employee Separation Costs	6.Employee Separation Costs Employee separation costs activity was as follows (in millions): Nine Months Ended September 30, 2009 2008 Beginning balance at January1, $ 79 $ 91 Accruals 12 3 Payments (10 ) (11 ) Ending balance at September30, $ 81 $ 83 Employee separation liabilities of $81million were included in the Consolidated Balance Sheet at September30, 2009, and principally represent the following: (i) $79million for deferred benefits payable upon separation or retirement to certain active conductors, trainmen and locomotive engineers; (ii)less than $1million for employee-related severance costs for the consolidation of clerical functions, material handlers in mechanical shops and trainmen on reserve boards; and (iii) $2million for certain non-union employee severance costs. Employee separation expenses are recorded in materials and other in the Consolidated Statements of Income. At September 30, 2009, $26million of the remaining liabilities was included in current liabilities. The deferred benefits payable upon separation or retirement to certain active conductors, trainmen and locomotive engineers were primarily incurred in connection with labor agreements reached prior to the business combination of BNSFs predecessor companies, Burlington Northern Inc. and Santa Fe Pacific Corporation. These agreements, among other things, reduced train crew sizes and allowed for more flexible work rules. The majority of the remaining costs will be paid between 2009 and 2020. As of September30, 2009, the Company had updated its estimate and recorded an additional liability of $12million related to deferred benefits. The remaining costs for (ii) above are expected to be paid out between 2009 and approximately 2011, and the costs for (iii) above are expected be paid out between 2009 and 2021 based on deferral elections made by the affected employees.

Employment Benefit Plans

Employment Benefit Plans (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Employment Benefit Plans [Abstract]
Employment Benefit Plans	7.Employment Benefit Plans Components of the net cost were as follows (in millions): Pension Benefits Three Months Ended Nine Months Ended September 30, September 30, Net Cost 2009 2008 2009 2008 Service cost $ 7 $ 7 $ 21 $ 19 Interest cost 25 25 76 76 Expected return on plan assets (27 ) (28 ) (80 ) (84 ) Amortization of net loss 7 4 19 12 Net cost recognized $ 12 $ 8 $ 36 $ 23 Retiree Health and Welfare Benefits Three Months Ended Nine Months Ended September 30, September 30, Net Cost 2009 2008 2009 2008 Service cost $ 1 $ 1 $ 2 $ 2 Interest cost 4 4 11 13 Amortization of net loss 1 1 3 Amortization of prior service credit (1 ) (1 ) (4 ) (5 ) Net cost recognized $ 4 $ 5 $ 10 $ 13 In the second quarter of 2009, the Company made a voluntary contribution of $33million to BNSFs qualified pension plan. The Company is not required to make any additional contributions to BNSFs qualified pension plan in 2009.

Earnings Per Share

Earnings Per Share (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Earnings Per Share [Abstract]
Earnings Per Share	8.Earnings Per Share Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on basic earnings per share adjusted for the effect of potential common shares outstanding that were dilutive during the period, arising from employee stock awards and incremental shares calculated using the treasury stock method. Weighted average stock options totaling 4.4million and 5.1million for the three and nine months ended September30, 2009, respectively, and 1.8million and 1.6million for the three and nine months ended September30, 2008, respectively, were not included in the computation of diluted earnings per share because the options exercise price exceeded the average market price of the Companys stock for those periods. The Company adopted authoritative accounting guidance which requires non-vested shares that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) to be considered participating securities, and therefore be included in computing earnings per share using the two-class method. The Company has retrospectively applied the provisions to the financial information included herein, which resulted in a reduction in earnings per diluted share of $0.01 and $0.02 for the three months and nine months ended in September30, 2008, respectively. The following table is a reconciliation of net income available to common stockholders used in the basic and diluted EPS computations for the three months and nine months ended September30, 2009 and 2008 (in millions, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Income Statement: Net income $ 488 $ 695 $ 1,185 $ 1,500 Net income allocated to participating securities (2 ) (3 ) (4 ) (6 ) Net income available to common stockholders $ 486 $ 692 $ 1,181 $ 1,494 Average Shares: Basic 340.2 343.5 339.8 344.9 Diluted 342.7 347.2 342.2 349.2 Earnings Per Share: Basic $ 1.43 $ 2.01 $ 3.48 $ 4.33 Diluted $ 1.42 $ 1.99 $ 3.45 $ 4.28

Comprehensive Income

Comprehensive Income (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Comprehensive Income [Abstract]
Comprehensive Income	9.Comprehensive Income Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income, a component of Stockholders Equity within the Consolidated Balance Sheets, rather than net income on the Consolidated Statements of Income. Under existing accounting standards, other comprehensive income may include, among other things, unrecognized gains and losses and prior service credit related to pension and other postretirement benefit plans and accounting for derivative financial instruments, which qualify for cash flow hedge accounting. The following table provides a reconciliation of net income reported in the Consolidated Statements of Income to total comprehensive income (in millions): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Net income $ 488 $ 695 $ 1,185 $ 1,500 Other comprehensive income: Change in unrecognized prior service credit and actuarial losses, net of tax (see Note 7) 3 2 9 6 Change in fuel/interest hedge mark-to-market and other items, net of tax (see Note 2) 9 (85 ) 249 (37 ) Recognized loss on derivative instruments-discontinued hedges, net of tax (see Note 2) 27 Change in unrealized loss on securities held by equity method investees, net of tax 1 (1 ) 1 (1 ) Total comprehensive income $ 501 $ 611 $ 1,471 $ 1,468 The following table provides the components of accumulated other comprehensive loss (in millions): September 30, December 31, 2009 2008 Unrecognized prior service credit and actuarial losses, net of tax (see Note 7) $ (514 ) $ (523 ) Fuel/interest hedge mark-to-market and other items, net of tax (see Note 2) (68 ) (344 ) Unrealized loss on securities held by equity method investees, net of tax (6 ) (7 ) Total Accumulated other comprehensive loss $ (588 ) $ (874 )

Accounting Pronouncements

Accounting Pronouncements (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Accounting Pronouncements [Abstract]
Accounting Pronouncements	10.Accounting Pronouncements In June2009, the FASB issued Statement of Financial Accounting Standards (SFAS) No.166, Accounting for Transfers of Financial Assets an amendment of FASB Statement No.140. SFAS 166 limits the circumstances in which financial assets can be derecognized and requires enhanced disclosures regarding transfers of financial assets and a transferors continuing involvement with transferred financial assets. SFAS No.166 also eliminates the concept of a qualifying special-purpose entity (QSPE), which will require companies to evaluate former QSPEs for consolidation. In June2009, the FASB issued SFAS No.167, Amendments to FASB Interpretation No.46(R). SFAS No.167 amends existing guidance used to determine whether or not a company is required to consolidate a variable interest entity (VIE)and requires enhanced disclosures. SFAS No.167 eliminates quantitative-based assessments and will require companies to perform ongoing qualitative assessments to determine whether or not the VIE should be consolidated. Both SFAS 166 and SFAS 167 are effective for the Company on January1, 2010. As discussed in Note 3, the Companys A/R sales program involves a master trust that issues an undivided interest in receivables to investors. The A/R sales master trust is not currently consolidated in the Companys financial statements and the undivided interest in receivables that have been sold to investors is derecognized. These new pronouncements will require the Company to consolidate the A/R sales master trust and to no longer derecognize the undivided interest sold to investors effective January1, 2010. As a result, the Companys Consolidated Balance Sheets will reflect an increase in accounts receivable, net and an increase in current liabilities for the amount of undivided interest sold to investors and any related cash flow impacts will be included in Financing Activities rather than Operating Activities in the Consolidated Statements of Cash Flows. There was no outstanding interest held by investors under the A/R sales program at September 30, 2009. Outstanding undivided interests held by investors under the A/R sales program was $50 million at December31, 2008.

Report of Independent Registere

Report of Independent Registered Public Accounting Firm (Unaudited)
	9 Months Ended Sep. 30, 2009 USD / shares
Report of Independent Registered Public Accounting Firm [Abstract]
Report of Independent Registered Public Accounting Firm	11.Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLPs review report is included in this quarterly report; however, PricewaterhouseCoopers LLP does not express an opinion on the unaudited financial information. Accordingly, such report is not a report or part of a registration statement within the meaning of Sections7 and 11 of the Securities Act of 1933 and PricewaterhouseCoopers LLP is not subject to the liability provisions of Section11 of such Act with respect to the review report.