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NEWS
Contact: Richard Russack FOR IMMEDIATE RELEASE
(817) 352-6425
Burlington Northern Santa Fe Reports Improved Second Quarter Results
. Net income of $277 million or $1.74 per share -- up 18 percent from
net income of $235 million or $1.50 per share in 1997
. Revenues of $2.2 billion for the second quarter 1998 were $155
million or 8 percent higher than second quarter 1997
. Second quarter 1998 operating income of $529 million -- $70 million
or 15 percent higher than a year ago
. Operating ratio for the second quarter improved to 76.2 percent
compared with 77.8 percent in 1997
FORT WORTH, Texas, July 21, 1998 - - Burlington Northern Santa Fe
Corporation (BNSF) (NYSE: BNI) today reported second quarter 1998 net income of
$277 million, or $1.74 per share on a diluted basis, an increase of 18 percent
from second quarter 1997 net income of $235 million, or $1.50 per share.
"Coal, Merchandise and Intermodal volume growth, coupled with effective
cost controls, were keys to the increase in second quarter income over the prior
year," said Robert D. Krebs, BNSF chairman, president and chief executive
officer.
Revenues of $2.2 billion for the second quarter 1998 were $155 million or 8
percent higher than second quarter 1997. Coal revenues improved $73 million or
15 percent to $555 million on a 13 percent increase in carloadings. Merchandise
revenues increased $45 million, or 7 percent, to $728 million, driven by volume
increases in all sectors. Intermodal volume growth in the direct marketing,
international and truckload sectors generated a $51 million, or 9 percent,
revcnue increase to $605 million. Agricultural commodity revenues decreased $14
million, or
more...
BNSF 2Q EARNINGS/ Page Two
6 percent, to $225 million, due primarily to weakness in the corn and soybean
export markets in the Pacific Northwest. Automotive revenues decreased $8
million, or 7 percent, to $100 million, primarily as a result of a loss of a
contract with Ford Motor Company.
Operating expenses increased $85 million, or only 5 percent, to $1.7
billion compared with the prior-year period, in spite of a 9 percent increase in
units handled. Higher compensation and benefits, purchased services and
material, and other expenses, all as a result of increased business levels, and
increased depreciation expense, were partially offset by lower fuel costs.
Operating income was $529 million for the second quarter of 1998 compared
with $459 million for the same 1997 period. Operating ratio improved to 76.2
percent for the second quarter 1998 compared with 77.8 percent a year earlier.
Six-Month 1998 Results
BNSF adjusted net income for the six months ended June 30, 1998, was $510
million, or $3.21 per share on a diluted basis, a 32 percent increase from 1997
net income of $385 million, or $2.46 per share. Including a one-time gain on
the March 1998 sale of substantially all of BNSF's interest in Santa Fe Pacific
Pipeline Partners, L.P., BNSF reported net income for the first six months of
1998 of $542 million, or $3.41 per share. Revenues for the period were $4.4
billion, up 7 percent. Operating expenses of $3.4 billion for 1998 increased 3
percent. Operating income was $976 million for 1998 compared with $788 million
for 1997. Operating ratio improved to 77.7 percent for 1998 compared with 80.7
percent a year earlier.
Through The Burlington Northern and Santa Fe Railway Company, BNSF owns one
of the largest railroad networks in the United States, with 34,000 route miles
covering 28 states and two Canadian provinces.
Consolidated financial statements follow.
Burlington Northern Santa Fe Corporation
Adjusted Consolidated Statement of Income
(Unaudited. In millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------
1998 1997 1998 1997
------ ------ ------ ------
Revenues $2,219 $2,064 $4,381 $4,088
------ ------ ------ ------
Operating Expenses
Compensation and benefits 690 652 1,393 1,345
Purchased services 233 211 464 427
Depreciation and amortization 205 189 407 379
Equipment rents 203 201 394 401
Fuel 181 186 363 382
Materials and other 178 166 384 366
------ ------ ------ ------
Total Operating Expenses 1,690 1,605 3,405 3,300
------ ------ ------ ------
Operating Income 529 459 976 788
Interest Expense 85 85 173 169
Other Income (Expense) - Net (4) - 6 (3)
------ ------ ------ ------
Income Before Income Taxes 440 374 809 616
Income Tax Expense 163 139 299 231
------ ------ ------ ------
Adjusted Net Income $ 277 $ 235 $ 510 $ 385
====== ====== ====== ======
Adjusted Diluted Earnings Per Share $ 1.74 $ 1.50 $ 3.21 $ 2.46
====== ====== ====== ======
Reported Earnings
Net Income $ 277 $ 235 $ 542 $ 385
====== ====== ====== ======
Basic Earnings Per Share $ 1.76 $ 1.53 $ 3.45 $ 2.50
====== ====== ====== ======
Diluted Earnings Per Share $ 1.74 $ 1.50 $ 3.41 $ 2.46
====== ====== ====== ======
Average Shares Outstanding
Basic 157.4 154.2 156.9 154.1
====== ====== ====== ======
Diluted 159.4 156.5 159.0 156.4
====== ====== ====== ======
Statement Explanation:
- ----------------------
1998 adjusted net income and diluted earnings per share exclude a first quarter
gain on pipeline partnership sale of $32 million ($67 million pre-tax) or $0.20
per share after tax.
Burlington Northern Santa Fe Corporation
(Unaudited, In millions)
Condensed Consolidated Balance Sheet
June 30, December 31,
1998 1997
-------- ------------
Assets
Cash and cash equivalents $ 31 $ 31
Other current assets 1,148 1,203
------- -------
Total current assets 1,179 1,234
Properties and other assets 20,634 20,102
------- -------
Total Assets $21,813 $21,336
======= =======
Liabilities and Stockholders' Equity
Current liabilities $ 2,169 $ 2,060
Long-term debt and commercial paper 4,969 5,181
Deferred income taxes 5,302 5,175
Other liabilities 2,006 2,108
Stockholders' equity 7,367 6,812
------- -------
Total Liabilities and Stockholders' Equity $21,813 $21,336
======= =======
Condensed Consolidated Statement of Cash Flows
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1998 1997 1998 1997
------------------ -------------------
Cash Provided by Operating Activities $ 540 $ 560 $1,001 $ 633
Cash Used for Capital Expenditures (586) (549) (952) (845)
Net Proceeds of Borrowings 227 38 206 322
Dividends Paid (47) (46) (94) (92)
Cash Used for Other Activities (136) (8) (161) (23)
----- ----- ------ -----
Increase (Decrease) in Cash and Cash Equivalents $ (2) $ (5) $ - $ (5)
===== ===== ====== =====
Burlington Northern Santa Fe Corporation
Supplemental Data
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------------
1998 1997 1998 1997
Revenues (In millions)
Intermodal $ 605 $ 554 $ 1,166 $ 1,070
Coal 555 482 1,113 971
Agricultural Commodities 225 239 504 531
Automotive 100 108 192 214
Merchandise
Chemicals 217 218 419 414
Metals and Minerals 209 190 398 360
Forest Products 158 147 305 283
Consumer Goods 144 128 276 246
------- ---------- ------- -------
Total Freight Revenues 2,213 2,066 4,373 4,089
Other Revenues 6 (2) 8 (1)
------- ---------- ------- -------
Total Revenues $ 2,219 $2,064 $ 4,381 $ 4,088
======= ========== ======= =======
Operating ratio 76.2% 77.8% 77.7% 80.7%
Revenue ton miles (billions) 114.7 103.8 227.8 203.4
Freight revenue per thousand revenue ton miles $ 19.29 $19.90 $ 19.19 $ 20.10
Cars/Units (thousands) 1,951 1,784 3,813 3,509
Average revenue per car/unit $ 1,134 $1,158 $ 1,147 $ 1,165
Employees (average) 44,910 43,661 44,390 42,672