Carrier 2004 fourth quarter income statements

Burlington Northern Santa Fe

Burlington Northern Santa Fe Corporation (BNSF) reported all-time record quarterly earnings of $0.91 per share, a 49 percent increase over fourth-quarter 2003 earnings of $0.61 per share. Fourth-quarter 2004 freight revenues increased $464 million, or 19 percent, to an all-time quarterly record of $2.92 billion compared with 2003 fourth-quarter revenues of $2.46 billion.

Consumer Products revenues increased $212 million, or 22 percent, to an all-time quarterly record of $1.18 billion as a result of double-digit increases in the international intermodal, truckload, and perishables sectors. Industrial Products revenues increased $89 million, or 16 percent, to $631 million reflecting strong demand in the building products, petroleum products, and construction products sectors. Coal revenues rose $90 million, or 17 percent, to $615 million resulting from record haulage of 66 million tons for utility customers. Agricultural Products revenues were up $73 million, or 17 percent, to $492 million driven by strong export moves to the Pacific Northwest.

BNSF's operating ratio improved three and one-half percentage points to 77.1 percent from 80.6 percent in the prior year.

Canadian National Railway

Canadian National Railway Co. said its fourth-quarter profit jumped 68 percent on a sharp rise in revenue from greater commodity shipments during the period. Quarterly income grew to $376 million from $224 million in the year-ago period. Revenue gained 15 percent to $1.74 billion from $1.51 billion a year earlier. For the year, earnings were $1.26 billion up from $1.01 billion in 2003.

CN's quarterly operating ratio was 65.0 percent, a 1.1-percentage point improvement over the fourth-quarter 2003 performance. For the full year, CN's 2004 operating ratio was 66.9 percent, a 2.9-percentage point improvement over the year-earlier performance.

Business levels benefited from the acquisitions of BC Rail and related holdings of Great Lakes Transportation LLC (GLT), which added $145 million to CN's fourth-quarter 2004 revenues.

Central to CN's performance was strong demand for lumber, chemicals, iron ore, coal, consumer goods from Asia, and Canadian wheat and barley. Six of CN's seven commodity groups registered revenue gains during the fourth quarter.

Canadian Pacific Railway

Canadian Pacific Railway reported net income of $413 million in 2004, compared with $401 million in 2003. Net income for the 2004 fourth quarter, however, declined to $129 million compared with $174 million in the 2003 fourth quarter. Results in 2004 reflected a decline of $115 million ($130 million after tax) in foreign exchange gains on long-term debt, and a reduction of $172 million in charges ($111 million after tax) for other specified items, which included a $91 million charge ($55 million after tax) for environmental remediation and a $19 million reversal ($12 million after tax) related to labor restructuring.

Full-year operating income was $789 million, an increase of 8 percent excluding other specified items. The railway's revenue was up $242 million, with significant growth in five of seven business lines, despite a $130 million reduction caused by the Canadian dollar's gain against the U.S. dollar.

Operating expenses were up $183 million, and the railway's operating ratio for the full year improved to 79.8 percent, from 80.1 percent (excluding other specified items).

CSX Transportation

CSX reported fourth-quarter earnings dropped by about 50 percent, mostly because of charges from the planned sale of its foreign port operations. CSX reported net income of $66 million in the October-to-December period, compared to $123 million a year earlier. Earnings were reduced by $93 million because of last month's agreement to sell CSX's international shipping terminals to Dubai Ports International for $1.15 billion.

Its fourth quarter 2004 operating ratio was 85.0 percent. For the full year, its operating ratio was 86.6 percent, compared to 87.9 percent for the full year 2003.

The railroad's net earnings were $66 million, including international terminal's discontinued operations and related tax obligations, which lowered net earnings by $93 million. Net earnings from continuing operations were $159 million, up $47 million, or 42% compared to the prior year's quarter. Surface Transportation operating income, including rail and intermodal operations, was $315 million, up $76 million, or 32% compared to the fourth quarter of 2003.

CSX's core Surface Transportation businesses produced operating income of $315 million in the fourth quarter of 2004 versus $239 million in the previous year's quarter.

Kansas City Southern

Driven by record fourth quarter revenues of $173.7 million, KCS reported substantial quarter-over-quarter gains in revenues and operating income. Consolidated KCS revenues increased to $174.6 million, a $26.1 million increase over the 2003 period. KCS operating income for fourth quarter 2004 was $27.4 million, compared to an operating loss of $6.8 million in 2003, which was impacted by a $21.1 million pre-tax increase in claims reserves.

Highlights for the quarter included: KCS reaching record consolidated revenues in the fourth quarter 2004 of $174.6 million, an increase of $26.1 million over fourth quarter 2003; Revenues for fourth quarter 2004 were a record $173.7 million, increasing $26.7 million over fourth quarter 2003; KCS and KCSR have reported 7 consecutive quarter-over-quarter gains in revenues; and KCSR's operating income for the fourth quarter 2004 was a record $31.7 million.

KCSR's enhanced profitability resulted in a fourth quarter 2004 operating ratio of 81.8%, a significant improvement over 86.9% for the fourth quarter 2003. For the full year, KCSR's operating ratio was 84.1%, up from 88.6% in 2003.

Norfolk Southern

NS reported record fourth-quarter net income of $264 million, compared with $52 million for fourth quarter 2003. Fourth-quarter 2003 was affected by costs related to a voluntary separation program and an asset impairment charge that together reduced the quarter's net income by $119 million. Excluding the effects of those items, fourth-quarter 2003 net income would have been $171 million. Net income for 2004 was a record $923 million, including a third-quarter noncash gain of $53 million from the Conrail corporate reorganization. Excluding the noncash gain, 2004 net income would have been $870 million, compared with net income of $535 million for 2003.

The fourth-quarter and full-year operating ratios were the best since 1998. The fourth-quarter ratio of 76.3 percent was an improvement of 4 percentage points compared with the fourth-quarter 2003 operating ratio. For 2004, the operating ratio was 76.7, 5.2 percent points better than 2003, excluding the voluntary separation charge. The operating ratios in 2003 were 86.6 percent in the fourth quarter and 83.5 percent for the year.

Union Pacific Corp.

Union Pacific Corp. reported an 86 percent drop in net income in the fourth quarter of 2004, compared with the same period in 2003.

The company cited inefficient operations, high fuel prices and a charge for future asbestos claims. Union Pacific, which operates the nation's largest railroad, has struggled with service delays and slow train speeds since fall 2003, when a rapid increase in freight demand coincided with an increase in retirements by train service workers, cutting into the rail system's capacity. The company said fourth-quarter net income totaled $79 million, compared with $551 million in fourth quarter 2003.

The railroad said that because of the poor performance, no executives received end-of-year bonuses. Revenue for the quarter rose to just over $3.2 billion from more than $2.96 billion, an 8 percent increase.

For the year, revenue was just over $12.2 billion, a 6 percent increase from revenue of more than $11.55 billion in 2003. Net income for the year was $604 million, which was 62 percent lower than the company's profit of more than $1.58 billion in 2003.

The railroad has suffered all year from an unexpected burst of business and not enough train crews or locomotives. It has responded by hiring more people and adding locomotives to its fleet.

Storms in California and Nevada that snarled the railroad's traffic in the West in January could cost more than $200 million in repairs and lost income for this year's first quarter, though some of that will be recovered from insurance, Union Pacific chairman and chief executive Dick Davidson said.

With high demand expected to continue, the railroad is redesigning its operations in a ''Unified Plan'' that includes higher prices, turning down less profitable business and increasing the number of nonstop trains, UP officials said.

The railroad's operating ratio for the quarter ballooned to 97.3 percent, compared to 80.1 percent in the 2003 fourth quarter. For the full year 2004, Union Pacific's operating ratio was 89.4 percent, compared to 81.5 percent for the full year 2003.

(From the Associated Press, Omaha World-Herald, and Union Pacific financial statements.)



© 2005 Brotherhood of Locomotive Engineers and Trainmen