This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Burlington Northern Santa Fe Corp. (BNI: chart) on January 23, 2007.

Management:

Chairman, President and Chief Executive Officer: Matthew Rose
Executive Vice President and Chief Financial Officer: Tom Hund
Executive Vice President and Chief Marketing Officer: John Lanigan, Jr.
Executive Vice President and Chief Operations Officer: Carl Ice
Key Investors Issues


Key Investors Issues

- Earnings per share were $1.42, which is 26% higher than the fourth quarter of 2005.
- Operating income was $942 million, or 18% higher than 2005.
- Compensation and benefits expense was $994 million, up 9% from 2005.

Fourth Quarter 2006 Highlights

Earnings per share were $1.42, which is 26% higher than the fourth quarter of 2005.

The 2006 earnings per share include 3 cents per share benefit from a state tax provision adjustment, also due to a net loss from two commuter-related transactions, partially offset by the JB Hunt settlement. Last year''s earnings per share were reduced by about 5 cents per share. So, when adjusting for these items, earnings per share are up 18% over 2005.

Operating income was $942 million, or 18% higher than 2005.

- Operating ratio was 75%, and when excluding the impact of fuel surcharge and both revenues and expenses, the operating ratio would have been just under 72%.
- Operating expense was $2.940 billion, or 7% higher than the fourth quarter of 2005. The majority of this increase was driven by higher volume and fuel-related expenses. The composition of expenses is generally in line with historical trends with the exception of fuel, which is still well above historical averages and a few percentage points above last year.

Compensation and benefits expense was $994 million, up 9% from 2005.

Employment increased 4% from 2005 to 2006, with the increase primarily in transportation and engineering, while compensation and benefits per employee was up 5%. About a third of this increase was driven by higher pension stock option expenses and the remainder is due to wages and benefit increases and to a lesser extent the timing of certain compensation accruals.

Purchase service expense was $161 million, up 5% or $21 million.

The increase is due primarily to higher volume-related costs for ramping services. Growing BNSF Logistics Company is driving a third of this increase, and logistics expense increases are offset by increases in other revenues.

Depreciation expense was $290 million.

Equipment rents was $235 million, or 1% higher than 2005. Equipment rents were nearly flat with 2005 because of improved velocity and equipment privatization.

Material and other expense of $257 million were down $28 million.

However, when excluding the two commuter-related transactions in 2005, material and other was up about $29 million. This year-over-year variance is driven mostly by higher-volume costs, material inflation and increased cash of the expense.

Fuel expense was up $703 million, or 16% higher than fourth quarter 2005.