This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Burlington Northern Santa Fe Corp. (BNI: chart) on January 29, 2008.

Management:

Chairman, President and CEO: Matthew K. Rose
EVP and CFO: Thomas N. Hund
EVP and Chief Marketing Officer: John P. Lanigan, Jr.
EVP and Chief Operations Officer: Carl R. Ice

Key Investors Issues

- EPS were $1.46 a share compared to $1.42 a share last year.
- Net income was $517 million compared to $519 million a year earlier.
- Revenue rose to $4.25 billion from $3.88 billion a year ago.

Fourth Quarter Highlights

Earnings per share were $1.46.

That represents fourth quarter earnings and an increase of over fourth quarter earnings per share of last year of $1.42. These results were achieved in spite of $125 million or 22 cents per share fuel headwind, primarily due to higher fuel prices, a $32 million reduction in fuel hedge benefits and the lagging effect of fuel surcharge program.

Freight revenue increased 9% to $4.1 billion due to the continued strong pricing of about 6% and higher fuel surcharges driven by higher fuel prices, partially offset by mix.

- The company experienced fuel revenue growth in each of four business units against strong results in the prior year.
- Operating ratio was 76.9% and would have been about 300 basis points lower, excluding the impact of the fuel surcharge on both the revenue and the expenses.
- The company made progress on service and productivity initiatives.

- Operating income was $950 million, increasing by $7 million, or 1% over 2006.
- Operating expense was $3.295 billion, $356 million or 12% higher than the fourth quarter of 2006.

- Lower compensation and benefits expense was more than offset by higher fuel depreciation and purchased service expenses.
- Compensation and benefits expense was $979 million, down $15 million from 2006.
- The compensation and benefits per employee was about flat on a 1% decline in headcount.

Wages and benefit increases were offset by lower variable compensation under incentive compensation and profit sharing plans as well as other cost controls.

Purchased service expense was $513 million, up 11% from 2006. About 20% of the increase is driven by growing BNSF Logistics Company, which is offset in other revenues, and the remainder is due to higher haulage, partially resulting from increased agricultural volumes as well as higher locomotive and freight car maintenance.

- Depreciation expense was $340 million, up 13% from last year, as a result of continuing capital investment as well as from depreciation studies on existing assets. These studies have generally increased depreciation run rate modestly, due to increased velocity and volume growth over the past several years.
- Equipment rents expense was $238 million, up 1% from 2006.
- Material and other expense of $265 million was up $20 million over the fourth quarter of 2006. This increase was mainly the result of higher environmental accrual and higher freight car and property tax expense.

- Fuel expense of $960 million was about 37% higher than the fourth quarter of 2006. The $257 million increase was driven by higher fuel prices and a $32 million reduction in hedge benefit, partially offset by improved fuel efficiency of more than 3%.
- Average fuel price per gallon was $2.59 before hedge and $2.57 after hedge. Fuel expense reflected a $125 million headwind and this headwind is the net impact of higher fuel prices and hedge benefit changes, partially offset by increased fuel surcharge participation. The increase over last quarter''s guidance is principally due to higher fuel prices.

Interest expense was $126 million.

- Other expense was $1 million and tax rate was 37.2%.
- Free cash flow after dividend for the year was an all-time record of $738 million, driven by strong cash from operations and free cash flow before dividend exceeded $1 billion for the second year in a row.
- The company achieved return on investment of 10.5%.
- The company bought back 3.4 million shares under the share repurchase program.

Despite continued economic softness, the company posted an all-time record in freight revenue.