This summary is based on the first quarter fiscal 2008 earnings call conducted by Burlington Northern Santa Fe Corp. (BNI: chart) on April 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 $1.30 a share compared to 96 cents a share last year.
- Net income was $455 million compared to $349 million a year earlier.
- Revenue rose 17% to $4.26 billion.

First Quarter Highlights

Earnings per share were $1.30.

That represents an increase of 18% from adjusted first quarter earnings per share last year of $1.10 in spite of 11 cents per share head win. For the first quarter of 2007 earnings per share included 14 cents per share charge for environmental cost and the write off of technology system. When adjusting for these items earnings per share for the first quarter of 2008 is up 18% over 2007. This increase is despite of $65 million or 11 cents per share of fuel headwind that Matt referred to.

- Operating income was $875 million, and after adjusting for the unusual items in 2007 this was an increase of $100 million or 13% over 2007.
- Operating ratio was 78.9% and adjusting for the impact of fuel surcharge on revenue and expenses, operating ratio would have been 75%.
- Operating expense was $3.386 billion, $435 million or 15% higher than first quarter 2007 on a GAAP basis. After adjusting for the unusual items in 2007, this was an increase of $516 million or 18% over 2007 and consistent with last quarter''s guidance.

Fuel made up more than 80% of the year-over-year expense increase on a GAAP basis or about 70% on an adjusted basis.

- For the first time quarterly fuel expenses above the $1 billion and additionally for the first time ever, fuel became largest expense category.
- Compensation and benefits expense was $983 million up $51 million from 2007.
- Headcount declined about 2% in 2007, while compensation and benefits expense per employee increased about 7%.
- Comparison and benefits per employee was impacted by wage and benefit inflation along with higher incentive compensation accruals for both exempt and scheduled employees.

- Purchase service expense was $525 million, up 5% from 2007. About 30% of the increase is driven by growing BNSF logistics company which is to offset another revenues. The remainder was due to higher hologic expense as well as higher freight car and locomotive maintenance.
- Depreciation expense was $341 million up about 11% from last year as a result of continuing capital investment as well as from depreciation studies on existing assets and these studies have generally increased depreciation run rate due to increased velocity and volume growth over the past few years.
- Equipment rent expense was $230 million down 1% in 2007 due in part to improve velocity and asset utilization. Mature and other expense of $298 million was down, $28 million over the first quarter of 2007 on a GAAP basis. After adjusting for the environmental and technology charge in 2007, expense was about $50 million higher than 2007. This increase was mainly the result of higher casualties, property taxes, and environment accruals.

- Additionally non-locomotive fuel expense increased about $15 million.
- Fuel expense of $1.9 billion was about 55% higher than the first quarter in 2007, $357 million increase was principally driven by higher fuel prices and a $16 million of reduction in hedge benefit.
- Average fuel price per gallon was $2.80 before hedge and after hedge the price was $2.77.

Interest expense was $134 million, up $13 million over 2007 due to increased debt levels.

- Other expense was flat. The first quarter tax-rate was 38.6% and the company anticipates the second quarter tax-rate to be about the same.
- The company bought back 4 million shares under the share repurchase program.

- The company achieved a 17% year-over-year freight revenue increase and a first quarter record for revenue with and without fuel. These results highlight the value of diverse franchise. Coal and Ag achieved all time freight revenue records and quarterly volume records, while industrial and consumers had first quarter freight revenue records. Overall the company delivered an improved revenue performance driven by yield quality despite the slow down in the U.S. economy. Total fuel surcharge revenue in the first quarter was about $280 million more than a year ago driven by higher fuel prices as well as increased customer participation in the fuel surcharge program. The strong yield quality includes mix changes within businesses as well as a decline in international revenue empties.

The company had an all time record loadings per day of 57.1 system wide and 52.4 on the Powder River Basin.

This record was achieved in spite of challenging weather conditions.

- In agricultural products business unit the company produces an all time record quarter for revenue and units with a 15% volume increase led by growth in wheat, milo, soy beans, and ethanol. Overall PNW export volume was up 28%.
- Gulf exports were up 57% driven by milo and wheat exports. Corn volumes grew by 5%, strong corn exports mitigated weakness in other quarters. West of Texas and Mexico were down because large local crops in both areas reduced the need for inbound rail shipments. Ethanol volume grew by 70% as plans continue to come online.

- Despite the sluggish economy, industrial products achieved a first quarter revenue record driven by improvement in yield quality. For the second consecutive quarter industrial products saw positive unit growth with a 3% increase for the first quarter. Construction products produced 26% revenue growth led by a record quarter in steel, taconite, minerals, and clays. The company saw a strong demand in petroleum products driven by fuel by rail, petroleum coke, and asphalt traffic. Building products units were down 12% as the company saw the continued impact of the housing declines. Lumber and panel volumes were down over 30%.
- Consumer products revenue was up 6% on a 9% decline in units. International posted a revenue increase despite a 14% decline in volumes. The volume decrease was driven by pure East downloads due to the slowing U.S. economy and weak U.S. dollar. Additionally the company continued to be impacted by last year''s reduction in Trans-Pacific service by a major international customer.
- West downloads were up on strong demand for U.S. exports. However, total West units were down due to fewer revenue empties. Domestic Intermodal reported a 9% increase in revenue on different volume as overall softness in the trucking market continues. Automotive segment achieved an 11% revenue growth on a 5% decline in volume.