Company Quick10K Filing
Quick10K
Burlington Northern Santa Fe
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-24 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-08-02 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-03-05 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
FGCO Financial Gravity Companies 18
GETH Green Envirotech Holdings 5
OSMU Original Source Music 0
LACP Lake Area Corn Processors 0
USEL uSell.com 0
TYGS TYG Solutions 0
HPGN Hypgen 0
WSCC Waterside Capital 0
CQCQ Makingorg 0
HGIT Hines Global Income Trust 0
BNI 2019-09-30
Part I
Item 1. Financial Statements.
Item 2. Management's Narrative Analysis of Results of Operations.
Item 4. Controls and Procedures.
Part II Other Information
Item 1. Legal Proceedings.
Item 6. Exhibits.
EX-31.1 llc93019-ex311.htm
EX-31.2 llc93019-ex312.htm
EX-32.1 llc93019-ex321.htm

Burlington Northern Santa Fe Earnings 2019-09-30

BNI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 llc9301910q.htm FORM 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended September 30, 2019
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from            to            

Commission file number            1-11535
bnsflogo63019a02.jpg
BURLINGTON NORTHERN SANTA FE, LLC
(Exact name of registrant as specified in its charter)
Delaware
 
27-1754839
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification No.)

2650 Lou Menk Drive
Fort Worth, Texas
(Address of principal executive offices)

76131-2830
(Zip Code)

(800) 795-2673
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
None
None
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  
 
 
Yes  [x]  No  [  ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 
Yes  [x]  No  [  ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ]  Accelerated filer  [  ]  Non-accelerated filer  [x]  Smaller reporting company  [  ] Emerging growth company  [  ]
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [ ]
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
Yes  [  ]  No  [x]
Registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format permitted by General Instruction H (2).




Table of Contents
 
 

2


PART I
FINANCIAL INFORMATION

Item 1.
Financial Statements.

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions)
(Unaudited)

 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Revenues
 
$
6,021

 
$
6,147

 
$
17,676

 
$
17,649

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Compensation and benefits
 
1,337

 
1,378

 
4,071

 
4,021

Fuel
 
725

 
859

 
2,211

 
2,456

Purchased services
 
687

 
718

 
2,087

 
2,124

Depreciation and amortization
 
602

 
580

 
1,788

 
1,726

Equipment rents
 
195

 
183

 
573

 
542

Materials and other
 
295

 
320

 
980

 
1,041

Total operating expenses
 
3,841

 
4,038

 
11,710

 
11,910

Operating income
 
2,180

 
2,109

 
5,966

 
5,739

Interest expense
 
271

 
262

 
806

 
774

Other (income) expense, net
 
(32
)
 
(32
)
 
(219
)
 
(82
)
 
 
 
 
 
 
 
 
 
Income before income taxes
 
1,941

 
1,879

 
5,379

 
5,047

Income tax expense
 
475

 
486

 
1,322

 
1,200

Net income
 
$
1,466

 
$
1,393

 
$
4,057

 
$
3,847


See accompanying Notes to Consolidated Financial Statements.

3


BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)

 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
1,466

 
$
1,393

 
$
4,057

 
$
3,847

 
 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
 
    Change in pension and retiree health and welfare benefits, net of tax
 

 
(1
)
 
63

 
(1
)
    Change in accumulated other comprehensive income (loss) of equity method investees
 

 

 
(1
)
 
1

Other comprehensive income (loss), net of tax
 

 
(1
)
 
62

 

Total comprehensive income
 
$
1,466

 
$
1,392

 
$
4,119

 
$
3,847


See accompanying Notes to Consolidated Financial Statements.


4


BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
 
 
 
September 30,
2019
 
December 31,
2018
ASSETS
 
 
 
 

Current assets:
 
 
 
 
Cash and cash equivalents
 
$
2,572

 
$
1,985

Accounts receivable, net
 
1,579

 
1,499

Materials and supplies
 
759

 
793

Other current assets
 
176

 
257

Total current assets
 
5,086

 
4,534

 
 
 
 
 
Property and equipment, net of accumulated depreciation of $11,512 and $10,004, respectively
 
64,002

 
63,185

Goodwill
 
14,851

 
14,851

Operating lease right-of-use assets
 
2,423

 

Intangible assets, net of accumulated amortization of $306 and $279, respectively
 
346

 
373

Other assets
 
2,325

 
2,150

Total assets
 
$
89,033

 
$
85,093

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and other current liabilities
 
$
3,730

 
$
3,261

Long-term debt due within one year
 
1,321

 
830

Total current liabilities
 
5,051

 
4,091

 
 
 
 
 
Long-term debt
 
22,669

 
22,396

Deferred income taxes
 
14,239

 
13,795

Operating lease liabilities
 
1,678

 

Casualty and environmental liabilities
 
446

 
486

Intangible liabilities, net of accumulated amortization of $1,043 and $1,022, respectively
 
360

 
381

Pension and retiree health and welfare liability
 
273

 
267

Other liabilities
 
949

 
1,028

Total liabilities
 
45,665

 
42,444

Commitments and contingencies (see Notes 5 and 6)
 

 

Equity:
 
 
 
 
Member’s equity
 
43,176

 
42,519

   Accumulated other comprehensive income (loss)
 
192

 
130

Total equity
 
43,368

 
42,649

Total liabilities and equity
 
$
89,033

 
$
85,093


See accompanying Notes to Consolidated Financial Statements.

5





BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
 
Nine Months Ended
September 30,
 
 
2019
 
2018
OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
4,057

 
$
3,847

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
1,788

 
1,726

Deferred income taxes
 
423

 
279

Long-term casualty and environmental liabilities, net
 
(35
)
 
(24
)
Other, net
 
(314
)
 
(106
)
Changes in current assets and liabilities:
 
 
 
 
Accounts receivable, net
 
(80
)
 
(125
)
Materials and supplies
 
34

 
(23
)
Other current assets
 
(147
)
 
(55
)
Accounts payable and other current liabilities
 
71

 
424

Net cash provided by operating activities
 
5,797

 
5,943

 
 
 
 
 
INVESTING ACTIVITIES
 
 
 
 
Capital expenditures excluding equipment
 
(2,363
)
 
(2,022
)
Acquisition of equipment
 
(181
)
 
(134
)
Purchases of investments and investments in time deposits
 
(6
)
 
(23
)
Proceeds from sales of investments and maturities of time deposits
 
19

 
37

Other, net
 
(37
)
 
(114
)
Net cash used in investing activities
 
(2,568
)
 
(2,256
)
 
 
 
 
 
FINANCING ACTIVITIES
 
 
 
 
Proceeds from issuance of long-term debt
 
825

 
1,500

Payments on long-term debt
 
(54
)
 
(711
)
Cash distributions
 
(3,400
)
 
(4,150
)
Other, net
 
(13
)
 
(21
)
Net cash used in financing activities
 
(2,642
)
 
(3,382
)
Increase in cash and cash equivalents
 
587

 
305

Cash and cash equivalents:
 
 
 
 
Beginning of period
 
1,985

 
1,975

End of period
 
$
2,572

 
$
2,280

 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION
 
 
 
 
Interest paid, net of amounts capitalized
 
$
815

 
$
819

Capital investments accrued but not yet paid
 
$
227

 
$
166

Income taxes paid, net of refunds
 
$
959

 
$
540

Non-cash asset financing
 
$
8

 
$
4


See accompanying Notes to Consolidated Financial Statements. 

6


BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions)
(Unaudited)

 
 
Member’s
Equity

 
Accumulated
Other
Comprehensive Income (Loss)

 
Total
Equity

Balance at December 31, 2018
 
$
42,519

 
$
130

 
$
42,649

Cash distributions
 
(1,200
)
 

 
(1,200
)
Comprehensive income (loss), net of tax
 
1,253

 
62

 
1,315

Balance at March 31, 2019
 
42,572

 
192

 
42,764

Cash distributions
 
(1,200
)
 

 
(1,200
)
Comprehensive income (loss), net of tax
 
1,338

 

 
1,338

Balance at June 30, 2019
 
42,710

 
192

 
42,902

Cash distributions
 
(1,000
)
 

 
(1,000
)
Comprehensive income (loss), net of tax
 
1,466

 

 
1,466

Balance at September 30, 2019
 
$
43,176

 
$
192

 
$
43,368


 
 
Member’s
Equity

 
Accumulated
Other
Comprehensive Income (Loss)

 
Total
Equity

Balance at December 31, 2017
 
$
42,778

 
$
231

 
$
43,009

Adoption of ASC Topic 606a
 
(3
)
 

 
(3
)
Equity method investee adoption of ASU 2016-01b
 
1

 
(1
)
 

Reclassification upon early adoption of ASU 2018-02c
 
(26
)
 
26

 

Cash distributions
 
(1,100
)
 

 
(1,100
)
Comprehensive income (loss), net of tax
 
1,145

 
1

 
1,146

Balance at March 31, 2018
 
42,795

 
257

 
43,052

Cash distributions
 
(1,175
)
 

 
(1,175
)
Comprehensive income (loss), net of tax
 
1,309

 

 
1,309

Balance at June 30, 2018
 
42,929

 
257

 
43,186

Cash distributions
 
(1,875
)
 

 
(1,875
)
Comprehensive income (loss), net of tax
 
1,393

 
(1
)
 
1,392

Balance at September 30, 2018
 
$
42,447

 
$
256

 
$
42,703

a
Accounting Standards Codification Topic 606 - Revenue from Contracts with Customers
b
Accounting Standards Update (ASU) No. 2016-01 Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities
c
ASU No. 2018-02 Income Statement - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

See accompanying Notes to Consolidated Financial Statements.

7


BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
1.
Accounting Policies and Interim Results
 
The Consolidated Financial Statements should be read in conjunction with Burlington Northern Santa Fe, LLC’s Annual Report on Form 10-K for the year ended December 31, 2018, including the financial statements and notes thereto. Burlington Northern Santa Fe, LLC (BNSF) is a holding company that conducts no operating activities and owns no significant assets other than through its interests in its subsidiaries. The Consolidated Financial Statements include the accounts of BNSF and its majority-owned subsidiaries, all of which are separate legal entities (collectively, the Company). BNSF’s principal operating subsidiary is BNSF Railway Company (BNSF Railway). All intercompany accounts and transactions have been eliminated.

On February 12, 2010, Berkshire Hathaway Inc., a Delaware corporation (Berkshire), acquired 100 percent of the outstanding shares of Burlington Northern Santa Fe Corporation common stock that it did not already own. The acquisition was completed through the merger (Merger) of a Berkshire wholly-owned merger subsidiary and Burlington Northern Santa Fe Corporation with the surviving entity renamed Burlington Northern Santa Fe, LLC. Earnings per share data is not presented because BNSF has only one holder of its membership interests.

The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the entire year. In the opinion of management, the unaudited financial statements reflect all adjustments (consisting of only normal recurring adjustments, except as disclosed) necessary for the fair statement of BNSF’s consolidated financial position as of September 30, 2019, and the results of operations for the three and nine months ended September 30, 2019 and 2018.


2.
Revenue from Contracts with Customers
    
The Company disaggregates revenue from contracts with customers based on the characteristics of the services provided and the types of products transported (in millions):
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Consumer Products
 
$
1,973

 
$
2,002

 
$
5,878

 
$
5,841

Industrial Products
 
1,588

 
1,576

 
4,637

 
4,416

Agricultural Products
 
1,166

 
1,165

 
3,500

 
3,499

Coal
 
996

 
1,069

 
2,748

 
2,928

     Total freight revenues
 
5,723

 
5,812

 
16,763

 
16,684

Non-rail logistics subsidiary
 
199

 
235

 
595

 
641

Accessorial and other
 
99

 
100

 
318

 
324

     Total other revenues
 
298

 
335

 
913

 
965

           Total operating revenues
 
$
6,021

 
$
6,147

 
$
17,676

 
$
17,649


Contract assets and liabilities are immaterial. Receivables from contracts with customers is a component of accounts receivable, net on the Consolidated Balance Sheets. At both September 30, 2019 and December 31, 2018, $1.3 billion represented net receivables from contracts with customers.

Remaining performance obligations primarily consist of in-transit freight revenues, which will be recognized in the next reporting period. At September 30, 2019 and December 31, 2018, remaining performance obligations were $210 million and $237 million, respectively.

3.
Accounts Receivable, Net
 
Accounts receivable, net consists of freight and other receivables, reduced by an allowance for bill adjustments and uncollectible accounts, based upon expected collectibility. At September 30, 2019 and December 31, 2018, $94 million and $87 million, respectively, of such allowances had been recorded.
     

8

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

4.
Leases

On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842), using a modified retrospective approach for leases existing at or entered into after the effective date. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard. The standard requires the recognition of right-of-use assets and lease liabilities for operating leases on the Company’s Consolidated Balance Sheets. The accounting for finance leases remained unchanged. There was no effect of adopting Topic 842 on member’s equity, operating income, or net income. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted.

The Company has substantial lease commitments for locomotives, freight cars, office buildings, operating facilities, and other property. Many of the Company’s leases provide the option to purchase the leased item at fair market value or a fixed purchase price at the end of the lease, and some leases include early buyout options at a fixed purchase price. Also, many of the Company’s leases include both fixed rate and fair market value renewal options.
  
As the implicit interest rate is not readily available for most leases, the Company used its incremental borrowing rate to determine the present value of lease payments at the transition date. The Company has lease agreements that contain both lease and non-lease components, but only freight cars are accounted for as a single lease component. BNSF has applied the short-term lease exemption to all asset classes, and as a result, short-term leases are not recognized on the Consolidated Balance Sheets. Variable lease costs, sublease income, and lessor transactions were not significant.

The following table shows the components of lease cost (in millions):
Lease Cost
 
Three Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2019
Operating lease cost
 
$
116

 
$
361

Finance lease cost:
 
 
 
 
     Amortization of right-of-use assets
 
9

 
28

     Interest on lease liabilities
 
6

 
18

Short-term lease cost
 
22

 
64

      Total lease cost
 
$
153

 
$
471


Supplemental balance sheet information related to leases was as follows (in millions):
Operating Leases
 
September 30,
2019
Operating lease right-of-use assets
 
$
2,423

 
 
 
Accounts payable and other current liabilities
 
$
460

Operating lease liabilities
 
1,678

      Total operating lease liabilities
 
$
2,138

   





9

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Finance Leases
 
September 30,
2019
Property and equipment
 
$
794

Accumulated depreciation
 
(340
)
      Property and equipment, net
 
$
454

 
 
 
Long-term debt due within one year
 
$
48

Long-term debt
 
337

      Total finance lease liabilities
 
$
385


Supplemental cash flow information related to leases was as follows (in millions):
Cash Flow
 
Nine Months Ended
September 30, 2019
Cash paid for amounts included in the measurement of lease obligations:
 
 
     Operating cash flows for operating leases
 
$
368

     Operating cash flows for finance leases
 
$
19

     Financing cash flows for finance leases
 
$
34

Right-of-use assets obtained in exchange for lease obligations:
 
 
     Operating leases
 
$
101


Other information related to leases was as follows:
Other Information
 
September 30,
2019
Weighted-average remaining lease term (in years):
 
 
     Operating leases
 
7.8

     Finance leases
 
4.9

Weighted-average discount rate:
 
 
     Operating leases
 
3.7
%
     Finance leases
 
6.3
%

Maturities of lease liabilities as of September 30, 2019 are summarized as follows (in millions):
 
 
Operating Leases

 
Finance Leases
2019
 
$
42

 
$
19

2020
 
510

 
69

2021
 
436

 
200

2022
 
346

 
35

2023
 
301

 
28

Thereafter
 
818

 
101

      Total lease payments
 
2,453

 
452

Less amount representing interest
 
(315
)
 
(67
)
      Total
 
$
2,138

 
$
385



10

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Future minimum lease payments as of December 31, 2018 are summarized as follows (in millions):
 
 
Operating Leases

 
Capital Leases
2019
 
$
400

 
$
72

2020
 
496

 
69

2021
 
421

 
200

2022
 
328

 
35

2023
 
289

 
28

Thereafter
 
787

 
101

      Total lease payments
 
$
2,721

 
505

Less amount representing interest
 


 
(86
)
      Total
 


 
$
419


5.
Debt
 
Notes and Debentures
    
In May 2019, BNSF filed a new automatic shelf registration with the Securities and Exchange Commission (SEC) for the issuance of debt securities which became effective on May 8, 2019 and will remain effective for three years.

In May 2019, the Board of Managers (the Board) authorized an additional $2.25 billion of debt securities that may be issued pursuant to the debt shelf registration statement filed with the SEC. As of September 30, 2019, $1.675 billion remained authorized by the Board to be issued through the SEC debt shelf offering process.

In July 2019, BNSF issued $825 million of 3.55 percent debentures due February 15, 2050. The net proceeds from the sale of the debentures will be used for general corporate purposes, which may include but are not limited to working capital, capital expenditures, repayment of outstanding indebtedness, and distributions.

The Company is required to maintain certain financial covenants in conjunction with $500 million of certain issued and outstanding junior subordinated notes. As of September 30, 2019, the Company was in compliance with these financial covenants.

Fair Value of Debt Instruments
 
At September 30, 2019 and December 31, 2018, the fair value of BNSF’s debt, excluding finance leases, was $27.6 billion and $24.1 billion, respectively, while the book value, which also excludes finance leases, was $23.6 billion and $22.8 billion, respectively. The fair value of BNSF’s debt is primarily based on market value price models using observable market-based data for the same or similar issues, or on the estimated rates that would be offered to BNSF for debt of the same remaining maturities (Level 2 inputs).


11

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Guarantees 

As of September 30, 2019, BNSF has not been called upon to perform under the guarantees specifically disclosed in this footnote and does not anticipate a significant performance risk in the foreseeable future.

Debt and other obligations of non-consolidated entities guaranteed by the Company as of September 30, 2019, were as follows (dollars in millions):
 
Guarantees
 
 
 
 
BNSF
Ownership
Percentage

 
Principal
Amount
Guaranteed

 
Maximum
Future
Payments

 
Maximum
Recourse
Amounta

 
Remaining
Term
(in years)
 
Capitalized Obligations

 
Kinder Morgan Energy Partners, L.P.
0.5
%
 
$
190

 
$
190

 
$

 
Termination of Ownership
 
$
2

b 
Chevron Phillips Chemical Company LP
%
 
N/Ad

 
N/Ad

 
N/Ad

 
8
 
$
17

c 
a 
Reflects the maximum amount the Company could recover from a third party other than the counterparty.
b 
Reflects capitalized obligations that are recorded on the Company’s Consolidated Balance Sheets.
c 
Reflects the asset and corresponding liability for the fair value of these guarantees required by authoritative accounting guidance related to guarantees.
d 
There is no cap to the liability that can be sought from BNSF for BNSF’s negligence or the negligence of the indemnified party. However, BNSF could receive reimbursement from certain insurance policies if the liability exceeds a certain amount.

Kinder Morgan Energy Partners, L.P.
 
Santa Fe Pacific Pipelines, Inc., an indirect, wholly-owned subsidiary of BNSF, has a guarantee in connection with its remaining special limited partnership interest in Santa Fe Pacific Pipeline Partners, L.P. (SFPP), a subsidiary of Kinder Morgan Energy Partners, L.P., to be paid only upon default by the partnership. All obligations with respect to the guarantee will cease upon termination of ownership rights, which would occur upon a put notice issued by BNSF or the exercise of the call rights by the general partners of SFPP.

Chevron Phillips Chemical Company LP
 
BNSF has an indemnity agreement with Chevron Phillips Chemical Company LP (Chevron Phillips), granting certain rights of indemnity from BNSF, in order to facilitate access to a storage facility. Under certain circumstances, payment under this obligation may be required in the event Chevron Phillips were to incur certain liabilities or other incremental costs resulting from trackage access.

Indemnities
 
In the ordinary course of business, BNSF enters into agreements with third parties that include indemnification clauses. The Company believes that these clauses are generally customary for the types of agreements in which they are included. At times, these clauses may involve indemnification for the acts of the Company, its employees and agents, indemnification for another party’s acts, indemnification for future events, indemnification based upon a certain standard of performance, indemnification for liabilities arising out of the Company’s use of leased equipment or other property, or other types of indemnification. Despite the uncertainty whether events which would trigger the indemnification obligations would ever occur, the Company does not believe that these indemnity agreements will have a material adverse effect on the Company’s results of operations, financial position, or liquidity. Additionally, the Company believes that, due to lack of historical payment experience, the fair value of indemnities cannot be estimated with any amount of certainty and that the fair value of any such amount would be immaterial to the Consolidated Financial Statements. Unless separately disclosed above, no fair value liability related to indemnities has been recorded in the Consolidated Financial Statements.


12

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

6.
Commitments and Contingencies

Personal Injury
 
BNSF’s personal injury liability includes the cost of claims for employee work-related injuries, third-party claims, and asbestos claims. BNSF records a liability for asserted and unasserted claims when the expected loss is both probable and reasonably estimable. Because of the uncertainty of the timing of future payments, the liability is undiscounted. Defense and processing costs, which are recorded on an as-reported basis, are not included in the recorded liability. Expense accruals and adjustments are classified as materials and other in the Consolidated Statements of Income.

Personal injury claims by BNSF Railway employees are subject to the provisions of the Federal Employers’ Liability Act (FELA) rather than state workers’ compensation laws. Resolution of these cases under the FELA’s fault-based system requires either a finding of fault by a jury or an out of court settlement. Third-party claims include claims by non-employees for compensatory damages and may, from time to time, include requests for punitive damages or treatment of the claim as a class action.

BNSF estimates its personal injury liability claims and expense using standard actuarial methodologies based on the covered population, activity levels and trends in frequency, and the costs of covered injuries. The Company monitors actual experience against the forecasted number of claims to be received, the forecasted number of claims closing with payment, and expected claim payments and records adjustments as new events or changes in estimates develop.

BNSF is party to asbestos claims by employees and non-employees who may have been exposed to asbestos. Because of the relatively finite exposed population, the Company has recorded an estimate for the full amount of probable exposure. This is determined through an actuarial analysis based on estimates of the exposed population, the number of claims likely to be filed, the number of claims that will likely require payment, and the cost per claim. Estimated filing and dismissal rates and average cost per claim are determined utilizing recent claim data and trends.
 
The following table summarizes the activity in the Company’s accrued obligations for personal injury claims (in millions):
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Beginning balance
 
$
308

 
$
307

Accruals / changes in estimates
 
69

 
56

Payments
 
(88
)
 
(62
)
     Ending balance
 
$
289

 
$
301

Current portion of ending balance
 
$
85

 
$
80


The amount recorded by the Company for the personal injury liability is based upon the best information currently available. Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to resolve these claims may be different from the recorded amounts. The Company estimates that costs to resolve the liability may range from approximately $245 million to $345 million.

Although the final outcome of these personal injury matters cannot be predicted with certainty, it is the opinion of BNSF that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, the occurrence of a number of these items in the same period could have a material adverse effect on the results of operations in a particular quarter or fiscal year.


13

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Environmental
 
BNSF is subject to extensive federal, state, and local environmental regulation. The Company’s operating procedures include practices to protect the environment from the risks inherent in railroad operations, which frequently involve transporting chemicals and other hazardous materials. Additionally, many of BNSF’s land holdings are or have been used for industrial or transportation-related purposes or leased to commercial or industrial companies whose activities may have resulted in discharges onto the property. Under federal (in particular, the Comprehensive Environmental Response, Compensation, and Liability Act) and state statutes, the Company may be held jointly and severally liable for cleanup and enforcement costs associated with a particular site without regard to fault or the legality of the original conduct. The Company participates in the study, cleanup, or both of environmental contamination at approximately 200 sites.
    
Environmental costs may include, but are not limited to, site investigations, remediation, and restoration. The liability is recorded when the expected loss is both probable and reasonably estimable and is undiscounted due to uncertainty of the timing of future payments. Expense accruals and adjustments are classified as materials and other in the Consolidated Statements of Income.
    
BNSF estimates the cost of cleanup efforts at its known environmental sites based on experience gained from cleanup efforts at similar sites, estimated percentage to closure ratios, possible remediation work plans, estimates of the costs and likelihood of each possible outcome, historical payment patterns, and benchmark patterns developed from data accumulated from industry and public sources. The Company monitors actual experience against expectations and records adjustments as new events or changes in estimates develop.

The following table summarizes the activity in the Company’s accrued obligations for environmental costs (in millions):
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Beginning balance
 
$
298

 
$
317

Accruals / changes in estimates
 

 
(5
)
Payments
 
(16
)
 
(13
)
     Ending balance
 
$
282

 
$
299

Current portion of ending balance
 
$
40

 
$
35


The amount recorded by the Company for the environmental liability is based upon the best information currently available. It has not been reduced by anticipated recoveries from third parties and includes both asserted and unasserted claims. BNSF’s total cleanup costs at these sites cannot be predicted with certainty due to various factors, such as the extent of corrective actions that may be required, evolving environmental laws and regulations, advances in environmental technology, the extent of other parties’ participation in cleanup efforts, developments in ongoing environmental analyses related to sites determined to be contaminated, and developments in environmental surveys and studies of contaminated sites. Because of the uncertainty surrounding various factors, it is reasonably possible that future costs to settle these claims may be different from the recorded amounts. The Company estimates that costs to settle the liability may range from approximately $230 million to $380 million.

Although the final outcome of these environmental matters cannot be predicted with certainty, it is the opinion of BNSF that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, the occurrence of a number of these items in the same period could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

Other Claims and Litigation
 
In addition to personal injury and environmental matters, BNSF and its subsidiaries are also parties to a number of other legal actions and claims, governmental proceedings, and private civil suits arising in the ordinary course of business, including those related to disputes and complaints involving certain transportation rates and charges. Some of the legal proceedings include claims for compensatory damages and may, from time to time, include requests for punitive damages or treatment of the claim as a class action. Although the final outcome of these matters cannot be predicted with certainty, it is the opinion of BNSF that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, the occurrence of a number of these items in the same period could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

14

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)


BNSF Insurance Company
 
BNSF has a consolidated, wholly-owned subsidiary, Burlington Northern Santa Fe Insurance Company, Ltd. (BNSFIC), that offers insurance coverage for certain risks, including FELA claims, railroad protective and force account insurance claims, certain excess general liability and property coverage, and certain other claims which are subject to reinsurance. BNSFIC has entered into annual reinsurance treaty agreements with several other companies. The treaty agreements insure workers’ compensation, general liability, auto liability, and FELA risk. In accordance with the agreements, BNSFIC cedes a portion of its FELA exposure through the treaties and assumes a proportionate share of the entire risk. Each year, BNSFIC reviews the objectives and performance of the treaties to determine its continued participation. The treaty agreements provide for certain protections against the risk of treaty participants’ non-performance. On an ongoing basis, BNSF and/or the treaty manager reviews the creditworthiness of each of the participants. The Company does not believe its exposure to treaty participants’ non-performance is material at this time. BNSFIC typically invests in time deposits and money market accounts. At September 30, 2019, there was $507 million related to these third-party investments, which were classified as cash and cash equivalents on the Company’s Consolidated Balance Sheets, as compared with $519 million at December 31, 2018.

The Company experienced significant flooding across parts of the network for which impacts extended into the third quarter. The Company is insured for certain costs incurred as a result of flooding and is in process of compiling and submitting claims to its insurers. The Company may recover up to $250 million associated with property damage, business interruption and extra expense incurred as part of the flooding.

7.
Employment Benefit Plans

During the first quarter of 2019, the Company amended its funded, noncontributory qualified pension plan, which covers most non-union employees, and its unfunded, non-tax-qualified pension plan, which covers certain officers and other employees (collectively, the Retirement Plans). Non-union employees hired on or after April 1, 2019 will not be eligible for the Retirement Plans and instead will receive an additional company contribution as part of the qualified 401(k) plan based on the employees age and years of service. Current employees will be transitioned away from the Retirement Plans within the next ten years, beginning October 1, 2019, and upon transition will be eligible for the additional company contribution. As a result of the plan amendments, the Company recognized a curtailment gain of $120 million in the first quarter of 2019 consisting of $117 million for the reduction in projected benefit obligation and $3 million for the recognition of prior service credits.

Components of the net (benefit) cost for the periods presented below for certain employee benefit plans were as follows (in millions):
 
 
Pension Benefits
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Net (Benefit) Cost
 
2019
 
2018
 
2019
 
2018
Service cost
 
$
7

 
$
12

 
$
24

 
$
34

Interest cost
 
20

 
20

 
62

 
62

Expected return on plan assets
 
(41
)
 
(39
)
 
(120
)
 
(118
)
Amortization of net gain
 

 

 
(1
)
 

Amortization of prior service credits
 

 

 
(3
)
 

Curtailment gain
 

 

 
(117
)
 

Net (benefit) cost recognized
 
$
(14
)
 
$
(7
)
 
$
(155
)
 
$
(22
)


15

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

 
 
Retiree Health and Welfare Benefits
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Net (Benefit) Cost
 
2019
 
2018
 
2019
 
2018
Service cost
 
$
1

 
$
1

 
$
1

 
$
1

Interest cost
 
2

 
2

 
6

 
6

Amortization of prior service credits
 

 
(2
)
 

 
(2
)
Net (benefit) cost recognized
 
$
3

 
$
1

 
$
7

 
$
5


Service cost is included in compensation and benefits expense and the other components of net periodic benefit costs are included in other (income) expense, net in the Consolidated Statements of Income.

8.
Related Party Transactions

The companies identified as affiliates of BNSF include Berkshire and its subsidiaries. During the nine months ended September 30, 2019 and 2018, the Company declared and paid cash distributions of $3.4 billion and $4.2 billion, respectively, to its parent company. In the nine months ended September 30, 2019 and 2018, the Company made tax payments to Berkshire of $741 million and $591 million, respectively. Additionally, the Company received $217 million of tax refunds from Berkshire in the nine months ended September 30, 2018. As of September 30, 2019, the Company had a tax receivable from Berkshire of $32 million. As of December 31, 2018, the Company had a tax payable to Berkshire of $54 million.

BNSF engages in various transactions with related parties in the ordinary course of business. The following tables summarize revenues earned by BNSF for services provided to related parties and expenditures to related parties (in millions):
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Revenues
 
$
39

 
$
39

 
$
118

 
$
106

Expenditures
 
$
93

 
$
95

 
$
286

 
$
281


BNSF owns 17.3 percent of TTX Company (TTX) while other North American railroads own the remaining interest. As BNSF possesses the ability to exercise significant influence, but not control, over the operating and financial policies of TTX, BNSF applies the equity method of accounting to its investment in TTX. The investment in TTX is recorded in other assets in the Consolidated Balance Sheets. Equity income or losses are recorded in materials and other in the Consolidated Statements of Income. North American railroads pay TTX car hire to use TTX’s freight equipment to serve their customers. BNSF’s car hire expenditures incurred with TTX are included in the table above. BNSF had $645 million and $609 million recognized as investments related to TTX in its Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018, respectively.


16

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

9.
Accumulated Other Comprehensive Income
 
Other comprehensive income refers to revenues, expenses, gains, and losses that under generally accepted accounting principles are included in accumulated other comprehensive income, a component of equity within the Consolidated Balance Sheets, rather than net income on the Consolidated Statements of Income. Other comprehensive income may include, among other things, unrecognized gains and losses and prior service credit related to pension and other postretirement benefit plans.

The following table provides the components of accumulated other comprehensive income (loss) (AOCI) by component (in millions):
 
 
Pension and Retiree Health and Welfare Benefit Items
 
Equity Method Investments
 
Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018
 
$
133

 
$
(3
)
 
$
130

Other comprehensive income (loss), net before reclassifications
 
66

 
(1
)
 
65

Amounts reclassified from AOCI:
 
 
 
 
 
 
    Amortization of net gaina
 
(1
)
 

 
(1
)
    Amortization of prior service creditsa
 
(3
)
 

 
(3
)
    Tax expense (benefit)
 
1

 

 
1

Balance at September 30, 2019
 
$
196

 
$
(4
)
 
$
192

 
 
 
 
 
 
 
Balance at December 31, 2017
 
$
234

 
$
(3
)
 
$
231

Other comprehensive income (loss), net before reclassifications
 

 
1

 
1

Amounts reclassified from AOCI:
 
 
 
 
 
 
    Reclassification due to ASU 2016-01 adoption
 

 
(1
)
 
(1
)
    Reclassification due to ASU 2018-02 adoption
 
26

 

 
26

    Amortization of prior service creditsa
 
(2
)
 

 
(2
)
    Tax expense (benefit)
 
1

 

 
1

Balance at September 30, 2018
 
$
259

 
$
(3
)
 
$
256

a
This accumulated other comprehensive income component is included in the computation of net periodic pension and retiree health and welfare cost (see Note 7 for additional details).

10.
Accounting Pronouncements

No pronouncements materially affecting the Company’s financial statements have been issued since the filing of the Company’s 2018 Annual Report on Form 10-K.


17


Item 2.
Management’s Narrative Analysis of Results of Operations.
 
Management’s narrative analysis relates to the results of operations of Burlington Northern Santa Fe, LLC and its majority-owned subsidiaries (collectively BNSF, Registrant, or Company). The principal operating subsidiary of BNSF is BNSF Railway Company (BNSF Railway) through which BNSF derives substantially all of its revenues. The following narrative analysis should be read in conjunction with the Consolidated Financial Statements and the accompanying notes.
 
The following narrative analysis of results of operations includes a brief discussion of the factors that materially affected the Company’s operating results in the nine months ended September 30, 2019, and a comparative analysis to the nine months ended September 30, 2018.

Results of Operations

Revenues Summary
 
The following tables present BNSF’s revenue information by business group:
 
 
Revenues (in millions)
 
Cars / Units (in thousands)
 
 
Nine Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Consumer Products
 
$
5,878

 
$
5,841

 
4,014

 
4,198

Industrial Products
 
4,637

 
4,416

 
1,474

 
1,483

Agricultural Products
 
3,500

 
3,499

 
856

 
908

Coal
 
2,748

 
2,928

 
1,338

 
1,401

Total freight revenues
 
16,763

 
16,684

 
7,682

 
7,990

Other revenues
 
913

 
965

 
 
 
 
Total operating revenues
 
$
17,676

 
$
17,649

 
 
 
 

 
 
Average Revenue Per Car / Unit
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Consumer Products
 
$
1,464

 
$
1,391

Industrial Products
 
3,146

 
2,978

Agricultural Products
 
4,089

 
3,854

Coal
 
2,054

 
2,090

Total freight revenues
 
$
2,182

 
$
2,088


Fuel Surcharges
 
Freight revenues include both revenue for transportation services and fuel surcharges. Where BNSF’s fuel surcharge program is applied, it is intended to recover BNSF’s incremental fuel costs when fuel prices exceed a threshold fuel price. Fuel surcharges are calculated differently depending on the type of commodity transported. BNSF has two standard fuel surcharge programs – Percent of Revenue and Mileage-Based. In addition, in certain commodities, fuel surcharge is calculated using a fuel price from a time period that can be up to 60 days earlier. In a period of volatile fuel prices or changing customer business mix, changes in fuel expense and fuel surcharge may differ significantly.

The following table presents fuel surcharge and fuel expense information (in millions):
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Fuel expense a
 
$
2,211

 
$
2,456

Fuel surcharges
 
$
973

 
$
1,015

a  Fuel expense includes locomotive and non-locomotive fuel.

18


Nine Months Ended September 30, 2019 vs. the Nine Months Ended September 30, 2018

Revenues
 
Revenues for the nine months ended September 30, 2019 were $17.7 billion, an increase of $27 million, as compared with the nine months ended September 30, 2018. The increase in revenue is primarily due to a 5 percent increase in average revenue per car / unit as a result of increased rates per car / unit and a favorable outcome of an arbitration hearing. This increase was partially offset by a 4 percent decrease in unit volume due to severe winter weather and flooding on parts of the network, as well as the following:

Consumer Products volumes decreased primarily due to lower intermodal volumes, which were driven by overall lower demand and the availability of truck capacity as well as lower international intermodal market share.

Industrial Products volumes decreased primarily due to overall softness in the industrial sector, lower sand volumes, and reduced car loadings due to the aforementioned challenging weather conditions. This decrease was partially offset by higher demand for petroleum products and liquefied petroleum gas.

Agricultural Products volumes decreased primarily due to export competition from non-U.S. sources, the impacts of changes in international trade policies, and the aforementioned challenging weather conditions.

Coal volumes decreased primarily due to the aforementioned challenging weather conditions as well as the effects of lower natural gas prices.

Expenses
 
Operating expenses for the nine months ended September 30, 2019 were $11.7 billion, a decrease of $200 million, or 2 percent, as compared with the nine months ended September 30, 2018. This decrease is due to lower volume-related costs and cost controls, partially offset by increased costs related to severe winter weather and flooding, as well as the following:

Fuel expense decreased primarily due to lower average fuel prices and lower volumes.

There were no significant changes in compensation and benefits, purchased services, depreciation and amortization, equipment rents, materials and other, and interest expense.

Other (income) expense, net income increased primarily due to a curtailment gain related to a first quarter 2019 amendment to the Company’s retirement plans.

The effective tax rate was 24.6 percent and 23.8 percent for the nine months ended September 30, 2019 and 2018, respectively. The 2018 effective tax rate included the impact of various state income tax rate reductions enacted during the second quarter of 2018.

Capital Commitments
 
BNSF anticipates that capital commitments for 2019 will be approximately $3.67 billion, or $100 million higher than previously disclosed.


19


Forward-Looking Information
 
To the extent that statements made by the Company relate to the Company’s future economic performance or business outlook, projections or expectations of financial or operational results, or refer to matters that are not historical facts, such statements are “forward-looking” statements within the meaning of the federal securities laws.
 
Forward-looking statements involve a number of risks and uncertainties, and actual performance or results may differ materially. For a discussion of material risks and uncertainties that the Company faces, see the discussion in Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K. Important factors that could cause actual results to differ materially include, but are not limited to, the following:

•  Economic and industry conditions: material adverse changes in economic or industry conditions, both in the United States and globally; volatility in the capital or credit markets including changes affecting the timely availability and cost of capital; changes in customer demand; effects of adverse economic conditions affecting shippers or BNSF’s supplier base; effects due to more stringent regulatory policies such as the regulation of greenhouse gas emissions that could reduce the demand for coal or governmental tariffs or subsidies that could affect the demand for products BNSF hauls; the impact of low natural gas or oil prices on energy-related commodities demand; changes in environmental laws and other laws and regulations that could affect the demand for drilling products and products produced by drilling; changes in prices of fuel and other key materials, the impact of high barriers to entry for prospective new suppliers, and disruptions in supply chains for these materials; competition and consolidation within the transportation industry; and changes in crew availability, labor and benefits costs and labor difficulties, including stoppages affecting either BNSF’s operations or customers’ abilities to deliver goods to BNSF for shipment.
 
•   Legal, legislative and regulatory factors: developments and changes in laws and regulations, including those affecting train operations, the marketing of services or regulatory restrictions on equipment; the ultimate outcome of shipper and rate claims subject to adjudication; claims, investigations, or litigation alleging violations of the antitrust laws; increased economic regulation of the rail industry through legislative action and revised rules and standards applied by the U.S. Surface Transportation Board in various areas including rates and services; developments in environmental investigations or proceedings with respect to rail operations or current or past ownership or control of real property or properties owned by others impacted by BNSF operations; losses resulting from claims and litigation relating to personal injuries, asbestos, and other occupational diseases; the release of hazardous materials, environmental contamination, and damage to property; regulation, restrictions or caps, or other controls on transportation of energy-related commodities or other operating restrictions that could affect operations or increase costs; the availability of adequate insurance to cover the risks associated with operations; and changes in tax rates and tax laws.
 
•   Operating factors: changes in operating conditions and costs; operational and other difficulties in implementing positive train control technology, including increased compliance or operational costs or penalties; restrictions on development and expansion plans due to environmental concerns; disruptions to BNSF’s technology network including computer systems and software, such as cybersecurity intrusions, misappropriation of assets or sensitive information, corruption of data or operational disruptions; network congestion, including effects of greater than anticipated demand for transportation services and equipment; as well as natural events such as severe weather, fires, floods, and earthquakes or man-made or other disruptions of BNSF’s or other railroads’ operating systems, structures, or equipment including the effects of acts of war or terrorism on the Company’s system or other railroads’ systems or other links in the transportation chain.
 
The Company cautions against placing undue reliance on forward-looking statements, which reflect its current beliefs and are based on information currently available to it as of the date a forward-looking statement is made. The Company undertakes no obligation to revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs. In the event the Company does update any forward-looking statement, no inference should be made that the Company will make additional updates with respect to that statement, related matters, or any other forward-looking statements.


20


Item 4.
Controls and Procedures.
 
Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, the Company’s principal executive officer and principal financial officer have concluded that BNSF’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by BNSF in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to BNSF’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Additionally, as of the end of the period covered by this report, BNSF’s principal executive officer and principal financial officer have concluded that there have been no changes in BNSF’s internal control over financial reporting that occurred during BNSF’s third fiscal quarter that have materially affected, or are reasonably likely to materially affect, BNSF’s internal control over financial reporting.


21


BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

PART II OTHER INFORMATION

Item 1. Legal Proceedings.
 
Beginning May 14, 2007, some 30 similar class action complaints were filed in six federal district courts around the country by rail shippers against BNSF Railway and other Class I railroads alleging that they have conspired to fix fuel surcharges with respect to unregulated freight transportation services in violation of the antitrust laws. The complaints seek injunctive relief and unspecified treble damages. These cases were consolidated and are currently pending in the federal District Court for the District of Columbia for coordinated or consolidated pretrial proceedings. (In re: Rail Freight Fuel Surcharge Antitrust Litigation, MDL No. 1869). Consolidated amended class action complaints were filed against BNSF Railway and three other Class I railroads in April 2008. On June 21, 2012, the District Court certified the class sought by the plaintiffs. BNSF Railway and the other three Class I railroads appealed the class certification decision to the U.S. Court of Appeals. On August 9, 2013, the U.S. Court of Appeals vacated the District Court’s class certification decision and remanded the case to permit the District Court to reconsider its decision in light of the United States Supreme Court case of Comcast Corp. v. Behrend. In September 2016, the District Court held a hearing to determine whether to certify a class. On October 10, 2017, the District Court denied the plaintiffs’ motion to certify a class. The plaintiffs appealed the denial of class certification to the U.S. Court of Appeals. In September 2018, the U.S. Court of Appeals held a hearing on the appeal of the denial of class certification.  On August 16, 2019, the U.S. Court of Appeals affirmed the District Court’s denial of class certification.  The Company continues to believe that these allegations are without merit and will continue to vigorously dispute any such claims in any subsequent litigation by individual parties involving such allegations.  The Company does not believe that the outcome of these proceedings will have a material effect on its financial condition, results of operations or liquidity.


22

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Item 6.
Exhibits.
 
 
Incorporated by Reference
(if applicable)
 
Exhibit Number and Description
Form
File Date
File No.
Exhibit
 
 
 
 
 
 
8-K
2/16/2010
001-11535
3.1
 
 
 
 
 
 
8-K
2/16/2010
001-11535
3.2
 
 
 
 
 
 
8-K
4/13/2010
001-11535
3.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101
eXtensible Business Reporting Language (XBRL) documents submitted electronically:

101.INS - XBRL Instance Document
101.SCH - XBRL Taxonomy Extension Schema Document
101.CAL - XBRL Extension Calculation Linkable Document
101.DEF - XBRL Taxonomy Extension Definition Linkable Document
101.LAB - XBRL Taxonomy Extension Label Linkbase
101.PRE - XBRL Taxonomy Extension Presentation Linkbase Document
 
 
 
 
 
 
 
 
 
 
 
The following unaudited information from Burlington Northern Santa Fe, LLC’s Form 10-Q for the three and nine months ended September 30, 2019 formatted in XBRL includes: (i) the Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018, (ii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iii) the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, (v) the Consolidated Statements of Changes in Equity for the periods ended September 30, 2019 and 2018, and (vi) the Notes to the Consolidated Financial Statements. *
 
 
 
 
Certain instruments evidencing long-term indebtedness of BNSF are not being filed as exhibits to this report because the total amount of securities authorized under any single instrument does not exceed 10 percent of BNSF’s total assets. BNSF will furnish copies of any material instruments upon request of the Securities and Exchange Commission.
__________________
* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
BURLINGTON NORTHERN SANTA FE, LLC
(Registrant)
 
 
 
 
By:
/s/    Julie A. Piggott       
 
 
Julie A. Piggott
Executive Vice President and Chief Financial Officer
(On behalf of the Registrant and
as principal financial officer)

Date:  November 1, 2019


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