10-Q

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 June 30, 2018

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

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)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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, 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

PART I	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements	3
Item 2.	Management’s Narrative Analysis of Results of Operations	21
Item 4.	Controls and Procedures	24
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 6.	Exhibits	26
Signatures		S-1

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 June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues	$	5,878		$	5,250		$	11,502		$	10,435
Operating expenses:
Compensation and benefits	1,328			1,255			2,643			2,552
Fuel	830			577			1,597			1,182
Purchased services	714			609			1,406			1,235
Depreciation and amortization	575			592			1,146			1,165
Equipment rents	167			196			359			392
Materials and other	381			247			721			555
Total operating expenses	3,995			3,476			7,872			7,081
Operating income	1,883			1,774			3,630			3,354
Interest expense	256			256			512			508
Other (income) expense, net	(28		)	(19		)	(50		)	(36		)
Income before income taxes	1,655			1,537			3,168			2,882
Income tax expense	346			579			714			1,086
Net income	$	1,309		$	958		$	2,454		$	1,796

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 June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Net income	$	1,309	$	958		$	2,454	$	1,796
Other comprehensive income:
Change in pension and retiree health and welfare benefits, net of tax	—		(1		)	—		(1		)
Change in accumulated other comprehensive income (loss) of equity method investees	—		1			1		(1		)
Other comprehensive income (loss), net of tax	—		—			1		(2		)
Total comprehensive income	$	1,309	$	958		$	2,455	$	1,794

See accompanying Notes to Consolidated Financial Statements.

4

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

	June 30, 2018		December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	2,139	$	1,975
Accounts receivable, net	1,462		1,448
Materials and supplies	789		803
Other current assets	276		408
Total current assets	4,666		4,634
Property and equipment, net of accumulated depreciation of $9,259 and $8,627, respectively	62,507		62,313
Goodwill	14,845		14,845
Intangible assets, net	382		394
Other assets	2,401		2,337
Total assets	$	84,801	$	84,523
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and other current liabilities	$	3,161	$	3,169
Long-term debt due within one year	86		740
Total current liabilities	3,247		3,909
Long-term debt	22,448		21,759
Deferred income taxes	13,600		13,452
Casualty and environmental liabilities	490		499
Intangible liabilities, net	426		471
Pension and retiree health and welfare liability	311		310
Other liabilities	1,093		1,114
Total liabilities	41,615		41,514
Commitments and contingencies (see Notes 7 and 8)
Equity:
Member’s equity	42,929		42,778
Accumulated other comprehensive income (loss)	257		231
Total equity	43,186		43,009
Total liabilities and equity	$	84,801	$	84,523

See accompanying Notes to Consolidated Financial Statements.

5

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended June 30,
	2018			2017
OPERATING ACTIVITIES
Net income	$	2,454		$	1,796
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,146			1,165
Deferred income taxes	144			232
Long-term casualty and environmental liabilities, net	(19		)	(19		)
Other, net	(93		)	(113		)
Changes in current assets and liabilities:
Accounts receivable, net	(14		)	(17		)
Materials and supplies	14			6
Other current assets	(104		)	(17		)
Accounts payable and other current liabilities	266			502
Net cash provided by operating activities	3,794			3,535
INVESTING ACTIVITIES
Capital expenditures excluding equipment	(1,224		)	(1,296		)
Acquisition of equipment	(72		)	(200		)
Purchases of investments and investments in time deposits	(13		)	(8		)
Proceeds from sales of investments and maturities of time deposits	17			15
Other, net	(108		)	(235		)
Net cash used for investing activities	(1,400		)	(1,724		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	750			1,250
Payments on long-term debt	(696		)	(700		)
Cash distributions	(2,275		)	(1,425		)
Other, net	(9		)	(19		)
Net cash used for financing activities	(2,230		)	(894		)
Increase in cash and cash equivalents	164			917
Cash and cash equivalents:
Beginning of period	1,975			3,218
End of period	$	2,139		$	4,135
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amounts capitalized	$	532		$	530
Capital investments accrued but not yet paid	$	93		$	103
Income taxes paid, net of refunds	$	226		$	212

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, 2017	$	42,778		$	231		$	43,009
Adoption of ASC Topic 606	(3		)	—			(3		)
Equity method investee adoption of ASU 2016-01a	1			(1		)	—
Reclassification upon early adoption of ASU 2018-02	(26		)	26			—
Cash distributions	(2,275		)	—			(2,275		)
Comprehensive income (loss), net of tax	2,454			1			2,455
Balance at June 30, 2018	$	42,929		$	257		$	43,186

^a Accounting Standards Update No. 2016-01 Financial Instruments- Recognition and Measurement of Financial Assets and Financial Liabilities

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, 2017, 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 a fair statement of BNSF’s consolidated financial position as of June 30, 2018, and the results of operations for the three and six months ended June 30, 2018 and 2017.

2. Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC Topic 606 (new revenue guidance) using the modified retrospective transition method and the practical expedient for contracts not completed as of the date of adoption. The Company recorded the cumulative effect of adopting ASC Topic 606 as a $3 million net reduction to member’s equity as of January 1, 2018, primarily due to the timing impacts of variable consideration for certain customer incentives. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts were not adjusted and continue to be reported under the accounting standards in effect for the prior period. The impact of adoption to our Consolidated Statements of Income, Balance Sheets, and Statements of Cash Flows for the current year is immaterial as reflected in the Consolidated Statements of Changes in Equity. Therefore, financial statements showing 2018 reported under previous guidance are not presented.

The Company’s primary source of revenue is freight rail transportation services. The primary performance obligation for the Company is to move freight from a point of origin to a point of destination for its customers. The performance obligations are represented by bills of lading which create a series of distinct services that have a similar pattern of transfer to the customer. The revenues for each performance obligation are based on various factors including the product being shipped, the origin and destination pair, and contract incentives which are outlined in various private rate agreements, common carrier public tariffs, interline foreign road agreements and pricing quotes. The transaction price is generally a per car amount to transport cars from a certain origin to a certain destination.

The associated freight revenues are recognized over time as the service is performed because the customer simultaneously receives and consumes the benefits of the service. The Company recognizes revenue based on the proportion of the service completed as of the balance sheet date. Bills for freight transportation services are generally issued to customers and paid within thirty days or less. As a result, no significant contract assets exist and there are no significant financing components in the Company’s revenue arrangements.

Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a reduction to revenue on a pro-rata basis based on actual or projected future customer shipments. A small portion of customer incentive agreements have a component where a different discount amount is provided for different levels of volumes, resulting in variable consideration. To determine transaction price in these cases, the Company estimates the amount of variable consideration at each reporting period utilizing the most likely amount based on historical trends as well as economic and other indicators. These incentives are ratably applied to all units using an estimate of how much volume the customer will ship under the customer incentive agreement. Both the variable consideration and the associated contract liabilities resulting from these types of customer incentives are immaterial.

8

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

Other revenues are primarily generated from a wholly owned non-rail logistics subsidiary providing logistics and transportation services and from accessorial services provided to customers which are primarily storage and demurrage. The vast majority of revenues generated by the non-rail logistics subsidiary are recognized over time as the services are performed and accessorial revenues are recognized when the service is performed.

In accordance with ASC Topic 606, the Company disaggregates revenue from contracts with customers based on the characteristics of the services being provided and the types of products being transported and other revenues (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Consumer Products	$	1,979	$	1,742	$	3,839	$	3,422
Industrial Products	1,482		1,274		2,840		2,498
Agricultural Products	1,182		1,074		2,334		2,182
Coal	911		912		1,859		1,872
Total freight revenues	5,554		5,002		10,872		9,974
Non-rail logistics subsidiary	214		157		406		295
Accessorial and other	110		91		224		166
Total other revenues	324		248		630		461
Total operating revenues	$	5,878	$	5,250	$	11,502	$	10,435

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 June 30, 2018 and January 1, 2018, $1.2 billion represents 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 June 30, 2018 and January 1, 2018, remaining performance obligations were $282 million and $192 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 June 30, 2018 and December 31, 2017, $84 million and $87 million, respectively, of such allowances had been recorded.

At June 30, 2018 and December 31, 2017, $62 million and $82 million, respectively, of accounts receivable were greater than 90 days old.

4. Investments

BNSF holds investments which are included in other assets on the Consolidated Balance Sheets. The following table summarizes the fair value of investments held as of June 30, 2018 and December 31, 2017 (in millions):

	June 30, 2018		December 31, 2017
Debt securities	$	39	$	43
Equity securities	56		54
Total	$	95	$	97

The fair value measurements of BNSF’s debt securities are based on Level 2 inputs and equity securities are based on Level 1 inputs, using a market approach. Gains and losses recognized in other (income) expense, net for the Company for the six months ended June 30, 2018 and 2017 were not material.

9

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

5. Other Intangible Assets and Liabilities

Intangible assets and liabilities were as follows (in millions):

	As of June 30, 2018				As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets	$	653	$	271	$	647	$	253
Intangible liabilities	$	1,403	$	977	$	1,403	$	932

As of June 30, 2018 and December 31, 2017, intangible assets primarily consisted of franchise and customer assets. Intangible liabilities primarily consisted of customer and shortline contracts which were in an unfavorable position at the date of Merger.

Amortizable intangible assets and liabilities are amortized based on the estimated pattern in which the economic benefits are expected to be consumed or on a straight-line basis over their estimated economic lives.

Amortization of intangible assets and liabilities was as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Amortization of intangible assets	$	9	$	9	$	18	$	18
Amortization of intangible liabilities	$	22	$	24	$	45	$	48

Amortization of intangible assets and liabilities for the next five years is expected to approximate the following (in millions):

	Amortization of intangible assets		Amortization of intangible liabilities
Remainder of 2018	$	17	$	45
2019	$	33	$	27
2020	$	33	$	26
2021	$	31	$	24
2022	$	31	$	23

6. Other Assets

In July 2010, the Company entered into a low-income housing partnership (the Partnership) as the limited partner, holding a 99.9 percent interest in the Partnership. The Partnership is a variable interest entity (VIE), with the purpose of developing and operating low-income housing rental properties. Recovery of the Company’s investment is accomplished through the utilization of low-income housing tax credits and the tax benefits of Partnership losses. The general partner, who holds a 0.1 percent interest in the Partnership, is an unrelated third party and is responsible for controlling and managing the business and financial operation of the Partnership. As the Company does not have the power to direct the activities that most significantly impact the Partnership’s economic performance, the Company is not the primary beneficiary and therefore, does not consolidate the Partnership. The Company does not provide financial support to the Partnership that it was not previously contractually obligated to provide.    

10

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

The Company has accounted for its investment in the Partnership using the effective yield method. The risk of loss of the Company’s investment in the Partnership is considered low as an affiliate of the general partner has provided certain guarantees of tax credits and minimum annual returns. For the six months ended June 30, 2018 and 2017, the Company recognized a reduction to income tax expense of $10 million and $17 million, respectively. The Company’s maximum exposure to loss related to the Partnership is the unamortized investment balance. The following table provides information related to this Partnership (in millions):

	June 30, 2018		December 31, 2017
Unamortized investment balance classified as other assets	$	85	$	118
Maximum exposure to loss	$	85	$	118

Included within other assets are capitalized right-to-use fixed assets of $975 million and $958 million, and related accumulated amortization of $298 million and $287 million, at June 30, 2018 and December 31, 2017, respectively.

7. Debt

Notes and Debentures

In March 2018, BNSF issued $750 million of 4.05 percent debentures due June 15, 2048. 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.

As of June 30, 2018, $1 billion remained authorized by the Board of Managers (the Board) of the Company to be issued through the Securities and Exchange Commission (SEC) debt shelf offering process.

The Company is required to maintain certain financial covenants in conjunction with $500 million of certain issued and outstanding junior subordinated notes. As of June 30, 2018, the Company was in compliance with these financial covenants.

Subsequent Event

In August 2018, BNSF issued $750 million of 4.15 percent debentures due December 15, 2048. 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.

After this issuance, $250 million remained authorized by the Board to be issued through the SEC debt shelf offering process.

Fair Value of Debt Instruments

At June 30, 2018 and December 31, 2017, the fair value of BNSF’s debt, excluding capital leases and unamortized gains on interest rate swaps, was $23.4 billion and $25.1 billion, respectively, while the book value, which also excludes capital leases and the associated unamortized fair value adjustment under acquisition method accounting related to capital leases and unamortized gains on interest rate swaps, was $22.1 billion and $22.0 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 June 30, 2018, 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 June 30, 2018, 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		9	$	19	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. Agreements that reflect unique circumstances, particularly agreements that contain guarantees that indemnify for another party’s acts, are disclosed separately, if appropriate. 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)

Variable Interest Entities - Leases

BNSF Railway has entered into various lease transactions in which the structure of the lease contains VIEs. These leases are primarily for equipment. These VIEs were created solely for the lease transactions and have no other activities, assets or liabilities outside of the lease transactions. In some of the arrangements, BNSF Railway has the option to purchase some or all of the leased assets at a fixed price, thereby creating variable interests for BNSF Railway in the VIEs. The future minimum lease payments associated with the VIE leases were approximately $1.5 billion as of June 30, 2018.

In the event the leased asset is destroyed, BNSF Railway is generally obligated to either replace the asset or pay a fixed loss amount. The inclusion of the fixed loss amount is a standard clause within the lease arrangements. Historically, BNSF Railway has not incurred significant losses related to this clause. As such, it is not anticipated that the maximum exposure to loss would materially differ from the future minimum lease payments.

BNSF Railway does not provide financial support to the VIEs that it was not previously contractually obligated to provide.

BNSF Railway maintains and operates the leased assets based on contractual obligations within the lease arrangements, which set specific guidelines consistent within the industry. As such, BNSF Railway has no control over activities that could materially impact the fair value of the leased assets. BNSF Railway does not hold the power to direct the activities of the VIEs and therefore does not control the ongoing activities that have a significant impact on the economic performance of the VIEs. Additionally, BNSF Railway does not have the obligation to absorb losses of the VIEs or the right to receive benefits of the VIEs that could potentially be significant to the VIEs. Depending on market conditions, the fixed-price purchase options could potentially provide benefit to the Company; however, any benefits potentially received from a fixed-price purchase option are generally expected to be minimal. Based on these factors, BNSF Railway is not the primary beneficiary of the VIEs. As BNSF Railway is not the primary beneficiary and the majority of the VIE leases are operating leases, the assets and liabilities related to the VIEs recorded in the Company’s Consolidated Balance Sheets are immaterial.

8. Commitments and Contingencies

Personal Injury

Personal injury claims, including asbestos claims and employee work-related injuries and third-party injuries (collectively, other personal injury), are a significant expense for the railroad industry. 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. FELA’s system of requiring the finding of fault, coupled with unscheduled awards and reliance on the jury system, contributed to increased expenses in past years. Other proceedings include claims by non-employees for punitive as well as compensatory damages, and from time to time may include proceedings that have been certified as or purport to be class actions. The variability present in settling these claims, including non-employee personal injury and matters in which punitive damages are alleged, could result in increased expenses in future years. BNSF has implemented a number of safety programs designed to reduce the number of personal injuries as well as the associated claims and personal injury expense.

BNSF records an undiscounted liability for personal injury claims when the expected loss is both probable and reasonably estimable. The liability and ultimate expense projections are estimated using standard actuarial methodologies. Liabilities recorded for unasserted personal injury claims are based on information currently available. Due to the inherent uncertainty involved in projecting future events such as the number of claims filed each year, developments in judicial and legislative standards and the average costs to settle projected claims, actual costs may differ from amounts recorded. Expense accruals and any required adjustments are classified as materials and other in the Consolidated Statements of Income.

Asbestos

The Company is party to a number of personal injury claims by employees and non-employees who may have been exposed to asbestos. The heaviest exposure for certain BNSF employees was due to work conducted in and around the use of steam locomotive engines that were phased out between the years of 1950 and 1967. However, other types of exposures, including exposure from locomotive component parts and building materials, continued after 1967 until they were substantially eliminated at BNSF by 1985.

13

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

BNSF assesses its unasserted asbestos liability exposure on an annual basis during the third quarter. BNSF determines its asbestos liability by estimating its exposed population, the number of claims likely to be filed, the number of claims that will likely require payment and the estimated cost per claim. Estimated filing and dismissal rates and average cost per claim are determined utilizing recent claim data and trends.

Throughout the year, BNSF monitors actual experience against the number of forecasted claims and expected claim payments and will record adjustments to the Company’s estimates as necessary.

Based on BNSF’s estimate of the potentially exposed employees and related mortality assumptions, it is anticipated that unasserted asbestos claims will continue to be filed through the year 2050. The Company recorded an amount for the full estimated filing period through 2050 because it had a relatively finite exposed population (former and current employees hired prior to 1985), which it was able to identify and reasonably estimate and about which it had obtained reliable demographic data (including age, hire date and occupation) derived from industry or BNSF specific data that was the basis for the study. BNSF projects that approximately 65, 80 and 95 percent of the future unasserted asbestos claims will be filed within the next 10, 15 and 25 years, respectively.

Other Personal Injury

BNSF estimates its other personal injury liability claims and expense quarterly based on the covered population, activity levels and trends in frequency and the costs of covered injuries. Estimates include unasserted claims except for certain repetitive stress and other occupational trauma claims that allegedly result from prolonged repeated events or exposure. Such claims are estimated on an as-reported basis because the Company cannot estimate the range of reasonably possible loss due to other non-work related contributing causes of such injuries and the fact that continued exposure is required for the potential injury to manifest itself as a claim. BNSF has not experienced any significant adverse trends related to these types of claims in recent years.

BNSF monitors quarterly actual experience against the number of forecasted claims to be received, the forecasted number of claims closing with payment and expected claim payments. Adjustments to the Company’s estimates are recorded quarterly as necessary or more frequently as new events or changes in estimates develop.

The following table summarizes the activity in the Company’s accrued obligations for asbestos and other personal injury matters (in millions):

	Three Months Ended June 30,
	2018			2017
Beginning balance	$	305		$	367
Accruals / changes in estimates	27			4
Payments	(37		)	(7		)
Ending balance	$	295		$	364

	Six Months Ended June 30,
	2018			2017
Beginning balance	$	307		$	367
Accruals / changes in estimates	34			18
Payments	(46		)	(21		)
Ending balance	$	295		$	364

At June 30, 2018 and December 31, 2017, $75 million and $85 million was included in current liabilities, respectively. Defense and processing costs, which are recorded on an as-reported basis, were not included in the recorded liability. The Company is primarily self-insured for personal injury claims.

Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle personal injury claims may range from approximately $260 million to $355 million. However, BNSF believes that the $295 million recorded at June 30, 2018 is the best estimate of the Company’s future obligation for the settlement of personal injury claims.

14

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

The amounts recorded by BNSF for personal injury liabilities were based upon currently known facts. Future events, such as the number of new claims to be filed each year, the average cost of disposing of claims, as well as the numerous uncertainties surrounding personal injury litigation in the United States, could cause the actual costs to be higher or lower than projected.

Although the final outcome of personal injury matters cannot be predicted with certainty, considering among other things the meritorious legal defenses available and liabilities that have been recorded, 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.

BNSF Insurance Company

The Company has a consolidated, wholly-owned subsidiary, Burlington Northern Santa Fe Insurance Company, Ltd. (BNSFIC), that offers insurance coverage for certain risks, FELA claims, railroad protective and force account insurance claims and 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 treaty and assumes a proportionate share of the entire risk. Each year BNSFIC reviews the objectives and performance of the treaty to determine its continued participation in the treaty. 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. BNSF 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 June 30, 2018, there was $513 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 $497 million at December 31, 2017.

Environmental

The Company’s operations, as well as those of its competitors, are subject to extensive federal, state and local environmental regulation. BNSF’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 and 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. As a result, BNSF is subject to environmental cleanup and enforcement actions. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), also known as the Superfund law, as well as similar state laws, generally impose joint and several liability for cleanup and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. BNSF has been notified that it is a potentially responsible party (PRP) for study and cleanup costs at Superfund sites for which investigation and remediation payments are or will be made or are yet to be determined (the Superfund sites) and, in many instances, is one of several PRPs. In addition, BNSF may be considered a PRP under certain other laws. Accordingly, under CERCLA and other federal and state statutes, BNSF may be held jointly and severally liable for all environmental costs associated with a particular site. If there are other PRPs, BNSF generally participates in the cleanup of these sites through cost-sharing agreements with terms that vary from site to site. Costs are typically allocated based on such factors as relative volumetric contribution of material, the amount of time the site was owned or operated and/or the portion of the total site owned or operated by each PRP.

BNSF is involved in a number of administrative and judicial proceedings and other mandatory cleanup efforts for 210 sites, including 18 Superfund sites, at which it is participating in the study or cleanup, or both, of alleged environmental contamination.

Liabilities for environmental cleanup costs are recorded when BNSF’s liability for environmental cleanup is probable and reasonably estimable. Subsequent adjustments to initial estimates are recorded as necessary based upon additional information developed in subsequent periods. Environmental costs include initial site surveys and environmental studies as well as costs for remediation of sites determined to be contaminated.

15

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

BNSF estimates the ultimate cost of cleanup efforts at its known environmental sites on an annual basis during the third quarter. Ultimate cost estimates for environmental sites are based on current estimated percentage to closure ratios, possible remediation work plans and 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, including the Environmental Protection Agency and other governmental agencies. These factors incorporate into the estimates experience gained from cleanup efforts at other similar sites.

Annual studies do not include: (i) contaminated sites of which the Company is not aware; (ii) additional amounts for third-party tort claims, which arise out of contaminants allegedly migrating from BNSF property, due to a limited number of sites; or (iii) natural resource damage claims. BNSF continues to estimate third-party tort claims on a site by site basis when the liability for such claims is probable and reasonably estimable. BNSF’s recorded liability for third-party tort claims as of June 30, 2018 and December 31, 2017 was $9 million for both periods.

On a quarterly basis, BNSF monitors actual experience against the forecasted remediation and related payments made on existing sites and conducts ongoing environmental contingency analyses, which consider a combination of factors including independent consulting reports, site visits, legal reviews and analysis of the likelihood of other PRPs’ participation in, and their ability to pay for, cleanup. Adjustments to the Company’s estimates will continue to be recorded as necessary based on developments in subsequent periods. Additionally, environmental accruals, which are classified as materials and other in the Consolidated Statements of Income, include amounts for newly identified sites or contaminants, third-party claims, and legal fees incurred for defense of third-party claims and recovery efforts.

The following table summarizes the activity in the Company’s accrued obligations for environmental matters (in millions):

	Three Months Ended June 30,
	2018			2017
Beginning balance	$	314		$	335
Accruals / changes in estimates	1			(2		)
Payments	(5		)	(7		)
Ending balance	$	310		$	326

	Six Months Ended June 30,
	2018			2017
Beginning balance	$	317		$	342
Accruals / changes in estimates	2			(1		)
Payments	(9		)	(15		)
Ending balance	$	310		$	326

At June 30, 2018 and December 31, 2017, $40 million was included in current liabilities for both periods.

BNSF’s environmental liabilities are not discounted. BNSF anticipates that the majority of the accrued costs at June 30, 2018, will be paid over the next ten years, and no individual site is considered to be material.

Liabilities recorded for environmental costs represent BNSF’s best estimate of its probable future obligation for the remediation and settlement of these sites and include both asserted and unasserted claims. Although recorded liabilities include BNSF’s best estimate of all probable costs, without reduction for anticipated recoveries from third parties, 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 these factors, it is reasonably possible that future costs for environmental liabilities may range from approximately $250 million to $410 million. However, BNSF believes that the $310 million recorded at June 30, 2018 is the best estimate of the Company’s future obligation for environmental costs.

16

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

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 asbestos, other personal injury and environmental matters discussed above, 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 punitive as well as compensatory damages, and from time to time may include proceedings that purport to be class actions. Although the final outcome of these matters cannot be predicted with certainty, considering among other things the meritorious legal defenses available and liabilities that have been recorded along with applicable insurance, BNSF currently believes that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, an unexpected adverse resolution of one or more of these items could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

9. Employment Benefit Plans

Components of the net cost (credit) for the periods presented below for certain employee benefit plans were as follows (in millions):

	Pension Benefits
	Three Months Ended June 30,
Net Cost (Credit)	2018			2017
Service cost	$	11		$	11
Interest cost	21			22
Expected return on plan assets	(39		)	(37		)
Net credit recognized	$	(7	)	$	(4	)

	Pension Benefits
	Six Months Ended June 30,
Net Cost (Credit)	2018			2017
Service cost	$	22		$	21
Interest cost	42			44
Expected return on plan assets	(79		)	(74		)
Net credit recognized	$	(15	)	$	(9	)

	Retiree Health and Welfare Benefits
	Three Months Ended June 30,
Net Cost (Credit)	2018		2017
Service cost	$	—	$	1
Interest cost	2		2
Amortization of prior service credits	—		(1		)
Net cost recognized	$	2	$	2

17

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

	Retiree Health and Welfare Benefits
	Six Months Ended June 30,
Net Cost (Credit)	2018		2017
Service cost	$	—	$	1
Interest cost	4		4
Amortization of prior service credits	—		(1		)
Net cost recognized	$	4	$	4

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.

10. Related Party Transactions

The companies identified as affiliates of BNSF include Berkshire and its subsidiaries. During the six months ended June 30, 2018 and 2017, the Company declared and paid cash distributions of $2.3 billion and $1.4 billion, respectively, to its parent company. For the six months ended June 30, 2018 and 2017, the Company received tax refunds of $217 million and $0 million, respectively, from Berkshire, and made tax payments of $347 million and $91 million to Berkshire. As of June 30, 2018, the Company had a payable to Berkshire of $53 million. As of December 31, 2017, the Company had a receivable from Berkshire of $235 million recorded in other current assets and a payable to Berkshire of $19 million. Uncertain tax positions will affect the tax payable to Berkshire if and when settled. As of June 30, 2018 and December 31, 2017, the Company had $31 million and $32 millionpayable to Berkshire related to prior year tax audit settlements. 

BNSF engages in various transactions with related parties in the ordinary course of business. The following table summarizes revenues earned by BNSF for services provided to related parties and expenditures to related parties (in millions):

	Three Months Ended June 30,
	2018		2017
Revenues	$	33	$	31
Expenditures	$	97	$	82

	Six Months Ended June 30,
	2018		2017
Revenues	$	67	$	68
Expenditures	$	186	$	161

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. In applying the equity method, the investment is recorded in other assets. 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 $585 million and $554 million recognized as investments related to TTX in its Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, respectively.

18

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

11. 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. Under existing accounting standards, 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 tables provide the components of accumulated other comprehensive income / (loss) (AOCI) by component (in millions):

	Pension and Retiree Health and Welfare Benefit Itemsa			Equity Method Investments			Total
Balance at December 31, 2017	$	234		$	(3	)	$	231
Other comprehensive income (loss) before reclassifications	—			1			1
Amounts reclassified from AOCI	26			(1		)	25
Balance at June 30, 2018	$	260		$	(3	)	$	257
Balance at December 31, 2016	$	122		$	(3	)	$	119
Other comprehensive income (loss) before reclassifications	—			(1		)	(1		)
Amounts reclassified from AOCI	(1		)	—			(1		)
Balance at June 30, 2017	$	121		$	(4	)	$	117

^a Amounts are net of tax.

Reclassifications out of AOCIb
	Three Months Ended June 30,
Details about AOCI Components	2018			2017		Income Statement Line Item
Amortization of pension and retiree health and welfare benefit items
Prior service credits	—			1		c
Total reclassifications for the period	$	—		$	1	Net of tax
	Six Months Ended June 30,
Details about AOCI Components	2018			2017		Income Statement Line Item
Amortization of pension and retiree health and welfare benefit items
Prior service credits	—			1		c
Reclassification due to ASU 2018-02 adoption	(26		)	—
Total reclassifications for the period	$	(26	)	$	1	Net of tax

^b Amounts in parenthesis indicate debits to the income statement.

^c This accumulated other comprehensive income component is included in the computation of net periodic pension and retiree health and welfare cost (see Note 9 for additional details).

19

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

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

12. Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. At December 31, 2017, BNSF had long-term operating leases with $3.0 billion of remaining minimum lease payments, and is assessing these contracts and others for lease qualification under the new standard. This new standard will require the present value of these leases to be recorded in the Consolidated Balance Sheets as a right of use asset and lease liability. Management is currently evaluating the impacts of the new guidance on its financials, disclosures and internal control framework and is in the process of implementing a lease accounting system to support the new reporting requirements.

In March 2017, the FASB issued Accounting Standards Update No. 2017-07 (ASU 2017-07), Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires an entity to present the service cost component of net benefit cost in the same line item as other current employee compensation costs (including being capitalized, if appropriate, as part of an asset). The other components of net benefit cost are presented below income from operations. BNSF adopted the standard as of January 1, 2018. Other components of net benefit costs previously recorded in compensation and benefits expense were reclassified to other income. See Note 9 to the Consolidated Financial Statements. The retrospective impact of the adoption is shown in the table below (in millions):

	Three Months Ended June 30, 2017
	As Previously Reported			Adjustments			As Revised
Operating expenses	$	3,463		$	13		$	3,476
Operating income	$	1,787		$	(13	)	$	1,774
Other (income) expense, net	$	(6	)	$	(13	)	$	(19	)

	Six Months Ended June 30, 2017
	As Previously Reported			Adjustments			As Revised
Operating expenses	$	7,054		$	27		$	7,081
Operating income	$	3,381		$	(27	)	$	3,354
Other (income) expense, net	$	(9	)	$	(27	)	$	(36	)

In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (ASU 2018-02), Income Statement - Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company early adopted the guidance in ASU 2018-02 during the quarter ended March 31, 2018, and elected to reclassify $26 million of tax from accumulated other comprehensive income to retained earnings. See the Consolidated Statements of Changes in Equity.

20

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 six months ended June 30, 2018, and a comparative analysis to the six months ended June 30, 2017.

Results of Operations

Revenues Summary

The following tables present BNSF’s revenue information by business group:

	Revenues (in millions)				Cars / Units (in thousands)
	Six Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018	2017
Consumer Products	$	3,839	$	3,422	2,798	2,654
Industrial Products	2,840		2,498		964	878
Agricultural Products	2,334		2,182		609	565
Coal	1,859		1,872		899	912
Total freight revenues	10,872		9,974		5,270	5,009
Other revenues	630		461
Total operating revenues	$	11,502	$	10,435

	Average Revenue Per Car / Unit
	Six Months Ended June 30,
	2018		2017
Consumer Products	$	1,372	$	1,289
Industrial Products	2,946		2,845
Agricultural Products	3,833		3,862
Coal	2,068		2,053
Total freight revenues	$	2,063	$	1,991

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):

	Six Months Ended June 30,
	2018		2017
Total fuel expense a	$	1,597	$	1,182
BNSF fuel surcharges	$	636	$	394

^a  Total fuel expense includes locomotive and non-locomotive fuel.

21

Six Months Ended June 30, 2018vs. theSix Months Ended June 30, 2017

Revenues

Revenues for the six months ended June 30, 2018 were $11.5 billion, an increase of $1.1 billion, or 10 percent, as compared with the six months ended June 30, 2017. The increase in revenue is primarily due to a 5 percentincrease in unit volume and an increase in average revenue per car / unit. The change in revenues is due to the following:

▪ Average revenue per car / unit increased4 percent as a result of higher fuel surcharges driven primarily by higher fuel prices, increased rates per car / unit, and business mix changes.

▪ Consumer Products volumes increased due to higher intermodal volumes, which were driven by economic growth and tight truck capacity leading to conversion from highway to rail, as well as strength in imports and containerized agricultural product exports, offset by a contract loss.

▪ Industrial Products volumes increased primarily due to strength in the energy and industrial sectors which drove demand for sand, petroleum products, taconite, steel, and plastics.

▪ Agricultural Products volumes increased due to strong export and domestic grain shipments, as well as higher fertilizer and other grain products volumes.

▪ Coal volumes decreased due mainly to plant retirements partially offset by market share gains and improved export volumes.

Expenses

Operating expenses for the six months ended June 30, 2018 were $7.9 billion, an increase of $791 million, or 11 percent, as compared with the six months ended June 30, 2017. A significant portion of this increase is due to the following changes in underlying trends in expenses:

▪ Compensation and benefits expense increased primarily due to wage inflation, increased volumes, and higher training costs.

▪ Fuel expense increased primarily due to higher average fuel prices and increased volumes.

▪ Purchased services expense increased as a result of higher purchased transportation costs of our logistics services business, which are offset in other revenues, as well as increased intermodal ramping, drayage, and other volume-related activities.

▪ Materials and other expense increased primarily as a result of higher locomotive materials, derailment-related costs, property taxes, and personal injury expenses.

▪ There were no significant changes in depreciation and amortization and equipment rents expense.

▪ The effective tax rate was 22.5 percent and 37.7 percent for the six months ended June 30, 2018 and 2017, respectively. The decrease is primarily driven by the Tax Cuts and Jobs Act (the Tax Act) signed into law on December 22, 2017 and various state income tax rate reductions enacted in 2018. The Tax Act decreased the federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018.

22

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.

•   Operatingfactors: 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 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.

23

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 second fiscal quarter that have materially affected, or are reasonably likely to materially affect, BNSF’s internal control over financial reporting.

24

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

PART II OTHER INFORMATION

Item 1. Legal Proceedings.

On June 22, 2018, a loaded BNSF Railway train derailed in Doon, Iowa. Some of the derailed railcars released petroleum hydrocarbons into floodwaters. The extent of the damage from the derailment has yet to be determined and the cause of the derailment is currently under investigation. The Company is working with federal, state and local authorities to respond to the incident. In addition, although no notice of penalty has yet been issued, regulatory penalties could exceed $100,000. While the costs of resolving this matter are subject to further developments, the Company does not believe that the outcome will have a material adverse effect on its financial position, results of operations or liquidity.

25

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
3.1	Certificate of Formation dated November 2, 2009.	8-K	2/16/2010	001-11535	3.1
3.2	Amended and Restated Limited Liability Company Operating Agreement of Burlington Northern Santa Fe, LLC, dated as of February 12, 2010.	8-K	2/16/2010	001-11535	3.2
3.3	Written Consent of Sole Member, dated April 8, 2010, amending the Amended and Restated Limited Liability Company Operating Agreement.	8-K	4/13/2010	001-11535	3.1
4.1	Twenty-first Supplemental Indenture, dated as of August 2, 2018, to Indenture dated as of December  1, 1995, between Burlington Northern Santa Fe, LLC and The Bank of New York Mellon Trust Company, N.A., as Trustee.	8-K	8/2/2018	001-11535	4.1
4.2	Certificate of Determination as to the terms of BNSF’s 4.150% Debentures due December 15, 2048.	8-K	8/2/2018	001-11535	4.2
12.1	Computation of Ratio of Earnings to Fixed Charges.*
31.1	Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Principal Financial Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).*
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 six months ended June 30, 2018, formatted in XBRL includes: (i) the Consolidated Statements of Income for the three and six months ended June 30, 2018 and 2017, (ii) the Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2018 and 2017, (iii) the Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017, (v) the Consolidated Statements of Changes in Equity as of June 30, 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

26

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:  August 3, 2018

S-1

EX-12.1

Exhibit 12.1

BURLINGTON NORTHERN SANTA FE, LLC and SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In millions, except ratio amounts)

(Unaudited)

	Six Months Ended June 30,
	2018		2017
Earnings:
Income before income taxes	$	3,168	$	2,882
Add:
Interest and other fixed charges, excluding capitalized interest	512		508
Reasonable approximation of portion of rent under long-term operating           leases representative of an interest factor	87		95
Distributed income of investees accounted for under the equity method	4		5
Amortization of capitalized interest	3		2
Less:
Equity in earnings of investments accounted for under the equity method	30		15
Total earnings available for fixed charges	$	3,744	$	3,477
Fixed charges:
Interest and fixed charges	$	525	$	520
Reasonable approximation of portion of rent under long-term operating leases    representative of an interest factor	87		95
Total fixed charges	$	612	$	615
Ratio of earnings to fixed charges	6.12x		5.65x

E-1

EX-31.1

Exhibit 31.1

Principal Executive Officer’s Certifications

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Matthew K. Rose, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Burlington Northern Santa Fe, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2018

/s/ Matthew K. Rose

Matthew K. Rose

Executive Chairman and

Chief Executive Officer

E-2

EX-31.2

Exhibit 31.2

Principal Financial Officer’s Certifications

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Julie A. Piggott, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Burlington Northern Santa Fe, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2018

/s/ Julie A. Piggott

Julie A. Piggott

Executive Vice President and

Chief Financial Officer

E-3

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. § 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

Burlington Northern Santa Fe, LLC

In connection with the Quarterly Report of Burlington Northern Santa Fe, LLC (the “Company”) on Form 10-Q for the period ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Matthew K. Rose, Executive Chairman and Chief Executive Officer of the Company, and Julie A. Piggott, Executive Vice President and Chief Financial Officer of the Company, each hereby certifies that, to his and her knowledge on the date hereof:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 3, 2018

/s/ Matthew K. Rose	/s/ Julie A. Piggott
Matthew K. Rose	Julie A. Piggott
Executive Chairman and Chief Executive Officer	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Burlington Northern Santa Fe, LLC and will be retained by Burlington Northern Santa Fe, LLC and furnished to the Securities and Exchange Commission or its staff upon request.

E-4

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 03, 2018
Entity Information [Line Items]
Entity Registrant Name	BURLINGTON NORTHERN SANTA FE, LLC
Entity Central Index Key	0000934612
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		0
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

XML

Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 5,878	$ 5,250	$ 11,502	$ 10,435
Operating expenses:
Compensation and benefits	1,328	1,255	2,643	2,552
Purchased services	714	609	1,406	1,235
Fuel	830	577	1,597	1,182
Depreciation and amortization	575	592	1,146	1,165
Equipment rents	167	196	359	392
Materials and other	381	247	721	555
Total operating expenses	3,995	3,476	7,872	7,081
Operating income	1,883	1,774	3,630	3,354
Interest expense	256	256	512	508
Other (income) expense, net	(28)	(19)	(50)	(36)
Income before income taxes	1,655	1,537	3,168	2,882
Income tax expense	346	579	714	1,086
Net income	$ 1,309	$ 958	$ 2,454	$ 1,796

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net income	$ 1,309	$ 958	$ 2,454	$ 1,796
Other Comprehensive Income:
Change in pension and retiree health and welfare benefits, net of tax	0	(1)	0	(1)
Change in accumulated other comprehensive income (loss) of equity method investees	0	1	1	(1)
Other comprehensive income (loss), net of tax	0	0	1	(2)
Total comprehensive income	$ 1,309	$ 958	$ 2,455	$ 1,794

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 2,139	$ 1,975
Accounts receivable, net	1,462	1,448
Materials and supplies	789	803
Other current assets	276	408
Total current assets	4,666	4,634
Property and equipment, net of accumulated depreciation of $9,259 and $8,627, respectively	62,507	62,313
Goodwill	14,845	14,845
Intangible assets, net	382	394
Other assets	2,401	2,337
Total assets	84,801	84,523
Current liabilities:
Accounts payable and other current liabilities	3,161	3,169
Long-term debt due within one year	86	740
Total current liabilities	3,247	3,909
Long-term debt	22,448	21,759
Deferred income taxes	13,600	13,452
Casualty and environmental liabilities	490	499
Intangible liabilities, net	426	471
Pension and retiree health and welfare liability	311	310
Other liabilities	1,093	1,114
Total liabilities	41,615	41,514
Commitments and contingencies (see Notes 6 and 7)
Equity:
Member's equity	42,929	42,778
Accumulated other comprehensive income	257	231
Total equity	43,186	43,009
Total liabilities and equity	$ 84,801	$ 84,523

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
ASSETS
Accumulated depreciation	$ 9,259	$ 8,627

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES
Net income	$ 2,454	$ 1,796
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,146	1,165
Deferred income taxes	144	232
Long-term casualty and environmental liabilities, net	(19)	(19)
Other, net	(93)	(113)
Changes in current assets and liabilities:
Accounts receivable, net	(14)	(17)
Materials and supplies	14	6
Other current assets	(104)	(17)
Accounts payable and other current liabilities	266	502
Net cash provided by operating activities	3,794	3,535
INVESTING ACTIVITIES
Capital expenditures excluding equipment	(1,224)	(1,296)
Acquisition of equipment	(72)	(200)
Purchases of investments and investments in time deposits	(13)	(8)
Proceeds from sales of investments and maturities of time deposits	17	15
Other, net	(108)	(235)
Net cash used for investing activities	(1,400)	(1,724)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	750	1,250
Payments on long-term debt	(696)	(700)
Cash distributions	(2,275)	(1,425)
Other, net	(9)	(19)
Net cash provided by (used for) financing activities	(2,230)	(894)
Increase (decrease) in cash and cash equivalents	164	917
Cash and cash equivalents:
Beginning of period	1,975	3,218
End of period	2,139	4,135
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amounts capitalized	532	530
Capital investments accrued but not yet paid	93	103
Income taxes paid, net of refunds	$ 226	$ 212

XML

Consolidated Statements of Changes in Equity - USD ($) $ in Millions	Total	Member's Equity	Accumulated Other Comprehensive Income (Loss)
Balance at Dec. 31, 2016			$ 119
Cash distributions	$ (1,425)
Comprehensive income (loss), net of tax	1,794
Balance at Jun. 30, 2017			117
Cumulative Effect of New Accounting Principle in Period of Adoption | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]	(3)	$ (3)	0
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2016-01 [Member]	0	(1)	1
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2018-02 [Domain]	0	(26)	26
Balance at Dec. 31, 2017	43,009	42,778	231
Cash distributions	(2,275)	(2,275)	0
Comprehensive income (loss), net of tax	2,455	2,454	1
Balance at Jun. 30, 2018	$ 43,186	$ 42,929	$ 257

XML

Accounting Policies and Interim Results

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Accounting Policies and Interim Results [Text Block]

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, 2017, 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 a fair statement of BNSF’s consolidated financial position as of June 30, 2018, and the results of operations for the three and six months ended June 30, 2018 and 2017.

XML

Revenue from Contracts with Customers Revenue from contracts with customers (Notes)

6 Months Ended

Jun. 30, 2018

Disaggregation of Revenue [Line Items]

Revenue from Contract with Customer [Text Block]

Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC Topic 606 (new revenue guidance) using the modified retrospective transition method and the practical expedient for contracts not completed as of the date of adoption. The Company recorded the cumulative effect of adopting ASC Topic 606 as a $3 million net reduction to member’s equity as of January 1, 2018, primarily due to the timing impacts of variable consideration for certain customer incentives. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts were not adjusted and continue to be reported under the accounting standards in effect for the prior period. The impact of adoption to our Consolidated Statements of Income, Balance Sheets, and Statements of Cash Flows for the current year is immaterial as reflected in the Consolidated Statements of Changes in Equity. Therefore, financial statements showing 2018 reported under previous guidance are not presented.

The Company’s primary source of revenue is freight rail transportation services. The primary performance obligation for the Company is to move freight from a point of origin to a point of destination for its customers. The performance obligations are represented by bills of lading which create a series of distinct services that have a similar pattern of transfer to the customer. The revenues for each performance obligation are based on various factors including the product being shipped, the origin and destination pair, and contract incentives which are outlined in various private rate agreements, common carrier public tariffs, interline foreign road agreements and pricing quotes. The transaction price is generally a per car amount to transport cars from a certain origin to a certain destination.

The associated freight revenues are recognized over time as the service is performed because the customer simultaneously receives and consumes the benefits of the service. The Company recognizes revenue based on the proportion of the service completed as of the balance sheet date. Bills for freight transportation services are generally issued to customers and paid within thirty days or less. As a result, no significant contract assets exist and there are no significant financing components in the Company’s revenue arrangements.

Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a reduction to revenue on a pro-rata basis based on actual or projected future customer shipments. A small portion of customer incentive agreements have a component where a different discount amount is provided for different levels of volumes, resulting in variable consideration. To determine transaction price in these cases, the Company estimates the amount of variable consideration at each reporting period utilizing the most likely amount based on historical trends as well as economic and other indicators. These incentives are ratably applied to all units using an estimate of how much volume the customer will ship under the customer incentive agreement. Both the variable consideration and the associated contract liabilities resulting from these types of customer incentives are immaterial.

Other revenues are primarily generated from a wholly owned non-rail logistics subsidiary providing logistics and transportation services and from accessorial services provided to customers which are primarily storage and demurrage. The vast majority of revenues generated by the non-rail logistics subsidiary are recognized over time as the services are performed and accessorial revenues are recognized when the service is performed.

In accordance with ASC Topic 606, the Company disaggregates revenue from contracts with customers based on the characteristics of the services being provided and the types of products being transported and other revenues (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Consumer Products	$	1,979	$	1,742	$	3,839	$	3,422
Industrial Products	1,482		1,274		2,840		2,498
Agricultural Products	1,182		1,074		2,334		2,182
Coal	911		912		1,859		1,872
Total freight revenues	5,554		5,002		10,872		9,974
Non-rail logistics subsidiary	214		157		406		295
Accessorial and other	110		91		224		166
Total other revenues	324		248		630		461
Total operating revenues	$	5,878	$	5,250	$	11,502	$	10,435

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 June 30, 2018 and January 1, 2018, $1.2 billion represents 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 June 30, 2018 and January 1, 2018, remaining performance obligations were $282 million and $192 million, respectively.

XML

Accounts Receivable, Net

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Accounts Receivable, Net

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 June 30, 2018 and December 31, 2017, $84 million and $87 million, respectively, of such allowances had been recorded.

At June 30, 2018 and December 31, 2017, $62 million and $82 million, respectively, of accounts receivable were greater than 90 days old.

XML

Investments

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Investments

BNSF holds investments which are included in other assets on the Consolidated Balance Sheets. The following table summarizes the fair value of investments held as of June 30, 2018 and December 31, 2017 (in millions):

	June 30, 2018		December 31, 2017
Debt securities	$	39	$	43
Equity securities	56		54
Total	$	95	$	97

The fair value measurements of BNSF’s debt securities are based on Level 2 inputs and equity securities are based on Level 1 inputs, using a market approach. Gains and losses recognized in other (income) expense, net for the Company for the six months ended June 30, 2018 and 2017 were not material.

XML

Other Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]

Other Intangible Assets and Liabilities

Other Intangible Assets and Liabilities

Intangible assets and liabilities were as follows (in millions):

	As of June 30, 2018				As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets	$	653	$	271	$	647	$	253
Intangible liabilities	$	1,403	$	977	$	1,403	$	932

As of June 30, 2018 and December 31, 2017, intangible assets primarily consisted of franchise and customer assets. Intangible liabilities primarily consisted of customer and shortline contracts which were in an unfavorable position at the date of Merger.

Amortizable intangible assets and liabilities are amortized based on the estimated pattern in which the economic benefits are expected to be consumed or on a straight-line basis over their estimated economic lives.

Amortization of intangible assets and liabilities was as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Amortization of intangible assets	$	9	$	9	$	18	$	18
Amortization of intangible liabilities	$	22	$	24	$	45	$	48

Amortization of intangible assets and liabilities for the next five years is expected to approximate the following (in millions):

	Amortization of intangible assets		Amortization of intangible liabilities
Remainder of 2018	$	17	$	45
2019	$	33	$	27
2020	$	33	$	26
2021	$	31	$	24
2022	$	31	$	23

XML

Other Assets

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Other Assets

Other Assets

In July 2010, the Company entered into a low-income housing partnership (the Partnership) as the limited partner, holding a 99.9 percent interest in the Partnership. The Partnership is a variable interest entity (VIE), with the purpose of developing and operating low-income housing rental properties. Recovery of the Company’s investment is accomplished through the utilization of low-income housing tax credits and the tax benefits of Partnership losses. The general partner, who holds a 0.1 percent interest in the Partnership, is an unrelated third party and is responsible for controlling and managing the business and financial operation of the Partnership. As the Company does not have the power to direct the activities that most significantly impact the Partnership’s economic performance, the Company is not the primary beneficiary and therefore, does not consolidate the Partnership. The Company does not provide financial support to the Partnership that it was not previously contractually obligated to provide.    

The Company has accounted for its investment in the Partnership using the effective yield method. The risk of loss of the Company’s investment in the Partnership is considered low as an affiliate of the general partner has provided certain guarantees of tax credits and minimum annual returns. For the six months ended June 30, 2018 and 2017, the Company recognized a reduction to income tax expense of $10 million and $17 million, respectively. The Company’s maximum exposure to loss related to the Partnership is the unamortized investment balance. The following table provides information related to this Partnership (in millions):

	June 30, 2018		December 31, 2017
Unamortized investment balance classified as other assets	$	85	$	118
Maximum exposure to loss	$	85	$	118

Included within other assets are capitalized right-to-use fixed assets of $975 million and $958 million, and related accumulated amortization of $298 million and $287 million, at June 30, 2018 and December 31, 2017, respectively.

XML

Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

Notes and Debentures

In March 2018, BNSF issued $750 million of 4.05 percent debentures due June 15, 2048. 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.

As of June 30, 2018, $1 billion remained authorized by the Board of Managers (the Board) of the Company to be issued through the Securities and Exchange Commission (SEC) debt shelf offering process.

The Company is required to maintain certain financial covenants in conjunction with $500 million of certain issued and outstanding junior subordinated notes. As of June 30, 2018, the Company was in compliance with these financial covenants.

Subsequent Event

In August 2018, BNSF issued $750 million of 4.15 percent debentures due December 15, 2048. 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.

After this issuance, $250 million remained authorized by the Board to be issued through the SEC debt shelf offering process.

Fair Value of Debt Instruments

At June 30, 2018 and December 31, 2017, the fair value of BNSF’s debt, excluding capital leases and unamortized gains on interest rate swaps, was $23.4 billion and $25.1 billion, respectively, while the book value, which also excludes capital leases and the associated unamortized fair value adjustment under acquisition method accounting related to capital leases and unamortized gains on interest rate swaps, was $22.1 billion and $22.0 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).

Guarantees

As of June 30, 2018, 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 June 30, 2018, 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		9	$	19	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. Agreements that reflect unique circumstances, particularly agreements that contain guarantees that indemnify for another party’s acts, are disclosed separately, if appropriate. Unless separately disclosed above, no fair value liability related to indemnities has been recorded in the Consolidated Financial Statements.

Variable Interest Entities - Leases

BNSF Railway has entered into various lease transactions in which the structure of the lease contains VIEs. These leases are primarily for equipment. These VIEs were created solely for the lease transactions and have no other activities, assets or liabilities outside of the lease transactions. In some of the arrangements, BNSF Railway has the option to purchase some or all of the leased assets at a fixed price, thereby creating variable interests for BNSF Railway in the VIEs. The future minimum lease payments associated with the VIE leases were approximately $1.5 billion as of June 30, 2018.

In the event the leased asset is destroyed, BNSF Railway is generally obligated to either replace the asset or pay a fixed loss amount. The inclusion of the fixed loss amount is a standard clause within the lease arrangements. Historically, BNSF Railway has not incurred significant losses related to this clause. As such, it is not anticipated that the maximum exposure to loss would materially differ from the future minimum lease payments.

BNSF Railway does not provide financial support to the VIEs that it was not previously contractually obligated to provide.

BNSF Railway maintains and operates the leased assets based on contractual obligations within the lease arrangements, which set specific guidelines consistent within the industry. As such, BNSF Railway has no control over activities that could materially impact the fair value of the leased assets. BNSF Railway does not hold the power to direct the activities of the VIEs and therefore does not control the ongoing activities that have a significant impact on the economic performance of the VIEs. Additionally, BNSF Railway does not have the obligation to absorb losses of the VIEs or the right to receive benefits of the VIEs that could potentially be significant to the VIEs. Depending on market conditions, the fixed-price purchase options could potentially provide benefit to the Company; however, any benefits potentially received from a fixed-price purchase option are generally expected to be minimal. Based on these factors, BNSF Railway is not the primary beneficiary of the VIEs. As BNSF Railway is not the primary beneficiary and the majority of the VIE leases are operating leases, the assets and liabilities related to the VIEs recorded in the Company’s Consolidated Balance Sheets are immaterial.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Personal Injury

Personal injury claims, including asbestos claims and employee work-related injuries and third-party injuries (collectively, other personal injury), are a significant expense for the railroad industry. 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. FELA’s system of requiring the finding of fault, coupled with unscheduled awards and reliance on the jury system, contributed to increased expenses in past years. Other proceedings include claims by non-employees for punitive as well as compensatory damages, and from time to time may include proceedings that have been certified as or purport to be class actions. The variability present in settling these claims, including non-employee personal injury and matters in which punitive damages are alleged, could result in increased expenses in future years. BNSF has implemented a number of safety programs designed to reduce the number of personal injuries as well as the associated claims and personal injury expense.

BNSF records an undiscounted liability for personal injury claims when the expected loss is both probable and reasonably estimable. The liability and ultimate expense projections are estimated using standard actuarial methodologies. Liabilities recorded for unasserted personal injury claims are based on information currently available. Due to the inherent uncertainty involved in projecting future events such as the number of claims filed each year, developments in judicial and legislative standards and the average costs to settle projected claims, actual costs may differ from amounts recorded. Expense accruals and any required adjustments are classified as materials and other in the Consolidated Statements of Income.

Asbestos

The Company is party to a number of personal injury claims by employees and non-employees who may have been exposed to asbestos. The heaviest exposure for certain BNSF employees was due to work conducted in and around the use of steam locomotive engines that were phased out between the years of 1950 and 1967. However, other types of exposures, including exposure from locomotive component parts and building materials, continued after 1967 until they were substantially eliminated at BNSF by 1985.

BNSF assesses its unasserted asbestos liability exposure on an annual basis during the third quarter. BNSF determines its asbestos liability by estimating its exposed population, the number of claims likely to be filed, the number of claims that will likely require payment and the estimated cost per claim. Estimated filing and dismissal rates and average cost per claim are determined utilizing recent claim data and trends.

Throughout the year, BNSF monitors actual experience against the number of forecasted claims and expected claim payments and will record adjustments to the Company’s estimates as necessary.

Based on BNSF’s estimate of the potentially exposed employees and related mortality assumptions, it is anticipated that unasserted asbestos claims will continue to be filed through the year 2050. The Company recorded an amount for the full estimated filing period through 2050 because it had a relatively finite exposed population (former and current employees hired prior to 1985), which it was able to identify and reasonably estimate and about which it had obtained reliable demographic data (including age, hire date and occupation) derived from industry or BNSF specific data that was the basis for the study. BNSF projects that approximately 65, 80 and 95 percent of the future unasserted asbestos claims will be filed within the next 10, 15 and 25 years, respectively.

Other Personal Injury

BNSF estimates its other personal injury liability claims and expense quarterly based on the covered population, activity levels and trends in frequency and the costs of covered injuries. Estimates include unasserted claims except for certain repetitive stress and other occupational trauma claims that allegedly result from prolonged repeated events or exposure. Such claims are estimated on an as-reported basis because the Company cannot estimate the range of reasonably possible loss due to other non-work related contributing causes of such injuries and the fact that continued exposure is required for the potential injury to manifest itself as a claim. BNSF has not experienced any significant adverse trends related to these types of claims in recent years.

BNSF monitors quarterly actual experience against the number of forecasted claims to be received, the forecasted number of claims closing with payment and expected claim payments. Adjustments to the Company’s estimates are recorded quarterly as necessary or more frequently as new events or changes in estimates develop.

The following table summarizes the activity in the Company’s accrued obligations for asbestos and other personal injury matters (in millions):

	Three Months Ended June 30,
	2018			2017
Beginning balance	$	305		$	367
Accruals / changes in estimates	27			4
Payments	(37		)	(7		)
Ending balance	$	295		$	364

	Six Months Ended June 30,
	2018			2017
Beginning balance	$	307		$	367
Accruals / changes in estimates	34			18
Payments	(46		)	(21		)
Ending balance	$	295		$	364

At June 30, 2018 and December 31, 2017, $75 million and $85 million was included in current liabilities, respectively. Defense and processing costs, which are recorded on an as-reported basis, were not included in the recorded liability. The Company is primarily self-insured for personal injury claims.

Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle personal injury claims may range from approximately $260 million to $355 million. However, BNSF believes that the $295 million recorded at June 30, 2018 is the best estimate of the Company’s future obligation for the settlement of personal injury claims.

The amounts recorded by BNSF for personal injury liabilities were based upon currently known facts. Future events, such as the number of new claims to be filed each year, the average cost of disposing of claims, as well as the numerous uncertainties surrounding personal injury litigation in the United States, could cause the actual costs to be higher or lower than projected.

Although the final outcome of personal injury matters cannot be predicted with certainty, considering among other things the meritorious legal defenses available and liabilities that have been recorded, 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.

BNSF Insurance Company

The Company has a consolidated, wholly-owned subsidiary, Burlington Northern Santa Fe Insurance Company, Ltd. (BNSFIC), that offers insurance coverage for certain risks, FELA claims, railroad protective and force account insurance claims and 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 treaty and assumes a proportionate share of the entire risk. Each year BNSFIC reviews the objectives and performance of the treaty to determine its continued participation in the treaty. 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. BNSF 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 June 30, 2018, there was $513 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 $497 million at December 31, 2017.

Environmental

The Company’s operations, as well as those of its competitors, are subject to extensive federal, state and local environmental regulation. BNSF’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 and 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. As a result, BNSF is subject to environmental cleanup and enforcement actions. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), also known as the Superfund law, as well as similar state laws, generally impose joint and several liability for cleanup and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. BNSF has been notified that it is a potentially responsible party (PRP) for study and cleanup costs at Superfund sites for which investigation and remediation payments are or will be made or are yet to be determined (the Superfund sites) and, in many instances, is one of several PRPs. In addition, BNSF may be considered a PRP under certain other laws. Accordingly, under CERCLA and other federal and state statutes, BNSF may be held jointly and severally liable for all environmental costs associated with a particular site. If there are other PRPs, BNSF generally participates in the cleanup of these sites through cost-sharing agreements with terms that vary from site to site. Costs are typically allocated based on such factors as relative volumetric contribution of material, the amount of time the site was owned or operated and/or the portion of the total site owned or operated by each PRP.

BNSF is involved in a number of administrative and judicial proceedings and other mandatory cleanup efforts for 210 sites, including 18 Superfund sites, at which it is participating in the study or cleanup, or both, of alleged environmental contamination.

Liabilities for environmental cleanup costs are recorded when BNSF’s liability for environmental cleanup is probable and reasonably estimable. Subsequent adjustments to initial estimates are recorded as necessary based upon additional information developed in subsequent periods. Environmental costs include initial site surveys and environmental studies as well as costs for remediation of sites determined to be contaminated.

BNSF estimates the ultimate cost of cleanup efforts at its known environmental sites on an annual basis during the third quarter. Ultimate cost estimates for environmental sites are based on current estimated percentage to closure ratios, possible remediation work plans and 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, including the Environmental Protection Agency and other governmental agencies. These factors incorporate into the estimates experience gained from cleanup efforts at other similar sites.

Annual studies do not include: (i) contaminated sites of which the Company is not aware; (ii) additional amounts for third-party tort claims, which arise out of contaminants allegedly migrating from BNSF property, due to a limited number of sites; or (iii) natural resource damage claims. BNSF continues to estimate third-party tort claims on a site by site basis when the liability for such claims is probable and reasonably estimable. BNSF’s recorded liability for third-party tort claims as of June 30, 2018 and December 31, 2017 was $9 million for both periods.

On a quarterly basis, BNSF monitors actual experience against the forecasted remediation and related payments made on existing sites and conducts ongoing environmental contingency analyses, which consider a combination of factors including independent consulting reports, site visits, legal reviews and analysis of the likelihood of other PRPs’ participation in, and their ability to pay for, cleanup. Adjustments to the Company’s estimates will continue to be recorded as necessary based on developments in subsequent periods. Additionally, environmental accruals, which are classified as materials and other in the Consolidated Statements of Income, include amounts for newly identified sites or contaminants, third-party claims, and legal fees incurred for defense of third-party claims and recovery efforts.

The following table summarizes the activity in the Company’s accrued obligations for environmental matters (in millions):

	Three Months Ended June 30,
	2018			2017
Beginning balance	$	314		$	335
Accruals / changes in estimates	1			(2		)
Payments	(5		)	(7		)
Ending balance	$	310		$	326

	Six Months Ended June 30,
	2018			2017
Beginning balance	$	317		$	342
Accruals / changes in estimates	2			(1		)
Payments	(9		)	(15		)
Ending balance	$	310		$	326

At June 30, 2018 and December 31, 2017, $40 million was included in current liabilities for both periods.

BNSF’s environmental liabilities are not discounted. BNSF anticipates that the majority of the accrued costs at June 30, 2018, will be paid over the next ten years, and no individual site is considered to be material.

Liabilities recorded for environmental costs represent BNSF’s best estimate of its probable future obligation for the remediation and settlement of these sites and include both asserted and unasserted claims. Although recorded liabilities include BNSF’s best estimate of all probable costs, without reduction for anticipated recoveries from third parties, 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 these factors, it is reasonably possible that future costs for environmental liabilities may range from approximately $250 million to $410 million. However, BNSF believes that the $310 million recorded at June 30, 2018 is the best estimate of the Company’s future obligation for environmental costs.

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 asbestos, other personal injury and environmental matters discussed above, 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 punitive as well as compensatory damages, and from time to time may include proceedings that purport to be class actions. Although the final outcome of these matters cannot be predicted with certainty, considering among other things the meritorious legal defenses available and liabilities that have been recorded along with applicable insurance, BNSF currently believes that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, an unexpected adverse resolution of one or more of these items could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

XML

Employment Benefit Plans

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Employment Benefit Plans

Employment Benefit Plans

Components of the net cost (credit) for the periods presented below for certain employee benefit plans were as follows (in millions):

	Pension Benefits
	Three Months Ended June 30,
Net Cost (Credit)	2018			2017
Service cost	$	11		$	11
Interest cost	21			22
Expected return on plan assets	(39		)	(37		)
Net credit recognized	$	(7	)	$	(4	)

	Pension Benefits
	Six Months Ended June 30,
Net Cost (Credit)	2018			2017
Service cost	$	22		$	21
Interest cost	42			44
Expected return on plan assets	(79		)	(74		)
Net credit recognized	$	(15	)	$	(9	)

	Retiree Health and Welfare Benefits
	Three Months Ended June 30,
Net Cost (Credit)	2018		2017
Service cost	$	—	$	1
Interest cost	2		2
Amortization of prior service credits	—		(1		)
Net cost recognized	$	2	$	2

	Retiree Health and Welfare Benefits
	Six Months Ended June 30,
Net Cost (Credit)	2018		2017
Service cost	$	—	$	1
Interest cost	4		4
Amortization of prior service credits	—		(1		)
Net cost recognized	$	4	$	4

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.

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The companies identified as affiliates of BNSF include Berkshire and its subsidiaries. During the six months ended June 30, 2018 and 2017, the Company declared and paid cash distributions of $2.3 billion and $1.4 billion, respectively, to its parent company. For the six months ended June 30, 2018 and 2017, the Company received tax refunds of $217 million and $0 million, respectively, from Berkshire, and made tax payments of $347 million and $91 million to Berkshire. As of June 30, 2018, the Company had a payable to Berkshire of $53 million. As of December 31, 2017, the Company had a receivable from Berkshire of $235 million recorded in other current assets and a payable to Berkshire of $19 million. Uncertain tax positions will affect the tax payable to Berkshire if and when settled. As of June 30, 2018 and December 31, 2017, the Company had $31 million and $32 millionpayable to Berkshire related to prior year tax audit settlements. 

BNSF engages in various transactions with related parties in the ordinary course of business. The following table summarizes revenues earned by BNSF for services provided to related parties and expenditures to related parties (in millions):

	Three Months Ended June 30,
	2018		2017
Revenues	$	33	$	31
Expenditures	$	97	$	82

	Six Months Ended June 30,
	2018		2017
Revenues	$	67	$	68
Expenditures	$	186	$	161

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. In applying the equity method, the investment is recorded in other assets. 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 $585 million and $554 million recognized as investments related to TTX in its Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, respectively.

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income

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. Under existing accounting standards, 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 tables provide the components of accumulated other comprehensive income / (loss) (AOCI) by component (in millions):

	Pension and Retiree Health and Welfare Benefit Itemsa			Equity Method Investments			Total
Balance at December 31, 2017	$	234		$	(3	)	$	231
Other comprehensive income (loss) before reclassifications	—			1			1
Amounts reclassified from AOCI	26			(1		)	25
Balance at June 30, 2018	$	260		$	(3	)	$	257
Balance at December 31, 2016	$	122		$	(3	)	$	119
Other comprehensive income (loss) before reclassifications	—			(1		)	(1		)
Amounts reclassified from AOCI	(1		)	—			(1		)
Balance at June 30, 2017	$	121		$	(4	)	$	117

^a Amounts are net of tax.

Reclassifications out of AOCIb
	Three Months Ended June 30,
Details about AOCI Components	2018			2017		Income Statement Line Item
Amortization of pension and retiree health and welfare benefit items
Prior service credits	—			1		c
Total reclassifications for the period	$	—		$	1	Net of tax
	Six Months Ended June 30,
Details about AOCI Components	2018			2017		Income Statement Line Item
Amortization of pension and retiree health and welfare benefit items
Prior service credits	—			1		c
Reclassification due to ASU 2018-02 adoption	(26		)	—
Total reclassifications for the period	$	(26	)	$	1	Net of tax

^b Amounts in parenthesis indicate debits to the income statement.

^c This accumulated other comprehensive income component is included in the computation of net periodic pension and retiree health and welfare cost (see Note 9 for additional details).

XML

Accounting Pronouncements

6 Months Ended

Jun. 30, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Accounting Pronouncements

Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. At December 31, 2017, BNSF had long-term operating leases with $3.0 billion of remaining minimum lease payments, and is assessing these contracts and others for lease qualification under the new standard. This new standard will require the present value of these leases to be recorded in the Consolidated Balance Sheets as a right of use asset and lease liability. Management is currently evaluating the impacts of the new guidance on its financials, disclosures and internal control framework and is in the process of implementing a lease accounting system to support the new reporting requirements.

In March 2017, the FASB issued Accounting Standards Update No. 2017-07 (ASU 2017-07), Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires an entity to present the service cost component of net benefit cost in the same line item as other current employee compensation costs (including being capitalized, if appropriate, as part of an asset). The other components of net benefit cost are presented below income from operations. BNSF adopted the standard as of January 1, 2018. Other components of net benefit costs previously recorded in compensation and benefits expense were reclassified to other income. See Note 9 to the Consolidated Financial Statements. The retrospective impact of the adoption is shown in the table below (in millions):

	Three Months Ended June 30, 2017
	As Previously Reported			Adjustments			As Revised
Operating expenses	$	3,463		$	13		$	3,476
Operating income	$	1,787		$	(13	)	$	1,774
Other (income) expense, net	$	(6	)	$	(13	)	$	(19	)

	Six Months Ended June 30, 2017
	As Previously Reported			Adjustments			As Revised
Operating expenses	$	7,054		$	27		$	7,081
Operating income	$	3,381		$	(27	)	$	3,354
Other (income) expense, net	$	(9	)	$	(27	)	$	(36	)

In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (ASU 2018-02), Income Statement - Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company early adopted the guidance in ASU 2018-02 during the quarter ended March 31, 2018, and elected to reclassify $26 million of tax from accumulated other comprehensive income to retained earnings. See the Consolidated Statements of Changes in Equity.

XML

Revenue from Contracts with Customers Revenue from contracts with customers (Tables)

6 Months Ended

Jun. 30, 2018

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue [Table Text Block]

In accordance with ASC Topic 606, the Company disaggregates revenue from contracts with customers based on the characteristics of the services being provided and the types of products being transported and other revenues (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Consumer Products	$	1,979	$	1,742	$	3,839	$	3,422
Industrial Products	1,482		1,274		2,840		2,498
Agricultural Products	1,182		1,074		2,334		2,182
Coal	911		912		1,859		1,872
Total freight revenues	5,554		5,002		10,872		9,974
Non-rail logistics subsidiary	214		157		406		295
Accessorial and other	110		91		224		166
Total other revenues	324		248		630		461
Total operating revenues	$	5,878	$	5,250	$	11,502	$	10,435

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Trading Securities [Table Text Block]

The following table summarizes the fair value of investments held as of June 30, 2018 and December 31, 2017 (in millions):

	June 30, 2018		December 31, 2017
Debt securities	$	39	$	43
Equity securities	56		54
Total	$	95	$	97

XML

Other Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]

Schedule of Finite-Lived Intangible Assets and Liabilities

Intangible assets and liabilities were as follows (in millions):

	As of June 30, 2018				As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets	$	653	$	271	$	647	$	253
Intangible liabilities	$	1,403	$	977	$	1,403	$	932

Schedule of Finite-Lived Intangible Assets and Liabilities Amortization Expense

Amortization of intangible assets and liabilities was as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Amortization of intangible assets	$	9	$	9	$	18	$	18
Amortization of intangible liabilities	$	22	$	24	$	45	$	48

Schedule of Finite-Lived Intangible Assets and Liabilities, Future Amortization Expense

Amortization of intangible assets and liabilities for the next five years is expected to approximate the following (in millions):

	Amortization of intangible assets		Amortization of intangible liabilities
Remainder of 2018	$	17	$	45
2019	$	33	$	27
2020	$	33	$	26
2021	$	31	$	24
2022	$	31	$	23

XML

Other Assets (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities

The following table provides information related to this Partnership (in millions):

	June 30, 2018		December 31, 2017
Unamortized investment balance classified as other assets	$	85	$	118
Maximum exposure to loss	$	85	$	118

XML

Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Guarantor Obligations

Debt and other obligations of non-consolidated entities guaranteed by the Company as of June 30, 2018, 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		9	$	19	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.

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Loss Contingencies by Contingency

The following table summarizes the activity in the Company’s accrued obligations for asbestos and other personal injury matters (in millions):

	Three Months Ended June 30,
	2018			2017
Beginning balance	$	305		$	367
Accruals / changes in estimates	27			4
Payments	(37		)	(7		)
Ending balance	$	295		$	364

	Six Months Ended June 30,
	2018			2017
Beginning balance	$	307		$	367
Accruals / changes in estimates	34			18
Payments	(46		)	(21		)
Ending balance	$	295		$	364

Accrued Obligations for Environmental Matters

The following table summarizes the activity in the Company’s accrued obligations for environmental matters (in millions):

	Three Months Ended June 30,
	2018			2017
Beginning balance	$	314		$	335
Accruals / changes in estimates	1			(2		)
Payments	(5		)	(7		)
Ending balance	$	310		$	326

	Six Months Ended June 30,
	2018			2017
Beginning balance	$	317		$	342
Accruals / changes in estimates	2			(1		)
Payments	(9		)	(15		)
Ending balance	$	310		$	326

XML

Employment Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2018

Defined Benefit Plan Disclosure [Line Items]

Schedule of Net Benefit Costs

Employment Benefit Plans

Components of the net cost (credit) for the periods presented below for certain employee benefit plans were as follows (in millions):

	Pension Benefits
	Three Months Ended June 30,
Net Cost (Credit)	2018			2017
Service cost	$	11		$	11
Interest cost	21			22
Expected return on plan assets	(39		)	(37		)
Net credit recognized	$	(7	)	$	(4	)

	Pension Benefits
	Six Months Ended June 30,
Net Cost (Credit)	2018			2017
Service cost	$	22		$	21
Interest cost	42			44
Expected return on plan assets	(79		)	(74		)
Net credit recognized	$	(15	)	$	(9	)

	Retiree Health and Welfare Benefits
	Three Months Ended June 30,
Net Cost (Credit)	2018		2017
Service cost	$	—	$	1
Interest cost	2		2
Amortization of prior service credits	—		(1		)
Net cost recognized	$	2	$	2

	Retiree Health and Welfare Benefits
	Six Months Ended June 30,
Net Cost (Credit)	2018		2017
Service cost	$	—	$	1
Interest cost	4		4
Amortization of prior service credits	—		(1		)
Net cost recognized	$	4	$	4

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.

XML

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2018

Related Party Transaction [Line Items]

Schedule of Related Party Transactions [Table Text Block]

The following table summarizes revenues earned by BNSF for services provided to related parties and expenditures to related parties (in millions):

	Three Months Ended June 30,
	2018		2017
Revenues	$	33	$	31
Expenditures	$	97	$	82

	Six Months Ended June 30,
	2018		2017
Revenues	$	67	$	68
Expenditures	$	186	$	161

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following tables provide the components of accumulated other comprehensive income / (loss) (AOCI) by component (in millions):

	Pension and Retiree Health and Welfare Benefit Itemsa			Equity Method Investments			Total
Balance at December 31, 2017	$	234		$	(3	)	$	231
Other comprehensive income (loss) before reclassifications	—			1			1
Amounts reclassified from AOCI	26			(1		)	25
Balance at June 30, 2018	$	260		$	(3	)	$	257
Balance at December 31, 2016	$	122		$	(3	)	$	119
Other comprehensive income (loss) before reclassifications	—			(1		)	(1		)
Amounts reclassified from AOCI	(1		)	—			(1		)
Balance at June 30, 2017	$	121		$	(4	)	$	117

^a Amounts are net of tax.

XML

Accounting Pronouncements Schedule of new accounting pronouncements and changes (Tables)

6 Months Ended

Jun. 30, 2017

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Restatement to Prior Year Income [Table Text Block]

See Note 9 to the Consolidated Financial Statements. The retrospective impact of the adoption is shown in the table below (in millions):

	Three Months Ended June 30, 2017
	As Previously Reported			Adjustments			As Revised
Operating expenses	$	3,463		$	13		$	3,476
Operating income	$	1,787		$	(13	)	$	1,774
Other (income) expense, net	$	(6	)	$	(13	)	$	(19	)

	Six Months Ended June 30, 2017
	As Previously Reported			Adjustments			As Revised
Operating expenses	$	7,054		$	27		$	7,081
Operating income	$	3,381		$	(27	)	$	3,354
Other (income) expense, net	$	(9	)	$	(27	)	$	(36	)

XML

Accounting Policies and Interim Results (Details) - Burlington Northern Santa Fe Corporation [Member]	Jun. 30, 2018	Feb. 12, 2010
Business Acquisition [Line Items]
Acquired remaining outstanding shares, percentage		100.00%
Holders of membership interests	1

XML

Revenue from Contracts with Customers Cumulative effect of adopting ASC 606(Details) $ in Millions	Jan. 01, 2018 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Retained Earnings (Accumulated Deficit)	$ 3

XML

Revenue from Contracts with Customers Disaggregation of Revenue (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 11,502	$ 10,435
Total other revenues	630	461
Cargo and Freight Revenue	10,872	9,974
Consumer Products [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	3,839	3,422
Industrial Products [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	2,840	2,498
Agricultural Products [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	2,334	2,182
Coal [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	1,859	1,872
Non-rail logistics subsidiary [Domain]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	406	295
Accessorial and other [Domain]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 224	$ 166

XML

Revenue from Contracts with Customers Disclosure of contract asset and liability (Details) - USD ($) $ in Billions	Jun. 30, 2018	Jan. 01, 2018
Revenue from External Customer [Line Items]
Accounts Receivable, Net	$ 1.2	$ 1.2

XML

Revenue from Contracts with Customers Remaining performance obligations (Details) - USD ($) $ in Millions	Jun. 30, 2018	Jan. 01, 2018
Remaining Performance Obligations [Abstract]
Revenue, Remaining Performance Obligation	$ 282	$ 192

XML

Accounts Receivable, Net (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Allowance for bill adjustments and uncollectible accounts	$ 84	$ 87
Accounts receivable greater than 90 days old	1,462	1,448
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accounts receivable greater than 90 days old	$ 62	$ 82

XML

Investments (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Schedule of Trading Securities [Line Items]
Trading Securities, Debt	$ 39	$ 43
Trading Securities, Equity	56	54
Trading Securities, Total	$ 95	$ 97

XML

Other Intangible Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
Amortized intangible assets, gross carrying amount	$ 653		$ 653		$ 647
Amortized intangible assets, accumulated amortization	271		271		253
Amortized intangible liabilities, gross carrying amount	1,403		1,403		1,403
Amortized intangible liabilities, accumulated amortization	977		977		$ 932
Amortization of Intangible Assets	9	$ 9	18	$ 18
Amortization of Intangible Liabilities	22	$ 24	45	$ 48
Finite-Lived Intangible Assets and Liabilities, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Amortization of intangible assets, Remainder of 2018	17		17
Amortization of intangible liabilities, Remainder of 2018	45		45
Amortization of intangible assets, 2019	33		33
Amortization of intangible liabilities, 2019	27		27
Amortization of intangible assets, 2020	33		33
Amortization of intangible liabilities, 2020	26		26
Amortization of intangible assets, 2021	31		31
Amortization of intangible liabilities, 2021	24		24
Amortization of intangible assets, 2022	31		31
Amortization of intangible liabilities, 2022	$ 23		$ 23

XML

Other Assets Low Income Housing (Details) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Jul. 31, 2010	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Company limited partner holding interest, percentage	99.90%
Tax credits, reduction to income tax expense		$ 10	$ 17
Unamortized investment balance classified as Other Assets		85		$ 118
Maximum exposure to loss		$ 85		$ 118
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
General partner holding interest, percentage	0.10%

XML

Other Assets Right-to-Use Fixed Assets (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Right to use fixed assets	$ 975	$ 958
Accumulated amortization on right-to-use fixed assets	9,259	8,627
Right to use fixed assets [Member]
Property, Plant and Equipment [Line Items]
Accumulated amortization on right-to-use fixed assets	$ 298	$ 287

XML

Debt Notes and Debentures (Details) $ in Millions	Jun. 30, 2018 USD ($)
SEC Debt Shelf Registration [Member]
Debt Instrument [Line Items]
Remaining Debt Securities Authorized by the Board	$ 1,000
Junior Subordinated Debt
Debt Instrument [Line Items]
Subordinated notes related to financial covenants	500
Four Point Zero Five Percent Debentures Due June 15, 2048 [Member] [Member] [Member] | Corporate Debt Securities [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 750
Debt Instrument, Interest Rate, Stated Percentage	4.05%

XML

Debt Fair Value of Debt Instruments (Details) - USD ($) $ in Billions	Jun. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Fair value of debt excluding capital leases and unamortized gains on interest rate swaps	$ 23.4	$ 25.1
Book value of debt excluding capital leases, the associated unamortized fair value adjustment and unamortized gains on interest rate swaps	$ 22.1	$ 22.0

XML

Debt Guarantees (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Kinder Morgan Energy Partners, L.P. | Payment Guarantee
Guarantor Obligations [Line Items]
BNSF Ownership Percentage	0.50%
Principal Amount Guaranteed	$ 190
Maximum Future Payments	190
Maximum Recourse Amount	0	[1]
Capitalized Obligations	$ 2	[2]
Chevron Phillips Chemical Company, LP | Indemnification Agreement
Guarantor Obligations [Line Items]
BNSF Ownership Percentage	0.00%
Remaining Term (in years)	9 years
Capitalized Obligations	$ 19	[3]

[1] Reflects the maximum amount the Company could recover from a third party other than the counterparty.

[2] Reflects capitalized obligations that are recorded on the Company’s Consolidated Balance Sheets.

[3] Reflects the asset and corresponding liability for the fair value of these guarantees required by authoritative accounting guidance related to guarantees.

XML

Debt Variable Interest Entities - Leases (Details) $ in Billions	Jun. 30, 2018 USD ($)
Variable Interest Entity, Not Primary Beneficiary | Equipment
Operating Leased Assets [Line Items]
Future minimum lease payments	$ 1.5

XML

Debt Subsequent Event (Details) - Subsequent Event [Member] $ in Millions	Aug. 02, 2018 USD ($)
Subsequent Event [Line Items]
Debt Instrument, Face Amount	$ 750
Debt Instrument, Interest Rate, Stated Percentage	4.15%
Remaining Debt Securities Authorized by the Board	$ 250

XML

Commitments and Contingencies Personal Injury (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Unasserted Claim
Asbestos and Personal Injury [Abstract]
Percent of future unasserted asbestos claims to be filed within the next ten years	65.00%		65.00%
Percent of future unasserted asbestos claims to be filed within the next fifteen years	80.00%		80.00%
Percent of future unasserted asbestos claims to be filed within the next twenty-five years	95.00%		95.00%
Length in years for 65 percent of future unasserted asbestos claims to be filed			10 years
Length in years for 80 percent of future unasserted asbestos claims to be filed			15 years
Length in years for 95 percent of future unasserted asbestos claims to be filed			25 years
Personal Injury [Member]
Asbestos and Personal Injury [Abstract]
Loss Contingency, Accrual, Current	$ 75		$ 75		$ 85
Loss Contingency Accrual [Roll Forward]
Beginning balance	305	$ 367	307	$ 367
Accruals / changes in estimates	27	4	34	18
Payments	(37)	(7)	(46)	(21)
Ending balance	295	$ 364	295	$ 364
Loss Contingency, Accrual, Current	75		75		$ 85
Personal Injury [Member] | Minimum [Member]
Asbestos and Personal Injury [Abstract]
Future costs to settle claims and associated liability	260		260
Personal Injury [Member] | Maximum [Member]
Asbestos and Personal Injury [Abstract]
Future costs to settle claims and associated liability	$ 355		$ 355

XML

Commitments and Contingencies Insurance (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Insurance [Line Items]
Third party investments, classified as cash and cash equivalents	$ 2,139	$ 1,975	$ 4,135	$ 3,218
BNSF Insurance Company [Member] | Commercial Paper, Bank Time Deposits, and Money Market Funds [Member]
Insurance [Line Items]
Third party investments, classified as cash and cash equivalents	$ 513	$ 497

XML

Commitments and Contingencies Environmental (Details) - Environmental Issue [Member] $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) sites	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) sites	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Loss Contingencies [Line Items]
Number of alleged environmental contamination sites (in sites) | sites	210		210
Number of environmental superfund sites (in sites) | sites	18		18
Recorded Liability For Third Party Environmental Tort Claims	$ 9		$ 9		$ 9
Accrued obligations for environmental matters, current liabilities	$ 40		$ 40		$ 40
Years in which accrued environmental costs will be paid over	10		10
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning balance	$ 314	$ 335	$ 317	$ 342
Accruals / changes in estimates	1	(2)	2	(1)
Payments	(5)	(7)	(9)	(15)
Ending balance	310	$ 326	310	$ 326
Minimum [Member]
Loss Contingencies [Line Items]
Future costs to settle claims and associated liability	250		250
Maximum [Member]
Loss Contingencies [Line Items]
Future costs to settle claims and associated liability	$ 410		$ 410

XML

Employment Benefit Plans (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost		$ 11	$ 11	$ 22		$ 21
Interest Cost		21	22	42		44
Expected return on plan assets		(39)	(37)	(79)		(74)
Net cost (credit) recognized		(7)	(4)	(15)		(9)
Retiree Health and Welfare Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost		0	1	0		1
Interest Cost		2	2	4		4
Amortization of Prior Service Credit		0	(1)	0		(1)
Net cost (credit) recognized		2	2	4		4
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Defined Benefit Plan Disclosure [Line Items]
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	[1]	0	(1)	26	[2]	(1)	[2]
Accumulated Defined Benefit Plans Adjustment, Net Prior Service Attributable to Parent [Member]
Defined Benefit Plan Disclosure [Line Items]
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	[1],[3]	$ 0	$ (1)	$ 0		$ (1)

[1] Reclassifications out of AOCIb Three Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Total reclassifications for the period $— $1 Net of tax Six Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Reclassification due to ASU 2018-02 adoption (26) — Total reclassifications for the period $(26) $1 Net of tax

[2] Amounts are net of tax.

[3] Reclassifications out of AOCIb Three Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Total reclassifications for the period $— $1 Net of tax Six Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Reclassification due to ASU 2018-02 adoption (26) — Total reclassifications for the period $(26) $1 Net of tax b Amounts in parenthesis indicate debits to the income statement.c This accumulated other comprehensive income component is included in the computation of net periodic pension and retiree health and welfare cost (see Note 9 for additional details).

XML

Related Party Transactions (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Related Party Transaction [Line Items]
Cash distributions			$ 2,275	$ 1,425
Related Party Transaction Revenue with Affiliates	$ 33	$ 31	67	68
Related Party Transaction Expenditures from Transactions with Related Party	$ 97	$ 82	$ 186	161
Equity Method Investments and Joint Ventures [Abstract]
Ownership Percentage in TTX Company	17.30%		17.30%
Investments related to TTX	$ 585		$ 585		$ 554
Parent Company
Related Party Transaction [Line Items]
Cash distributions			2,300	1,400
Tax Refund From Parent			217	0
Tax payments to parent company			347	$ 91
Receivable from parent company	31		31		235
Payable to parent company	53		53		$ 19
Earliest Tax Year [Member] | Parent Company
Related Party Transaction [Line Items]
Tax payable to parent related to prior year tax audits	$ 32		$ 32

XML

Accumulated Other Comprehensive Income AOCI by Component (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract]
Balance				$ 43,009
Balance		$ 43,186		43,186
Equity Method Investee [Member]
Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract]
Balance				(3)		$ (3)
Other comprehensive (loss) before reclassifications				1		(1)
Amounts reclassified from AOCI				(1)		0
Balance		(3)	$ (4)	(3)		(4)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract]
Balance	[1]			234		122
Other comprehensive (loss) before reclassifications	[1]			0		0
Amounts reclassified from AOCI	[2]	0	(1)	26	[1]	(1)	[1]
Balance	[1]	260	121	260		121
AOCI Attributable to Parent [Member]
Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract]
Balance				231		119
Other comprehensive (loss) before reclassifications				1		(1)
Amounts reclassified from AOCI				25		(1)
Balance		$ 257	$ 117	$ 257		$ 117

[1] Amounts are net of tax.

[2] Reclassifications out of AOCIb Three Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Total reclassifications for the period $— $1 Net of tax Six Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Reclassification due to ASU 2018-02 adoption (26) — Total reclassifications for the period $(26) $1 Net of tax

XML

Accumulated Other Comprehensive Income Reclassification out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net of Tax	[1]	$ 0	$ 1	$ (26)	[2]	$ 1	[2]

[1] Reclassifications out of AOCIb Three Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Total reclassifications for the period $— $1 Net of tax Six Months Ended June 30, Details about AOCI Components 2018 2017 Income Statement Line ItemAmortization of pension and retiree health and welfare benefit items Prior service credits — 1 c Reclassification due to ASU 2018-02 adoption (26) — Total reclassifications for the period $(26) $1 Net of tax

[2] Amounts are net of tax.

XML

Accounting Pronouncements ASU 2018-02 and ASU 2017-07 (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Early adoption of ASU 2018-02			26
Operating Expenses	$ 3,995	$ 3,476	$ 7,872	$ 7,081
Operating Income	1,883	1,774	3,630	3,354
Other (income) expense, net	$ (28)	(19)	$ (50)	$ (36)
Scenario, Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Expenses		3,463
Operating Income		1,787
Other (income) expense, net		(6)
Restatement Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Expenses		13
Operating Income		(13)
Other (income) expense, net		$ (13)

XML

Accounting Pronouncements Future Minimum Payments Due on Operating Leases (Details) $ in Billions	Dec. 31, 2017 USD ($)
Adjustments for New Accounting Pronouncement [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Future minimum lease payments	$ 3.0