QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
None | None | None | ||||||
Securities registered pursuant to Section 12(g) of the Act: Limited Liability Company Membership Interest |
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. | ☒ | No | ☐ | |||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). | ☒ | No | ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and "emerging growth company" in Rule 12b-2 of the Exchange Act. | |||||||||||||||||||||||||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ☒ | 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 Act). | Yes | No | ☒ |
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). |
PART I | FINANCIAL INFORMATION | PAGE | ||||||
PART II | OTHER INFORMATION | |||||||
S-1 | ||||||||
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Revenues | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||
Compensation and benefits | ||||||||||||||
Purchased services | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Fuel | ||||||||||||||
Equipment rents | ||||||||||||||
Materials and other | ||||||||||||||
Total operating expenses | ||||||||||||||
Operating income | ||||||||||||||
Interest expense | ||||||||||||||
Other (income) expense, net | ( | ( | ||||||||||||
Income before income taxes | ||||||||||||||
Income tax expense | ||||||||||||||
Net income | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive income: | ||||||||||||||
Change in pension and retiree health and welfare benefits, net of tax | ||||||||||||||
Change in accumulated other comprehensive income (loss) of equity method investees | ||||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||
Total comprehensive income | $ | $ |
March 31, 2021 | December 31, 2020 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net | ||||||||||||||
Materials and supplies | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment, net of accumulated depreciation of $ | ||||||||||||||
Goodwill | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and other current liabilities | $ | $ | ||||||||||||
Long-term debt and finance leases due within one year | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt and finance leases | ||||||||||||||
Deferred income taxes | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Casualty and environmental liabilities | ||||||||||||||
Pension and retiree health and welfare liability | ||||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (see Note 5) | ||||||||||||||
Equity: | ||||||||||||||
Member’s equity | ||||||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||||
Total equity | ||||||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Operating Activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Deferred income taxes | ||||||||||||||
Long-term casualty and environmental liabilities, net | ( | |||||||||||||
Other, net | ( | ( | ||||||||||||
Changes in current assets and liabilities: | ||||||||||||||
Accounts receivable, net | ( | |||||||||||||
Materials and supplies | ( | |||||||||||||
Other current assets | ( | ( | ||||||||||||
Accounts payable and other current liabilities | ( | |||||||||||||
Net cash provided by operating activities | ||||||||||||||
Investing Activities | ||||||||||||||
Capital expenditures excluding equipment | ( | ( | ||||||||||||
Acquisition of equipment | ( | ( | ||||||||||||
Proceeds from sales of investments and maturities of time deposits | ||||||||||||||
Other, net | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Financing Activities | ||||||||||||||
Payments on long-term debt and finance leases | ( | ( | ||||||||||||
Cash distributions | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
(Decrease) increase in cash and cash equivalents | ( | ( | ||||||||||||
Cash and cash equivalents: | ||||||||||||||
Beginning of period | ||||||||||||||
End of period | $ | $ | ||||||||||||
Supplemental Cash Flow Information | ||||||||||||||
Interest paid, net of amounts capitalized | $ | $ | ||||||||||||
Capital investments accrued but not yet paid | $ | $ | ||||||||||||
Income taxes paid, net of refunds | $ | $ | ||||||||||||
Non-cash asset financing | $ | $ |
Member’s Equity | Accumulated Other Comprehensive Income (Loss) | Total Equity | ||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | $ | |||||||||||||||||
Cash distributions | ( | ( | ||||||||||||||||||
Comprehensive income (loss), net of tax | ||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | |||||||||||||||||
Balance as of December 31, 2020 | $ | $ | $ | |||||||||||||||||
Cash distributions | ( | ( | ||||||||||||||||||
Comprehensive income (loss), net of tax | ||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | |||||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Consumer Products | $ | $ | ||||||||||||
Agricultural Products | ||||||||||||||
Industrial Products | ||||||||||||||
Coal | ||||||||||||||
Total freight revenues | ||||||||||||||
Non-rail logistics subsidiary | ||||||||||||||
Accessorial and other | ||||||||||||||
Total other revenues | ||||||||||||||
Total operating revenues | $ | $ |
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. | % | $ | $ | $ | Termination of Ownership | $ | b | |||||||||||||||||||||||||||||||
Chevron Phillips Chemical Company LP | % | N/Ad | N/Ad | N/Ad | $ | c |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Beginning balance | $ | $ | ||||||||||||
Accruals / changes in estimates | ||||||||||||||
Payments | ( | ( | ||||||||||||
Ending balance | $ | $ | ||||||||||||
Current portion of ending balance | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Beginning balance | $ | $ | ||||||||||||
Accruals / changes in estimates | ||||||||||||||
Payments | ( | ( | ||||||||||||
Ending balance | $ | $ | ||||||||||||
Current portion of ending balance | $ | $ |
Pension Benefits | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Service cost | $ | $ | ||||||||||||
Interest cost | ||||||||||||||
Expected return on plan assets | ( | ( | ||||||||||||
Net (benefit) cost recognized | $ | ( | $ | ( |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Revenues | $ | $ | ||||||||||||
Expenditures | $ | $ |
Pension and Retiree Health and Welfare Benefit Items | Equity Method Investments | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | ( | $ | ||||||||||||||||
Other comprehensive income (loss), net before reclassifications | ||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | ( | $ | ||||||||||||||||
Balance as of December 31, 2020 | $ | $ | ( | $ | ||||||||||||||||
Other comprehensive income (loss), net before reclassifications | ||||||||||||||||||||
Amounts reclassified from AOCI: | ||||||||||||||||||||
Amortization of actuarial lossesa | ||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | ( | $ |
Revenues (in millions) | Cars / Units (in thousands) | |||||||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Consumer Products | $ | 1,890 | $ | 1,765 | 1,393 | 1,207 | ||||||||||||||||||||
Agricultural Products | 1,308 | 1,144 | 318 | 285 | ||||||||||||||||||||||
Industrial Products | 1,226 | 1,465 | 399 | 460 | ||||||||||||||||||||||
Coal | 686 | 766 | 339 | 384 | ||||||||||||||||||||||
Total freight revenues | 5,110 | 5,140 | 2,449 | 2,336 | ||||||||||||||||||||||
Other revenues | 291 | 277 | ||||||||||||||||||||||||
Total operating revenues | $ | 5,401 | $ | 5,417 |
Average Revenue Per Car / Unit | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Consumer Products | $ | 1,357 | $ | 1,462 | ||||||||||
Agricultural Products | 4,113 | 4,014 | ||||||||||||
Industrial Products | 3,073 | 3,185 | ||||||||||||
Coal | 2,024 | 1,995 | ||||||||||||
Total freight revenues | $ | 2,087 | $ | 2,200 |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Fuel expense a | $ | 550 | $ | 614 | ||||||||||
Fuel surcharges | $ | 202 | $ | 273 |
Incorporated by Reference (if applicable) | |||||||||||||||||
Exhibit Number and Description | Form | File Date | File No. | Exhibit | |||||||||||||
8-K | 2/16/2010 | 001-11535 | 3.1 | ||||||||||||||
10-K | 3/1/2021 | 001-11535 | 3.2 | ||||||||||||||
8-K | 4/6/2021 | 001-11535 | 4.1 | ||||||||||||||
8-K | 4/6/2021 | 001-11535 | 4.2 | ||||||||||||||
101 | The following unaudited information from Burlington Northern Santa Fe, LLC’s Form 10-Q for the three months ended March 31, 2021 formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) the Cover Page, (ii) the Consolidated Statements of Income for the three months ended March 31, 2021 and 2020, (iii) the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020, (iv) the Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, (v) the Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020, (vi) the Consolidated Statements of Changes in Equity for the periods ended March 31, 2021 and 2020, and (vii) the Notes to the Consolidated Financial Statements. * | ||||||||||||||||
104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101) |
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) |
/s/ Kathryn M. Farmer | /s/ Julie A. Piggott | |||||||
Kathryn M. Farmer | Julie A. Piggott | |||||||
President and Chief Executive Officer | Executive Vice President and Chief Financial Officer |
Consolidated Statements of Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Income Statement [Abstract] | ||
Revenues | $ 5,401 | $ 5,417 |
Operating expenses: | ||
Compensation and benefits | 1,183 | 1,244 |
Purchased services | 665 | 666 |
Depreciation and amortization | 619 | 615 |
Fuel | 550 | 614 |
Equipment rents | 171 | 165 |
Materials and other | 324 | 290 |
Total operating expenses | 3,512 | 3,594 |
Operating income | 1,889 | 1,823 |
Interest expense | 258 | 262 |
Other (income) expense, net | (28) | (23) |
Income before income taxes | 1,659 | 1,584 |
Income tax expense | 408 | 394 |
Net income | $ 1,251 | $ 1,190 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Consolidated Statements of Comprehensive Income [Abstract] | ||
Net income | $ 1,251 | $ 1,190 |
Other comprehensive income: | ||
Change in pension and retiree health and welfare benefits, net of tax | 1 | 0 |
Change in accumulated other comprehensive income (loss) of equity method investees | 0 | 1 |
Other comprehensive income (loss), net of tax | 1 | 1 |
Total comprehensive income | $ 1,252 | $ 1,191 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 13,687 | $ 13,175 |
Consolidated Statements of Changes in Equity - USD ($) $ in Millions |
Total |
Member’s Equity |
Accumulated Other Comprehensive Income (Loss) |
---|---|---|---|
Beginning Balance at Dec. 31, 2019 | $ 43,720 | $ 43,575 | $ 145 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Cash distributions | (1,100) | (1,100) | 0 |
Comprehensive income (loss), net of tax | 1,191 | 1,190 | 1 |
Ending Balance at Mar. 31, 2020 | 43,811 | 43,665 | 146 |
Beginning Balance at Dec. 31, 2020 | 44,004 | 43,906 | 98 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Cash distributions | (1,000) | (1,000) | 0 |
Comprehensive income (loss), net of tax | 1,252 | 1,251 | 1 |
Ending Balance at Mar. 31, 2021 | $ 44,256 | $ 44,157 | $ 99 |
Accounting Policies and Interim Results |
3 Months Ended |
---|---|
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounting Policies and Interim Results | 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, 2020, including the financial statements and notes thereto. Burlington Northern Santa Fe, LLC (BNSF) is a holding company that conducts no operating activities and owns no significant assets other than through its interests in its subsidiaries. The Consolidated Financial Statements include the accounts of BNSF and its majority-owned subsidiaries, all of which are separate legal entities (collectively, the Company). BNSF’s principal operating subsidiary is BNSF Railway Company (BNSF Railway). All intercompany accounts and transactions have been eliminated. On February 12, 2010, Berkshire Hathaway Inc., a Delaware corporation (Berkshire), acquired 100 percent of the outstanding shares of Burlington Northern Santa Fe Corporation common stock that it did not already own. The acquisition was completed through the merger (Merger) of a Berkshire wholly-owned merger subsidiary and Burlington Northern Santa Fe Corporation with the surviving entity renamed Burlington Northern Santa Fe, LLC. Earnings per share data is not presented because BNSF has only one holder of its membership interests. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the entire year. In the opinion of management, the unaudited financial statements reflect all adjustments (consisting of only normal recurring adjustments, except as disclosed) necessary for the fair statement of BNSF’s consolidated financial position as of March 31, 2021, and the results of operations for the three months ended March 31, 2021 and 2020.
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Revenue from Contracts with Customers |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer | Revenue from Contracts with Customers The Company disaggregates revenue from contracts with customers based on the characteristics of the services provided and the types of products transported (in millions):
Contract assets and liabilities are immaterial. Receivables from contracts with customers is a component of accounts receivable, net on the Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, $1.1 billion and $1.0 billion, respectively, represented net receivables from contracts with customers. Remaining performance obligations primarily consist of in-transit freight revenues, which will be recognized in the next reporting period. As of March 31, 2021 and December 31, 2020, remaining performance obligations were $260 million and $204 million, respectively.
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Accounts Receivable, Net |
3 Months Ended |
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Mar. 31, 2021 | |
Receivables [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable, net consists of freight and other receivables, reduced by an allowance for credit losses which is based upon expected collectability. As of March 31, 2021 and December 31, 2020, $47 million and $54 million, respectively, of such allowance had been recorded.
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Debt |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Notes and Debentures As of March 31, 2021, $1.1 billion remained authorized by the Board of Directors to be issued through the Securities and Exchange Commission 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 March 31, 2021, the Company was in compliance with these financial covenants. Subsequent Event In April 2021, BNSF issued $925 million of 3.30 percent debentures due September 15, 2051. 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. Fair Value of Debt Instruments As of March 31, 2021 and December 31, 2020, the fair value of BNSF’s debt, excluding finance leases, was $26.6 billion and $29.3 billion, respectively, while the book value, which also excludes finance leases, was $22.6 billion and $22.9 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 March 31, 2021, 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 March 31, 2021, were as follows (dollars in millions):
aReflects the maximum amount the Company could recover from a third party other than the counterparty. bReflects capitalized obligations that are recorded on the Company’s Consolidated Balance Sheets. cReflects the asset and corresponding liability for the fair value of these guarantees required by authoritative accounting guidance related to guarantees. dThere is no cap to the liability that can be sought from BNSF for BNSF’s negligence or the negligence of the indemnified party. However, BNSF could receive reimbursement from certain insurance policies if the liability exceeds a certain amount. Kinder Morgan Energy Partners, L.P. Santa Fe Pacific Pipelines, Inc., an indirect, wholly-owned subsidiary of BNSF, has a guarantee in connection with its remaining special limited partnership interest in Santa Fe Pacific Pipeline Partners, L.P. (SFPP), a subsidiary of Kinder Morgan Energy Partners, L.P., to be paid only upon default by the partnership. All obligations with respect to the guarantee will cease upon termination of ownership rights, which would occur upon a put notice issued by BNSF or the exercise of the call rights by the general partners of SFPP. Chevron Phillips Chemical Company LP BNSF has an indemnity agreement with Chevron Phillips Chemical Company LP (Chevron Phillips), granting certain rights of indemnity from BNSF, in order to facilitate access to a storage facility. Under certain circumstances, payment under this obligation may be required in the event Chevron Phillips were to incur certain liabilities or other incremental costs resulting from trackage access. Indemnities In the ordinary course of business, BNSF enters into agreements with third parties that include indemnification clauses. The Company believes that these clauses are generally customary for the types of agreements in which they are included. At times, these clauses may involve indemnification for the acts of the Company, its employees and agents, indemnification for another party’s acts, indemnification for future events, indemnification based upon a certain standard of performance, indemnification for liabilities arising out of the Company’s use of leased equipment or other property, or other types of indemnification. Despite the uncertainty whether events which would trigger the indemnification obligations would ever occur, the Company does not believe that these indemnity agreements will have a material adverse effect on the Company’s results of operations, financial position, or liquidity. Additionally, the Company believes that, due to lack of historical payment experience, the fair value of indemnities cannot be estimated with any amount of certainty and that the fair value of any such amount would be immaterial to the Consolidated Financial Statements. Unless separately disclosed above, no fair value liability related to indemnities has been recorded in the Consolidated Financial Statements.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Personal Injury BNSF’s personal injury liability includes the cost of claims for employee work-related injuries, third-party claims, and asbestos claims. BNSF records a liability for asserted and unasserted claims when the expected loss is both probable and reasonably estimable. Because of the uncertainty of the timing of future payments, the liability is undiscounted. Defense and processing costs, which are recorded on an as-reported basis, are not included in the recorded liability. Expense accruals and adjustments are classified as materials and other in the Consolidated Statements of Income. Personal injury claims by BNSF Railway employees are subject to the provisions of the Federal Employers’ Liability Act (FELA) rather than state workers’ compensation laws. Resolution of these cases under the FELA’s fault-based system requires either a finding of fault by a jury or an out of court settlement. Third-party claims include claims by non-employees for compensatory damages and may, from time to time, include requests for punitive damages or treatment of the claim as a class action. BNSF estimates its personal injury liability claims and expense using standard actuarial methodologies based on the covered population, activity levels and trends in frequency, and the costs of covered injuries. The Company monitors actual experience against the forecasted number of claims to be received, the forecasted number of claims closing with payment, and expected claim payments and records adjustments as new events or changes in estimates develop. BNSF is party to asbestos claims by employees and non-employees who may have been exposed to asbestos. Because of the relatively finite exposed population, the Company has recorded an estimate for the full amount of probable exposure. This is determined through an actuarial analysis based on estimates of the exposed population, the number of claims likely to be filed, the number of claims that will likely require payment, and the cost per claim. Estimated filing and dismissal rates and average cost per claim are determined utilizing recent claim data and trends. The following table summarizes the activity in the Company’s accrued obligations for personal injury claims (in millions):
The amount recorded by the Company for the personal injury liability is based upon the best information currently available. Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to resolve these claims may be different from the recorded amounts. The Company estimates that costs to resolve the liability may range from approximately $245 million to $340 million. Although the final outcome of these personal injury matters cannot be predicted with certainty, it is the opinion of BNSF that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, the occurrence of a number of these items in the same period could have a material adverse effect on the results of operations in a particular quarter or fiscal year. Environmental BNSF is subject to extensive federal, state, and local environmental regulation. The Company’s operating procedures include practices to protect the environment from the risks inherent in railroad operations, which frequently involve transporting chemicals and other hazardous materials. Additionally, many of BNSF’s land holdings are or have been used for industrial or transportation-related purposes or leased to commercial or industrial companies whose activities may have resulted in discharges onto the property. Under federal (in particular, the Comprehensive Environmental Response, Compensation, and Liability Act) and state statutes, the Company may be held jointly and severally liable for cleanup and enforcement costs associated with a particular site without regard to fault or the legality of the original conduct. The Company participates in the study, cleanup, or both of environmental contamination at approximately 200 sites. Environmental costs may include, but are not limited to, site investigations, remediation, and restoration. The liability is recorded when the expected loss is both probable and reasonably estimable and is undiscounted due to uncertainty of the timing of future payments. Expense accruals and adjustments are classified as materials and other in the Consolidated Statements of Income. BNSF estimates the cost of cleanup efforts at its known environmental sites based on experience gained from cleanup efforts at similar sites, estimated percentage to closure ratios, possible remediation work plans, estimates of the costs and likelihood of each possible outcome, historical payment patterns, and benchmark patterns developed from data accumulated from industry and public sources. The Company monitors actual experience against expectations and records adjustments as new events or changes in estimates develop. The following table summarizes the activity in the Company’s accrued obligations for environmental costs (in millions):
The amount recorded by the Company for the environmental liability is based upon the best information currently available. It has not been reduced by anticipated recoveries from third parties and includes both asserted and unasserted claims. BNSF’s total cleanup costs at these sites cannot be predicted with certainty due to various factors, such as the extent of corrective actions that may be required, evolving environmental laws and regulations, advances in environmental technology, the extent of other parties’ participation in cleanup efforts, developments in ongoing environmental analyses related to sites determined to be contaminated, and developments in environmental surveys and studies of contaminated sites. Because of the uncertainty surrounding various factors, it is reasonably possible that future costs to settle these claims may be different from the recorded amounts. The Company estimates that costs to settle the liability may range from approximately $215 million to $350 million. Although the final outcome of these environmental matters cannot be predicted with certainty, it is the opinion of BNSF that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, the occurrence of a number of these items in the same period could have a material adverse effect on the results of operations in a particular quarter or fiscal year. Other Claims and Litigation In addition to personal injury and environmental matters, BNSF and its subsidiaries are also parties to a number of other legal actions and claims, governmental proceedings, and private civil suits arising in the ordinary course of business, including those related to disputes and complaints involving certain transportation rates and charges. Some of the legal proceedings include claims for compensatory damages and may, from time to time, include requests for punitive damages or treatment of the claim as a class action. Although the final outcome of these matters cannot be predicted with certainty, it is the opinion of BNSF that none of these items, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, the occurrence of a number of these items in the same period could have a material adverse effect on the results of operations in a particular quarter or fiscal year. BNSF Insurance Company BNSF has a consolidated, wholly-owned subsidiary, Burlington Northern Santa Fe Insurance Company, Ltd. (BNSFIC), that offers insurance coverage for certain risks, including FELA claims, railroad protective and force account insurance claims, certain excess general liability and property coverage, and certain other claims which are subject to reinsurance. BNSFIC has entered into annual reinsurance treaty agreements with several other companies. The treaty agreements insure workers’ compensation, general liability, auto liability, and FELA risk. In accordance with the agreements, BNSFIC cedes a portion of its FELA exposure through the treaties and assumes a proportionate share of the entire risk. Each year, BNSFIC reviews the objectives and performance of the treaties to determine its continued participation. The treaty agreements provide for certain protections against the risk of treaty participants’ non-performance. On an ongoing basis, BNSF and/or the treaty manager reviews the creditworthiness of each of the participants. The Company does not believe its exposure to treaty participants’ non-performance is material at this time. BNSFIC typically invests in time deposits, money market accounts, and treasuries. As of both March 31, 2021 and December 31, 2020, there was $548 million related to these third-party investments, which were classified as cash and cash equivalents on the Company’s Consolidated Balance Sheets.
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Employment Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employment Benefit Plans | Employment Benefit Plans BNSF provides a funded, noncontributory qualified pension plan (BNSF Retirement Plan), which covers most non-union employees, and an unfunded non-tax-qualified pension plan (BNSF Supplemental Retirement Plan), which covers certain officers and other employees. The benefits under these pension plans are based on years of credited service and the highest consecutive sixty months of compensation for the last ten years of salaried employment with the Company. In 2019, the Company amended the BNSF Retirement Plan and the BNSF Supplemental Retirement Plan. Non-union employees hired on or after April 1, 2019 are not eligible to participate in these retirement plans and instead receive an additional employer contribution as part of the qualified 401(k) plan based on the employees’ age and years of service. Current plan participants are being transitioned away from the retirement plans and upon transition are eligible for the additional employer contribution. BNSF also provides a funded, noncontributory qualified pension plan which covers certain union employees of the former The Atchison, Topeka and Santa Fe Railway Company (Union Plan). The benefits under this pension plan are based on elections made at the time the plan was implemented. With respect to the funded plans, the Company's funding policy is to contribute annually not less than the regulatory minimum and not more than the maximum amount deductible for income tax purposes. The BNSF Retirement Plan, the BNSF Supplemental Retirement Plan, and the Union Plan are collectively referred to herein as the Pension Plans. Components of the net (benefit) cost for the Pension Plans were as follows (in millions):
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.
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Related Party Transactions |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions The companies identified as affiliates of BNSF include Berkshire and its subsidiaries. During the three months ended March 31, 2021 and 2020, the Company declared and paid cash distributions of $1.0 billion and $1.1 billion, respectively, to Berkshire. In both of the three-month periods ended March 31, 2021 and 2020, the Company made tax payments of less than $1 million to Berkshire. As of March 31, 2021 and December 31, 2020, the Company had a tax payable to Berkshire of $360 million and $70 million, respectively. 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):
BNSF owns 17.3 percent of TTX Company (TTX) while other North American railroads own the remaining interest. As BNSF possesses the ability to exercise significant influence, but not control, over the operating and financial policies of TTX, BNSF applies the equity method of accounting to its investment in TTX. The investment in TTX recorded under the equity method 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 $718 million and $703 million recognized as investments related to TTX in its Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively.
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Accumulated Other Comprehensive Income |
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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 table provides the components of accumulated other comprehensive income (loss) (AOCI) by component (in millions):
a This accumulated other comprehensive income component is included in the computation of net periodic pension and retiree health and welfare costs (see Note 6 for additional details on pensions costs).
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Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Accounting Pronouncements | Accounting PronouncementsIn December 2019, the FASB issued Accounting Standards Update No. 2019-12 (ASU 2019-12), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of Accounting Standards Codification (ASC) 740. BNSF adopted the standard as of January 1, 2021. Adoption of the standard did not have a material impact on the Company’s Consolidated Financial Statements and disclosures. |
Revenue from Contracts with Customers (Tables) |
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Disaggregation of Revenue | The Company disaggregates revenue from contracts with customers based on the characteristics of the services provided and the types of products transported (in millions):
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Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Guarantor Obligations | Debt and other obligations of non-consolidated entities guaranteed by the Company as of March 31, 2021, were as follows (dollars in millions):
aReflects the maximum amount the Company could recover from a third party other than the counterparty. bReflects capitalized obligations that are recorded on the Company’s Consolidated Balance Sheets. cReflects the asset and corresponding liability for the fair value of these guarantees required by authoritative accounting guidance related to guarantees. dThere 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.
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Commitments and Contingencies (Tables) |
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Schedule of Loss Contingencies by Contingency | The following table summarizes the activity in the Company’s accrued obligations for personal injury claims (in millions):
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Accrued Obligations for Environmental Matters | The following table summarizes the activity in the Company’s accrued obligations for environmental costs (in millions):
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Employment Benefit Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | Components of the net (benefit) cost for the Pension Plans were as follows (in millions):
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Related Party Transactions (Tables) |
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Schedule of Related Party Transactions | The following table summarizes revenues earned by BNSF for services provided to related parties and expenditures to related parties (in millions):
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Accumulated Other Comprehensive Income (Tables) |
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides the components of accumulated other comprehensive income (loss) (AOCI) by component (in millions):
a This accumulated other comprehensive income component is included in the computation of net periodic pension and retiree health and welfare costs (see Note 6 for additional details on pensions costs).
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Accounting Policies and Interim Results (Details) - Burlington Northern Santa Fe Corporation |
Mar. 31, 2021 |
Feb. 12, 2010 |
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Business Acquisition [Line Items] | ||
Acquired remaining outstanding shares, percentage | 100.00% | |
Holders of membership interests | 1 |
Revenue from Contracts with Customers Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2021 |
Mar. 31, 2020 |
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Disaggregation of Revenue [Line Items] | ||
Revenues | $ 5,401 | $ 5,417 |
Total freight revenues | 5,110 | 5,140 |
Total other revenues | 291 | 277 |
Consumer Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,890 | 1,765 |
Agricultural Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,308 | 1,144 |
Industrial Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,226 | 1,465 |
Coal | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 686 | 766 |
Non-rail logistics subsidiary | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 180 | 173 |
Accessorial and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 111 | $ 104 |
Revenue from Contracts with Customers Disclosure of contract asset and liability (Details) - USD ($) $ in Billions |
Mar. 31, 2021 |
Dec. 31, 2020 |
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Revenue from Contract with Customer [Abstract] | ||
Net receivables from contracts with customers | $ 1.1 | $ 1.0 |
Revenue from Contracts with Customers Remaining performance obligations (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
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Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligations | $ 260 | $ 204 |
Accounts Receivable, Net Allowance for Credit Losses (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
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Receivables [Abstract] | ||
Accounts receivable, allowance for credit loss | $ 47 | $ 54 |
Debt Notes and Debentures (Details) - USD ($) $ in Millions |
Apr. 30, 2021 |
Mar. 31, 2021 |
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SEC Debt Shelf Registration | ||
Debt Instrument [Line Items] | ||
Remaining Debt Securities Authorized by the Board | $ 1,100 | |
Junior Subordinated Debt | ||
Debt Instrument [Line Items] | ||
Subordinated notes related to financial covenants | $ 500 | |
Three Point Three Zero Percent Due September 15, 2051 | Corporate Debt Securities | Subsequent Event | ||
Debt Instrument [Line Items] | ||
Debt issuance, face amount | $ 925 | |
Debt instrument, stated interest rate | 3.30% |
Debt Fair Value of Debt Instruments (Details) - USD ($) $ in Billions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Disclosure [Abstract] | ||
Fair value of debt excluding capital leases and unamortized gains on interest rate swaps | $ 26.6 | $ 29.3 |
Book value of debt excluding capital leases, the associated unamortized fair value adjustment and unamortized gains on interest rate swaps | $ 22.6 | $ 22.9 |
Commitments and Contingencies Personal Injury (Details) - Personal Injury - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Loss Contingency Accrual [Roll Forward] | ||
Beginning balance | $ 273 | $ 275 |
Accruals / changes in estimates | 17 | 11 |
Payments | (6) | (22) |
Ending balance | 284 | 264 |
Current portion of ending balance | 75 | $ 70 |
Minimum | ||
Loss Contingencies [Line Items] | ||
Loss contingency, estimate of possible loss | 245 | |
Maximum | ||
Loss Contingencies [Line Items] | ||
Loss contingency, estimate of possible loss | $ 340 |
Commitments and Contingencies Environmental (Details) - Environmental Issue $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021
USD ($)
sites
|
Mar. 31, 2020
USD ($)
|
|
Loss Contingencies [Line Items] | ||
Number of alleged environmental contamination sites | sites | 200 | |
Accrual for Environmental Loss Contingencies [Roll Forward] | ||
Beginning balance | $ 265 | $ 282 |
Accruals / changes in estimates | 1 | 1 |
Payments | (5) | (5) |
Ending balance | 261 | 278 |
Current portion of ending balance | 35 | $ 40 |
Minimum | ||
Loss Contingencies [Line Items] | ||
Future costs to settle claims and associated liability | 215 | |
Maximum | ||
Loss Contingencies [Line Items] | ||
Future costs to settle claims and associated liability | $ 350 |
Commitments and Contingencies Insurance (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Loss Contingencies [Line Items] | ||
Cash and cash equivalents | $ 1,951 | $ 1,986 |
Commercial Paper, Bank Time Deposits, and Money Market Funds | BNSF Insurance Company | ||
Loss Contingencies [Line Items] | ||
Cash and cash equivalents | $ 548 |
Employment Benefit Plans (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Number of months for highest consecutive compensation | 60 months | |
Total number of years of salaried employees to qualify for pension plans | 10 years | |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 6 | $ 5 |
Interest cost | 14 | 18 |
Expected return on plan assets | (44) | (42) |
Net cost recognized | $ (24) | $ (19) |
Related Party Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Related Party Transaction [Line Items] | |||
Cash distributions | $ 1,000 | $ 1,100 | |
Related Party Transaction Revenue with Affiliates | 23 | 37 | |
Related Party Transaction Expenditures from Transactions with Related Party | $ 97 | 93 | |
Equity Method Investments and Joint Ventures [Abstract] | |||
Ownership Percentage in TTX Company | 17.30% | ||
Equity Method Investments | $ 718 | $ 703 | |
Parent Company | |||
Related Party Transaction [Line Items] | |||
Cash distributions | 1,000 | $ 1,100 | |
Tax payments to parent company | 1 | ||
Accounts Payable, Related Parties | $ 360 | $ 70 |
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