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During the third quarter, Burlington Northern Santa Fe set a quarterly revenue record, but the Class I ended up spending just as much as it earned. Today, BNSF reported quarterly freight revenue of $2.7 billion, a 16 percent increase compared with third-quarter 2003 data.

"We achieved an all-time record for quarterly revenues, which enabled BNSF to record its third-consecutive quarterly double-digit revenue increase," said BNSF Chairman, President and Chief Executive Officer Matthew Rose in a prepared statement, adding that consumer and industrial product, and coal revenue contributed to the quarterly performance.

However, operating expenses rose 37 percent to $2.7 billion compared with third-quarter 2003. The railroad reported a net of tax charge of $288 million to reflect changes in the way it estimates asbestos and environmental liabilities. Quarterly expenses also increased because of rising fuel prices and freight volume, which was up 12 percent compared with a similar 2003 period.

Because of the special charge, BNSF's quarterly operating income plummeted 330 percent to $100 million and net income fell from $203 million to $2 million compared with third-quarter 2003 data. The Class I's quarterly operating ratio worsened 14.5 points to 96.3.

During 2004's first nine months, BNSF increased revenue 15 percent to $7.8 billion compared with similar 2003 data. However, operating income dropped 1 percent to $1 billion, net income fell 119 percent to $203 million, operating expenses rose 21 percent to $6.9 billion and the railroad's operating ratio worsened 4.4 points to 87.0.