Norfolk Southern reports first-quarter 2014 results

NORFOLK, Va., April 23, 2014 /PRNewswire/ -- Norfolk Southern (NYSE: NSC) reported first-quarter net income of $368 million, or $1.17 per diluted share, compared with $450 million, or $1.41 per diluted share, earned in the same period of 2013. First-quarter 2013 net income included a $60 million, or $0.19 per diluted share, gain from a land sale.

First-Quarter 2014 Results

  • Railway operating revenues totaled $2.7 billion.
  • Income from railway operations was $667 million.
  • Net income totaled $368 million.
  • Diluted earnings per share of $1.17.
  • The railway operating ratio was 75.2 percent.

"Following the extreme winter weather across the U.S. rail network which impacted first-quarter results, we are seeing a rebound in shipments across all of our business," said Norfolk Southern CEO Wick Moorman. "Our people responded admirably to meet the challenges of the harsh conditions, and we remain focused on delivering superior service to our customers."

Railway operating revenues were $2.7 billion, 2 percent lower compared with first-quarter 2013, and shipment volumes decreased 1 percent.

First-Quarter Revenue by Commodity

  • Chemicals, up 12 percent.
  • Intermodal, up 4 percent.
  • Agriculture, even.
  • Metals/Construction, down 1 percent.
  • Paper/Forest, down 3 percent.
  • Automotive, down 7 percent
  • Coal, down 15 percent.

For the first quarter, general merchandise revenues were $1.6 billion, 1 percent higher than the same period last year, despite overall volume declining 1 percent. Increased crude and liquefied petroleum gas shipments were offset by declines in automotive, metals/construction, and paper/forest shipments.

Intermodal revenues improved 4 percent, to $596 million, compared with first-quarter 2013. Growth primarily in domestic business pushed traffic volume up 3 percent in the quarter compared with the same period of 2013.

First-quarter coal revenues were $541 million, 15 percent lower compared with the same quarter of 2013, the result of a 13 percent volume decrease due primarily to lower utility and export shipments. 

Railway operating expenses for the first quarter were $2 billion, 1 percent lower than in the same period of 2013.

Income from railway operations was $667 million, 3 percent lower compared with first-quarter 2013.

The quarterly railway operating ratio, or operating expenses as a percentage of revenue, was 75.2 percent versus 74.8 percent in the same period of 2013.

Norfolk Southern Corporation (NYSE: NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 20,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal, automotive, and industrial products.

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Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)



First Quarter


2014


2013


($ in millions, except per share
amounts)







Railway operating revenues






   Coal

$

541


$

635

   General merchandise


1,552



1,530

   Intermodal


596



573

   Total railway operating revenues


2,689



2,738







Railway operating expenses






   Compensation and benefits


740



780

   Purchased services and rents


392



393

   Fuel


432



429

   Depreciation


237



227

   Materials and other


221



218

      Total railway operating expenses


2,022



2,047







      Income from railway operations


667



691







Other income – net (note 1)


26



135

Interest expense on debt


139



129







   Income before income taxes


554



697







Provision for income taxes






   Current


194



173

   Deferred


(8)



74

       Total income taxes


186



247







     Net income

$

368


$

450







Earnings per share (note 1)






   Basic

$

1.18


$

1.43

   Diluted


1.17



1.41







Weighted average shares outstanding (note 2)






   Basic


309.5



314.5

   Diluted


312.6



318.1

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)



First Quarter


2014


2013


($ in millions)







Net income

$

368


$

450

Other comprehensive income, before tax:






     Pension and other postretirement benefits


299



36

     Other comprehensive income of equity investees


3



1

Other comprehensive income, before tax


302



37

Income tax expense related to items of other   






     comprehensive income


(114)



(14)

     Other comprehensive income, net of tax


188



23







           Total comprehensive income

$

556


$

473

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



March 31,


December 31,


2014


2013


($ in millions)

Assets








Current assets:








   Cash and cash equivalents

$


1,522


$


1,443

   Short-term investments



10




118

   Accounts receivable – net



1,109




1,024

   Materials and supplies



240




223

   Deferred income taxes



179




180

   Other current assets



70




87

   Total current assets



3,130




3,075









Investments



2,466




2,439

Properties less accumulated depreciation of $10,512 and $10,387,








   respectively



26,768




26,645

Other assets



336




324









      Total assets

$


32,700


$


32,483









Liabilities and stockholders' equity








Current liabilities:








   Accounts payable

$


1,194


$


1,265

   Short-term debt



-




100

   Income and other taxes



323




225

   Other current liabilities



359




270

   Current maturities of long-term debt



445




445

      Total current liabilities



2,321




2,305









Long-term debt



8,909




8,903

Other liabilities



1,130




1,444

Deferred income taxes



8,647




8,542

      Total liabilities



21,007




21,194









Stockholders' equity:








   Common stock $1.00 per share par value, 1,350,000,000 shares








      authorized; outstanding 309,646,086 and 308,878,402 shares,








      respectively, net of treasury shares



311




310

   Additional paid-in capital



2,085




2,021

   Accumulated other comprehensive loss



(193)




(381)

   Retained income



9,490




9,339









     Total stockholders' equity



11,693




11,289









     Total liabilities and stockholders' equity

$


32,700


$


32,483

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



First Quarter


2014


2013


($ in millions)

Cash flows from operating activities






   Net income

$

368


$

450

   Reconciliation of net income to net cash provided by operating activities:






   Depreciation


238



228

   Deferred income taxes


(8)



74

   Gains and losses on properties and investments (note 1)


(2)



(99)

   Changes in assets and liabilities affecting operations:






   Accounts receivable


(85)



(49)

   Materials and supplies


(17)



(30)

   Other current assets


17



17

   Current liabilities other than debt


86



96

   Other – net


(9)



36

   Net cash provided by operating activities


588



723







Cash flows from investing activities






   Property additions


(381)



(379)

   Property sales and other transactions


22



19

   Investments, including short-term


(3)



(5)

   Investment sales and other transactions


108



(1)

   Net cash used in investing activities


(254)



(366)







Cash flows from financing activities






   Dividends


(167)



(157)

   Common stock issued – net


62



55

   Purchase and retirement of common stock (note 2)


(50)



(33)

   Debt repayments


(100)



(203)

   Net cash used in financing activities


(255)



(338)







   Net increase in cash and cash equivalents


79



19







Cash and cash equivalents






   At beginning of period


1,443



653







   At end of period

$

1,522


$

672







Supplemental disclosures of cash flow information






   Cash paid during the period for:






   Interest (net of amounts capitalized)

$

75


$

62

   Income taxes (net of refunds)


60



23

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. Other Income Net
              
    In first quarter 2013, we recognized a $97 million gain on a land sale, which increased net income by $60 million or $0.19 per share.
  2. Stock Repurchase Program    
              In each of the first quarters of 2014 and 2013, we repurchased 0.5 million shares of common stock, totaling $50 million and $33 million, respectively. We have remaining authorization from our Board of Directors to repurchase up to 37.7 million shares through December 31, 2017.  The timing and volume of purchases is guided by our assessment of market conditions and other pertinent factors.  Any near-term share repurchases are expected to be made with internally generated cash, cash on hand, or proceeds from borrowings.  Since the beginning of 2006, we have repurchased and retired 137.3 million shares at a total cost of $8.2 billion.

SOURCE Norfolk Southern Corporation



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