Norfolk Southern reports fourth-quarter 2012 and full-year results

Jan 22, 2013, 16:05 ET from Norfolk Southern Corporation

NORFOLK, Va., Jan. 22, 2013 /PRNewswire/ --  

For fourth-quarter 2012:

  • Railway operating revenues were $2.7 billion.
  • Income from railway operations was $714 million.
  • Net income totaled $413 million.
  • Diluted earnings per share were $1.30.
  • The railway operating ratio was 73.4 percent.

For 2012:

  • Railway operating revenues were $11 billion.
  • Income from railway operations was $3.1 billion.
  • Net income was $1.7 billion.
  • Diluted earnings per share were $5.37.
  • The railway operating ratio was 71.7 percent.

Norfolk Southern Corporation (NYSE: NSC) today reported fourth-quarter 2012 net income of $413 million, or $1.30 per diluted share, compared with $480 million, or $1.42 per diluted share, earned in the fourth quarter of 2011. Net income for 2012 was $1.7 billion, or $5.37 per diluted share, compared with $1.9 billion, or $5.45 per diluted share, earned in 2011.

"While the fourth quarter reflected declines in coal shipments, we also saw steady intermodal volume gains coupled with improved volumes in our chemicals, auto, and housing sectors," said Norfolk Southern CEO Wick Moorman. "We remain focused on controlling costs and improving productivity while continuing to provide high service levels for our customers. In 2013, we plan to invest $2 billion in capital improvements to further our strong safety performance, improve operational efficiency and service, and support future growth."

Fourth-quarter railway operating revenues were $2.7 billion, down 4 percent compared with the same period of 2011. For 2012, railway operating revenues were $11 billion, 1 percent lower than 2011.

General merchandise revenues were $1.4 billion, 4 percent higher compared with fourth-quarter 2011 results. For 2012, general merchandise revenues increased to $5.9 billion, 6 percent higher compared with 2011. Traffic volume increased 1 percent in the quarter and 2 percent for the year compared with the same periods of 2011.

Coal revenues were $657 million, 23 percent lower compared with fourth-quarter 2011, and $2.9 billion for 2012, 17 percent lower than 2011. Coal traffic volume declined 13 percent both in the quarter and for 2012 compared with the same periods of 2011.

Intermodal revenues increased to $584 million, 5 percent higher compared with fourth-quarter 2011. For the full year, intermodal revenues reached $2.2 billion, up 5 percent compared with 2011. Traffic volume increased 4 percent in the quarter and 5 percent for 2012 compared with the same periods of 2011.

Fourth-quarter railway operating expenses were $2 billion, 1 percent lower compared with the same period a year earlier. For 2012, railway operating expenses were $7.9 billion, also down 1 percent compared with 2011.

Income from railway operations was $714 million, 11 percent lower compared with fourth-quarter 2011, and $3.1 billion for 2012, 3 percent lower compared with 2011.

The railway operating ratio increased 3 percent to 73.4 percent during the fourth quarter and rose 1 percent to 71.7 percent for 2012 compared with the same periods of 2011.

Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway 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)

Three Months Ended

Years Ended

December 31,

December 31,

2012

2011

2012

2011

(in millions, except per share amounts)

Railway operating revenues:

Coal

$

657

$

850

$

2,879

$

3,458

General merchandise

1,443

1,393

5,920

5,584

Intermodal

584

554

2,241

2,130

    Total railway operating revenues

2,684

2,797

11,040

11,172

Railway operating expenses:

Compensation and benefits

726

734

2,960

2,974

Purchased services and rents

418

419

1,604

1,610

Fuel

395

403

1,577

1,589

Depreciation

233

221

916

862

Materials and other (note 1)

198

220

859

924

Total railway operating expenses

1,970

1,997

7,916

7,959

Income from railway operations

714

800

3,124

3,213

Other income – net

36

39

129

160

Interest expense on debt

129

116

495

455

Income before income taxes

621

723

2,758

2,918

Provision for income taxes:

Current

121

130

643

475

Deferred

87

113

366

527

    Total income taxes (note 2)

208

243

1,009

1,002

Net income

$

413

$

480

$

1,749

$

1,916

Earnings per share (note 3):

Basic

$

1.31

$

1.44

$

5.42

$

5.52

Diluted

1.30

1.42

5.37

5.45

Weighted average shares outstanding (note 4):

Basic

314.8

332.8

320.9

345.5

Diluted

318.6

338.6

325.2

351.3

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2012

2011

2012

2011

($ in millions)

Net income

$

413

$

480

$

1,749

$

1,916

Other comprehensive loss, before tax:

Pension and other postretirement benefits

(211)

(410)

(114)

(325)

Other comprehensive loss of equity investees

(9)

(21)

(13)

(21)

Other comprehensive loss, before tax

(220)

(431)

(127)

(346)

Income tax benefit related to items of other   

comprehensive loss

82

158

44

125

Other comprehensive loss, net of tax

(138)

(273)

(83)

(221)

Total comprehensive income

$

275

$

207

$

1,666

$

1,695

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

December 31,

December 31,

2012

2011

($ in millions)

Assets

Current assets:

Cash and cash equivalents

$

653

$

276

Short-term investments

15

25

Accounts receivable - net

1,109

1,022

Materials and supplies

216

209

Deferred income taxes

167

143

Other current assets

82

76

Total current assets

2,242

1,751

Investments

2,300

2,234

Properties less accumulated depreciation of $9,922 and

$9,464, respectively

25,736

24,469

Other assets

64

84

Total assets

$

30,342

$

28,538

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

1,362

$

1,092

Short-term debt

200

100

Income and other taxes

206

207

Other current liabilities

263

252

Current maturities of long-term debt

50

50

Total current liabilities

2,081

1,701

Long-term debt

8,432

7,390

Other liabilities

2,237

2,050

Deferred income taxes

7,832

7,486

Total liabilities

20,582

18,627

Stockholders' equity:

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

authorized; outstanding 314,034,174 and 330,386,089 shares,

respectively, net of treasury shares

315

332

Additional paid-in capital

1,911

1,912

Accumulated other comprehensive loss

(1,109)

(1,026)

Retained income

8,643

8,693

Total stockholders' equity

9,760

9,911

Total liabilities and stockholders' equity

$

30,342

$

28,538

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Years Ended

December 31,

2012

2011

($ in millions)

Cash flows from operating activities:

Net income

$

1,749

$

1,916

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

Depreciation

922

869

Deferred income taxes

366

527

Gains and losses on properties and investments

(6)

(32)

Changes in assets and liabilities affecting operations:

Accounts receivable

(64)

(215)

Materials and supplies

(7)

(40)

Other current assets

(6)

14

Current liabilities other than debt

82

68

Other – net

29

120

Net cash provided by operating activities

3,065

3,227

Cash flows from investing activities:

Property additions

(2,241)

(2,160)

Property sales and other transactions

192

84

Investments, including short-term

(23)

(135)

Investment sales and other transactions

78

439

Net cash used in investing activities

(1,994)

(1,772)

Cash flows from financing activities:

Dividends

(624)

(576)

Common Stock issued – net

89

120

Purchase and retirement of Common Stock (note 4)

(1,288)

(2,051)

Proceeds from borrowings – net

1,491

1,101

Debt repayments

(362)

(600)

Net cash used in financing activities

(694)

(2,006)

Net increase (decrease) in cash and cash equivalents

377

(551)

Cash and cash equivalents:

At beginning of year

276

827

At end of year

$

653

$

276

Supplemental disclosures of cash flow information:

Cash paid during the year for:

Interest (net of amounts capitalized)

$

473

$

435

Income taxes (net of refunds)

618

289

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. MATERIALS AND OTHER        During the first quarter of 2011, we received an unfavorable ruling for an arbitration claim with an insurance carrier, and were denied recovery of the contested portion of the claim.  As a result, we recorded a $43 million charge for the receivables associated with the contested portion of the claim and a $15 million charge for other receivables affected by the ruling for which recovery was no longer probable. 
  2. INCOME TAXES      During the second quarter of 2011, the Internal Revenue Service (IRS) completed its examination of our 2008 tax return and review of certain claims for refund for prior years that resulted in a decrease in income tax expense of $40 million.  During the second and fourth quarters of 2011, enacted state tax law changes resulted in a decrease to deferred income tax expense of $19 million and $11 million, respectively. 
  3. EARNINGS PER SHARE      For basic earnings per share, income available to common stockholders reflects reductions for the effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows:  for the fourth quarter, $2 million in 2012 and $3 million in 2011; and for the year, $9 million in both 2012 and 2011.             For diluted earnings per share, income available to common stockholders reflects reductions for the effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows:  for the fourth quarter, $1 million in 2012 and less than $1 million in 2011; and for the year, $4 million in 2012 and $2 million in 2011.
  4. STOCK REPURCHASE PROGRAM      We repurchased and retired 18.8 million shares of Common Stock in 2012, at a cost of $1.3 billion, and 30.2 million shares at a cost of $2.1 billion for the same period of 2011.  On August 1, 2012, our Board of Directors authorized the repurchase of up to an additional 50 million shares of Common Stock 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 128.4 million shares at a total cost of $7.5 billion.

SOURCE Norfolk Southern Corporation



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