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

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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