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Norfolk Southern reports third-quarter 2012 results

- Railway operating revenues were $2.7 billion.

- Income from railway operations was $731 million.

- Net income totaled $402 million.

- Diluted earnings per share were $1.24.

- The railway operating ratio equaled 72.9 percent.

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NORFOLK, Va., Oct. 23, 2012 /PRNewswire/ -- For the third quarter of 2012, Norfolk Southern (NYSE: NSC) reported net income of $402 million, or $1.24 per diluted share, 27 percent lower compared with $554 million, or $1.59 per diluted share, in the third quarter of 2011.

"Third-quarter results reflect weak market conditions, which resulted in declines in our coal and merchandise shipments," said Norfolk Southern CEO Wick Moorman. "We remain focused on controlling costs while continuing to provide high service levels for our customers and invest in projects that will support future growth."

Railway operating revenues totaled $2.7 billion, down 7 percent compared with third-quarter 2011, primarily as the result of volume declines in coal and merchandise and lower revenues from fuel surcharges. Third-quarter 2012 fuel surcharge revenues were impacted by a $21 million unfavorable lag effect, while third-quarter 2011 fuel surcharge revenues included a favorable lag effect of $52 million.

General merchandise revenues were $1.4 billion, 1 percent lower than third-quarter 2011 results. Coal revenues fell 22 percent, to $701 million, compared with the same period last year. Intermodal revenues were $567 million, 3 percent higher compared with the third quarter of 2011.

Railway operating expenses for the third quarter increased 1 percent to $2.0 billion, compared with 2011.

Income from railway operations was $731 million, 22 percent lower compared with the same period last year.

The third-quarter railway operating ratio increased to 72.9 percent compared with 67.5 percent during the third quarter 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 and industrial products.

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Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)






Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011


(in millions, except per share amounts)













Railway operating revenues:












Coal

$

701


$

899


$

2,222


$

2,608

General merchandise


1,425



1,439



4,477



4,191

Intermodal


567



551



1,657



1,576

    Total railway operating revenues


2,693



2,889



8,356



8,375













Railway operating expenses:












Compensation and benefits


724



736



2,234



2,240

Purchased services and rents


403



403



1,186



1,191

Fuel


379



385



1,182



1,186

Depreciation


230



217



683



641

Materials and other (note 1)


226



210



661



704

Total railway operating expenses


1,962



1,951



5,946



5,962













Income from railway operations


731



938



2,410



2,413













Other income – net


33



60



93



121

Interest expense on debt


124



114



366



339













Income before income taxes


640



884



2,137



2,195













Provision for income taxes:












Current


97



159



522



345

Deferred


141



171



279



414

    Total income taxes (note 2)


238



330



801



759













Net income

$

402


$

554


$

1,336


$

1,436













Earnings per share (note 3):












Basic

$

1.26


$

1.61


$

4.12


$

4.09

Diluted


1.24



1.59



4.07



4.03













Weighted average shares outstanding (note 4):












Basic


317.7



343.2



322.9



349.8

Diluted


321.8



349.0



327.4



355.6













See accompanying notes.












 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)






Three Months Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011


($ in millions)













Net income

$

402


$

554


$

1,336


$

1,436

Other comprehensive income, before tax:












Pension and other postretirement benefits


33



28



97



85

Other comprehensive loss of equity investees


-



-



(4)



-

Other comprehensive income, before tax


33



28



93



85

Income tax expense related to items of other   












comprehensive income


(13)



(11)



(38)



(33)

Other comprehensive income, net of tax


20



17



55



52













Total comprehensive income

$

422


$

571


$

1,391


$

1,488













See accompanying notes.












 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)






September 30,


December 31,


2012


2011


($ in millions)

Assets








Current assets:








Cash and cash equivalents


$

693



$

276

Short-term investments



15




25

Accounts receivable - net



1,078




1,022

Materials and supplies



236




209

Deferred income taxes



144




143

Other current assets



33




76

Total current assets



2,199




1,751









Investments



2,315




2,234

Properties less accumulated depreciation of $9,859 and








$9,464, respectively



25,260




24,469

Other assets



66




84









Total assets


$

29,840



$

28,538









Liabilities and stockholders' equity








Current liabilities:








Accounts payable


$

1,260



$

1,092

Short-term debt



-




100

Income and other taxes



150




207

Other current liabilities



362




252

Current maturities of long-term debt



52




50

Total current liabilities



1,824




1,701









Long-term debt



8,428




7,390

Other liabilities



2,018




2,050

Deferred income taxes



7,803




7,486

Total liabilities



20,073




18,627









Stockholders' equity:








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








authorized; outstanding 316,043,185 and 330,386,089 shares,








respectively, net of treasury shares



317




332

Additional paid-in capital



1,909




1,912

Accumulated other comprehensive loss



(971)




(1,026)

Retained income



8,512




8,693

Total stockholders' equity



9,767




9,911









Total liabilities and stockholders' equity


$

29,840



$

28,538









See accompanying notes.

 









 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)




Nine Months Ended


September 30,


2012


2011


($ in millions)

Cash flows from operating activities:






Net income

$

1,336


$

1,436

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






Depreciation


688



646

Deferred income taxes


279



414

Gains and losses on properties and investments


(4)



(30)

Changes in assets and liabilities affecting operations:






Accounts receivable


(56)



(222)

Materials and supplies


(27)



(43)

Other current assets


43



60

Current liabilities other than debt


183



402

Other – net


34



101

Net cash provided by operating activities


2,476



2,764







Cash flows from investing activities:






Property additions


(1,522)



(1,433)

Property sales and other transactions


47



70

Investments, including short-term


(14)



(88)

Investment sales and other transactions


37



246

Net cash used in investing activities


(1,452)



(1,205)







Cash flows from financing activities:






Dividends


(467)



(432)

Common stock issued – net


77



95

Purchase and retirement of common stock (note 4)


(1,150)



(1,611)

Proceeds from borrowings – net


1,291



396

Debt repayments


(358)



(592)

Net cash used in financing activities


(607)



(2,144)







Net increase (decrease) in cash and cash equivalents


417



(585)







Cash and cash equivalents:






At beginning of year


276



827







At end of period

$

693


$

242







Supplemental disclosures of cash flow information:






Cash paid during the period for:






Interest (net of amounts capitalized)

$

297


$

296

Income taxes (net of refunds)


536



121







See accompanying notes.

 







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. MATERIALS AND OTHER 
    During the first quarter of 2011, NS received an unfavorable ruling for an arbitration claim with an insurance carrier, and was denied recovery of the contested portion ($43 million) of the claim.  As a result, NS recorded a $43 million charge during the first quarter of 2011 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 NS' 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.  Also during the second quarter of 2011, three states enacted tax law changes that decreased deferred income tax expense by $19 million
  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 third quarter, $3 million in 2012 and $2 million in 2011; and for the first nine months, $7 million in 2012 and $6 million in 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 third quarter, $1 million in 2012 and less than $1 million in 2011; and for the first nine months, $3 million in 2012 and $2 million in 2011.
  4. STOCK REPURCHASE PROGRAM  
    NS repurchased and retired 16.5 million shares of Common Stock in the first nine months of 2012, at a cost of $1.2 billion, and 23.8 million shares at a cost of $1.6 billion for the same period of 2011.  On August 1, 2012, NS' 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 management's 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, NS has repurchased and retired 126.1 million shares at a total cost of $7.4 billion.

SOURCE Norfolk Southern Corporation



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http://www.nscorp.com

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