Norfolk Southern Reports 2009 Fourth-Quarter and Full-Year Results
NORFOLK, Va., Jan. 27 /PRNewswire-FirstCall/ --
For fourth-quarter 2009:
- Railway operating revenues were $2.1 billion.
- Income from railway operations was $549 million.
- Net income was $307 million.
- Diluted earnings per share were $0.82.
- The railway operating ratio was 73.9 percent.
For 2009:
- Railway operating revenues were $8.0 billion.
- Income from railway operations was $2.0 billion.
- Net income was $1.0 billion.
- Diluted earnings per share were $2.76.
- The railway operating ratio was 75.4 percent.
Norfolk Southern Corporation (NYSE: NSC) today reported fourth-quarter 2009 net income of $307 million, or $0.82 per diluted share, compared with $452 million, or $1.21 per diluted share, for the same quarter of 2008. Net income for 2009 was $1.0 billion, or $2.76 per diluted share, compared with $1.7 billion, or $4.52 per diluted share, for 2008.
"Our fourth-quarter results demonstrate a continuation of the momentum we have generated since the second quarter of 2009," said CEO Wick Moorman. "The results reflect a high level of performance throughout Norfolk Southern, and showcase the strength and flexibility of our franchise, our industry-leading safety and service performance, and continuing strong cost discipline."
"We expect to build upon the sequential volume gains we experienced in the third and fourth quarters driven by anticipated improvement in economic conditions combined with project growth. We plan to invest about $1.4 billion, slightly higher than our 2009 capital spending, in our rail network in 2010, including leveraging technology to improve operational efficiency and service, and support the business growth we expect in future years."
Fourth-quarter railway operating revenues were $2.1 billion, down 16 percent compared with the same period a year earlier. For 2009, railway operating revenues were $8.0 billion, down 25 percent compared with 2008.
General merchandise revenues were $1.1 billion, down 9 percent compared with fourth-quarter 2008. For 2009, general merchandise revenues were $4.2 billion, down 24 percent compared with 2008. General merchandise traffic volume declined 2 percent in the quarter and 21 percent for the year compared with the same periods of 2008.
Coal revenues in the fourth quarter were $580 million, down 27 percent compared with the same period last year. For 2009, coal revenues were $2.3 billion, 27 percent lower compared with 2008. Coal traffic volume declined 19 percent in the quarter and 20 percent for the year compared with the same periods of 2008.
Intermodal revenues were $407 million, down 15 percent compared with fourth-quarter 2008. For the full year, intermodal revenues were $1.5 billion, down 26 percent compared with 2008. Intermodal traffic volume was down 9 percent in the quarter and 16 percent for 2009 compared with the same periods of 2008.
Railway operating expenses were $1.6 billion for the quarter, 8 percent lower compared with fourth-quarter 2008. For 2009, railway operating expenses declined 21 percent to $6.0 billion, compared with 2008, primarily due to lower fuel costs.
Income from railway operations for the fourth quarter was $549 million, down 32 percent, compared with fourth-quarter 2008 and $2.0 billion for the year, 36 percent lower, compared with 2008.
The fourth-quarter operating ratio was 73.9 percent compared with 67.5 percent in the same period last year. For the year, the operating ratio was 75.4 percent vs. 71.1 percent for 2008.
Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal and industrial products.
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Years
Ended Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
($ in millions,
except per share amounts)
Railway operating revenues:
Coal (note 1) $580 $798 $2,264 $3,111
General merchandise 1,119 1,224 4,175 5,492
Intermodal 407 480 1,530 2,058
--- --- ----- -----
Total railway operating revenues 2,106 2,502 7,969 10,661
----- ----- ----- ------
Railway operating expenses:
Compensation and benefits (note 2) 613 609 2,401 2,684
Purchased services and rents 362 405 1,403 1,599
Fuel 221 269 725 1,638
Depreciation 213 206 837 804
Materials and other (note 3) 148 200 641 852
--- --- --- ---
Total railway operating expenses 1,557 1,689 6,007 7,577
----- ----- ----- -----
Income from railway operations 549 813 1,962 3,084
Other income – net 37 18 127 110
Interest expense on debt 119 112 467 444
--- --- --- ---
Income before income taxes 467 719 1,622 2,750
Provision for income taxes:
Current (5) 158 250 744
Deferred 165 109 338 290
--- --- --- ---
Total income taxes 160 267 588 1,034
--- --- --- -----
Net income $307 $452 $1,034 $1,716
==== ==== ====== ======
Earnings per share (note 4):
Basic $0.83 $1.23 $2.79 $4.58
Diluted $0.82 $1.21 $2.76 $4.52
Weighted average shares outstanding (millions)
(notes 4 & 5):
Basic 367.9 365.8 367.1 372.3
Diluted 373.3 372.4 372.1 380.0
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
As of December 31,
2009 2008
---- ----
($ in millions)
Assets
Current assets:
Cash and cash equivalents $996 $618
Short-term investments 90 -
Accounts receivable – net 766 870
Materials and supplies 164 194
Deferred income taxes 142 149
Other current assets 88 168
--- ---
Total current assets 2,246 1,999
Investments 2,164 1,779
Properties less accumulated depreciation 22,643 22,247
Other assets 316 272
--- ---
Total assets $27,369 $26,297
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $974 $1,140
Short-term debt 100
Income and other taxes 109 261
Other current liabilities 232 220
Current maturities of long-term debt 374 484
--- ---
Total current liabilities 1,789 2,105
Long-term debt 6,679 6,183
Other liabilities 1,801 2,030
Deferred income taxes 6,747 6,372
----- -----
Total liabilities 17,016 16,690
Stockholders' equity:
Common stock $1.00 per share par value,
1,350,000,000 shares
authorized; outstanding 369,019,990 and
366,233,106 shares,
respectively, net of treasury shares 370 368
Additional paid-in capital 1,809 1,680
Accumulated other comprehensive loss (853) (942)
Retained income 9,027 8,501
----- -----
Total stockholders' equity 10,353 9,607
------ -----
Total liabilities and stockholders' equity $27,369 $26,297
======= =======
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Years Ended December 31,
2009 2008
---- ----
($ in millions)
Cash flows from operating activities:
Net income $1,034 $1,716
Reconciliation of net income to net cash
provided
by operating activities:
Depreciation 845 815
Deferred income taxes 338 290
Gains and losses on properties (18) (29)
Changes in assets and liabilities
affecting operations:
Accounts receivable 63 269
Materials and supplies 30 (18)
Other current assets 72 (8)
Current liabilities other than debt (365) (262)
Other – net (139) (58)
---- ---
Net cash provided by operating
activities 1,860 2,715
Cash flows from investing activities:
Property additions (1,299) (1,558)
Property sales and other transactions 84 109
Investments, including short-term (266) (86)
Investment sales and other transactions 30 307
--- ---
Net cash used in investing activities (1,451) (1,228)
Cash flows from financing activities:
Dividends (500) (456)
Common stock issued – net 66 229
Purchase and retirement of common stock
(note 5) - (1,128)
Proceeds from borrowings – net 1,090 1,425
Debt repayments (687) (1,145)
----
Net cash used in financing activities (31) (1,075)
--- ------
Net increase in cash and cash
equivalents 378 412
Cash and cash equivalents:
At beginning of year 618 206
--- ---
At end of year $996 $618
==== ====
Supplemental disclosure of cash flow
information
Cash paid during the year for:
Interest (net of amounts capitalized) $458 $421
Income taxes (net of refunds) $381 $615
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. Coal Revenues
2008 includes $22 million related to a coal customer's 2008 contracted volume shortfall and a nonrecurring effect related to the implementation of NS' new export coal billing system.
2. Labor Agreement
2008 includes $31 million for lump-sum payments (including payroll taxes) due under a new labor agreement with the Brotherhood of Locomotive Engineers and Trainmen (BLET).
3. Materials and Other
2009 includes a $21 million favorable adjustment related to settlement of a multi-year state tax dispute.
4. Earnings Per Share
In the first quarter of 2009, NS adopted the provisions of the Financial Accounting Standards Board Staff Position (FSP) EITF No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" (Accounting Standards Codification (ASC) 260-10), which requires the treatment of unvested stock options receiving dividend equivalents as participating securities in computing earnings per share under the two-class method. NS has retrospectively applied the provisions of this FSP. Accordingly, for basic earnings per share, income available to common stockholders for the fourth quarter 2009 and 2008 reflects a $2 million reduction, and for the years 2009 and 2008 an $8 million and $9 million reduction, respectively, from net income for the effect of dividend equivalent payments made to holders of stock options. In addition, for the fourth quarter and year 2009, diluted earnings per share was calculated under the more dilutive two-class method (as compared to the treasury stock method) and income available to common stockholders reflects a $2 million and $8 million reduction, respectively, from net income for dividend equivalent payments.
5. Stock Repurchase Program
In March 2007, NS' Board of Directors amended the stock repurchase program that was authorized in November 2005 so as to increase the number of shares of NS common stock that may be repurchased from 50 million to 75 million. In addition, the term of the program was shortened from December 31, 2015 to December 31, 2010. During 2009, NS did not repurchase any shares of common stock. Since inception of the stock repurchase program in 2006, NS has repurchased and retired 64.7 million shares at a total cost of $3.3 billion.
SOURCE Norfolk Southern Corporation
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