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Norfolk Southern Corp. (NSC:US)
Exchange: New York Stock Exchange
$ 112.00
Sep 19, 2014, 11:37 PM EDT
Change: -0.15 (-0.13%)
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Norfolk Southern reports second-quarter 2013 earnings

NORFOLK, Va., July 23, 2013 /PRNewswire/ --

  • Railway operating revenues were $2.8 billion.
  • Income from railway operations was $836 million.
  • Net income was $465 million.
  • Diluted earnings per share were $1.46.
  • Railway operating ratio was 70.2 percent.

For the second quarter of 2013, Norfolk Southern (NYSE: NSC) reported net income of $465 million, 11 percent lower than $524 million for second-quarter 2012. Diluted earnings per share were $1.46, down 9 percent compared with $1.60 per diluted share in the same period last year.

"In the second quarter, Norfolk Southern delivered solid results, supported by growth in our chemicals, intermodal, and automotive businesses, despite continuing weakness in the coal markets," said CEO Wick Moorman. "We continue to focus on service efficiency and velocity, which is enabling us to control operating expenses and deliver superior performance to our customers."

Railway operating revenues were $2.8 billion, 3 percent lower compared with second-quarter 2012, with shipment volumes increasing 2 percent. Second-quarter 2013 fuel surcharge revenues were $306 million, or $59 million less than the same period last year.

General merchandise revenues were $1.6 billion, 2 percent higher compared with the second quarter of 2012, driven by increased chemical and automotive shipments.

Coal revenues were $626 million, 17 percent lower compared with the same quarter last year, due to lower average revenue per unit and a 4 percent decline in volumes, the result of a combination of reduced global demand for U.S. coal and competition from natural gas.

Intermodal revenues increased 4 percent to $588 million compared with the same period of 2012. Volumes increased 5 percent due to continued domestic and international growth.

Railway operating expenses were $2.0 billion, 1 percent higher compared with second-quarter 2012.

Income from railway operations for the second quarter was $836 million, 10 percent lower compared with the same period last year.

The second-quarter railway operating ratio was 70.2 percent, 4 percent higher compared with 2012.

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.

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)



Second Quarter


First Six Months


2013


2012


2013


2012


(in millions, except per share amounts)













Railway operating revenues












Coal

$

626


$

755


$

1,261


$

1,521

General merchandise


1,588



1,556



3,118



3,052

Intermodal


588



563



1,161



1,090

   Total railway operating revenues


2,802



2,874



5,540



5,663













Railway operating expenses












Compensation and benefits


726



724



1,506



1,510

Purchased services and rents


410



392



803



783

Fuel


391



390



820



803

Depreciation


226



229



453



453

Materials and other


213



205



431



435

Total railway operating expenses


1,966



1,940



4,013



3,984













Income from railway operations


836



934



1,527



1,679













Other income – net (note 1)


29



31



164



60

Interest expense on debt


128



122



257



242













Income before income taxes


737



843



1,434



1,497













Provision for income taxes












Current


203



269



376



425

Deferred


69



50



143



138

Total income taxes


272



319



519



563













Net income

$

465


$

524


$

915


$

934













Earnings per share (notes 1 & 2)












Basic

$

1.47


$

1.62


$

2.90


$

2.86

Diluted


1.46



1.60



2.87



2.82













Weighted average shares outstanding (note 3)












Basic


314.1



322.7



314.3



325.5

Diluted


317.8



327.5



317.9



330.2


See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)



Second Quarter


First Six Months


2013


2012


2013


2012


($ in millions)













Net income

$

465


$

524


$

915


$

934

Other comprehensive income, before tax:












Pension and other postretirement benefits


36



32



72



64

Other comprehensive income (loss) of equity investees


1



-



2



(4)

Other comprehensive income, before tax


37



32



74



60

Income tax expense related to items of other   












comprehensive income


(14)



(13)



(28)



(25)

Other comprehensive income, net of tax


23



19



46



35













Total comprehensive income

$

488


$

543


$

961


$

969


See accompanying notes to consolidated financial statements.  

 


Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



June 30,


December 31,


2013


2012


($ in millions)

Assets








Current assets:








Cash and cash equivalents


$

587



$

653

Short-term investments



-




15

Accounts receivable - net



1,072




1,109

Materials and supplies



228




216

Deferred income taxes



137




167

Other current assets



54




82

Total current assets



2,078




2,242









Investments



2,366




2,300

Properties less accumulated depreciation of $10,152 and








$9,922, respectively



26,098




25,736

Other assets



63




64









Total assets


$

30,605



$

30,342









Liabilities and stockholders' equity








Current liabilities:








Accounts payable


$

1,180



$

1,362

Short-term debt



-




200

Income and other taxes



284




206

Other current liabilities



304




263

Current maturities of long-term debt



47




50

Total current liabilities



1,815




2,081









Long-term debt



8,430




8,432

Other liabilities



2,198




2,237

Deferred income taxes



7,974




7,832

Total liabilities



20,417




20,582









Stockholders' equity:








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








authorized; outstanding 311,952,780 and 314,034,174 shares,








respectively, net of treasury shares



313




315

Additional paid-in capital



1,984




1,911

Accumulated other comprehensive loss



(1,063)




(1,109)

Retained income



8,954




8,643









Total stockholders' equity



10,188




9,760









      Total liabilities and stockholders' equity


$

30,605



$

30,342


See accompanying notes to consolidated financial statements.

 


Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



First Six Months


2013


2012


($ in millions)

Cash flows from operating activities






Net income

$

915


$

934

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






  Depreciation


456



456

  Deferred income taxes


143



138

  Gains on properties (note 1)


(99)



(2)

  Changes in assets and liabilities affecting operations:






      Accounts receivable


37



(64)

      Materials and supplies


(12)



(33)

      Other current assets


28



23

      Current liabilities other than debt


6



162

  Other – net


32



49

     Net cash provided by operating activities


1,506



1,663







Cash flows from investing activities






Property additions


(884)



(968)

Property sales and other transactions


68



15

Investments, including short-term


(7)



(12)

Investment sales and other transactions


16



33

Net cash used in investing activities


(807)



(932)







Cash flows from financing activities






Dividends


(315)



(308)

Common stock issued – net


80



47

Purchase and retirement of common stock (note 3)


(314)



(850)

Proceeds from borrowings – net


-



696

Debt repayments


(216)



(236)

Net cash used in financing activities


(765)



(651)







Net increase (decrease) in cash and cash equivalents


(66)



80







Cash and cash equivalents






At beginning of period


653



276







At end of period

$

587


$

356







Supplemental disclosures of cash flow information






Cash paid during the period for:






Interest (net of amounts capitalized)

$

244


$

232

Income taxes (net of refunds)


238



264


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.  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 second quarter, $1 million in 2013 and $2 million in 2012; and for the first six months, $3 million in 2013 and $4 million in 2012.       

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 second quarter, $1 million in 2013 and less than $1 million in 2012; and for the first six months, $2 million in both 2013 and 2012.

3.  STOCK REPURCHASE PROGRAM
We repurchased and retired 4.2 million shares of common stock in the first six months of 2013, at a cost of $314 million, and 12.3 million shares at a cost of $850 million for the same period of 2012.  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 132.6 million shares at a total cost of $7.8 billion.

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SOURCE Norfolk Southern Corporation

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