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Press release from PR Newswire

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

Tuesday, January 22, 2013

Norfolk Southern reports fourth-quarter 2012 and full-year results16:05 EST Tuesday, January 22, 2013NORFOLK, 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.Connect with NShttp://www.nscorp.com http://www.facebook.com/NorfolkSouthern http://www.flickr.com/photos/norfolksouthern http://www.twitter.com/nscorp http://www.youtube.com/user/norfolksoutherncorp   Norfolk Southern Corporation and SubsidiariesConsolidated Statements of Income(Unaudited)Three Months EndedYears EndedDecember 31,December 31,2012201120122011(in millions, except per share amounts)Railway operating revenues:Coal$657$850$2,879$3,458General merchandise1,4431,3935,9205,584Intermodal5845542,2412,130    Total railway operating revenues2,6842,79711,04011,172Railway operating expenses:Compensation and benefits7267342,9602,974Purchased services and rents4184191,6041,610Fuel3954031,5771,589Depreciation233221916862Materials and other (note 1)198220859924Total railway operating expenses1,9701,9977,9167,959Income from railway operations7148003,1243,213Other income ? net3639129160Interest expense on debt129116495455Income before income taxes6217232,7582,918Provision for income taxes:Current121130643475Deferred87113366527    Total income taxes (note 2)2082431,0091,002Net income$413$480$1,749$1,916Earnings per share (note 3):Basic$1.31$1.44$5.42$5.52Diluted1.301.425.375.45Weighted average shares outstanding (note 4):Basic314.8332.8320.9345.5Diluted318.6338.6325.2351.3  Norfolk Southern Corporation and SubsidiariesConsolidated Statements of Comprehensive Income(Unaudited)Three Months EndedYears EndedDecember 31,December 31,2012201120122011($ in millions)Net income$413$480$1,749$1,916Other 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 loss8215844125Other comprehensive loss, net of tax(138)(273)(83)(221)Total comprehensive income$275$207$1,666$1,695 Norfolk Southern Corporation and SubsidiariesConsolidated Balance Sheets(Unaudited)December 31,December 31,20122011($ in millions)AssetsCurrent assets:Cash and cash equivalents$653$276Short-term investments1525Accounts receivable - net1,1091,022Materials and supplies216209Deferred income taxes167143Other current assets8276Total current assets2,2421,751Investments2,3002,234Properties less accumulated depreciation of $9,922 and$9,464, respectively25,73624,469Other assets6484Total assets$30,342$28,538Liabilities and stockholders' equityCurrent liabilities:Accounts payable$1,362$1,092Short-term debt200100Income and other taxes206207Other current liabilities263252Current maturities of long-term debt5050Total current liabilities2,0811,701Long-term debt8,4327,390Other liabilities2,2372,050Deferred income taxes7,8327,486Total liabilities20,58218,627Stockholders' equity:Common Stock $1.00 per share par value, 1,350,000,000 sharesauthorized; outstanding 314,034,174 and 330,386,089 shares,respectively, net of treasury shares315332Additional paid-in capital1,9111,912Accumulated other comprehensive loss(1,109)(1,026)Retained income8,6438,693Total stockholders' equity9,7609,911Total liabilities and stockholders' equity$30,342$28,538 Norfolk Southern Corporation and SubsidiariesConsolidated Statements of Cash Flows(Unaudited)Years EndedDecember 31,20122011($ in millions)Cash flows from operating activities:Net income$1,749$1,916Reconciliation of net income to net cash provided by operating activities:Depreciation922869Deferred income taxes366527Gains 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)14Current liabilities other than debt8268Other ? net29120Net cash provided by operating activities3,0653,227Cash flows from investing activities:Property additions(2,241)(2,160)Property sales and other transactions19284Investments, including short-term(23)(135)Investment sales and other transactions78439Net cash used in investing activities(1,994)(1,772)Cash flows from financing activities:Dividends(624)(576)Common Stock issued ? net89120Purchase and retirement of Common Stock (note 4)(1,288)(2,051)Proceeds from borrowings ? net1,4911,101Debt repayments(362)(600)Net cash used in financing activities(694)(2,006)Net increase (decrease) in cash and cash equivalents377(551)Cash and cash equivalents:At beginning of year276827At end of year$653$276Supplemental disclosures of cash flow information:Cash paid during the year for:Interest (net of amounts capitalized)$473$435Income taxes (net of refunds)618289 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS: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.  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.  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. 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 CorporationFor further information: Norfolk Southern contacts: (Media) Frank Brown, +1-757-629-2710, fsbrown@nscorp.com; (Investors) Michael Hostutler, +1-757-629-2861, michael.hostutler@nscorp.com