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Press release from PR Newswire

Norfolk Southern reports second-quarter 2013 earnings

Tuesday, July 23, 2013

Norfolk Southern reports second-quarter 2013 earnings

16:05 EDT Tuesday, July 23, 2013

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 SHAREFor 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 PROGRAMWe 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.

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 http://www.nscorp.com/nscportal/nscorp/RSS/rss.html

SOURCE Norfolk Southern Corporation

For further information: Norfolk Southern contacts: (Media) Frank Brown, 757-629-2710 (fsbrown@nscorp.com) or (Investors) Michael Hostutler, 757-629-2861 (michael.hostutler@nscorp.com)

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