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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

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)