NORFOLK, Va., July 25, 2018 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported record second-quarter financial results.

Net income was $710 million, up 43 percent year-over-year, a result of an 18 percent increase in income from railway operations and a lower effective income tax rate. Diluted earnings per share were $2.50, up 46 percent year-over-year and a second-quarter record.

"Our second-quarter results reflect strong growth in our business and our sustained commitment to improving financial performance," said James A. Squires, Norfolk Southern chairman, president and CEO. "We are committed to delivering financial results that benefit our shareholders and service that benefits our customers."

Second-quarter summary

• Railway operating revenues of $2.9 billion increased 10 percent compared with second-quarter 2017, as overall volumes were up 6 percent reflecting growth in all three major commodity categories of intermodal, merchandise and coal.   

• Railway operating expenses increased $107 million, or 6 percent, to $1.9 billion compared with the same period last year largely a result of higher fuel prices, higher incentive compensation, and increased costs associated with overall lower network velocity offset, in part, by refund claims for prior years' employment taxes paid on equity awards.    

• Income from railway operations was $1.0 billion, an increase of 18 percent year-over-year, a record for any quarter. The railway operating ratio, or operating expenses as a percentage of revenues, was 64.6 percent, a second-quarter record. 

About Norfolk Southern
Norfolk Southern Corporation (NYSE: NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 19,500 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.

Forward-looking statements
This news release contains forward-looking statements that may be identified by the use of words like "believe," "expect," "anticipate," "estimate," "plan," "consider," "project," and similar references to the future. Forward-looking statements reflect our good-faith evaluation of information currently available. These forward-looking statements are subject to a number of risks and uncertainties, and our actual results may differ materially from those projected. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. Pension and Other Postretirement Benefits
   We adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2017-07 on January 1, 2018.  The retrospective application resulted in the reclassification of $16 million and $32 million of pension and other postretirement benefits from the "Compensation and benefits" line item within "Railway operating expenses" to "Other income - net" on the Consolidated Statements of Income for the second quarter and first six months of 2017, respectively.
2. Stock Repurchase Program
   We repurchased and retired 4.8 million and 3.4 million shares of common stock under our stock repurchase program in the first six months of 2018 and 2017, respectively, at a cost of $700 million and $402 million, respectively.  Since the beginning of 2006, we have repurchased and retired 173.3 million shares at a total cost of $12.0 billion.
3. Reclassification of Stranded Tax Effects
   In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This update is intended to reclassify the stranded tax effects resulting from the Tax Cuts and Jobs Act that was enacted on December 22, 2017 from accumulated other comprehensive income to retained earnings.  In the first quarter of 2018, we adopted the provisions of ASU 2018-02 resulting in an increase to "Accumulated other comprehensive loss" of $88 million and a corresponding increase to "Retained income," with no impact on "Total stockholders' equity."

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SOURCE Norfolk Southern Corporation